Press Release

Press Release

January 29, 2024

PLATINUM HOLDINGS PRIVATE LIMITED
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	350.00	ACUITE BBB- \| Stable \| Assigned	-
Total Outstanding	350.00	-	-

Rating Rationale

Acuité has assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.350.00 Cr bank facilities of Platinum Holdings Private Limited. The outlook is ‘Stable’.

Rationale for rating assigned
The rating assigned factors in the experience of the promotors in real estate ventures, refinance of the debt with LRD term loan, long-term lease agreements with reputed tenants and strategic location of the property at prime locality of Chennai. However, rating remains constrained by high customer concentration risk along with the occupancy and lease renewal risk.

About the Company

Tamil Nadu Based, Platinum Holdings Private Limited was incorporated in 2006. The company is engaged in the business of real estate and it is Leasing of Commercial Asset. The directors of company are Mr. Yerram Vikranthreddy, and Ms. Apoorva Reddy Yerram.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of Platinum Holding Pvt Ltd.

Key Rating Drivers

Strengths

Experienced management and established track record of operations

Platinum Holding Private limited (PHPL) is incorporated in the year 2006 as a subsidiary of True Living Spaces Pvt ltd. It was subsequently was acquired by Viko Infra Projects LLP(promoted and managed by Mr.Yerram Vikrant Reddy) in April 2023. PHPL owns and operates commercial property in Chennai named as ‘Ozone Techno Park’ located along side Chennai IT expressway, Rajiv Gandi Salai (Old Mahabalipuram road). Ozone Techno park is built on land of 7 acres of land with total leasable area of 9,75,447 Sq fts occupied by anchor tenants like Cognizant Technological solutions, HCL Technologies Ltd, State street HCL, First Source Solutions Ltd and Rainbird Corpporation. The new promotor of the company Mr.Yarrum Vikranth Reddy is a High net worth experienced entrepreneur in various businesses. He has investments in SPP Sports Private Limited, Viko Realty, Summit Infra developers, and various other companies. His previous ventures include Hetero Med Solutions Ltd, which is sold to Apollo Hospital Enterprise Ltd. Acuite believes that PHPL will continue to benefit from its experienced management and established track record of operations.

Strategic location of the property and healthy cash flows supported by healthy occupancy rate
Ozone Techno Park is located at major IT office destination Rajiv Gandhi Salai, it is in close proximity to SIPCOT IT park with a concentration of large number of employees engaged in IT and allied services, conducive eco system with schools, hospitals and retail outlets. The building is equipped with modern amenities and ‘Grade A’ infrastructure meeting the criteria requirement for Blue Chip companies. Major tenants for the company includes Cognizant Technological solutions, HCL Technologies ltd, First Source Solutions Ltd, Rain Bird Corporation and State Street HCL. The company's occupancy levels remains at 90 percent level. Source of income for the company includes lease rental income, CAM income and Utility income. Company's long term lease agreements with tenants includes built in revenue escalation clause and lock in period thereby providing stability to business risk profile of the company.

Moderate financial risk profile
The financial risk profile of the company is moderate marked by comfortable debt protection metrics and lease rental cash flows, however, the net worth of the company remained negative due to carry forward losses of previous years. The tangible net worth of the company stood at (39.63) Cr as on March 31st 2023 as against Rs.(66.23) Cr as on March 31st 2022 and Rs.(78.18) Cr as on March 31st 2021. The negative Net worth in the financials is mainly due to past losses and unabsorbed depreciation. Platinum holdings have Rs. 85.26 Crore of eligible unabsorbed depreciation to be set off against future profits. Gearing ratio of the company remained as (10.11) times as on March 31st 2023 as against (6.04) times as on March 31st 2022. Debt protection metrics remains comfortable with sufficient surplus from lease rentals to service the company’s debt repayment obligation. DSCR remained comfortable between 1.20 to 1.74 times for near to medium term. Acuite believes the financial risk profile of the company is likely to remain moderate in the near to medium term on account of healthy rental income and no major debt funded capital expenditure.

Weaknesses

Customer concentration risk along with occupancy and renewal risk
The main revenue source of the firm is the income generating from lease rentals. As on date 90 percent of the property is let out to five tenets. PHPL is highly dependent on timely renewal of leave and license agreement from its tenant. Further, occurrence of events such as delays in receipt of rentals, or early exits/renegotiation by lessee due to the latter's lower than expected business performance may result in disruption of cash flow streams, thereby affecting debt servicing ability of the company. Further, any significant increase in competition from any other large real estate company in a competitive market like Chennai may result in the properties of PHPL facing renewal risks.

Rating Sensitivities

Timely payment of lease rentals
Any termination of lease from the existing tenant resulting in stretched liquidity position

Liquidity Position: Adequate

Liquidity of the company remained adequate with sufficient cash surplus generated to meets its debt repayment obligations. The rental inflows are managed through ESCROW mechanism, the average DSCR stood at 1.36 times for balance tenure of loan. The unencumbered cash and bank balance stood at Rs.0.08 Cr as on March 31 2023. Acuité believes that the liquidity of the company is likely to remain adequate over the medium term on account of healthy cash accruals to its maturing debt obligation.

Outlook: Stable

Acuité believes that PHPL will maintain a 'Stable' outlook over the medium term from its promoter’s industry experience. The outlook may be revised to 'Positive' in case of the company generates healthy net cash accruals while maintaining a comfortable liquidity position. Conversely, the outlook may be revised to 'Negative' in case of any significant stretch in its receivables leading to deterioration of its financial flexibility and liquidity.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	63.67	57.93
PAT	Rs. Cr.	26.60	11.95
PAT Margin	(%)	41.78	20.62
Total Debt/Tangible Net Worth	Times	(10.11)	(6.04)
PBDIT/Interest	Times	26.24	1.10

Status of non-cooperation with previous CRA (if applicable)

None

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
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Real Estate Entities: https://www.acuite.in/view-rating-criteria-63.htm

Note on complexity levels of the rated instrument

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 Ratng Criteria “Complexity Level Of Financial Instruments”on www.acuite.in.

Rating History :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Union Bank of India	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Jul 2038	350.00	Simple	ACUITE BBB- \| Stable \| Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Gnanreddy Rakesh Reddy Senior Analyst - Rating Operations Tel: 022-49294065 rakesh.reddy@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.