Aftab Automobiles LTD - Surveillance Report 2015

2015
Credit Rating Report [Surveillance]

Aftab Automobiles Limited
Particulars Ratings Remarks
Aftab Automobiles Limited AA3 Entity
BDT 503.0 million Long Term Outstanding (LTO) AA3 (Lr)
BDT 430.0 million Cash Credit limits* AA3 (Lr) Please see Appendix-1
BDT 1,200.0 million aggregate fund based limits ST-3 for details
BDT 2,800.0 million aggregate non-fund based limits ST-3
Outlook Stable
Lr- Loan rating; ST-Short Term
* Due to its revolving nature, CRAB views Cash Credit (CC) as long-term facility
Date of Rating: 07 May 2015
Validity: The Entity and Long Term ratings are valid up to 28 February 2016 and the Short Term ratings are valid up
to limit expiry date of respective credit facilities or 28 February 2016 whichever is earlier.
Rating Based on: Audited financial statements up to 31 August 2014 and other relevant quantitative & qualitative
information up to the date of rating declaration.
Methodology: CRAB’s Corporate Rating Methodology (www.crab.com.bd)
Analysts: AA3 (Lr) rating of BDT 503.0 million aggregate Long
Koushik Mohammad Term Outstanding (LTO) and BDT 430.0 million Cash
koushik@crabrating.com Credit limit of AAL. CRAB has also retained ST-3
rating to BDT 1,200.0 million aggregate fund based
Zubairia Khan

limits and BDT 2,800.0 million aggregate non fund
zubairia@crabrating.com
based limits in the Short Term.
Financial Highlights
Year ended Aug. 31 CRAB has retained the rating of AAL considering the
(Mil. BDT) 2014 2013 2012 strong leverage position, improved profitability
Net Sales 1.730.0 1,989.3 2,541.2 position and credit risk profile irrespective of decline
EBITDA 476.0 454.4 465.8 in sales consecutively two years and other financial
EBITDA Margin (%) 27.5 22.8 18.3 indicators in 2014. Total sales of the Company
Net Profit Margin (%) 16.2 13.6 11.5
declined to BDT 1,729.9 million in 2014 from BDT
ROAA (%) 4.2 4.3 5.3
1,989.3 million in 2013 when total sales was
Quick Ratio (×) 2.1 2.0 2.4
unusually high in 2012 compared to previous trend.
Operating Cycle (Days) 369 319 276
Total sales also declined in 2014 due to decline in
Debt to Equity (×) 0.22 0.21 0.1
Borrowed Fund to EBITDA (×) 2.3 2.2 1.4
demand trend during 2014 following the overall
Cash Flow from Operation -197.2 564.8 563.1 market condition which directly affected the road
Free Cash Flow -253.0 536.9 264.7 transportation sector of Bangladesh.
EBIT/Interest (x) 3.8 5.7 8.0
CRAB moreover has retained the ratings considering CRAB Rating Report
PROFILE the new motorcycle assembling unit established in
Aftab Automobiles Limited (hereafter also referred to Chittagong in December 2013, and started its
as “AAL” or the Company) was incorporated in 1967 as commercial selling from July 2014. This will further
a private limited company named East Pakistan increase the revenue base of AAL in 2015. Increase in
Automobiles Ltd which was named as Aftab profitability position also supported reaffirmation of
Automobiles Limited in 1972. The Company is enlisted ratings irrespective of declining sales trend.
with DSE and CSE. The Company has been enjoying the
contractual right of assembling Hino Chassis from In spite of the decreased sales, gross profit of the
1983 from Navana Ltd which has dealership from Company improved in 2014 due to the declining
Toyota Tsusho Corporation (Japan). CoGS resulting from foreign exchange gain in case of
importing goods. The earning status of the Company
RATIONALE
is balanced to ensure the increased operating profit
Credit Rating Agency of Bangladesh Limited (CRAB) margin as well as net profit margin irrespective of
has assigned AA3 (Pronounced double A three) rating substantial increase in financial expense which
to Aftab Automobiles Limited. CRAB has also assigned
Page 1 of 13
CRAB I CRAB Ratings on Corporate Credit Digest I 17 May 2015
reflects better cost efficiency. The factor was considered for retaining the ratings.
The liquidity position of the Company was quite stringent due to delay in receivable collection and long inventory
processing period affecting track record of meeting short term debt obligations which was considered while
assigning short term ratings.
The operating cycle deteriorated to 369 days in 2014 from 319 days in 2013. The credit risk profile of the
Company considering debt ratio and borrowed fund to EBITDA ratio was favourable although negative cash flow
position constrained the assigned ratings.
The rating also considers the technology used, quality control system and service to maintain customer confidence.
The brand image of ‘Hino’, ‘Navana’ and “Mahindra” along with well diversified business of the Company will help to
keep its success trend. The management of the Company is not likely to pose any threat for Aftab Automobiles
Limited as it is an old and established organization having good succession planning. The IT infrastructure and quick
flow of information regarding production, labor, stocks and sales related issues are also considered while assigning
rating which eventually help the Head Office to effectively control and monitor the operation of the factory.
The Company has been enjoying the contractual right of assembling Hino Chassis since 1983 from Navana Limited
which has dealership of Hino chassis from Toyota Tsusho Corporation (Japan), which has been also considered while
assigning the ratings.
COMPANY PROFILE
Aftab Automobiles Ltd was incorporated in 1967 as a private limited company named East Pakistan Automobiles Ltd
which was renamed as Aftab Automobiles Limited in 1972. The Company was converted into Public limited company
in 1981 and enlisted in DSE and CSE in 1987 and 1996 respectively. The Company has been enjoying the contractual
right of assembling Hino Chassis since 1983 from Navana Ltd which has dealership of Hino chassis from Toyota
Tsusho Corporation (Japan) and presently it is assembling Hino Bus, Hino Mini Bus/Truck Chassis, Hino CNG Bus etc.
The Company started commercial operation of Bus Body Fabrication unit from 1997, Paint unit from 1999, Battery
unit and furniture unit from 2002. In an Extra-Ordinary General Meeting held on 6 December 2009, the three non-
core business; the Batteries, Furniture and Paint Units were transferred into fully-owned subsidiaries of Aftab
Automobiles Ltd. The assembling unit is located at Fouzderhat Heavy Industrial Estate, Chittagong and Body Building
unit is located at Gabtoli, Dhaka. In 2014, the Company has added motorcycle assembling unit in its production line
and started its selling and distribution under “Mahindra” brand name, which is imported as CKD from Indian
company named Mahindra & Mahindra Limited.
CAPITAL STRUCTURE
Total authorized capital of the Company was BDT 400.0 million up to 2008 comprising BDT 200.0 million as ordinary
shares and BDT 200.0 million as cumulative redeemable preference shares. The authorized capital of ordinary shares
was increased by BDT 300.0 million in 2009 which resulted in total authorized capital of BDT 700.0 million. In an
Extra-Ordinary General Meeting held on 6 December 2009, the three non-core businesses; Battery, Furniture and
Paint Units were transferred into fully-owned subsidiaries of Aftab Automobiles Ltd. Subsequently the mentioned
three units started its business activities under the name of Navana Batteries Ltd., Navana Furniture Ltd. and Navana
Paints Ltd. as fully owned subsidiary companies of AAL from 1 August 2010. AAL is holding approximately 99.95%
share of three subsidiary companies. The Company has been increasing its paid up capital by issuing bonus share
over the years which was BDT 854.8 million as of 31 August 2013. Furthermore, the paid up capital increased to BDT
957.3 million as of 31 August 2014. The paid up capital increased due to issuance of bonus shares of BDT 102.57
million in 2014.
Total equity of the Company stood at BDT 5,039.0 million in 2014 comprising BDT 957.3 million (18.9%) paid up
capital, BDT 1,925.9 million (38.2%) share premium, BDT 2,088.5 million (41.4%) retained earnings and BDT 67.3
million (1.3%) reserve & surplus.
Page 2 of 13
www.crab.com.bd; www.crabrating.com
Table 1
Shareholding Position as of 31 August, 2014 (in %)
Particulars 2014 2013 2012
Sponsors 30.39 30.5 30.5
Financial Institutions including ICB 23.71 22.0 18.8
General public 45.9 47.5 50.7

