Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating of ‘ACUITE B-’ (read as ACUITE B minus) on the Rs. 10.00 crore bank facilities of Class Restaurant (CR). The outlook is 'Stable'.
Rationale for Reaffirmation
The rating reaffirmation factors marginal improvement in the overall net profitability levels in FY25 as compared to previous years, however, scale remains low. Moreover, the rating remains constrained by its weak financial risk profile marked by negative net worth and negative gearing, stretched liquidity position with high bank limit utilization and highly competitive industry that the group operates in. The rating also factors in the experienced management with long track record of operations.
About the Company
Class Restaurant was established in 1999 under the proprietorship of Mr. Surendra Surana. The operations are currently managed by his son, Mr. Saurabh Surana, along with his wife, Ms. Manju Surana. The firm operates a lounge bar with a liquor business and is spread over a carpet area of 2,530 sq. ft., with a total seating capacity of 78 people, including one party hall. The firm is situated in Juhu, Mumbai.
About the Group
Incorporated in 1995, the Surana Group is a diversified conglomerate founded by Mr. Surendra Surana, Mr. Mahendra Surana, Mrs. Manju Surendrakumar Surana, Mr. Nanda Mahendra Surana, and Mr. Nalin Mahendra Surana. The group is primarily involved in the construction and hospitality sectors and has established a strong legacy of quality projects and services. The group commenced its operations with Surana Constructions Chembur and Surana Constructions Wadala, both well-renowned in the real estate sector, along with Surana Infrastructure Private Limited, which has contributed to several major development projects. The group also owns The Class Restaurant, known for fine dining, and Hotel Carnival, which operates in a similar line of business. In addition, the Surana family promotes The Aurangabad Gymkhana Club Private Limited (AGPL), which commenced operations in 2005 and provides premium leisure and event facilities, including 110 rooms and four banquet halls.
About Hotel Carnival
Hotel Carnival was established in 1994 under the proprietorship of Mr. Surendra Surana and is located in Worli, Mumbai. It operates as a bar and restaurant. The hotel is currently managed by his son, Mr. Saurabh Surana, along with his wife, Ms. Manju Surana.
Unsupported Rating
Not Applicable
Analytical Approach
Extent of Consolidation
•Full Consolidation
Rationale for Consolidation or Parent / Group / Govt. Support
Acuité has considered the consolidated view of the business and financial risk profiles of Class Restaurant (CR) and Hotel carnival (HC) to arrive at the rating. The consolidation is in the view of a common line of business and common management.
Key Rating Drivers
Strengths
Experienced promoter and locational advantage
CR has been present in the hospitality industry for nearly two decades through the Surana Group. The promoter, Mr. Surendra Surana, possesses nearly two decades of experience in the hospitality industry. Further, CR is located in Juhu, which is a prime location in Mumbai and caters to an upmarket audience. The restaurant typically reports occupancy levels of around 80–85 per cent on weekdays and approximately 90 per cent on weekends. The firm is located in Juhu, Mumbai, and employs a total of 25 staff members. At present, Class Restaurant is undergoing renovation, which is expected to be completed by September 2026.
Acuite believes that the firm will benefit from its experienced management, which has helped it maintain long-standing relationships with its target clientele and sustain its presence in the industry.
Weaknesses
Small scale of operations and weak profitability
The group operates on a small scale, with total operating income of Rs. 2.29 crore in FY2025 as against Rs. 2.68 crore in FY2024, marginal increase supported by higher liquor, food, and beverage sales. Further, in Fy26 scale of operations is expected to decline further, owing to the ongoing capex for the renovation of Class Restaurant, which commenced in April 2025 and is expected to be completed by September 2026. During this capex period, only Hotel Carnival was operational, resulting in revenue of ~Rs. 0.60 crore till March 2026. The group is expected to report revenue of ~Rs. 0.90–0.95 crore in FY2027, supported by partial operations at Class Restaurant. Profitability remains weak, with operating margin declining to 14.22 per cent in FY2025 from 17.75 per cent in FY2024. While the group reported a marginal net profit of Rs. 0.02 crore in FY2025 after losses during FY2022– FY2024, the improvement is yet to demonstrate stability.
Acuite believes that the group’s business profile remains constrained by its limited scale of operations and historically weak profitability, with earnings stability dependent on the timely completion and stabilisation of operations at Class Restaurant.
Weak financial risk profile
The financial risk profile of the group remains weak, characterised by negative net worth, high gearing, and weak debt protection metrics. The tangible net worth continued to remain negative at Rs. (12.35) crore as on 31 March 2025. The total debt of the group stood at Rs. 14.95 crore as on 31 March 2025 majorly towards working capital requirements. The interest coverage ratio improved in FY2025; however, debt service coverage ratio remained below unity.
Acuite believes that the group’s financial risk profile continues to remain constrained due to its negative net worth and adverse leverage indicators, despite marginal improvement in debt protection metrics.
Operations exposed to intense competition in the hospitality industry
The Indian hospitality industry remains highly competitive, with the presence of a large number of organised hotel chains as well as unorganised and alternative accommodation providers across key markets. The sector exhibits cyclical characteristics and is susceptible to economic downturns, demand slowdowns, and seasonality. Further, relatively low entry barriers continue to support capacity additions by existing as well as new players, intensifying competitive pressures on occupancy levels, room rates, and operating margins, which could adversely impact the company’s market position and financial performance.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Increase in scale of operations with operating income exceeding Rs. 3.00 crore, supported by stabilized operations at Class Restaurant post capex
Potential triggers (individual or collective) for a downward rating action:
Continued losses at the PAT level or net cash accruals remaining negative over the medium term impacting the debt servicing
Liquidity Position
Stretched
The group’s liquidity position remains stretched, as reflected by the average bank limit utilisation of ~97.76 per cent for the six months ended March 2026. Further, the group has insufficient net cash accruals of Rs. 0.23 crore to meet its maturing debt repayment obligation of Rs. 1.26 crore for the same period. The net cash accruals estimated to remain weak, ranging between Rs. 0.02 crore and Rs. 0.10 crore during the period from FY2026 to FY2027 and are not expected to improve significantly over the medium term. The group maintained unencumbered cash and bank balances of Rs. 0.19 crore as on March 31, 2025, compared to Rs. 0.13 crore as on March 31, 2024. The current ratio stood weak at 0.06 times as on March 31, 2025.
Acuite believes that the group’s liquidity profile continues to remain constrained due to high bank limit utilisation and inadequate cash accruals relative to debt repayment requirements.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
2.29
2.68
PAT
Rs. Cr.
0.02
(1.55)
PAT Margin
(%)
1.05
(57.95)
Total Debt/Tangible Net Worth
Times
(1.21)
(1.20)
PBDIT/Interest
Times
3.45
0.26
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)
Sr. No.
Entity name
1
Class Restaurant
2
Hotel Carnival
Contacts
List of instruments and names of regulators of the instruments
