Akbar Travels Of India Pvt. Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 351.65 Crs. of Akbar Travels Of India Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (19 Jul 2021)	Present
Fund Based	94.25	83.65	Long Term	BWR BBB- /Negative Upgrade and Removed from the INC category	BWR BBB - /Stable Reaffirmation and change in Outlook
Non Fund Based	40.00	268.00	Short Term	BWR A3 Upgrade and Removed from the INC category	BWR A3 Reaffirmation
Grand Total	134.25	351.65	(Rupees Three Hundred Fifty One Crores and Sixty Five 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 reaffirmed its ratings on the bank loan facilities of Akbar Travels Of India Pvt. Ltd. (ATIPL) at BWR BBB-/Stable/BWR A3 and revised the Outlook to Stable from Negative

The ratings continue to reflect the strong business profile backed by the extensive experience of promoters, established relationships with all stakeholders, established distribution network, experienced management team and a comfortable financial risk profile. These strengths are partially offset by the large working capital requirement, exposure to intense competition and susceptibility to cyclicality in the travel industry and any adverse regulatory changes. Continued recovery in air travel along with improvement in revenues while sustaining profitability and maintenance of the financial profile will be a key monitorable.

Outlook: Stable

BWR believes the recovery in the business post the pandemic is expected to sustain. The stable outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Established relationships with multiple airlines and strong distribution channel :
ATIPL is an IATA-approved agent and has strong relationships with all major international airlines, which provide attractive performance-linked bonuses. Widespread presence across India through branches and tie-ups with multiple sub-agents helped the company grow revenue over the past fiscals. While the pandemic caused major operational disruptions in FY21 and lower demand for international air travel, the revival in the sector in the current fiscal supports the business profile along with the benefit from its higher-margin corporate network.
Extensive experience of the promoters and an experienced management team :
The promoters have an extensive experience in air travel and associated services of around five decades and this has helped ATIPL become one of the largest air-ticketing agents in India, with a strong brand recall and healthy market share. The promoters have been able to continue their business in the pandemic albeit at a slow pace and have also improved post revival in the sector as witnessed in FY22. The promoters are assisted by an experienced management team to assist in all day-to-day operations.
Comfortable financial risk profile :
Networth was strong at Rs 236.9 crores (FY21A: 225.99 crores) and gearing 0.3 times (FY21A: 0.11 times) as per FY22 (management certified provisional financials), backed by strong accretion to reserves despite losses faced in FY21 and low debt levels. Low debt resulted in comfortable debt protection metrics, reflected in a significantly improved interest coverage ratio of above 3 times estimated for FY22 (FY21A: -1.03 times). Improvement in the financial profile is contingent on recovering air travel demand as well as steady working capital management.

Credit Risks:

Working Capital intensive nature of the Operations :
The Company has substantial working capital requirements as it has to make weekly payments to suppliers against higher credit periods extended to corporate customers. However, the company has implemented changes post the covid-19 pandemic disruptions to improve the working capital requirements and sustained improvement of the same will remain monitorable.
Exposure to intense competition, and susceptibility to cyclicality in the airline industry and any adverse regulatory changes :
Due to low fixed asset requirements, and low technology barriers, the industry has low entry barriers and a large number of players; this has constrained the operations thereby preventing any major scaling up of operations. Non-exclusivity and intense competition from other IATA-approved agents limit scalability for ATIPL. The travel and tourism industry is also cyclical in nature and sensitive to overall economic conditions. It is one of the most severely hit industries amid the Covid-19 pandemic.

ANALYTICAL APPROACH - Consolidated

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria. BWR has taken a consolidated view of the operational and financial performance of the company while arriving at the rating.

RATING SENSITIVITIES

Positive Factors:

Substantial scale-up in operations along with sustained improvement in profitability
Sustenance of liquidity profile with moderate bank limit utilisation

Negative Factors:

Decline is the scale of operations and/or profitability.
Substantial increase in debt leading to the weakening of the capital structure

LIQUIDITY INDICATORS - Adequate

The company is expected to generate accruals of over Rs 14 crores each over FY23 and FY24 against repayment obligations of Rs 3.8 crores in FY23 and Rs 7.2 crores in FY24. The bank limits are utilised at an average of 47% over the past 12 months through May 2022. However, the utilisation of non-fund-based limits remains full on account of business requirements. Liquidity is further supported by unencumbered cash and cash equivalents of over Rs 20 crores as on June 30, 2022.

