Orbit Resorts Limited

Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 212.67 Crs. of Orbit Resorts Limited

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (21 May 2021)	Present
Fund Based	203.25	212.67	Long Term	BWR D Reaffirmation	BWR BB - /Stable Upgrade
Grand Total	203.25	212.67	(Rupees Two Hundred Twelve Crores and Sixty Seven 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

Brickwork Ratings (BWR) upgrades the long-term rating to BWR BB- (Stable) for the bank loan facilities of Orbit Resorts Limited (ORL or ‘the company’).

The upgrade in the rating takes into account timely servicing of the debt obligation for more than three consecutive months and subsequent improvement in the liquidity profile of the company, in line with the BWR’s curing period guidelines. Besides that, the rating factors experienced promoters and association with the recognized 'Oberoi' brand, location advantage with an improved ARR (Average Room Rate), comfortable capital structure & current ratio, besides improved EBITDA in FY22 on a year-on-year basis. The rating is however constrained by the cyclical nature of industry, intense competition, Intra group investments and modest debt coverage indicators.

Outlook: Stable
The Outlook is Stable as the company is showing signs of improvement in the operational & financial performance post the impact of Covid-19 pandemic in the previous two years. The company was able to achieve revenue of Rs 70.66 Crs in Q1FY23 against Rs 16.56 Crs in Q1FY22. Besides that, the liquidity profile of the company has also improved after the Covid-19 restructuring.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and association with recognized 'Oberoi' brand :
The company has been in existence for more than 3 decades and the company promoters are well experienced. The director of the company, Mr. Avtar Singh has more than two decades of experience, while Gurcharan Singh (director) has more than 15 years of experience. Furthermore, the association with the 'Oberoi’ brand provides access to global marketing strategies with an established market position of the brand.
Locational advantage and improved occupancy :
Both the hotels namely- Trident Gurgaon and The Oberoi Gurgaon are located at one of the prime commercial locations at Udyog Vihar, Gurgaon. The area is in the vicinity of the IGI Airport and has several top end MNCs nearby. Though there is competition from other Hotels in the area, the brand value of ‘Oberoi’ gives them an edge to an extent. With the reduction in Covid-19 cases, the outlook for the hospitality industry remains stable. Both the hotels have current occupancy of 81.48%(Trident Gurgaon) and 61.00% (The Oberoi Gurgaon) in Q1FY23 against 25.26% and 17.94% in Q1FY 22respectively.
Improvement in revenue post Covid 19 :
The Gross revenue of the company has declined from Rs 290.19 Crs in FY20 to Rs 99.17 Crs in FY21 due to the adverse impact of pandemic Covid -19 on the hospitality and tourism sector. However, In FY22 provisional, revenue of the company has improved to Rs 174.40 Crs owing to decline in Covid 19 cases and improved outlook for hospitality sector. Post Covid and after opening of the airport,the sales of both the hotels have improved. Furthermore, the company has registered revenue of Rs 57.44 Crs in Q1FY23 against Rs 13.10 Crs in Q1FY22 from the Hotel segment, besides that, the company has registered revenue of Rs 13.22 Crs in Q1FY23 against Rs 3.46 Crs in Q1FY22 from buses-transport segment. Operating profit margins have improved to 17.31% in FY22 against 0.74% though still low as compared to the average of operating margins in pre-Covid times.
Comfortable capital structure and current ratio :
The company has a comfortable leverage position with overall gearing of 1.28x in FY22 (Provisional; PY:1.95x).The company also has a comfortable current ratio of 1.65x as on March 31, 2022 (Provisional; PY: 3.02x) which indicates comfortable ability of the company to meet its current liabilities from current assets. Debt service coverage ratio (DSCR) is at 1.49x in FY22 (Provisional; PY: 1.04x).
Timely servicing of the debt obligation :
The company defaulted on the servicing of the debt obligation in the past. However, the conduct has been satisfactory post Covid-19 restructuring.