BOARD & MANAGEMENT
The Board of Aftab Automobiles Ltd consists of seven members including two Independent Directors. Mr. Shafiul
Islam is the Chairman of the Company. He has substantial experience in automobiles business sector. The Board
meetings are generally held in every alternative month. The members generally take decisions in strategic planning
and policy related issues of the Company. Board proceedings are recorded in the Minutes Book kept in the Head
office of the Company. The Company has an Audit Committee comprises three members including two independent
directors where one is also the Chairman of the Audit Committee.
The management is headed by Mr. Saiful Islam who joined the Navana Group in 1997 and is performing as Managing
Director of Aftab Automobiles Ltd from 2006. At present he is the Sr. Vice Chairman of Navana Group consisting
sixteen companies including vehicles assembling, body building and trading, real estate, construction, CNG
conversion and gas station, textiles, car rental, electronics, IT, petroleum and renewable energy. All the three
subsidiary companies have separate management in the respective factory locations which performance is monitored
by AAL through regular monthly meeting and IT infrastructure. The chairman and managing director is supported by
operative director and a group of senior officials. Therefore the management is not likely to pose any serious threat
for Aftab Automobiles Ltd.
There was no major change in the top management, management practice & structure during the last one year,
except implementation of the plan focusing on expansion of motor cycle. The Company uses both IT infrastructure
as well as hard copy files to keep its management information. There are easy access and quick flow of information
regarding procurement, inventory, production and sales related issues which eventually help the Head Office to
control and monitor the operation of different units. Initially all the units had their independent section for
accounts and reports where presently three subsidiary companies are preparing separate financial statements
which are subsequently integrated into consolidated accounts. All the units including the subsidiaries prepare detail
monthly reports on production, stocks and sales related issues which are placed to the monthly management
meeting.
GROUP POSITION
Navana Group after its inception has experienced consecutive growth and expansion for the contribution of Mr.
Shafiul Islam Kamal as Chairman to the Group. Navana Group includes a number of companies and has diversified
activities in various areas like construction and real estate business, international trading, distributorship and
production of various items which already has achieved significant success in diversified business arena in
Bangladesh.
Navana Limited
Navana Limited, the first Company of the Navana Group (previously Islam Group) was incorporated in 1964 as a
private limited company. The Company is an exclusive distributorship franchise of Toyota Tsusho Kaisha Ltd, Japan
(reamed as Toyota Tsusho Corporation) to market Toyota personal vehicles. It is also distributor of Hino CKD
vehicles.
Navana Paints Limited