ABOUT THE ENTITY

The Company was incorporated in 1978 as a proprietorship concern by Mr. K V Abdul Nazar. Later on in the year 2001, it was converted into a private limited company. ATIPL is engaged in the business of International & Domestic Air Ticketing, Foreign Exchange [FFMC], Hotel Bookings, Visa Servicing, Hajj & Umrah Services, Travel Insurance, Car Rental Services, Cruise and Railway bookings, and Holiday Packages. Presently the company is managed by Mr. K V Abdul Nazar and his wife Mrs. Noorjahan Abdul Nazar in the Capacity of directors. ATIPL’s head office is located in Mumbai and has a pan-India presence with offices located in cities like Mangalore, Cochin, Trivandrum, Chennai, Delhi, Kolkata, Jalandhar, Ahmedabad, Bangalore, Lucknow, etc. Further, post establishing itself in India, ATIPL has set up its offices across the countries in the Middle East and the U.S.A.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	31.56	166.98
EBITDA	Rs.Crs.	-11.24	57.44
PAT	Rs.Crs.	-23.81	18.34
Tangible Net Worth	Rs.Crs.	225.99	249.80
Total Debt/TNW	Times	0.11	0.75
Current Ratio	Times	3.87	1.78

KEY FINANCIAL INDICATORS (Consolidated)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	244.58	547.57
EBITDA	Rs.Crs.	-19.15	82.64
PAT	Rs.Crs.	-35.90	23.35
Tangible Net Worth	Rs.Crs.	269.34	306.35
Total Debt/TNW	Times	0.15	0.83
Current Ratio	Times	1.83	1.47

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	83.65	BWR BBB-/Stable (Reaffirmation and change in Outlook)	07Jan2021	BWR BB Stable (Downgrade/ISSUER NOT COOPERATING*)	07Jan2020	BWR BBB- Stable (Assignment)	NA	NA
		0.00	NA	19Jul2021	BWR BBB- Negative (Upgrade and Removed from the INC category)	NA	NA	NA	NA
Non Fund Based	ST	268.00	BWR A3 (Reaffirmation)	07Jan2021	BWR A4 (Downgrade/ISSUER NOT COOPERATING*)	07Jan2020	BWR A3 (Assignment)	NA	NA
		0.00	NA	19Jul2021	BWR A3 (Upgrade and Removed from the INC category)	NA	NA	NA	NA
Grand Total		351.65	(Rupees Three Hundred Fifty One Crores and Sixty Five 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.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Arbez Noshir Karbhari Ratings Analyst arbez.k@brickworkratings.com	Chintan Dilip Lakhani Director- Ratings chintan.l@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Akbar Travels Of India Pvt. Ltd.

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	Bank of Baroda	Cash Credit - Sanctioned	19.00	_	19.00
2	Bank of Baroda	Cash Credit - Proposed	6.00	_	6.00
3	Bank of Baroda	Bank Guarantee - Sanctioned	_	111.00	111.00
4	Bank of Baroda	Bank Guarantee - Proposed	_	157.00	157.00
5	Bank of Baroda	GECL - Sanctioned	54.40	_	54.40
6	Federal Bank	Working Capital Demand Loan - Sanctioned	_	_	0.00
7	Federal Bank	Over Draft - Sanctioned	4.25	_	4.25
Total			83.65	268.00	351.65
TOTAL (Rupees Three Hundred Fifty One Crores and Sixty Five lakhs Only)

ANNEXURE-III

List of entities consolidated

Name of Entity	% Ownership	Extent of consolidation	Rationale for consolidation
Akbar Travels of India & Partners LLC (Oman)	55	To the extent of shareholding	Subsidiary
Akbar Travels of India Ltd (USA)	100	Full	Wholly owned subsidiary
Akbar Travels of India Ltd (UK)	100	Full	Wholly owned subsidiary
Akbar Travels of India Co WLL (Qatar)	49	To the extent of shareholding	Joint venture
Akbar Travels of India Pvt LLC (UAE)	49	To the extent of shareholding	Joint venture
Akbar Travels of India SDN.BHD (Malaysia)	30	To the extent of shareholding	Associate
Akbar Travels of India WLL (Kuwait)	49	To the extent of shareholding	Joint venture
Akbar Group International DMCC	100	Full	Wholly owned subsidiary
Akbar Holidays WLL (Bahrain)	49	To the extent of shareholding	Joint venture

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