Press Release October 07, 2024 SHRIMARC MALL LLP Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	78.00	ACUITE BBB | Stable | Reaffirmed	-
Total Outstanding	78.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuité has reaffirmed the long-term rating at ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.78.00 Cr. bank facilities of Shrimarc Mall LLP(SML). The outlook remains ‘Stable’. Rationale for reaffirmation The rating reaffirmation considers the favourable location of the mall and the steady cash flows backed by reputed clientele base. The firm has steady revenue which stood at Rs.19.06 Cr. as against a total expenditure of Rs.1.11 Cr. in FY2024 (Provisional). The DSCR stood at 1.29 times over the same period. The rating further factors in the presence of debt servicing reserve account (DSRA) in the form of fixed deposit equivalent to three months of debt repayment, and an escrow structure, which prioritizes debt servicing. The rating also continues to draw comfort from the strong partnership between the promoters Calcutta Beacon Engineering Co LLP (CBECL) and Sky Vinimay Private Limited (SVPL) for which SML is likely to derive operational synergies as well as financial flexibility from the proven track record and the diverse portfolio of the partners. The rating, however, remains constrained by the modest debt coverage indicators and exposure to lessee concentration risk.

About the Company

Incorporated in 2013, Shrimarc Mall LLP (SML) is a Limited Liability Partnership (LLP) between Calcutta Beacon Engineering Co LLP (CBECL) and Sky Vinimay Private Limited (SVPL) in an equal profit sharing ratio. SML operates a commercial mall at Durgapur (West Bengal) named ‘Junction Mall’ which is a multi storeyed shopping mall with various brand outlets, multiplex, joy rides and famous restaurants. The property is spread over a total area of around 4.2 lakh Sq Ft out of which leasable area is 3.24 lakh sq. ft. Out of this 2.85 lakh sq.ft is available for lease and balance area has been sold. It is located in the heart of the Durgapur town and was inaugurated in 2011. The mall has a mix of 200+ national & international brands like The Body Shop, Fabindia, The Apple Store, Shopper’s Stop, Nike, Reebok, Pantaloons to name a few. The business is managed by Mr. Mahesh Pansari and Mr. Siddharth Pansari. CBECL a joint venture between Ravi Todi, Rahul Todi and Chitralekha Todi.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone business and financial risk profile of SML to arrive at this rating.

Key Rating Drivers

Strengths

­Long track record of operations and experienced partners The promoters of SML, Calcutta Beacon Engineering Co LLP (CBECL) and Sky Vinimay Private Limited (SVPL) have more than two decades of experience in commercial property and real estate operations. SVPL belongs to the Primarc group, a conglomerate in diverse business operations such as real estate, retail franchisees, online and offline retail trading. Primarc group is engaged in the development of residential, commercial and retail projects with over two decades of operations in the Kolkata real estate market. The business is managed by Mr. Mahesh Pansari and Mr. Siddharth Pansari (sons of Mr. Nand Kishore Pansari). Calcutta Beacon Engineering Co LLP (CBECL) is a joint venture between Ravi Todi, Rahul Todi and Chitralekha Todi the promoters have extensive experience in development to commercial/real estate properties and investing activities. Hence, Acuité believes that the long track record of operations and the vintage of the promoters will continue to support the operations of the firm over the medium term. Steady revenue base coupled aided by association with reputed clientele The firm achieved revenue of Rs. 19.06 Cr. in FY2024 (Prov.) as compared to Rs.17.71 Cr. in FY2023. The firm has steady cash inflows from the rental income being generated from Junction mall which stood at Rs.19.06 Cr. as against a total expenditure of Rs.1.11 Cr. in FY2024 (Prov.) and a DSCR of 1.29 times which is expected to improve significantly going forward. The firm operates on lease model and has entered into a long term agreement with reputed brands like Shoppers stop, Pantaloons, Spencers, Priya Entertainment Private Limited, Subway, Chai Break, Mainland China, Pizza hut etc. Currently, there are around 127 tenants in the mall. Out of the same, there are four anchor tenants, Shoppers stop, and Pantaloons, Spencers and Priya Entertainment Private Limited which constitutes ~ 42 per cent of the total leased area. Acuité believes that the lease agreement with reputed clients, the firm’s established market position, and the brand recognition of the tenants, will continue to mitigate the risk of any unlikely delay in receipt of lease rental and will also ensure the renewal of lease agreements post completion of existing tenure. Favourable location of the mall and healthy occupancy level The Junction Mall is situated in the heart of the Durgapur city and is one of the largest malls in the city having tie up with reputed brands like Shoppers stop, Pantaloons, Spencers, Multiplex (Bioscope), Reliance trends, Khadims, Woodland, Blackberry Mumoso, etc. The Mall is very well connected and lies in close proximity to hotels, main Bus Terminus and residential apartments. Further, the mall has entertainment zones and food hubs such as KFC, Mainland China, Subway, Chai Break and Pizza hut etc. leading to healthy footfalls. Being the largest mall in Durgapur, it caters to nearby towns of Burdwan, Asansol, Rangiganj and Dhanbad. With no major competing mall in Durgapur market of similar scale and operations, the footfalls for the mall are robust. This is also reflected in near to full occupancy of the mall and premium brand presence. Hence, owing to an attractive location of the mall and robust footfall, the firm enjoys healthy occupancy level of ~95 per cent. Acuité believes that the favourable location of the mall would continue to benefit the firm in terms of robust footfalls and premium brand participation.

