Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 127.59 ACUITE BBB- | Stable | Reaffirmed -
Bank Loan Ratings 6.41 - ACUITE A3 | Reaffirmed
Total Outstanding Quantum (Rs. Cr) 134.00 - -
 
Rating Rationale

­Acuité has reaffirmed its long term rating of ‘ACUITE BBB-’ (read as ACUITE Triple B Minus) and the short term rating of ‘ACUITE A3’ (read as ACUITE A Three) to the Rs. 134.00 Cr bank facilities of Goldfinch Resorts Private Limited (GRPL). The outlook is 'Stable'.

Rationale for reaffirmation:
The rating reaffirmation  considers Goldfinch Resorts Private Limited (GRPL’s) promoters established track record of operations, committed cash flows from casino operations and improved scale of operations in hotel business. The company has reported revenue of Rs.65.3Cr during FY23 posting a growth rate of ~86 percent and same being sustained in the current year. The growth in revenue is attributable to improved occupancy in hotel business post covid.  The company’s EBITDA margins stood at 31.42 percent during FY23 however, suffered net loss on account of high depreciation and interest costs. Further, financial risk profile of the company has deteriorated marginally on account of infusion of debt during the year. The rating also draws comfort from the strong support of MRG Group to GRPL by way of unsecured loans. Going forward the company’s ability to improve its  scale up of operations will be a key monitorable.

About the Company
­Incorporated in 2011, Goldfinch Resorts Private Limited (GRPL) is engaged in hospitality business and owns a hotel in Goa managed by ‘Hilton Worldwide’. GRPL is a part of MRG Group and Trishul Buildtech and Infrastructure Private Limited (TBIPL) is the flagship company of the group. GRPL is a step-down subsidiary of TBIPL. GRPL has recently entered in to real estate business to acquire and monetize land parcels as well as develop residential/commercial property.
 
About the Group
­MRG group is promoted by Mr. K. Prakash Shetty along with his family members and is in the business for almost three decades. TBIPL is a flagship company of the MRG Group. The group has the following two verticals Hospitality Business- Running hotel at Bangalore under brand Marriott. The group also operates hotels under three brands- Goldfinch, Marriott and Hilton through its subsidiaries. Acquiring and monetizing land parcels through various avenues like Revenue Sharing and Joint Development Agreement (JDA) among others.
 
Unsupported Rating
­ACUITE BB-/Stable
 
Analytical Approach

­Acuité has considered the standalone business and financial risk profile of GRPL and has also factored in the support from MRG Group by way of unsecured loans, corporate guarantee amongst others. The unsecured loans have been treated as debt as the same are interest bearing, not subordinated to bank debt and are repayable in nature.
 

Key Rating Drivers

Strengths

­Experienced promoters, established track record of operations and continuous support from TBIPL
MRG Group, founded by Mr. K. Prakash Shetty, is a well-established group having an operational track record of more than three decades in the hospitality and land aggregation business. The promotors of the group have an experience of almost three decades in the aforementioned line of business. Mr. Gaurav Shetty is the Managing Director of TBIPL. The long track record of operations and experience of the management have helped the group to develop healthy relationships with large developers such as Prestige Group. GRPL’s liquidity has been continuously been supported by financial support from its parent company – TBIPL. TBIPL has been infusing unsecured loans in GRPL which has been utilized towards repayment obligations. TBIPL has unsecured loans worth Rs.125Cr towards GRPL as on 31 March, 2023 vis-à-vis Rs.94.77Cr as on previous year. Acuité believes that the group will sustain its existing business profile on the back of established track record of operations and experienced management.

Improving scale of operations:
The company’s total revenue improved to Rs.65.3Cr during FY23 posting a growth rate of ~86 percent from revenue of Rs.34.67Cr of previous year. Revenue consist income from hotels, foods & beverages, casino. During FY23, revenue from hotels, food and beverages stood at Rs.53Cr against the revenue of Rs.28Cr of previous year. The growth in revenue in hotels segment is contributed by improved rooms occupancy post covid and same has been sustained during the first 6 months of FY24 resulting in revenue of Rs.28.66Cr for the period. The average occupancy during 12 months’ period of FY23 which stood at ~75 percent improved to ~80 percent during the first 6 months of FY24.  