Aftab Automobiles Ltd started its paint manufacturing unit at the existing premises of Aftab automobiles Plant,
Chittagong in 1999. The Company manufactures and sales different category of paint through two sales centers
located in Dhaka and Chittagong and 18 dealers. The Company imported raw materials from Indonesia, Malaysia,
Australia, Taiwan, Korea etc. A separate company namely Navana Paint Limited as a subsidiary of Aftab Automobiles
Ltd. was incorporated in 1 August 2010 to execute the business operation of paint unit.
Page 3 of 13
Navana Batteries Limited

The battery manufacturing unit of Aftab Automobiles Ltd started its operation in January 2002. In August 2010, a
separate company namely Navana Battery Limited as a subsidiary of Aftab Automobiles Ltd. was incorporated to
execute the business operation of battery unit. The factory is located at the same premises with the assembling unit
and paint unit in an independent structure. It manufactures automotive and industrial batteries under the brand
name of “Navana Battery”. It produces a wide product range of batteries for small cars to big Lorries. The Company
also manufactures batteries for Instant Power Supply (I.P.S.). It has a plan to manufacture solar system battery in the
upcoming year. It imports major raw materials from Taiwan (for Separator, Aluminum Foil), Japan (for Flock
Polyester), USA (for Expander, for Cork Powder), Malaysia (for Anti & pure lead, for container) and India for tubular
Bag. The sales and marketing system of the unit is segregated into dealer based for retailing and other than dealer
for corporate and government. Navana Battery Ltd has nationwide dealer network, service network and battery
servicing kiosks. Most of the sales of the unit are done through the dealers who make about 15 days advance
payment to get the products of the Company.
Navana Furniture Limited

The Furniture Unit of Aftab Automobiles Ltd started its operation from 2002. In August 2010, a separate company
namely Navana Furniture Limited as a subsidiary of Aftab Automobiles Ltd. was incorporated to execute the business
operation of battery unit. It has been involved in manufacturing furniture for office, home and hospital under the
brand name of “Navana Furniture” with the raw materials imported from Malaysia. The strong brand name of
‘Navana’ has offered instant recognition of this unit. Its product range includes almirah (3 models of household, 2
models of office), file cabinet and special products such as heavy duty rack, slotted angle rack, book shelf, personal
locker, bed side cabinet, department storage rack and customized products. Its hospital item include intensive care
unit bed, mechanical bed, patient examination bed, saline stand, different category trolley and stretcher.
Table 2
Group Financial Highlights (Amounts in Mill. BDT)
Name of Company Reporting Revenue Net Profit Net Profit Total Equity Liabilities to
Period (before tax) Margin Liabilities Equity (X)
Navana Limited 31.07.14 2,775.0 244.1 8.80 3,985.3 1,778.1 2.24
Aftab Automobiles Ltd. 31.08.14 2,709.9 494.5 18.25 2,706.6 5,039.4 0.54
Biponon Limited 31.12.13 7.7 0.9 11.69 20.5 14.3 1.43
Navana Real Estate 30.06.14 3,652.4 100.4 2.75 18,066.7 1,370.7 13.18
Navana Construction Ltd. 31.12.14 2,163.0 228.7 10.57 2,267.1 253.3 8.95
Navana Taxi Cab Co. Ltd. 31.07.14 7.4 0.1 1.35 0.1 12.0 0.008
Navana Interlinks Ltd. 30.09.14 205.1 -9.0 -4.39 181.2 -14.2 n.a
Navana Electronics Ltd. 30.09.14 97.6 1.8 1.84 0.5 25.2 0.02
Navana Foods Ltd 30.06.14 109.1 1.6 1.47 22.9 90.8 0.25
Navana Petroleum Ltd. 31.12.14 545.1 34.3 6.29 193.7 39.6 4.89
Navana CNG Ltd. 31.03.14 1,606.2 309.7 19.28 1,016.9 1,928.6 0.53
Navana Renewable Energy Ltd 31.03.14 165.7 2.8 1.69 23.4 7.5 3.12
Navana Logistics Ltd 31.12.14 92.6 8.5 9.18 1.4 4.1 0.34
Navana Building Products Ltd 31.12.14 86.0 0.6 0.71 123.8 78.0 1.58
Essential Industries Ltd 31.07.14 0.6 0.5 83.33 0.2 2,316.1 0.00
TOTAL 14,223.4 1,419.5 28,610.3 12,943.5
Navana Group along with its 15 associated concerns reported BDT 14,223.4 million revenue in 2014 with BDT
1,419.5 million net profit. The Group reported BDT 12,935.9 million revenue and BDT 1,152.82 million net profit in
2013. Total equity of the Group increased to BDT 12,943.5 million in 2014 from BDT 8,789.0 million in 2013. The
Group’s overall financial performance in 2014 improved compared to the previous year.
Table 3
Long Term Bank Liability Position of Navana Group (Amounts in Mill. BDT)
Name of the Company Sanction amount Outstanding
Navana Limited 1,087.68 847.93
Aftab Automobiles Limited 439.26 389.00
Navana Real Estate Limited 320.00 328.78
Grand Total 1,846.94 1,565.71
Page 4 of 13
Table 4
Short Term Fund Based Bank Liability Position of Navana Group (Amounts in Mill. BDT)
Name of the Company Sanction Limit Outstanding
Navana Limited 1,815.00 1,386.15
Aftab Automobiles Limited 2,743.00 1,842.43
Navana Real Estate Limited 7,058.00 5,961.39
Navana CNG Limited 60.00 54.20
Navana Electronics 150.00 152.00
Navana Petroleum Limited 20.00 -
Navana Construction Limited 1,830.00 990.12
Navana Renewable Energy Limited 30.00 29.80
Navana Foods Limited 50.00 45.70
Navana Interlinks Limited 50.00 45.81
Navana Furniture Ltd 400.00 335.28
Navana Batteries Limited 560.00 534.50
Navana Building Products Limited 180.00 113.58
Navana Welding & Electrodes Ltd - -
Navana Engineering Ltd - -
Grand Total 14,946.00 11,490.96

