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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 2150.16 | ACUITE AA+ | Stable | Reaffirmed | - |
| Total Outstanding | 2150.16 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE AA+’ (read as ACUITE double A plus) on the Rs. 2,150.16 Cr. bank facilities of India International Convention and Exhibition Centre Limited (IICC). The outlook is ‘Stable’.
Rationale for reaffirmation The rating reaffirmation is on account of continuous equity support from parent, Government of India (GoI). The project is divided into two Phases and Phase I (Non PPP) of the project is completed. It is operational since 1st October, 2023 and has clocked a revenue of Rs.7.50 Cr. in FY24 (Prov.). Furthermore, Acuité also takes into account the continuous budgetary support from GoI to the tune of Rs.2442.39 Cr. along with debt amounting to Rs 2,150.16 crore through Rupee Term Loan (RTL) from SBI and balance amount being met through internal accruals and monetization of Government owned land as per cabinet approval. In addition, Loan from HUDCO of Rs.500 Crore will be disbursed in the current financial year (FY2024-25) providing comfort to the project. |
| About the Company |
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India International Convention and Exhibition Centre Limited was incorporated in 2017 and is a wholly owned Government of India (GOI) entity. The company is mandated to develop the India International Convention & Exhibition Centre (IICC) located at Dwarka Sector 25, New Delhi. The Project was approved by the Union Cabinet in November 2017 and adequate budgetary support has been provided for timely execution of the project. The project is to be implemented in two phases and the overall original cost of the project was Rs. 25,703 Cr. (including the investment by private parties through Public Private Partnership [PPP] route). The current Directors of the company are Mr. Ajay Seth, Mr. Rajeev Singh Thakur, Ms. Arti Bhatnagar, Mr. Amardeep Singh Bhatia, Mr. Balamurugan Devaraj, Mr. Surendrakumar Kashiram Bagde And Mr. Bhamidipati Venkata Rama Subrahmanyam.
About the Project Phase I: The Phase I of the project is a combination of PPP and Non-PPP model comprising development of Hotels, Retail, office, Convention Center (~60,000 sq.m. in size), two Exhibition centres (approximately 200,000 sq.m. in size) and complete trunk Infrastructure. The Convention Centre will have a capacity to hold 10,000 delegates. The construction is being undertaken through Engineering, Procurement and Construction (EPC) contract given to Larsen and Toubro Limited (L&T). Delhi Metro Rail Corporation has completed the work of extension of Air Express line to IICC Project. Further, Delhi Jal Board has provided the water and sewage connection and BSES has completed the work of electricity connection. The construction of Phase - I of the project commenced in FY2018 which is completed and is operational since 1st October, 2023. The overall project cost for Phase I has been revised to Rs. 5401 Cr. and additional budgetary support of Rs.405 Cr. has also been provided. Phase II: The Phase II of the project is also a combination of PPP and Non-PPP model. This phase will include additional commercial real estate development such as Five-star Hotels, Retail and Office Spaces as part of the PPP model and Exhibition Space as part of the Non-PPP model. The project is expected to generate over 5 lakh indirect employment opportunities. The Department for Promotion of Industry and Internal Trade in Commerce ministry is implementing the project through IICC. It will be operated by a consortium led by KINTEX who had submitted a joint bid with South Korean exhibition organiser, eSang Networks, to operate the project assets in New Delhi for 20 years. IICC is expected to be one of the landmark infrastructure development projects launched by GOI. |
| Unsupported Rating |
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Acuité BBB/Stable
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| Analytical Approach |
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Acuite has undertaken a standalone evaluation of the project and further adopted a notch up framework to take into account the significant support being provided by the Government of India to complete the project. We believe that this project is very strategically important for the government apart from the latter having a moral obligation to support a 100% owned entity.
