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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 11.45 | ACUITE B | Reaffirmed | Issuer not co-operating* | - |
| Total Outstanding Quantum (Rs. Cr) | 11.45 | - | - |
| Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE B’ (read as ACUITE B) on the Rs.11.45 crore bank facilities of Aurangabad Gymkhana Club Private Limited (AGPL). The rating is being flagged as “Issuer Not Cooperating” in line with existing SEBI regulations and Policy in respect of ‘What Constitutes Non-Cooperation’ of Acuite.
Rationale for Reaffirmation The rating reaffirmation considers improvement in revenues of the company, albeit its modest scale and improvement in working capital cycle and experienced management. AGPL has recorded a revenue of Rs.7.16 Cr in FY 2023(Prov) as against Rs 3.31 Cr in FY 2022. However, these strengths are offset by average financial risk profile and modest scale of operations. |
| About the Company |
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Incorporated in 1995, AGPL is an Aurangabad-based company which is promoted by Mr. Surendra Surana and family. AGPL started its operations from 2005 which is engaged running a club cum hotel. The hotel offers 110 rooms, four banquet halls, a club house and other amenities. The promoter also promotes the Surana Group which includes construction business namely Surana Constructions Chembur, Surana Constructions Wadala, Surana Infrastructure Private Limited among others and runs The Class Restaurant and Hotel Carnival to name a few. Further, AGPL has favourable location at Aurangabad which is located close to Aurangabad airport with easy access to railway and bus stations.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of AGPL to arrive at the rating. |
Key Rating Drivers
| Strengths |
| Experienced Management
AGPL is promoted by Mr. Surendra Surana who possesses experience of two decades in hospitality industry. Mr. Surana also promotes the Surana Group which includes construction business, namely, Surana Constructions Chembur, Surana Constructions Wadala, Surana Infrastructure Private Limited among others and runs 'The Class Restaurant' and 'Hotel Carnival' to name a few. Further, AGPL has favourable location at Aurangabad which is located close to Aurangabad airport with easy access to railway and bus stations. Acuité believes that the company will continue to benefit through the promoter's industry experience and favourable location which will help the firm to maintain long standing relations with its customers and suppliers. Improved working capital management The working capital management of the company improved marked by GCA days of 76 days in FY2023 (Prov) as against 625 days in FY2022. The GCA days were led by high other current assets previously. The debtor days stood at 22 days in FY2023 (Prov) as against 10 days in FY2022. However, the inventory days stood at 3 days in FY2023 (Prov) as against 05 days in FY2022. |
| Weaknesses |
| Modest scale of operations, albeit improvement recorded in FY2023(Prov)
AGPL has recorded a revenue of Rs.7.16 Cr in FY 2023(Prov) as against Rs 3.31 Cr in FY 2022, however the overall scale of operations continues to remain modest. The operating margin of the company improved to 45.47 percent in FY2023 (Prov) as against 15.47 percent in FY2022. Also, PAT margin stood at 66.73 percent in FY2023 (Prov) as against (4.13) percent in FY2022. Average Financial Risk Profile The financial risk profile of the company stood average marked by moderate net worth, high gearing and moderate debt protection metrics. The tangible net worth stood at Rs.12.00 crore as on 31 March 2023 (Prov) as against Rs.6.71 crore as on 31 March 2022 The improvement is on account of accretion of profits to reserves. The total debt of the company stood at Rs.28.83 crore which includes Rs.12.20 crore of long-term debt, Rs.11.42 crore of short-term debt, Rs.5.21 crore of unsecured loans. The gearing (debt-equity) stood at 2.40 times as on 31 March 2023 (Prov) as compared to 5.01 times as on 31 March 2022. The interest coverage stood at 3.97 times in FY2023 (Prov.) as against 1.09 times in FY2022. |
| Rating Sensitivities |
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Improvement in scale of operations while maintaining profitability margins and capital structure.
Improvement in financial risk profile and liquidity. |
| All Covenants |
| Not Applicable |
| Liquidity Position |
| Stretched |
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The company’s liquidity position is stretched on account of average cash accruals to its maturing debt repayment obligations. NCA stood at Rs.4.78 Cr against maturing repayment obligation of Rs.3.24 Cr. Further, the average bank limit utilization for the past 11 months ending July 2023 is ~ 90 percent. Current Ratio stood poor at 0.13 times in FY2023(Prov) against 0.36 times in FY2022.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Provisional) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 7.16 | 3.31 |
| PAT | Rs. Cr. | 4.78 | (0.14) |
| PAT Margin | (%) | 66.73 | (4.13) |
| Total Debt/Tangible Net Worth | Times | 2.40 | 5.01 |
| PBDIT/Interest | Times | 3.97 | 1.09 |
| Status of non-cooperation with previous CRA (if applicable) |
| Crisil vide its press release dated 19th Apr 2023, had rated the company to CRISIL B/Stable; Issuer Not Cooperating. |
| 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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