BUSINESS OVERVIEW
Presently the Company has three units, Assembling unit, Bus body building unit and Motor Cycle vehicles unit
which are directly operated under the name of Aftab Automobiles Ltd.
Assembling Unit
Aftab Automobiles Limited started its commercial assembling business of Hino chassis for Bangladesh from 1983.
This is flexible and modern assembling plant with annual capacity of 800 units (per shift) chassis of Toyota & Hino
Vehicles. It is located on 12.3 acre of land at Fouzderhat, approximately 20 km north of the port city of Chittagong
along the Dhaka-Chittagong highway. In 2014 the Company produced 222 units of vehicles which consist of 202
units Hino diesel bus chassis, 4 units of Hino mini-bus chassis and 16 units of Hino RM-2 bus chassis. AAL
generated around BDT 1,424.4 million revenue in 2014 from this unit. The sales volume of assembling unit has been
deteriorated in 2014 due to ongoing economical instability. Navana Ltd (a sister concern of AAL) is the distributor of
Hino chassis with whom Aftab Automobiles has the contractual agreement to assemble the chassis by importing
Completely Knocked Down ingredients.
The Company has been enjoying four months deferred facility from Toyota Tsusho Corporation (Japan) for importing
the ingredients. The overall sales & marketing and recovery are done by Navana Ltd. under set terms and condition
where Navana Ltd gets less than 5% of sales price as commission which is set on mutual agreed basis. It is an
obligatory part of Distributor (Navana Ltd) to fix up such selling price of Company’s products competitively in the
market and favourable for promotion of sales. The brand name Hino and service of Navana Ltd keep the company
free from sales and marketing of the assembling unit of Aftab Automobiles Ltd. Hanif Enterprise, S. Alam, Shaymoli
Paribahan, Shohagh Paribahan, Unique Paribahan, Nabil Paribahan, SilkLine, etc are the major buyers of AAL under
assembling unit.
Table 5
Category Wise Sales of Assembling unit
Year Sales in units Mil. BDT
HINO Bus Chassis – 202 Units
2014 HINO Mini Bus Chassis –4 Units 1,424.4
RM 2 AC Bus – 16 Units
RM 2 AC Bus – 12
RM 2 AC Bus - 13
Page 5 of 13

RM 2 AC Bus - 10
Bus Body Building Unit

The bus body building unit of Company is involved in fabricating Hino Bus and Hino Mini Bus body and also in minor
modification works of other vehicles. The location of the unit is DIP Nagor, Gabtoli, Dhaka and total area is 480 feet
by 270 feet. The unit comprises body fabrication shade, trimming section, heat chamber, store fibre section, fibre
washing room, machine shop, seat section, godi section and electrical section. The Company has established 3rd line
to assemble new model of RM2 Hino Luxury Buses. Modernization of existing storage and other logistics facilities
for Hino Bus assembling has already been completed. The Company imported Windshield glass, tube from Thailand,
Aluminum sheet from Thailand and India, Electric goods from Malaysia and procured pipes from the local market.
The sales & marketing and recovery function are tagged with the assembling unit done by Navana Ltd. which keeps
the related risk low.
AAL generated around BDT 167.5 million revenue from this unit by building and selling 103 units of Hino bus body.
The revenue from this unit also decreased in 2014 due to increased market completion. Some buyers of AAL already
established own bus body building factories, so they purchase only the Hino bus chassis from AAL and build the
bodies in their own facilities.
Table 6
Category Wise Sales of Body building unit
Year Sales in units Mil. BDT
2014 HINO Bus Body – 103 Units 167.5
HINO RM 2 AC bus body – 11 units
HINO AC Bus Body – 30 Units
HINO RM 2 AC bus body – 8 units
Mini Bus Body – 3 Units
CNG Bus Body – 36 Units
2011 231.1
HINO Bus Body – 180 Units

