Anahita Hospitality LLP

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.59.56 Crs. of Anahita Hospitality LLP

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	59.56	Long Term	BWR BB /Stable Assignment
Grand Total	59.56	(Rupees Fifty Nine Crores and Fifty Six lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

BWR has assigned a long term rating of BWR BB (Stable) to the bank loan facilities of Anahita Hospitality LLP. The rating factors in the experience of the partners in diversified business lines, well established infrastructure, continuous funding support from promoters. However, the ratings are constrained by the initial stage and small scale of operations, weak financial risk profile, susceptibility to competition and cyclicality in the hospitality sector.

The outlook is Stable as the firm has been able to commence its operations which can lead to healthy occupancy levels going forward due to favorable location of the hotel. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. Going forward, the ability of the firm to repay its debts while maintaining its profit margin with improvement in overall financial risk profile would be the key rating sensitivities.

KEY RATING DRIVERS

Credit Strengths:

Experience of partners in diversified business line :
Mr. Sarvesh Kumar Goel is one of the designated partner of the firm and has around more than two decades of experience in the marble and timber business. Mr. Manoj Kumar Goel, another partner is Graduate by education and has an experience of more than a decade. Further, they get support from other experienced and qualified partners to carry out the day-to-day operations. The promoters have experience in diversified business lines like agriculture, cold storage, rice mills, education institutions etc. which in turn support the firm to stabilize its operations.
Strategic location of hotel with well established infrastructure :
The firm has completed its hotel cum resort project and has modern infrastructure with a complete solution of restaurants, rooms, banquets, swimming pool, conference room and a bar cum lounge. This helps the resort in offering an all round luxury environment to guests. Further the hotel is located near Airport, IT park and in close proximity to sports stadium which can attract business travelers/celebrities most. This strategic location is expected to support growth of the hotel and firm.
Continuous support from promoters :
The promoters are consistently supporting AHLLP by infusing funds in the form of interest free unsecured loans of Rs.28.22cr as on March 31,2022 (prov) as against Rs.20.21cr as on March 31,2021 (PY Rs.16.20cr) in business in order to provide cushion to the liquidity profile of the firm. These funds will remain in the business over the medium term as well.

Credit Risks:

Initial stage of Operations and Stabilization Risk :
AHLLP commenced its operations in October 2021 however they are yet to stabilize their operations and establish presence in their location. The operations got delayed due to Covid-19 pandemic which affected the demand in the particular sector. The scale of operations of the firm remained small, marked by total operating income of Rs.2.32crore during FY21 as against Rs.0.79crore during FY20. The small scale limits the firm’s financial flexibility in times of stress and deprives it from scale benefits. The firm has reported growth in its total revenue to Rs.11.76crore in FY22 (prov) i.e. after Date of Commencement of Commercial Operation (DCCO) on account of benefit derived from wedding season in Q4FY22.
Weak financial risk profile :
As the firm is in the initial stage of operations and high cost incurred leads to weak profitability margins of the firm in FY22. The capital structure of the firm comprises secured term loan of Rs.60.01cr as on March 31, 2022 (provisional) which has increased from Rs.43.94cr as on March 31, 2021 on account of delay in project and additional funding of Rs.13.30cr taken in the form of UGECL-TL in FY22 to meet its working capital requirements. NCA to Total Debt (analysed) stood at 0.03 times as on 31 March,2021. The estimated Total Debt/TNW (analysed) stood at 1.62x as on March,2022 (prov) as against 1.26x as on March 31,2021. However, FY23 would be the first complete year of operations for AHLLP and with the ramp up in the scale operations the firm’s financial risk profile will improve over the medium term.
Susceptibility to competition and cyclicality in the hospitality sector :
The hotel industry remains vulnerable to changes in the domestic and international economies, which impacts occupancy revenue per available room. On the other hand, fixed cost remains high even during downward shifts in demand. Moreover, intense competition in the nearby region will constrain demand for newly set up hotel in Lucknow. The hotel has an estimated monthly fixed cost of Rs.2cr. Break even is expected at minimum 50-55% occupancy.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria below (hyperlinks provided at the end of this rationale). BWR has considered the standalone approach to arrive at the rating. Unsecured loans infused by promoters have been treated as quasi equity, as the loans are interest-free, and will be maintained in the company over the medium term.

RATING SENSITIVITIES

Upward : BWR may revise the ratings upward if there is a substantial improvement in the scale of operation and profitability margins leading to positive operating cash flows, along with improved occupancy level of the hotel.

Downward : BWR may revise the ratings downward in case of inability to achieve projected occupancy levels leading to, lower than expected cash accruals and/or inability to improve debt protection metrics.

LIQUIDITY INDICATORS - Stretched

The firm is having stretched liquidity position on account of increase in total debt and generation of cash losses in FY22 (prov) as the firm has started its commercial operation in Oct 2021. The firm has serviced its interest on borrowings and the principal repayments in FY22 from infusions of funds by the promoters. The firm has debt obligations of around Rs.6-7cr in FY 23 & 24 which is expected to be met through cash accruals on the back of stabilization of operation and FY23 being full year of operations for the firm. However, continuous support from promoters in the form of interest free unsecured loans provide liquidity cushion to the firm. The Tangible Net worth (Analysed) of the firm stood at Rs.34.73cr as on 31st March,2021 which increased to Rs.36.93cr as on March 31, 2022 (provisional) when unsecured loan treated as quasi equity.

ABOUT THE ENTITY

Anahita Hospitality LLP (AHLLP) registered as a Limited Liability Partnership in September, 2012 under The LLP Act, 2008 with an objective to establish and operate a luxurious resort and started its commercial operations in October, 2021. The firm operates a hotel, club cum resort in the name of ‘The Centrum’ which is spread over 5 acres of land (self owned by firm) located at Lucknow, Uttar Pradesh. The resort has two Banquet halls, two conference halls, 57 Guests rooms, swimming pool, shopping and gaming area and two restaurants with one bar cum lounge. The firm has total of ten partners. The day to day management of the firm is carried by Mr. Sarvesh Kumar Goel and Mr. Manoj Kumar Goel.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	2.27	0.53
EBITDA	Rs.Crs.	1.98	0.35
PAT	Rs.Crs.	1.23	0.35
Tangible Net Worth	Rs.Crs.	14.52	13.29
Total Debt/Tangible Net Worth	Times	4.42	2.23
Current Ratio	Times	1.20	2.53

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	59.56	BWR BB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		59.56	(Rupees Fifty Nine Crores and Fifty Six lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Analytical Contacts
Akanksha Senior Ratings Analyst akanksha@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Anahita Hospitality LLP

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Union Bank of India	Term Loan - Out-standing	44.55	_	44.55
2	Union Bank of India	Term Loan - Out-standing	1.71	_	1.71
3	Union Bank of India	Working Capital Term Loan - Sanctioned	2.30	_	2.30
4	Union Bank of India	Working Capital Term Loan - Sanctioned	11.00	_	11.00
Total			59.56	0.00	59.56
TOTAL (Rupees Fifty Nine Crores and Fifty Six lakhs Only)

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