Weaknesses

­Renewal risk of lease contracts and susceptibility to lower occupancy due to economic downturns In the event of non-renewal by existing lessee, the future cash flows will be impacted thereby translating to weakening of debt protection indicators. Key clients contribute to more than 40% of the total lease rentals. In the event of either of the tenants deciding to move out or seeking a renegotiation the rentals are likely to be impacted. Hence, timely renewal/leasing at similar or better terms than the existing agreements will remain a key rating sensitivity factor. However, this risk is mitigated at an extent considering mall’s strategic location and strong credit risk profile of tenants. Further, there is minimal risk of non renewability of the lease agreement of anchor tenants as few of them has already sustained beyond the lock in period. Moderate financial risk profile The financial risk profile of the firm is moderate marked by improving networth, high gearing and moderate debt protection metrics. The tangible net worth of the firm increased to Rs.16.45 Cr. as on March 31, 2024 (Prov.) from Rs.12.31 Cr. as on March 31, 2023. The gearing of the firm improved and stood at 4.44 times as on March 31, 2024 (Prov.) as against 6.44 times as on March 31, 2023. The total debt of the company stood at Rs.73.08 Cr. in FY2024 (Prov.) as compared to Rs.79.25 crore in FY2023. The debt is substantially backed by highly stable rent-generating assets. The moderate debt protection metrics of the group is marked by interest coverage ratio (ICR) which stood at 2.19 times as on March 31, 2024 (Prov.) as against 1.48 times  as on March 31, 2023 and debt service coverage ratio which stood at 1.32 times as on March 31, 2024 (Prov.) as against 1.34 times  as on March 31, 2023. Acuité believes that financial risk profile is expected to remain moderate over the medium term.

Rating Sensitivities

­Significant delays in payment of lease rentals by the counterparty. Improvement in financial risk profile. Decline in occupancy level leading to cash flow mismatch.

Liquidity Position

Adequate

The liquidity position of the firm is adequate and is expected to support debt servicing in the near-to-medium term on account of presence of escrow accounts to ensure timely repayment. The current ratio improved and stood at 0.74 times as on March 31, 2024 (Prov.) as against 0.67 times as on March 31, 2023. The cash flow cover is expected to be comfortable during the tenure of the loan and its debt service coverage ratio (DSCR) expected to remain comfortable at an average of 1.37 times over the tenure of the LRD loan, owing to the expectation of steady lease rentals and well-structured debt repayment obligation. Further, the firm maintains DSRA equivalent to three months debt service obligation which strengthens the liquidity profile of the firm. Acuité notes that liquidity of the firm is supported by strong refinancing ability as well as the ability to raise additional lease rental discounting loans, if required. Moreover, the overall liquidity profile has been supported by timely infusion of funds from the promoter and such support is expected going forward as well.

Outlook: Stable

­Acuité believes that firm’s outlook will remain 'Stable' over the medium term on account of experienced management, steady cash flows from lease rentals, strong counterparties and the presence of escrow mechanisms for the LRD loan. The outlook may be revised to 'Positive' in case of a sharp increase in the DSCR because of better-than-expected lease rentals. The outlook may be revised to 'Negative' if a significant dip in the lease rentals or re-negotiations leading to lower cash flows impacting the debt protection metrics or unexpected termination of existing leases.

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	19.06	17.71
PAT	Rs. Cr.	7.33	2.11
PAT Margin	(%)	38.47	11.93
Total Debt/Tangible Net Worth	Times	4.44	6.44
PBDIT/Interest	Times	2.19	1.48

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 • 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

­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.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 28 Jul 2023 Term Loan Long Term 71.00 ACUITE BBB | Stable (Reaffirmed) Secured Overdraft Long Term 7.00 ACUITE BBB | Stable (Reaffirmed) 02 Jun 2022 Term Loan Long Term 68.00 ACUITE BBB | Stable (Reaffirmed) Term Loan Long Term 10.00 ACUITE BBB | Stable (Assigned) 01 Apr 2021 Term Loan Long Term 68.00 ACUITE BBB | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Not Applicable Not avl. / Not appl. Proposed Long Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB | Stable | Reaffirmed Kotak Mahindra Bank Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.00 Simple ACUITE BBB | Stable | Reaffirmed Kotak Mahindra Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Apr 2032 66.00 Simple ACUITE BBB | Stable | Reaffirmed

Contacts

Mohit Jain Senior Vice President - Rating Operations Archita Sharma Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@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.