ICRA downwards JMT Auto ratings

ICRA has revised downwards JMT Auto’s long term rating to the Rs 94 crore term loans and the Rs 102 crore fund-based facilities from [ICRA]BBB+(pronounced ICRA triple B plus) to [ICRA]BBB- (pronounced ICRA triple B minus).

Ratings agency ICRA has revised downwards spareparts maker JMT Auto Ltd, and has placed the company’s ratings under watch with negative implications. JMT Auto is about 66.77% owned by Amtek Auto Ltd., and counts Tata Motors Ltd., as it major client.

ICRA has revised downwards JMT Auto’s long term rating to the Rs 94 crore term loans and the Rs 102 crore fund-based facilities from [ICRA]BBB+(pronounced ICRA triple B plus) to [ICRA]BBB- (pronounced ICRA triple B minus). It also has downgraded the short term rating to the Rs. 53 crore non-fund based facilities and to the Rs. 1.00 crore bill discounting facility of JMT from [ICRA]A2 (pronounced ICRA A two) to [ICRA]A3 (pronounced ICRA A three), it said.

“The revision in the ratings take into account the decline in JMT’s turnover and profits during the first quarter of FY16 which, along with the increase in working capital intensity, has led to a deterioration in debt coverage indicators of the company,” ICRA said in a note.

During the first quarter of the current fiscal that began in April, Amtek Auto slipped to a net loss of Rs 157.60 crore from a year earlier profit of Rs 86.08 crore. This has led to a stressed liquidity position in the group, ICRA says. JMT Auto reported a lower net profit of Rs 1.69 crore compared to Rs 3.59 crore a year earlier, while its sales also fell to Rs 84.25 crore compared to Rs 121.59 crore.

The ratings agency further adds that the ratings have been placed on watch with negative implications for lack of clairty on the company’s planned acquisiton of Germany-based REGE Holding GmbH, through its Singapore-based special purpose vehicle. “The total outflow for the acquisition and funding pattern thereof, at a time when JMT’s own performance and that of the parent have witnessed deteriorations, and success of integration of the acquired business with that of JMT, would be key rating sensitivities going forward. Apart from the said acquisition, JMT has sizeable capex plans in various other brownfield and greenfield expansion projects,” it said.

ICRA said it would “continue to monitor the developments and evaluate the impact of the same on the credit risk profile of JMT,” when it gets further details.