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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 51.09 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 51.09 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed the long term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 51.09 Cr bank facilities of Ganapati Parks Limited (GPL). The outlook is ‘Stable’.
Rationale on the rating The ratings reflects the improving business risk profile of the property, favorable location, tie-up with Indian Hotels Company Ltd (IHCL) to operate under the brand of ‘Selection’ and the resourcefulness and willingness of the Ambuja-Neotia group to support the business operations demonstrated by regular infusion of funds in the form of unsecured loans and equity. Further, Acuité has also taken into cognizance the improving nature of occupancy and ARR of the hotel properties post lifting of lockdown and restrictions and also being based out of Kolkata. These strengths are however, partly offset by the below average financial risk profile of the company and highly competitive hotel industry. |
| About the Company |
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Incorporated in 1994, Ganapati Parks Limited (GPL) is a Kolkata based heritage plaza and a joint venture between Ambuja Neotia Group and Kolkata Municipal Corporation (KMC). Currently, management control of the company is with Neotia Group. The heritage plaza, namely, ‘Swabhumi’ focuses on showcasing the heritage and culture from various regions in the country, especially Bengal. Swabhumi has a 33 bedroom 5star hotel ‘Raajkutir’, 3 banquet halls ‘Raasmanch’, ‘Rangmanch’ and ‘Rangdarbar’, 3 restaurants ‘Loafer's Cafe’, ‘East India Room’ and ‘The Swig’ and several other adjoining facilities such as spa, swimming pool, cafeteria, sports bar & lounge and an artisans gallery. Moreover, GPL has recently entered into a hotel operating agreement with India Hotel Company Limited for the management of the boutique hotel under the brand “Selection”.
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| Analytical Approach |
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Acuité has taken a standalone view of the business and financial risk profile of GPL to arrive at the rating. While arriving at the rating of GPL, 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 significant stake in GPL, directly and indirectly. Moreover, the rating also factors in the corporate guarantee of Ambuja Housing and Urban Infrastructure Company Limited (AHUICL) which is a wholly owned subsidiary of ANHPL.
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Key Rating Drivers
| Strengths |
The Ambuja-Neotia group has a long operational track record in the hospitality industry of around four decades. In addition to this, the promoter is highly experienced and actively involved in the operations of the company. Acuité believes that the long operational track record of the group and promoters’ extensive understanding and expertise will support the company’s growth plans going forward.
The hotel ‘Raajkutir’ became operational since December, 2018 and thereafter, the pandemic severely impacted the occupancy of this property during FY2021 and Q1of FY2022 and the ARR also declined substantially in this time period. However, the business has managed to partly recover from the pandemic induced slowdown and the occupancy has started to pick up from December, 2021 to more than 50 per cent and the ARR has increased further to around Rs.6000. 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 GPL.
In addition to this, the F&B revenues were reported at around 70 percent of the total revenues of Rs.17.72 Cr in FY2022 due to 3 luxurious banquet halls and 3 restaurants. Though the quantum of F&B revenue had decreased in FY2021, however, it has picked up again in FY2022 and is expected to increase at a healthy pace going forward. Acuité believes the occupancy levels and ARR of the hotel are expected to improve in the medium term.
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 15 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, Punjab, Chhattisgarh and Maharashtra 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 GPL. The group over the years has infused Rs.47.14 Cr (Rs.25 Cr classified as equity) as on FY2022 to support the business operations of the company. Acuité believes that GPL, 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. Moreover, the loans of GPL is currently having guaranteed by Ambuja Housing and Urban Infrastructure Company Limited (AHUICL).The parent company Ambuja Neotia Holdings Pvt Ltd (ANHPL) holds around 43 per cent in GPL which imparts further comfort to the rating. Any changes in the ownership pattern of GPL or any event that impinges the group’s overall credit profile shall remain a key rating sensitivity. |
| Weaknesses |
The company’s financial risk profile is marked by reducing networth and weak debt protection metrics. The tangible net worth of the company has been eroded due to continuous accumulated losses. Acuité has considered unsecured loans of Rs.25 Cr as on March 31, 2022, as quasi-equity as the management has undertaken to maintain the amount in the business over the medium term. Further, Acuité has considered redeemable preference shares of Rs.4.06 Cr as on March 31, 2022, as a portion of equity. The weak debt protection metrics of the company is marked by Interest Coverage Ratio of 0.27 as on March 31, 2022 and Debt Service Coverage Ratio of 0.19 as on March 31, 2022. Acuité believes that going forward the financial risk profile of the company will improve backed by the gradually improving accruals buoyed by the increasing room occupancy levels in “Raajkutir”.
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 also the quality and scope of other amenities, including food and beverage facilities.
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| ESG Factors Relevant for Rating |
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Not Applicable
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| Rating Sensitivities |
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| Material covenants |
| None |
| 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. However, the company’s liquidity is stretched marked by accumulated losses. The current ratio stood below unity at 0.26 times as on March 31, 2022, on account of high other current liabilities due to high interest accrued and borrowings. The cash and bank balances of the company stood at Rs.1.94 Cr as on March 31, 2022as compared to Rs.1.50 Cr as on March 31, 2021. However, the fund-based limit remains utilised at around 64 per cent over the ten months ended August, 2022. Acuité believes that going forward the liquidity position of the company will improve backed by the gradually improving accruals.
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| Outlook: Stable |
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Acuité believes that the outlook on GPL will remain 'Stable' over the medium term on account of the long track record of operations, experienced management, and financial flexibility of the Ambuja-Neotia group. The outlook may be revised to 'Positive' in case the company is able to increase its occupancy levels while maintaining a stable credit risk profile. Conversely, the outlook may be revised to 'Negative' in case there is significant drop in occupancy levels or any deterioration of financial risk profile leading to pressure on liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 17.72 | 8.94 |
| PAT | Rs. Cr. | (18.04) | (21.02) |
| PAT Margin | (%) | (101.79) | (235.21) |
| Total Debt/Tangible Net Worth | Times | (2.21) | (3.95) |
| PBDIT/Interest | Times | 0.27 | (0.20) |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm |
| Note on complexity levels of the rated instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
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