|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 30.00 | ACUITE BB | Stable | Assigned | - |
| Non Convertible Debentures (NCD) | 150.00 | ACUITE BB | Stable | Upgraded | - |
| Total Outstanding | 180.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuite has upgraded its long term rating to ' ACUITE BB' (read as ACUITE double B) from 'ACUITE C' (read as ACUITE C) on the Rs.150.00 Cr. Non Convertible Debentures of Magnum Ventures Limited. The outlook is 'Stable'.
Acuite has assigned its long term rating to 'ACUITE BB' (read as ACUITE double B) on the Rs.30.00 Cr. Non Convertible Debentures of Magnum Ventures Limited. The outlook is 'Stable'. Rationale for Rating The rating upgrade takes into account the established track record of the group and promoters in the hospitality and paper industry for more than four decades. It also runs a Hotel under the name “Country Inn & Suits by Radisson” which is managed by the Radisson group. Further, the rating factors in the improvement in operational metrics, moderate financial risk profile, adequate liquidity with an average occupancy in key properties rising to 84% in FY24 as compared to 80% in FY23. However, the rating is constrained due to intensive working capital operations and highly competitive industry of both paper & hotel segment. |
| About the Company |
|
Magnum Ventures Limited, incorporated in 1980, is a Delhi based company, engaged in trading and manufacturing of Newspaper, printing paper, grey, duplex boards and also owns and operates a Hotel under the name “Country Inn & Suites by Radisson” managed by the Radisson group for the last 15 years . The paper unit has a capacity of 85,000 metrics tons per annum for manufacturing of Newspaper, printing paper, grey, duplex boards. The hotel property located at Sahibabad, in the National Capital Region, comprises 216 rooms in four categories i.e. 64 Standard Rooms, 76 Superior Rooms, 70 Club Rooms, 6 Executive Suites, 9 banquet halls, 5 restaurants, 52 seater room theatre and 60,000+ sq.ft. of meeting space. The hotel holds the distinction of being the first all-vegetarian establishment to receive a formal 5-star certification from the HRACC, Ministry of Tourism. To expand its food and beverage business, the company has launched a new restaurant under the "Little Italy" franchise. Company also has an inhouse 6 MW Thermal power plant for captive consumption. Mr. Shiv Pravesh Chaturvedi, Mr. Parveen Jain, Mr. Abhay Jain, Mr. Pardeep Kumar Jain, Ms. Jyoti, Ms. Shalini Rahul, Ms. Aanchal Jain and Ms. Jyoti Bansal are currently directors of the company.
|
| Unsupported Rating |
|
Not Applicable
|
| Analytical Approach |
|
Acuite has considered the standalone approach on the business and financial risk profile of Magnum Ventures Limited (MVL) to arrive at rating.
|
| Key Rating Drivers |
| Strengths |
| Established Track record of operations and Experienced management
MVL engaged in trading and manufacturing of Newspaper, printing paper, grey and duplex boards for more than forty years. It also runs a Hotel under the name “Country Inn & Suites by Radisson” which is managed by the Radisson group. Mr. Shiv Pravesh Chaturvedi, Mr. Parveen Jain, Mr. Abhay Jain, Mr. Pardeep Kumar Jain, Ms. Jyoti, Ms. Shalini Rahul, Ms. Aanchal Jain and Ms. Jyoti Bansal are currently directors of the company. The operational metrics of the company have improved as compared to previous years. The average occupancy rate of the hotel has been more than 84% for FY 2024 as a result of which the room and Food & Beverage revenue has increased significantly on year on year basis. Further, the average room rates have also improved significantly in 6MFY2025 as compared to previous years. Slight decline in revenues albeit improved operating profitability The company have achieved the turnover of Rs.461.21 Crore in FY24 against Rs.464.73 Crore in FY23. This dip in top line of the company is because volatility in price realization in paper business. The average occupancy rate stood at ~84% in FY24 in hotel division. Further, the operating margins of the company have improved which stood at 11.68% in FY24 against 10.16% in FY23. The PAT margins of the company stood at 5.36% in FY24 against 15.25% in FY23. There is a dip in PAT margin is from 15.25% in FY23 to 5,36% in FY24 due to increase in depreciation cost in FY24 and the company enjoyed the gain on the closure/restructuring of AARC Loan of Rs. 5.97 Cr. in FY24 and Rs. 42.67 Cr. in FY23. The Q2FY25 revenues and operating margin were at Rs. 83.62 Cr. and 27.64% against Q1FY25 revenues and profitability of Rs. 90.08 Cr. and 12.31% respectively. Acuite believes that going forward the scale of