Motorcycle Assembling Unit
AAL’s motorcycle assembling unit started its operation in December 2013 on a land of 45,100 sq.ft within the
existing premises of assembling unit having total area of 12.3 acres. However, the Company has initiated its
commercial marketing and selling from July 2014. The company imported the machineries of the Motor Cycle
Assembling Plant from India. Present assembling capacity of the Company is 12,000 units. However, the
motorcycles assembled based on market demand. In 2014, they have assembled around 1260 units of motorcycles
and generated around BDT 138.1 million revenue from this section.
The Brand of Motor cycle is Mahindra which is imported as CKD from Indian company named Mahindra & Mahindra
Limited. Imported CKD materials are stored in the warehouse located inside factory. CKD includes, Frame box,
engine box, flasher unit, headlight frame and handle frame. Total process has 7 steps: CKD storing, Pre
assembling, Assembling, Quality control, Finished goods Storing, Pre delivery final inspection and Delivery. Pre
assembling goes through 4 stages and assembling is done by 5 phases. For quality control AAL tests the engine
through engine analyzer, then the motorcycle is finally tested on road performance. For better customer
satisfaction and reducing after sales complains the Company also conducts final inspection before product delivery.

FINANCIAL STRENGTH ANALYSIS
Total sales of the Company declined to BDT 1,730.0 million in 2014 from BDT 1,989.3 million in 2013 which was
2,541.2 million in 2012 due to economic downturn as well as difficulty in logistic support system triggered from
present market condition. Additionally, the customers of Hino chassis regarding the body building segment have
Page 6 of 13
gone through the backward linkage by initiating own operations of body building which affected the sales. Total
sales may bounce back to increasing trend in the upcoming year due to growth of sales of motor cycles section and
present slight increase in demand compared to previous year’s trend of sales.
AAL generated around BDT 1,424.4 million from assembling unit contributing 82.34% of total revenue, BDT 167.5
million from bus body building unit contributing 9.68% of total revenue and BDT 138.1 million from motorcycle
assembling unit contributing 7.98% of total revenue in 2014. Bus assembling unit contributes most of AAL’s
revenue, hence motorcycle assembling unit is also a potential source of the Company’s having good future
prospect in the market due to good brand value and market reputation. The motorcycle unit’s contribution to the
total revenue is expected to increase in 2015, as its initiation of commercial marketing and selling has just started
in July 2014.
Table 7
Revenue composition of AAL with percentage of contribution
Production Unit Revenue (Mill. BDT) % Contribution
Assembling Unit 1,424.4 82.34%
Bus Body Building Unit 167.5 9.68%
Motorcycle Assembling Unit 138.1 7.98%
Total 1,730.0 100.0%
In spite of the decreased sales, gross profit of the Company improved in 2014 due to the declining CoGS resulting
from foreign exchange gain in case of importing goods. The earning status of the Company is balanced to ensure
the increased operating profit margin as well as net profit margin irrespective of substantial increase in financial
expense which reflects better cost efficiency.
Since 2012, liquidity position of the Company has been in slight stress for temporary period due to delay in
receivable collection and prolonged inventory processing period although it did not severely affect the loan
repayment performance of the Company. The prolonged operating cycle of 369 days in 2014 which was 319 days
in 2013 was resulted from delay in receiving the receivables which creates the working capital pressure. The
Company has scope for overcoming the stress situation and management is expecting to report revenue growth as
well as improved performance in the upcoming year.