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| Key Rating Drivers |
| Strengths |
| Benefits derived from the ownership and budgetary support from the Government of India
The company has been promoted by Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and 100 percent of the shares are owned by GOI. In addition, the board of directors of the company includes representatives from NITI Aayog (National Institution for Transforming India), Department of Expenditure in Ministry of Finance and Ministry of Housing and Urban Affairs. The presence of senior bureaucrats in the board of IICC reinforces the importance of timely execution of the project to the government. The total estimated project cost for Phase I is Rs.5401 Cr. which is to be funded from budgetary support of Rs.2444.39 Cr, loan of Rs.2150.16 Cr. from SBI as well as Rs.500 Cr. from HUDCO and balance from internal accruals and monetization of Government owned land as per cabinet approval. Acuité believes that IICC will continue to be benifitted by its association and linkages with the GOI. Healthy prospects for the exhibition and convention industry The project is spread across 90 hectares of land. It is planned as a venue that will not just facilitate the Indian Government to hold multilateral events but also provide an option to private corporate sector for global convention and exhibition events. Besides the convention centre, the multi-purpose arena will have a capacity to host 20,000 people. The venue will also house three five-star hotels, four fourstar hotels, two three-star hotels, as well as service apartments. Parking facility for nearly 30,000 vehicles is being planned. The MICE (Meetings, Incentive, Conventions and Exhibitions) business is a large revenue generator for many economies across the world and at present the European Union and North American countries are the biggest benefactors of this market whereas India has not really been able to capitalize on this opportunity in the absence of world class exhibition and conference facilities and this project aims to tap into that market. The project is aimed at cementing India’s position as one of the top destinations for holding prestigious not only in Asia but globally as well. For India, the domestic convention market has evolved significantly and inbound convention market is also gradually picking up with the active support from the Government of India. This will strengthen the business prospects for IICC over the medium to long term. Location Advantages and Public transportation Infrastructure IICC is located 10 km from Delhi International Airport, with the surrounding area home to a sports complex, diplomatic residences, a golf course and the airport city hotel. It is 25 km from the city centre of New Delhi. Further, the Airport Metro Express from the airport offers direct internal access to IICC. In order to create easier access by automobile, IICC will be connected to the UER II(Urban Extension Road II) and Dwarka Expressway, while the Delhi Jaipur Railway Line and the Delhi Blue Line Metro are directly adjacent, thus offering the most convenient transportation infrastructure. With cutting edge parking facilities capable of accommodating 34,808 vehicles. (Indoor 28,608, Outdoor 6,200). IICC, unlike other convention and exhibition facilities, will be able to host events without any traffic congestion. Scale of operations IICC started its operations from the month of October, 2023 with Phase I (Non PPP Component) of the project being completed and has clocked a revenue of Rs.7.50 Cr. in FY24 (Prov.) with the source of revenue being the license fee received. An arrangement is set up wherein the entire revenue is booked by the operators (eSang Networks and Korean International Exhibition Centre (KINTEX)) and IICC will receive a share of 33.33% of the adjusted gross revenue as license fee. The Gross Revenue from October, 2023 to March, 2023 from Phase I of the project is around Rs.39.25 Cr. and the adjusted gross revenue calculated after deducting expenses such as power cost, water and sewerage cost, etc. stood at Rs.23.04 Cr. resulting the net revenue for IICC as license fee being Rs.7.50 Cr. in FY24 (Prov.). |
| Weaknesses |
| Cash flows susceptible to economic slowdown and downturn in infrastructure sector
The Indian economy has seen a slowdown in the past with the country's real estate, automobile, construction sectors and overall consumption demand facing a serious and constant decline thereby impacting the GDP growth. Acuité believes the influence of adverse macro-economic factors such as economic slowdown may impinge on the spending pattern of corporates thereby impacting the realisations from asset monetization and even slowing down the latter process. |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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The IICC project is being funded through long term debt and equity and there is a one-year moratorium on the debt repayment post COD. The company has drawn Rs.2141.82 Cr. term loan as on March 31, 2024 (Prov.). Further, the cash and bank balance available stood at Rs.78.59 Crore as on 31st March 2024 (Prov.). Given the availability of long-term funds, Acuité believes that liquidity concerns of the entity are mitigated over the near to medium-term.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 7.50 | 0.00 |
| PAT | Rs. Cr. | (85.50) | 0.30 |
| PAT Margin | (%) | (1140.32) | 0.00 |
| Total Debt/Tangible Net Worth | Times | 0.90 | 0.55 |
| PBDIT/Interest | Times | 0.07 | 135546.00 |
| 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 • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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