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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 426.54 | ACUITE BBB | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 52.46 | Not Applicable | Withdrawn | - |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 479.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and withdrawn its long-term rating of 'Acuité BBB' (read as Acuité Triple B) on the Rs. 426.54 Cr. bank facilities of Fomento Resorts and Hotels Limited (FRHL).
Acuité has further withdrawn the proposed long-term facilities of Rs.52.46 Cr. without assigning any rating to Fomento Resorts and Hotels Limited (FRHL). The rating is being withdrawn on account of the request received from the company and the NOC received from the banker. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. Rationale for Reaffimation The rating reaffirmation considers FRHL's promoters established track record of operations, committed cash flows from hotel's operations and improved scale of operations in the business. The company generated a revenue of Rs.226.98 crore in FY2023 as against Rs.127.79 crore in FY2022. Further, for FY2024 (Prov), the company generated revenue of Rs.325 Crore. The growth in revenue is attributable to improved occupancy in hotel business. The company’s EBITDA margins stood at 31.96 percent during FY23 as against 25.47 percent in FY2022 however continued to register losses after tax. Further, the rating also takes into account the moderate financial risk profile of the company. Also during FY2024, all the 500 rooms of Taj CDG heritage and Taj CDG horizon together were running and fully operational, which is also considered as a key rating factor. |
| About the Company |
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Fomento Resorts and Hotels Limited (FRHL), incorporated in the year 1971is engaged in the hotel business in India. Currently, the company owns a five-star deluxe resort "Taj Cidade de Goa Heritage”, consisting of 207 keys at Vainguinim Beach. The company also has a convention hotel Taj Cidade de Goa Horizon with 299 keys. FRHL has another boutique five-star resort which is in Aarvli, Maharashtra and will be commercial operated by the end of June 2024.
The registered office of this company is in Goa and it is managed by Mr. Auduth Modu Timblo, Mr. Vinayak Manohar Padwal, Mrs.Anju Auduth Timblo and Mr. Sujjain Suresh Talwar. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone financial and business risk profile of FRHL to arrive at the rating
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| Key Rating Drivers |
| Strengths |
| Experienced management and established presence in hospitality industry
The management of FRHL have more than 35 years of experience in the hospitality industry. Mrs. Anju Timblo is the managing director and CEO of the company. She is actively involved in decision-making and day-to-day operations of the hotel. Her active involvement coupled with strong leadership capability has helped the company to grow and become one of the top rated five-star hotels in Goa. Further, FRHL has signed a hotel operating agreement with IHCL - Indian Hotel Company Limited to operate its hotels Taj Cidade de Goa Heritage and Taj Cidade de Goa Horizon located at Vainguinim Beach, Goa. This will benefit the company due to brand name, expertise and professional management. The company enjoys competitive advantage in terms of its location. It is located at Vainguinim beach which is close to Panaji city. In addition, it is situated at a distance of 28 kms from the airport. Improved Operating Performance The operating performance of FHRL continued to improve as the company generated a revenue of Rs.226.98 crore in FY2023 as against revenue of Rs.127.79 crore in FY2022. Further, for FY2024 (Prov), the company achieved revenue of Rs.325 Crore. FRHL saw a robust recovery in its revenues with a Y-o-Y growth of 78% in FY2023 at the back of all hotels running and fully operational. The company however continued to register losses after tax. EBITDA margins improved further and stood at 31.96 percent in FY2023 as against 25.47 percent in FY2022 on account of improvement in scale of operations. Also, FY2024 was the first year where all 500 rooms of Taj CDG heritage and Taj CDG horizon together were fully operational. Additionally, the company has a hotel at Sindhudurg which is under construction with a capacity of 25 rooms and is expected to be completed by the end of June 2024 and will be commercially operated thereafter. Moderate Financial Risk Profile FRHL has a moderate financial risk profile marked by a healthy tangible net worth, high gearing and weak debt protection metrics. The company follows a moderate leverage policy as the total Debt of the company comprises of term loan of Rs. 476.02 Cr. and the gearing level of the company stood moderate at 2.00 times as on 31st March, 2023 and 2022 as against 4.41 times as on 31st March 2021. The tangible net worth of the company stood at Rs. 239.23 crore as on 31st March, 2023 as against Rs. 253.71 crore as on 31st March, 2022. The debt protection metrics of the company are weak as DSCR stood at 0.96 times in FY2023 as against 0.71 times in FY2022. Interest coverage ratio stood at 1.29 times in FY2023 as against 0.52 times in FY2022. The company has sufficient liquid cash balance and DSRA balance to meet its debt repayment obligations. As on March 31, 2024 the company has created DSRA of ~Rs. 20 Crore with HDFC Bank. Further, FRHL has prepaid its principal debt obligation of Rs.52.40 crore for FY2024. The cash and bank balance of the company stood at Rs. 68.49 crore as on March 31, 2023. |
| Weaknesses |
| Working Capital Operations
The operations of FHRL are of working capital-intensive nature marked by improved GCA days of 141 days in FY2023 as against 398 days in FY2022. However, GCA days are high on account of high cash balance maintained by the company consisting on unutilized GECL loans. The cash and bank balance of the company stood at Rs. 68.49 crore in FY2023 as against Rs.114.40 crore in FY2022. Further, for FY2024 (Prov), the cash balance stood at ~Rs.105 Crore. The debtor days of the company stood at 17 days in FY2023 as against 10 days in FY2022 and inventory days stood at 7 days in FY2023 as against 8 days in FY2022. Also, the creditor days stood at 159 days in FY2023 as against 255 days in FY2022. Highly competitive industry The Indian subcontinent and the state of Goa 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. |
| Rating Sensitivities |
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Not Applicable
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| Liquidity Position |
| Adequate |
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The liquidity position of the company is adequate marked by unencumbered cash and bank balance of Rs.68.49 Cr. in FY2023 as against Rs.114.40 Cr. in FY2022. Though the company has generated insufficient net cash accruals as against the debt repayment obligations, FRHL has maintained sufficient DSRA balance in addition to the unencumbered cash balance so as to meet its repayment obligations. Further, the company has prepaid the principal debt repayment obligations of Rs.52.40 Cr. in FY2024
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| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 226.98 | 127.79 |
| PAT | Rs. Cr. | (20.26) | (50.92) |
| PAT Margin | (%) | (8.93) | (39.84) |
| Total Debt/Tangible Net Worth | Times | 2.00 | 2.00 |
| PBDIT/Interest | Times | 1.29 | 0.52 |
| 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 |
| 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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