The leverage position of the company remained favorable to low credit risk profile due to very sound equity base of
the Company. Total equity of the Company stood at BDT 5,039.1 million in 2014 while the borrowed fund increased
to BDT 1109.5 million. The additional fund has been availed due to the implementation of the motor cycle with the
brand name of Mahindra. Debt ratio was 0.22x in 2014 which was 0.21x in 2013 and 1.4x in 2012. Coverage
indicator as reflected in TIE ratio stressed to 3.8x times in 2014 from 5.7x times in 2013 due to increased financial
expenses in 2014.
BANK FACILITIES AND CREDIT HISTORY
Aftab Automobiles Ltd. has banking relationship with 13 banks. CRAB did not get bankers’ confidential information
from any banks of Aftab Automobiles Ltd to assess the past track record of loan repayment. Details break down of
the Company’s borrowed fund is given in the appendix -1.
Page 7 of 13
APPENDIX – 1: Details of Credit Facilities of Aftab Automobiles Limited
Details of Credit Facilities of Aftab Automobiles Limited as of 31 March 2015 (Mil. BDT)
Loan Type Funded/Non Bank Nature of Facility Limit Outstanding Limit Expiry
Funded
Long Term Funded Mutual Trust Bank Ltd. Term Loan 100.0 28.4 31.03.2016
NRB Commercial Bank Ltd. Term Loan 250.0 49.5 31.08.2016
Standard Bank Ltd. Term Loan 93.0 45.8 30.06.2015
Mercantile Bank Ltd. Term Loan 40.0 25.8 12.02.2016
National Credit & Commerce Term Loan 60.0 37.9 26.09.2017
South Bangla Agriculture & Commerce Term Loan 150.0 140.3 30.04.2015
Bank Ltd.
Meghna Bank Limited Term Loan 150.0 175.3 31.10.2015
Total Long Term Loan 843.0 503.0
Short Term Funded OD 450.0 466.5 31.01.2016
Bank Asia Limited
Demand Loan 200.0 195.4 31.01.2016
Mutual Trust Bank Ltd. CC (Hypo) 50.0 51.9 27.06.2015
OD 50.0 52.0 30.09.2015
Dhaka Bank Ltd.
STL 150.0 103.5 30.09.2015
LTR 40.0 45.7 30.06.2015
Standard Bank Ltd.
CC (Hypo) 50.0 - 30.06.2015
Agrani Bank Limited CC (Hypo) 300.0 324.6 30.09.2015
SOD 100.0 8.1 31.10.2015
Mercantile Bank Ltd.
LTR 60.0 17.4 31.10.2015
South Bangla Agriculture & Commerce CC (Hypo) 30.0 32.5 30.04.2015
Bank Ltd.
Prime Bank Limited SOD 50.0 50.3 19.11.2015
Midland Bank Limited LTR 100.0 11.1 31.12.2015
Total Short Term Funded Loan 1,200.0 950.0
Total Cash Credit Loan 430.0 409.0
Short Term Non Funded LC 900.0 - 28.01.2016
NRB Commercial Bank Ltd.
BG 100.0 - 31.08.2016
LC 200.0 95.0 29.08.2015
Mutual Trust Bank Ltd
BG 100.0 - 31.08.2016
Dhaka Bank Ltd LC 200.0 70.8 30.09.2015
Bank Asia Ltd. LC 400.0 141.6 31.01.2016
Midland Bank Ltd. LC 100.0 53.1 31.12.2015
Standard Bank Ltd LC 200.0 37.1 30.06.2015
South Bangla Agriculture and Commerce LC 200.0 - 30.05.2015
Bank Ltd.
The City Bank Ltd. LC 200.0 - 30.04.2016
Meghna Bank Limited LC 200.0 - 31.10.2015
Total Short Term Non Funded Loan 2,800.0 397.6
Page 8 of 13
APPENDIX – 2: RATING HISTORY
Date of Rating: 11 May 2014
Particulars Ratings
Aftab Automobiles Limited AA3
BDT 390.0 million Cash Credit (Hypo)* AA3 (Lr)
BDT 1,880.0 million aggregate fund based limit ST-3
BDT 1,400.0 million aggregate non-fund based limit ST-3
Outlook Stable
Date of Rating: 05 August 2013
Particulars Ratings
Aftab Automobiles Limited AA3
BDT 400.0 million Cash Credit (Hypo)* AA3 (Lr)
BDT 1,443.5 million aggregate fund based limit ST-3
BDT 830.0 million aggregate non-fund based limit ST-3
Outlook Stable
Page 9 of 13
APPENDIX – 3: FINANCIAL HIGHLIGHTS OF AFTAB AUTOMOBILES LIMITED
Financial Highlights
--Year ended Aug. 31--
2014 2013** 2012 2011 2010
Net Sales (Mil. BDT) 1,730.0 1,989.3 2,541.2 1,768.1 1,347.6
Earnings & Stability
Sales Growth (%) -13.0% -21.7% 43.7% 31.2% -4.69%

CoGS as % of Sales 74.5% 78.5% 82.5% 77.4% 81.4%
EBITDA (Mil. BDT) 476.0 454.4 465.8 934.7 683.60
EBITDA Growth (%) 4.7% -2.4% -50.2% 36.7% 66.84%
EBITDA Margin (%) 27.5% 22.8% 18.3% 52.9% 50.73%
Net Profit after tax (Mil. BDT) 280.0 270.3 292.2 789.1 604.93
Net profit after tax growth (%) 3.6% -7.5% -63.0% 30.4% 109.7%
Gross Profit Margin 25.5% 21.5% 17.5% 22.6% 18.6%
Profitability
Operating Profit Margin 20.3% 17.8% 14.7% 19.1% 14.1%

