Namdev Builders & Developers

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 90.00 Crs. of Namdev Builders & Developers

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (10 Aug 2021)	Present
Fund Based	80.00	80.00	Long Term	BWR BB-/Stable Reaffirmation/ISSUER NOT COOPERATING*	BWR BB - /Stable Reaffirmation
Non Fund Based	10.00	10.00	Short Term	BWR A4 Reaffirmation/ISSUER NOT COOPERATING*	BWR A4 Reaffirmation
Grand Total	90.00	90.00	(Rupees Ninety Crores 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

Brickwork ratings has reaffirmed the long-term rating of Namdev Builders and Developers (NBD, or ‘the firm’) to BWR BB-, with a ‘Stable’ outlook and short-term rating to BWR A4. The ratings derive strength from the association of the firm with a reputed brand- HYATT, regular need-based financial support from the promoters, and commencement of operations in FY22. The ratings, however, are constrained by the highly competitive nature of the industry with susceptibility of operations to the cyclicality in the hotel industry, and expected slowdown in the operating performance of the firm due to the Covid-19 pandemic.

Outlook: Stable

The Stable outlook indicates a low likelihood of a rating change over the medium term. The rating outlook may be revised to Positive in case the operations stabilize and the firm is able to scale-up its operations and achieve the projected profitability. The rating outlook may be revised to Negative if the revenue and profitability is much lower than the projected levels and if there is any delay in the infusion of need based financial support from the promoters.

KEY RATING DRIVERS

Credit Strengths:

Association with a reputed brand :

The firm has constructed a new hotel named “Hyatt Regency Jaipur Mansarovar” in tie up with Hyatt International. The commercial operations of the hotel commenced from Jun 29, 2021 and the hotel has been handed over to Hyatt Hyatt has started to manage and operate the hotel for 25 years which provides a competitive edge.
Promoter’s Contribution :

The promoters have infused need based funds required to meet the business requirements of the firm. As on December 29, 2021, the promoters had infused total funds amounting to Rs. 64.41 Cr. in the form of partner's capital and unsecured loans amounting to Rs. 1.26 Cr., to fund the capex and other business requirements.
Start of commercial operations :

The firm has started commercial operations from Jun 29, 2021 as the construction of banquet hall and Block-A, which has a total of 150 rooms, had been completed and all approvals required for commencing commercial operations of the hotel had also been received by the firm. The construction work of Block-B (with 100 rooms) and presidential suite are still under completion (fencing & some decoration work mainly pending) which is expected to be completed by the end of Feb-2022. The firm has already handed over the management of the hotel to the team of Hyatt International. The firm has achieved a revenue of Rs.0.06 Crs only till Dec. 31, 2021 (Prov.), owing to subdued demand in the hotel industry, leading to low occupancy levels. The initial COD of the project was expected as July31, 2020 which was revised to July 01, 2021, as the Covid-19 pandemic had delayed the construction work which had also caused an increase in the project cost. The cost of the project was revised from Rs. 142.50 Crs to Rs. 166.19 Crs.

Credit Risks:

Highly Competitive Industry :

The firm faces tough competition from well established brands and upcoming hotels located in Jaipur which could impact its occupancy level and pricing flexibility in the near future.
Exposure to cyclicality in the hospitality industry, and expected slowdown in operating performance because of the pandemic :

The global hotel industry is inherently cyclical in nature, with growth dependent on the macroeconomic scenario and supply of rooms. The industry has been under severe stress post the outbreak of the Covid-19 pandemic, on account of slowdown in demand coinciding with huge supply addition. The impact of the pandemic is significant on the sector and industry has shown a significant dip in demand.

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating. Reference may be made to the detailed Rating Criteria hyperlinked below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: The rating may be revised upward in case the firm is able to scale-up its operations and achieve the projected profitability, while showing an improvement in its liquidity.

Negative: The rating may be revised downward in case the firm shows continued losses and there is a significant deterioration in its solvency or liquidity profile.

LIQUIDITY INDICATORS - Adequate

The commercial operations of the hotel started from Jun 29, 2021, with the firm having achieved a total operating income of only Rs.0.06 Crs till Dec 31, 2021. The firm has repayment obligation of Rs.1.07 cr. and Rs. 12.89 cr. in FY22 and FY23, respectively, which is expected to be met through the cash accruals and need based financial support from the promoters (in the form of partners’ capital or unsecured loan). The firm has not availed any fund-based working capital facility from any bank. As on Dec 29, 2021, the firm had a cash & bank balance of Rs. 6.12 Cr.

ABOUT THE ENTITY

Namdev Builders & Developers is a Jaipur based partnership firm incorporated on 30.01.2009 for the construction of hotel in luxury segment in tie up with Hyatt Group. The project is a hotel in the Luxury segment which has 250 rooms. The hotel is constructed on a 20,075 sq. mtrs. of land in Jaipur, Rajasthan. The hotel is a fully air conditioned luxury hotel which is constructed in the palace style and having three blocks, two for the residential guest and other for conferences and banquets. The hotel is having 250 rooms and suites in three – four categories and a presidential suite with facilities like specialty restaurants, multi cuisine restaurant, twenty four hours coffee shop, Bar, spa, conference halls, banquet hall, a swimming pool. The commercial operations of the hotel was achieved in Jun-2021 as the work of 150 rooms, banquet, restaurant and swimming pool was completed and fencing & some decoration work in balance rooms & presidential suite is expected to be completed by the end of Feb-2022.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	Not Available	Not Available
EBITDA	Rs.Crs.	5.72	-0.08
PAT	Rs.Crs.	-0.01	-0.02
Tangible Net Worth	Rs.Crs.	46.32	35.48
Total Debt/Tangible Net Worth	Times	1.41	1.31
Current Ratio	Times	3.27	3.61

RATING HISTORY FOR THE PREVIOUS 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	80.00	BWR BB-/Stable (Reaffirmation)	10Aug2021	BWR BB-Stable (Reaffirmation/ISSUER NOT COOPERATING*)	15May2020	BWR BB-Stable (Downgrade/ISSUER NOT COOPERATING*)	28Mar2019	BWR BB+ Stable (Assignment)
Non Fund Based	ST	10.00	BWR A4 (Reaffirmation)	10Aug2021	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)	15May2020	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	28Mar2019	BWR A4+ (Assignment)
Grand Total		90.00	(Rupees Ninety Crores 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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Neha Wahi Ratings Analyst Board : +91 11 2341 2232 nehawahi@brickworkratings.com	Sudeep Sanwal Associate Director - Ratings sudeep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Namdev Builders & Developers

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	Central Bank of India	Term Loan - Sanctioned	20.00	_	20.00
2	Punjab National Bank	Term Loan - Sanctioned	40.00	_	40.00
3	Punjab National Bank	Bank Guarantee - Sanctioned	_	10.00	10.00
4	SIDBI	Term Loan - Sanctioned	20.00	_	20.00
Total			80.00	10.00	90.00
TOTAL (Rupees Ninety Crores Only)

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