Credit Risks:

Cyclical nature of industry :
Revenues in the industry are generally higher in periods of economic prosperity. The hospitality industry is vulnerable to economic trends, if the economic trend is downward, the company may face adverse effects on the topline and bottomline.
Intense Competition :
The hospitality industry is intensely competitive. The cut-throat competition from other established players in the vicinity poses a tough challenge to maintain a healthy ARR and occupancy.
Intra group investments :
The company has invested a significant amount in subsidiaries and associate firms/companies (to the tune of Rs. 97.32 Crs as per FY22 provisional financials). Intra-group transactions may have a negative impact on the liquidity, gearing and expected return of funds in the scenario of non-performance of any of the group concerns, or delay in realization of funds back from these entities.
Modest debt coverage indicators :
The Total debt/EBITDA, though improved on a year-on-year basis, stood at a modest level of 8.94x in FY22 (Provisional; PY: 428.13x in FY21). The average Debt/EBITDA from FY17 to FY20 was around 4x, however due to Covid 19 induced lockdown, the hospitality industry was adversely impacted. There have been delays in the repayment obligations in the past, though the account has been standard now after Covid-19 one time restructuring. BWR will continue to monitor the performance of the company and key ratios.

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the trust to arrive at the rating.

RATING SENSITIVITIES

Positive: The ratings may be upgraded if there is a sustained improvement in the financial risk profile of the company as projected and the company meets its performance ratios as per Covid-19 one time restructuring.

Negative: BWR may revise the ratings downwards if there is deterioration in the financial risk profile of the company and if there is wide variation between projections Vs actual financials.

LIQUIDITY INDICATORS - Adequate

In Financial Year 2021-22, the account was restructured and only interest payments were being made on the term loans of PNB & PSB bank coupled with principal and interest payments on the emergency Credit (GECL) and other vehicle loans. In order to meet its operational & financial requirements, the company divested some of its investments in group companies in FY22. From the cash flows generated, the company has pre-paid its PNB Term Loan principal obligation till March 2023 showing signs of improved liquidity. The company has a CPLTD of Rs 32.34 Crs for FY23, which is projected to be met through the internal accruals. The company has not availed any working capital limit. The company has a comfortable capital structure having gearing of 1.28x in FY22 (Provisional; PY:1.95x) provides cushion to the company to raise additional equity incase of requirement. Current ratio of the company is at 1.65x as on March 31, 2022 (Provisional; PY: 3.02x) which further indicates adequate liquidity.

ABOUT THE ENTITY

Orbit Resorts Limited was incorporated in 1988 and the company has multiple business divisions. The Hotel division has established two hotels namely Trident Gurgaon & The Oberoi Gurgaon on plot No.443 Udyog Vihar, Ph-V, Gurgaon. Both the hotels are being managed by EIH Ltd. (Oberoi Group). The Trident Gurgaon commenced commercial operation in February 2004 and the Oberoi commenced commercial operations in March 2011. In addition to that, the company has a captive solar power plant of 7.5 MW at village Balasar, Dist. Sirsa, Haryana to supply power to the two hotels of the company.

The company also has a transport division which runs under the name of Indo Canadian Transport Co. and it has currently 72 buses to transport passengers from international flights arriving at terminal 3 of Indira Gandhi International Airport, New Delhi to various cities of Punjab. The company term loans accounts were restructured under Covid-19 one time restructuring scheme allowed by the RBI.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Provisional)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	174.40	99.17
EBITDA	Rs.Crs.	30.19	0.73
PAT	Rs.Crs.	24.50	2.50
Tangible Net Worth	Rs.Crs.	211.05	161.58
Total Debt/TNW	Times	1.28	1.95
Current Ratio	Times	1.65	3.02

KEY COVENANTS OF THE FACILITY RATED

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

ANY OTHER INFORMATION

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	212.67	BWR BB-/Stable (Upgrade)	21May2021	BWR D (Reaffirmation)	06Mar2020	BWR D (Downgrade)	09Aug2019	BWR BB- Stable (Reaffirmation)
Grand Total		212.67	(Rupees Two Hundred Twelve Crores and Sixty Seven 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
Raman Thakur Senior Rating Analyst Board : +91 11 2341 2232 raman.t@brickworkratings.com	Sudeep Sanwal Associate Director - Ratings sudeep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Orbit Resorts Limited

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	Punjab & Sind Bank	Term Loan - Out-standing	84.53	_	84.53
2	Punjab & Sind Bank	GECL - Out-standing	16.29	_	16.29
3	Punjab National Bank	Term Loan - Out-standing	92.55	_	92.55
4	Punjab National Bank	GECL - Out-standing	19.30	_	19.30
Total			212.67	0.00	212.67
TOTAL (Rupees Two Hundred Twelve Crores and Sixty Seven lakhs Only)

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