Net Profit Margin 16.2% 13.6% 11.5% 44.6% 44.9%
Return on Average Asset 4.2% 4.3% 5.3% 17.7% 20.4%
Return on Average Equity 5.7% 5.8% 6.8% 21.6% 29.4%
Current Ratio (x) 2.8 2.5 3.0 3.8 5.1
Quick Ratio (x) 2.1 2.0 2.4 3.1 4.1
Cash Ratio (x) 0.3 0.6 0.7 0.7 1.3
Inventory +AR to TA 24.6% 18.7% 30.9% 33.4% 26.8%
Net Working Capital to TA 36.9% 31.2% 39.5% 51.7% 45.0%
Inventory Turnover Ratio (x) 1.6 2.0 3.0 2.2 2.0
Liquidity
Average Inventory Processing Period (Days) 235 181 123 165 183
Receivable Turnover Ratio (x) 2.7 2.6 2.4 2.4 2.6
Average Receivable Collection Period (Days) 134 138 153 155 140
Payable Turnover Ratio (x) 13.7 8.0 9.4 8.2 4.9
Average Payable Payment Period (Days) 27 46 39 45 75
Operating Cycle (Days) 369 319 276 320 323
Cash Conversion Cycle (Days) 342 273 237 275 248
Equity Capital 5039.1 4839.2 4505.5 4083.4 3207.0
Total Borrowed Fund 1109.5 1016.4 671.9 564.8 236.9
Total Long Term Debt 552.1 323.9 25.3 25.3 25.3
Leverage & Capital Structure
EBITDA 476.0 454.4 465.8 934.7 683.6

Fund Flow from Operation (FFO) 299.5 288.5 313.9 802.9 611.7
Cash Flow from Operation (CFO) -197.2 564.8 563.1 -168.9 -46.6
Retained Cash Flow (RCF) -197.2 564.8 563.1 -168.9 -46.6
Free Cash Flow (FCF) -253.0 536.9 264.7 -176.1 -50.6
Debt to Equity (×) 0.22 0.21 0.1 0.14 0.07
2.3 2.2 1.4 0.6 0.3
Borrowed Fund/EBITDA (×)
FFO/Debt 27.0% 28.4% 46.7% 142.1% 258.2%
CFO/Debt -17.8% 55.6% 83.8% -29.9% -19.7%
RCF/Debt -17.8% 55.6% 83.8% -29.9% -19.7%
FCF/Debt -22.8% 52.8% 39.4% -31.2% -21.4%
** Restatement of audited financial statement of AAL of 2013 was taken under consideration while calculating the
ratios.
Page 10 of 13
CRAB RATING SCALES AND DEFINITIONS –Long Term (Corporate)
Long Term Rating Definition

Companies rated in this category have extremely strong capacity to meet financial
AAA
commitments. These companies are judged to be of the highest quality, with minimal
Triple A
credit risk.
Companies rated in this category have very strong capacity to meet financial
AA1, AA2, AA3*
commitments. These companies are judged to be of very high quality, subject to very low
Double A
credit risk.
Companies rated in this category have strong capacity to meet financial commitments,
A1, A2, A3
but are susceptible to the adverse effects of changes in circumstances and economic
Single A
conditions. These companies are judged to be of high quality, subject to low credit risk.
Companies rated in this category have adequate capacity to meet financial commitments
BBB1, BBB2, BBB3 but more susceptible to adverse economic conditions or changing circumstances. These
Triple B companies are subject to moderate credit risk. Such companies possess certain
speculative characteristics.
Companies rated in this category have inadequate capacity to meet financial
BB1, BB2, BB3 commitments. Have major ongoing uncertainties and exposure to adverse business,
Double B financial, or economic conditions. These companies have speculative elements, subject to
substantial credit risk.
B1, B2, B3 Companies rated in this category have weak capacity to meet financial commitments.
Single B These companies have speculative elements, subject to high credit risk.
CCC1, CCC2, CCC3 Companies rated in this category have very weak capacity to meet financial obligations.
Triple C These companies have very weak standing and are subject to very high credit risk.
Companies rated in this category have extremely weak capacity to meet financial
CC
obligations. These companies are highly speculative and are likely in, or very near,
Double C
default, with some prospect of recovery of principal and interest.
Companies rated in this category are highly vulnerable to non-payment, have payment
arrearages allowed by the terms of the documents, or subject of bankruptcy petition, but
C
have not experienced a payment default. Payments may have been suspended in
Single C
accordance with the instrument's terms. These companies are typically in default, with
little prospect for recovery of principal or interest.
D D rating will also be used upon the filing of a bankruptcy petition or similar action if
(Default) payments on an obligation are jeopardized.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The
modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
Page 11 of 13
CRAB RATING SCALES AND DEFINITIONS

