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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE BBB+ | Stable | Assigned | - |
| Bank Loan Ratings | 410.00 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 510.00 | - | - |
| Rating Rationale |
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Acuite has reaffirmed and assigned its long-term rating of ‘ACUITE BBB+’ (read as ACUITE Triple B Plus) on the Rs.510.00 crore bank facilities of Advant IT Park Private Limited (AIPPL). The outlook remains ‘Stable’.
Rationale for Reaffirmation and assignment of rating The rating derives strength from experienced and resourceful management, reputed lessee profile resulting in satisfactory operating performance along with locational advantage of business park. Further, the rating factors in the increase , in lease rentals to Rs 51.31 Cr in FY 22 as against Rs 42.44 Cr in FY 21. The occupancy has increased to 86% till date as against 76% in FY21.Also, the rating account for adequate liquidity through presence of DSRA and escrow mechanism. The ratings are, however, constrained by below average financial risk profile. |
| About the Company |
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AIPPL was incorporated in 2004 with an objective to provide highest quality of infrastructure and professional support services needed by IT/ITES companies for efficient business operations. Company provides one-stop turnkey option for world-class facilities, setup and support services to the clients who are interested in setting up their own captive centres in India, for their offshore IT /ITES functions. AIPPL had developed and currently operates ‘Advant Navis Business Park’, a corporate landmark located in sector 142 Noida Expressway. It is a class-A intelligent bright Green building with LEED GOLD CERTIFICATION. The company has constructed 5 tower with an aggregate area of 13,80,084 sq.ft. The total land area of the business park is 24,845 sq.mtr.
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| Analytical Approach |
| Acuite has considered standalone business and financial risk profile of ADVANT IT PARK PRIVATE LIMITED. |
Key Rating Drivers
| Strengths |
| Experienced and resourceful management
AIPPL is being managed by Mr. Sunil Sharma, Mr. Om Prakash Arora and Mr. Prithviaj Batra who hold directorial position in the company. The directors are associated with the company for more than a decade. Further, Mr. O.P. Arora is a president and CEO of AOV Group of Companies with strong presence in Finance, Export and Textile industry. Mr. Prithviraj Batra is promoter of Buniyad Group and also hold Directorial position at various real estate companies. Mr. Sunil Sharma is a qualified engineer from Indian Institute of Technology (IIT) and manages and are also associated with various line of business and is Director of various Food Processing and Real estate entities. Acuite believes that company would continue to benefit from experience of the promoters and timely support extended by them. Satisfactory Operating performance during FY22 by reputed lessee profile The company has entered into lease agreements with both corporate and retail entities in FY 22 and FY 23. The company has generated revenue of Rs.75.84 crore in FY22 against Rs.62.87 Crore in FY21. The company has recorded increase in sales on an account of increase in occupancy rate from 76.28% in FY21 to 86.25% till January 2023. The company is expected to record a revenue of Rs.110.87 Crores in FY 23. Further, the monthly lease rental has increased from Rs.4.27 Crore in FY 21 to Rs.6.43 Crore currently. The lessees include reputed companies such as KPMG, Foresight IT Solutions & Consulting India Pvt. Ltd., One EInfo Pvt. Ltd, BC Management Services Pvt. Ltd, NEC Technologies India Private Limited, Standard Chartered Bank, Jubilant Foods, Starbucks, etc. Acuite believes that operating performance of the company may improve going forward supported by increase in occupancy and reputed lessee profiles. Presence of escrow mechanism and DSRA with bank. The term loans availed by the company is backed by lease rentals. The lease rentals are directly deposited into escrow account and the debt obligation is deducted from the same. In addition to this, the company had already created 3 months EMI as DSRA. Till date an amount of Rs. 7.11 Crores is with HDFC Bank as part of DSRA. |
| Weaknesses |
| Below Average Financial Risk profile
The debt profile of the company majorly comprises of term loan and remaining unsecured loans. The company had availed term loan for the development of IT park against the lease rentals from Tower A, B,C, D & E. Hence, the total debt of the company remained at Rs.393.68 crore as on March 31, 2022 as against Rs.366.66 crore as on March 31, 2021. The tangible net worth remained at Rs.40.98 crore as on March 31, 2022 as against Rs.46.80 crore in FY21. The weakening in tangible net worth is mainly due to erosion of net worth due to losses during FY21-22. Hence, the debt-equity of the company is in FY22 stood at 9.61 times against 7.83 times in FY21. The interest coverage ratio, remained at 1.33 times during FY21-22 as against 1.47 times during FY21. The debt-EBITDA ratio, remained at 9.83 times during FY22 against 7.77 times in FY21. However, debt-service-coverage-ratio stood at 1.43 times in FY22 as against 1.47 times in FY21and is expected to remain above 1 times going forward. Acuite believes that with the repayment of debt obligations going forward, financial risk profile of the company may moderate. |
| ESG Factors Relevant for Rating |
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The construction industry is prone to releasing GHG and better use of technology to provide a green building structure is key. Further efficient use of material and better waste disposal and promotion of efficient alternatives are other key issues. Employee health and safety management is of prime importance for the industry. Safe building structures by using quality material is of utmost significance. Following the labour laws and labour rights is critical point to evaluate. Further ethical business practices and legal and regulatory compliance hold utmost significance. Other issues include management compensation and Board oversight. Likewise, corruption and bribery associated with getting licenses and permits are other material issues to the industry. The company is committed towards minimal GHG emission further the efficient use of material with minimal wastage is key focus of the company in order to maintain better environment and optimize cost. The company further focuses on employee health and safety and follows all the safety norms at their construction site. Further the company adheres to the labour laws and hiring of labour is a transparent process. The company is complying with the legal and regulatory requirements and have the permits in place from the concerned departments.
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| Rating Sensitivities |
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| Material covenants |
| None. |
| Liquidity Position |
| Adequate |
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The liquidity profile of the company remains at adequate level marked by net cash accruals of Rs.12.86 crore during FY22. The company is expected to generate a sufficient cash accruals going forward to meet its mature debt obligation with an average DSCR of 1.2 times. The term loans availed by the company entails long repayment tenure, ranging 96-177 months. The company has also maintained cash and bank balance of Rs.0.97 Crore as on March 31, 2022. The current ratio remained at 6.06 times as on March 31, 2022. The company also maintains escrow mechanism in which lease rentals are deposited and debt obligation is deducted. ?
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| Outlook: Stable |
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Acuité believes that the outlook on AIPPL will remain 'Stable' over the medium term on account of growing occupancy level, resulting in increase in lease rental. The outlook may be revised to 'Positive' in case of significant increase in lease rental than envisaged, long term lease contract with reputed clientele. Conversely, the outlook may be revised to 'Negative' in case of any decline in lease rentals and occupancy levels resulting in deterioration of financial risk profile.
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| Other Factors affecting Rating |
| Not Applicable. |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 75.89 | 62.87 |
| PAT | Rs. Cr. | (8.78) | (8.99) |
| PAT Margin | (%) | (11.57) | (14.30) |
| Total Debt/Tangible Net Worth | Times | 9.61 | 7.83 |
| PBDIT/Interest | Times | 1.33 | 1.47 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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