| Benefits derived from the ownership and budgetary support from the Government of India
The company has been promoted by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and 100 percent of the shares are owned by the Government of India (GOI). In addition, the board of directors of the company includes representatives from NITI Aayog (National Institution for Transforming India), the Department of Expenditure in the Ministry of Finance and others. The presence of senior bureaucrats on the board of IICC reinforces the importance of the project's timely execution to the government. The IICC Project is a combination of PPP and Non-PPP models, which is further being implemented in two phases wherein the total estimated project cost for Phase I Non-PPP component is Rs.5401 Cr. The same is funded from budgetary support in the form of equity of Rs.2444.39 Cr., term loans of Rs.2150.16 Cr. from State Bank of India as well as Rs.500 Cr. from HUDCO and the balance from internal accruals and monetization of Government-owned land, as per cabinet approval. Acuité believes that IICC will continue to benefit from its association and linkages with the Government of India (GOI).
Healthy prospects for the exhibition and convention industry
The MICE (Meetings, Incentives, Conventions and Exhibitions) business is a large revenue generator for many economies across the world and at present, the European Union and North American countries are the biggest benefactors of this market, whereas India has not really been able to capitalize on this opportunity in the absence of world-class exhibition and conference facilities and this project aims to tap into that market. The IICC project is spread across 90 hectares of land and aims to cement India’s position as one of the top destinations for holding prestigious events not only in Asia but globally as well. It is planned as a venue that will not just facilitate the Indian Government to hold multilateral events but also provide an option to the private corporate sector for global convention and exhibition events. Besides the convention centre, the multi-purpose arena will have a capacity to host 20,000 people with a parking facility for nearly 30,000 vehicles. The venue will also house five-star hotels, four-star hotels and three-star hotels, as well as service apartments. Acuite notes that, in India, the domestic convention market has evolved significantly and the inbound convention market is also gradually picking up with the active support from the Government of India. The same will strengthen the business prospects for IICC over the medium term.
Locational Advantages and Public transportation Infrastructure
IICC is located 10 km from Delhi International Airport, with the surrounding area home to a sports complex, diplomatic residences, a golf course and the Airport City Hotel. It is 25 km from the city centre of New Delhi. Further, the Airport Metro Express from the airport offers direct internal access to IICC. The IICC will also be connected to the UER II (Urban Extension Road II) and the Dwarka Expressway, while the Delhi-Jaipur Railway Line and the Delhi Blue Line Metro are directly adjacent, thus offering easier as well as convenient transportation infrastructure. Additionally, IICC, unlike other convention and exhibition facilities, will be able to host events without any traffic congestion with cutting-edge parking facilities capable of accommodating nearly 30,000 vehicles. Acuite believes that IICC will remain well-positioned on the back of its strategic location along with robust public transportation infrastructure.
Increase in scale of operations
The commercial segment of Phase I Non-PPP component of IICC, i.e. the Exhibition cum Convention Centre along with elite trunk infrastructure, was operationalized from October 2023. Consequently, IICC has entered into an operation service agreement with Kinexin Convention and Management Private Limited ((Messe Esang and Korean International Exhibition Centre (KINTEX)) to operate and manage the exhibition cum convention centre for a period of 20 years from the date of commencement of commercial operations. Accordingly, the company has registered a revenue of Rs. 46.05 Cr. in FY2025 as against Rs. 7.77 Cr. in FY2024. The entire revenue is booked by the operators, and the company earns its share of 33.33% of the adjusted gross revenue as license fees coupled with infrastructure charges income, which includes the cost of services recoverable from the operator, excluding electricity and water bills. Acuite believes that the company will continue to scale up its operations in the near to medium term on the back of the positive momentum within the exhibition and convention industry.
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| Decrease in profitability profile of the company
The profitability of the company witnessed a dip, despite the increase in revenue, wherein the company booked operating losses of Rs. 102.82 Cr. in FY2025 as against losses of Rs. 93.91 Cr. in FY2024. The losses are on account of high operating expenses in FY2025, majorly including property tax/service charges, reimbursable infrastructure charges from the operator, and metro road and connectivity expenses. Likewise, the net losses of the company stood at Rs. 324.64 Cr. in FY2025 as against losses of Rs. 295.65 Cr. in FY2024 owing to the high finance costs during the year. Acuite believes that the ability of the company to improve its profitability position while scaling up its operations in the near to medium term will remain a key rating sensitivity.
Cash flows susceptible to economic slowdown and downturn in infrastructure sector
The Indian economy has seen a slowdown in the past, with the country's real estate, automobile, and construction sectors as well as overall consumption demand facing a serious and constant decline, thereby impacting the GDP growth. Acuité believes the influence of adverse macroeconomic factors may impinge on the spending pattern of corporates. Any weakening in demand could impact the realizations from asset monetization or even slow down the process to an extent. The same will remain a key monitorable factor.
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