LONG-TERM RATING: LOANS/FACILITIES FROM BANKS/FIS
(All loans/facilities with original maturity exceeding one year)
RATINGS DEFINITION
AAA (Lr) Loans/facilities rated AAA (Lr) are judged to offer the highest degree of safety, with
(Triple A) Highest regard to timely payment of financial obligations. Any adverse changes in circumstances
Safety are unlikely to affect the payments on the loan facility.
AA (Lr)* Loans/facilities rated AA (Lr) are judged to offer a high degree of safety, with regard to
(Double A) High timely payment of financial obligations. They differ only marginally in safety from AAA
Safety (Lr) rated facilities.
A (Lr) Loan/facilities rated A (Lr) are judged to offer an adequate degree of safety, with regard
Adequate Safety to timely payment of financial obligations. However, changes in circumstances can
adversely affect such issues more than those in the higher rating categories.
BBB (Lr) Loans/facilities rated BBB (Lr) are judged to offer moderate safety, with regard to timely
(Triple B) Moderate payment of financial obligations for the present; however, changing circumstances are
Safety more likely to lead to a weakened capacity to pay interest and repay principal than for
issues in higher rating categories.
BB (Lr) Loans/facilities rated BB (Lr) are judged to carry inadequate safety, with regard to timely
(Double B) Inadequate payment of financial obligations; they are less likely to default in the immediate future
Safety than instruments in lower rating categories, but an adverse change in circumstances
could lead to inadequate capacity to make payment on financial obligations.
B (Lr) Loans/facilities rated B (Lr) are judged to have high risk of default; while currently
High Risk financial obligations are met, adverse business or economic conditions would lead to lack
of ability or willingness to pay interest or principal.
CCC (Lr) Loans/facilities rated CCC (Lr) are judged to have factors present that make them very
Very High Risk highly vulnerable to default; timely payment of financial obligations is possible only if
favourable circumstances continue.
CC (Lr) Loans/facilities rated CC (Lr) are judged to be extremely vulnerable to default; timely
Extremely High Risk payment of financial obligations is possible only through external support.
C (Lr) Loans/facilities rated C (Lr) are currently highly vulnerable to non-payment, having
Near to Default obligations with payment arrearages allowed by the terms of the documents, or
obligations that are subject of a bankruptcy petition or similar action but have not
experienced a payment default. C is typically in default, with little prospect for recovery of
principal or interest. C (Lr) are typically in default, with little prospect for recovery of
principal or interest.
D (Lr) Loans/facilities rated D (Lr) are in default or are expected to default on scheduled
Default payment dates.
*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA through CCC. The
modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
Page 12 of 13
SHORT-TERM CREDIT RATING: LOANS/FACILITIES OF BANKS/FIS

(All loans/facilities with original maturity within one year)
RATING DEFINITION
ST-1 This rating indicates that the degree of safety regarding timely payment on the
Highest Grade loans/facilities is very strong.
This rating indicates that the degree of safety regarding timely payment on the
ST-2
loans/facilities is strong; however, the relative degree of safety is lower than that
High Grade
for issues rated higher.
ST-3 loans/facilities is adequate; however, the issues are more vulnerable to the
Adequate Grade adverse effects of changing circumstances than issues rated in the two higher
categories.
ST-4
loans/facilities is marginal; and the issues are quite vulnerable to the adverse
Marginal
effects of changing circumstances.
ST-5
loans/facilities is minimal, and it is likely to be adversely affected by short-term
Inadequate Grade
adversity or less favorable conditions.
ST-6 This rating indicates that the loans/facilities are expected to be in default on
Lowest Grade maturity or is in default.
© Copyright 2015, CREDIT RATING AGENCY OF BANGLADESH LIMITED ("CRAB"). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS
PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER
TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT CRAB’S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by CRAB from sources believed by it to be accurate and reliable. Because of the possibility of human
or mechanical error as well as other factors, however, such information is provided “as is” without warranty of any kind and CRAB, in particular,
makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any
particular purpose of any such information. Under no circumstances shall CRAB have any liability to any person or entity for (a) any loss or
damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency
within or outside the control of CRAB or any of its directors, officers, employees or agents in connection with the procurement, collection,
compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special,
consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if CRAB is advised in advance of
the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting
analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion
and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE
ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER
OPINION OR INFORMATION IS GIVEN OR MADE BY CRAB IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed
solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must
accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for,
each security that it may consider purchasing, holding or selling.
Page 13 of 13

Aftab Automobiles LTD - Surveillance Report 2015

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Aftab Automobiles LTD - Surveillance Report 2015

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2015

Credit Rating Report [Surveillance]

Aftab Automobiles Limited

Navana Paints Limited

Navana Batteries Limited

Navana Furniture Limited

HINO Bus Chassis – 315 Units

Bus Body Building Unit

BANK FACILITIES AND CREDIT HISTORY

APPENDIX – 1: Details of Credit Facilities of Aftab Automobiles Limited

APPENDIX – 2: RATING HISTORY

Date of Rating: 11 May 2014

Date of Rating: 05 August 2013

APPENDIX – 3: FINANCIAL HIGHLIGHTS OF AFTAB AUTOMOBILES LIMITED

Sales Growth (%) -13.0% -21.7% 43.7% 31.2% -4.69%

Operating Profit Margin 20.3% 17.8% 14.7% 19.1% 14.1%

EBITDA 476.0 454.4 465.8 934.7 683.6

CRAB RATING SCALES AND DEFINITIONS –Long Term (Corporate)

Long Term Rating Definition

CRAB RATING SCALES AND DEFINITIONS

SHORT-TERM CREDIT RATING: LOANS/FACILITIES OF BANKS/FIS

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