operations and profitability will improve in near to medium term. Moderate Financial Risk Profile The financial risk profile of the company is moderate marked by net worth of Rs. 153.68 Crore as on 31st March 2024 against Rs. 37.04 Crore as on 31st March 2023. During the year, company has allotted 16784433 equity shares of face value of Rs.10 each fully paid up. In H1FY25, company has issued 7525000 equity shares of face value of Rs. 10 each fully paid up. The total debt of the company stood at Rs. 157.56 Crore as on 31st March 2024 against Rs. 166.12 Crore as on 31st March 2023. Additionally, company is raising Rs. 30 Cr. through NCD and Rs. 18 Cr. through share warrant in FY26 for the capex requirement. The gearing of the company has improved which stood at 1.03 times as on 31st March 2024 against 4.48 times as on 31st March 2023 due to increase in the net-worth of the company. Further, the interest coverage ratio and debt service coverage ratio of the company stood at 12.06 times and 1.04 times respectively as on 31st March 2024 against 22.51 times and 0.95 times respectively as on 31st March 2023. The TOL/TNW ratio of the company stood at 2.96 times as on 31st March 2024 against 12.39 times as on 31st March 2023. Acuite believes that financial risk profile of the company will remain moderate going ahead with ongoing capex raising through NCD & equity. |
| Weaknesses |
| Intensive Working Capital operations
Working capital operations of the company is intensive marked by GCA days which stood at 127 days as on 31st March 2024 against 85 days as on 31st March 2023. The GCA days of the company has increased on an account of debtor days which stood at 51 days as on 31st March 2024 against 32 days as on 31st March 2023. Also, the creditor day of the company stood at 54 days as on 31st March 2024 against 42 days as on 31st March 2023. On the other hand, the inventory days of the company stood at 38 days as on 31st March 2024 against 50 days as on 31st March 2023. Highly fragmented and competitive industry In paper division- The Company is operating in highly competitive and fragmented industry. It is exposed to intense competition from several players operating in the industry. The kraft paper manufacturers in India are exposed to the risk of volatility in waste paper prices, largely due to intense competition. On account of competitive pressures, players face challenges in passing on increased costs to end users. Business risk profile will remain constrained by exposure to the downturn in the paper industry. The rise in the prices of duplex paper over that of waste paper is expected to be gradual, rendering the profitability susceptible to volatility in the price of paper. Furthermore, any abrupt change in raw material prices due to supply-demand scenario can lead to distortion of prices and affect the profitability of the company. In hotel division- The hospitality sector is vulnerable to downturns in both the domestic and global economy. It is also sensitive to high competition and cyclicality. In a downturn, premium hotels are more negatively impacted because, despite high operating costs, their revenue per available room falls more precipitously than that of mid-sized or budget hotels. As a result, the cash flow from premium properties is more vulnerable to economic downturns. Also, the Indian hotel business is seeing fierce rivalry as a result of the expansion of domestic players and the growing presence of overseas competitors. |
| Rating Sensitivities |
|
| Liquidity Position |
| Adequate |
|
The Liquidity profile of the company is adequate. The company have generated net cash accruals of Rs.69.09 Crore as on 31st March 2024 against the debt repayment obligations of Rs. 66.35 Crore in the same period. The current ratio of the company stood at 2.32 times as on 31st March 2024 against 0.80 times as on 31st March 2023. The unencumbered investment of the company stood at Rs. 27.46 Crore and cash & bank balance stood at Rs. 20.01 Cr. as on 31st March 2024. Acuité believes that the liquidity position of the company will remain adequate on account of healthy net cash accruals against matured debt obligations over the medium term.
|
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 461.21 | 464.73 |
| PAT | Rs. Cr. | 24.70 | 70.86 |
| PAT Margin | (%) | 5.36 | 15.25 |
| Total Debt/Tangible Net Worth | Times | 1.03 | 4.48 |
| PBDIT/Interest | Times | 12.06 | 22.51 |
| 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 • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.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 |
|
| |
|
|
|||||||||||||||||||||||||||
|
|
Contacts |
About Acuité Ratings & Research |