GRPL has entered into a long term agreement with ‘Royal Royce Entertainment Private Limited’ to run the casino in the hotel for period of 15 years with a brand name- ‘Cadillac Casino’. Based on the agreement, the Casino Operator has to pay Rs.1Cr every month with an escalation of 10 percent in rent every year providing steady cashflows to the company. GRPL has recently ventured into sale of land parcels business and bought RS.63Cr worth of land during FY23. Sale of land parcels is expected to start from FY26. Going forward the company’s  revenue is expected to improve at a growth rate of 20-25 percent over the medium term on account of healthy occupancy and committed cash flows from casino.

Weaknesses

Below-average financial risk profile
The financial risk profile of the company stood average marked by average net worth, debt protection metrics and coverage indicators. The net worth of the company stood at (Rs.39.95)Cr as on 31 March, 2023 against (Rs.24.81)Cr of previous year. The networth is negative on account of historical losses suffered by the company. The gearing (debt to equity) stood at (9.72) times as on 31 March, 2023. The total debt of Rs.269.77 Cr as on 31 March, 2023 consist of long term debt from banks of Rs.123Cr and unsecured loans from TBIPL of Rs.125Cr. Acuité believes that the financial risk profile of the company will continue to be below-average until the company’s hospitality profitability improves.

Rating Sensitivities

  • Further deterioration in financial risk profile.

  • Sustainable improvement in scale of operations .
 
All Covenants
­Not Applicable
 
Liquidity Position : Adequate

The liquidity position of GRPL is marked adequate basis the estimated support from MRG group. The company is supported in the form of unsecured debt (outstanding Rs. 125.48 Cr as on March 31, 2023) from parent company TBIPL. The liquidity profile of the MRG group is strong marked by continuous inflows from various JDAs and outright sale of land. The group has prepaid some of the loans in the past. Acuite believes that in view of the group’s strong liquidity position and track record of support of MRG group to GRPL, the liquidity position of GRPL is expected to remain adequate for the medium term.
 
Outlook: Stable

Acuité believes that the company will maintain 'Stable' business and financial risk profile in the medium term on the back of established presence of the group and promotor experience in hospitality and established relations with reputed groups in the hospitality industry. The outlook may be revised to 'Positive' if the company generates higher-than-expected cash flows from booking levels from current coupled with significant decrease in the debt levels. Conversely, the outlook may be revised to 'Negative' in case of stretch in the company's liquidity position due to lower-than-expected cash generated by the company and/or significant increase in debt levels.
 
Other Factors affecting Rating
­Not Applicable
 

Particulars Unit FY 23 (Actual) FY 22 (Actual)
Operating Income Rs. Cr. 65.77 34.67
PAT Rs. Cr. (6.18) 25.45
PAT Margin (%) (9.39) 73.40
Total Debt/Tangible Net Worth Times (8.72) (7.82)
PBDIT/Interest Times 1.35 4.18
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Any other information
­None
 
Applicable Criteria
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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
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
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
25 Aug 2022 Proposed Term Loan Long Term 22.37 ACUITE BBB- | Stable (Reaffirmed)
Bank Guarantee Short Term 6.41 ACUITE A3 (Reaffirmed)
Term Loan Long Term 105.22 ACUITE BBB- | Stable (Reaffirmed)
27 May 2021 Proposed Term Loan Long Term 22.37 ACUITE BBB- | Stable (Assigned)
Term Loan Long Term 34.00 ACUITE BBB- (Withdrawn)
Term Loan Long Term 105.22 ACUITE BBB- | Stable (Reaffirmed)
Bank Guarantee Short Term 6.41 ACUITE A3 (Assigned)
26 Feb 2020 Term Loan Long Term 100.00 ACUITE BBB- | Stable (Assigned)
Term Loan Long Term 34.00 ACUITE BBB- | Stable (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating
Bank of Baroda Not Applicable Bank Guarantee (BLR) Not Applicable Not Applicable Not Applicable 6.41 Simple ACUITE A3 | Reaffirmed
Bank of Baroda Not Applicable Term Loan Not available Not available Not available 105.22 Simple ACUITE BBB- | Stable | Reaffirmed
Bank of Baroda Not Applicable Working Capital Term Loan Not available Not available Not available 22.37 Simple ACUITE BBB- | Stable | Reaffirmed

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