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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.90 | ACUITE BBB- | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 9.10 | Not Applicable | Withdrawn | - |
| Total Outstanding Quantum (Rs. Cr) | 0.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 110.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 100.90 Cr bank facilities and has withdrawn rating on Rs.9.10 Cr bank facilities of BAHDL Hospitality Limited (BHL).
The rating withdrawal is in accordance with Acuite’s policy on withdrawal of rating. The rating is being withdrawn on account of request received from the company and NOC received from the banker. Rationale for Reaffirmation The company has recorded a revenue of Rs.37.04 Cr in FY2023 in its first year of operation after the completion of renovation. With expected improvement in revenues, the losses are expected to come down over the medium term. The rating also considers the long experience of the Ambuja-Neotia group in the hospitality segment, favourable location of the hotel and the tie-up with Indian Hotels Company Ltd (IHCL) to operate under the brand of ‘Taj’. The group has been infusing capital in BHL in the form of unsecured loan and equity to provide support and the same is expected to continue over the medium. These strengths are however, partly offset by below average financial risk profile of the company and cyclical nature of hotel industry. |
| About the Company |
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Incorporated in 2009, BAHDL Hospitality Limited (BHL) is a part of Ambuja Neotia Group and manages a 5-star deluxe hotel in Netown, Kolkata. Earlier, the hotel started operation in 2010 with 147 rooms of various categories including luxury suites and all modern amenities. The hotel was subsequently closed for renovation in FY2021 and FY2022. Further, the hotel was partially operational in May 2022 and June 2022 and fully operational from July 2022 under the new name of “TAJ City Center New Town”. BHL has entered into a hotel operating agreement with India Hotel Company Limited for the management of the luxury hotel under the brand “Taj”.
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| Standalone (Unsupported) Rating |
| ACUITE BB |
| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of BHL to arrive at the rating. While arriving at the rating of BHL, Acuité has taken into account a strong level of support from the Ambuja-Neotia group given that Ambuja Neotia Holdings Pvt Ltd (ANHPL) has a 54 per cent stake in BHL, indirectly.
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Key Rating Drivers
| Strengths |
| Established presence in hospitality industry
The Ambuja-Neotia group has three-decade long experience in the hospitality industry. Moreover, the management is highly experienced and involved in the day-to-day operations of the company. Acuité draws comfort from the experience and expertise of the group as well as the management of BHL. Healthy traction in the ARR and occupancy levels along with tie-up with TIHCL. The hotel ‘TAJ City Center New Town’ was under renovation and non-operational during FY2021 and FY2022. However, the hotel has become fully operational from May 2022. The occupancy levels for H1FY2024 stood at 88% compared to 59% for FY2023. The ARR however, moderated in H1FY2024 to Rs.6275 per day against Rs.6748 per day in FY2023. Moreover, to operate the boutique hotel, the company has a 30-year arrangement with The Indian Hotels Company Limited (TIHCL). As per the agreement, TIHCL will be receiving 7-9 per cent of the revenue generated by BHL. Acuité expects the occupancy levels and ARR of the hotel to improve in the medium term. Financial flexibility of the Ambuja-Neotia group The Ambuja-Neotia Group has been promoted by the Neotia Family, which has been an integral part of the business community in Kolkata for nearly 125 years. The group through its various Joint Venture Companies and Special Purpose Vehicles (SPVs) has been engaged in development of Real Estate properties, both housing and commercial complexes and in the Hospitality business. The group has executed more than 25 million square feet of development comprising of residential, commercial and hospitality projects through its various joint ventures and subsidiary companies over a period of the last 20 years and has established its brand which is widely recognized in the region. The group has also ventured into the states of Sikkim, Bihar and Chhattisgarh for undertaking various types of real estate and hospitality projects. The group has strong financial risk profile with a willingness to support their businesses, demonstrated from the continuous infusion of unsecured loans and equity funds into BHL. Acuité believes that BHL, being a strategically important entity for the group shall continue to benefit from the financial, operational and management support from the Ambuja-Neotia Group as and when required. The parent company Ambuja Neotia Holdings Pvt Ltd (ANHPL) holds upto 54 per cent indirectly in BHL which imparts further comfort to the rating. Any changes in the ownership pattern of BHL or any event that impinges the group’s overall credit profile shall remain a key rating sensitivity. |
| Weaknesses |
| Below average financial risk profile
The company’s below average financial risk profile is marked by eroded net worth due to continuous losses and below average debt protection metrics. The financial risk profile is expected to improve over the medium term, however, remain below average on account of expected stable growth in revenues and further equity infusion by the promoters. Highly competitive industry The Indian subcontinent with vast opportunities and potential for high growth has become the focus area of major international chains. Several of these chains have established and others have their plans to establish hotels to take advantage of these opportunities. These entrants are expected to intensify the competitive environment. Acuité believes the success of the company will be dependent upon its ability to compete in areas such as room rates, quality of accommodation, service level and convenience of location and the quality and scope of other amenities, including food and beverage facilities. |
| Rating Sensitivities |
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| All Covenants |
| Not Applicable |
| Liquidity Position |
| Stretched |
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The group has provided fund to the company from time to time as required, which provides financial flexibility to the company. The cash and bank balances of the company stood at Rs.1.76 Cr in FY2023. The current ratio stood weak at 0.57 times as on 31st March 2023.
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 37.04 | 0.95 |
| PAT | Rs. Cr. | (24.81) | (25.87) |
| PAT Margin | (%) | (66.99) | (2736.00) |
| Total Debt/Tangible Net Worth | Times | (3.36) | (4.93) |
| PBDIT/Interest | Times | 0.13 | (0.72) |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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