Averina International Resorts Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.42.44 Crs. of Averina International Resorts Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing vehicle loan - Out-standing vehicle loan - Out-standing vehicle loan - Out-standing Secured OD - Sanctioned	00.49 00.73 02.15 02.54 02.54 02.71 07.09 05.10 04.58 01.79 02.06 02.06 06.00	Long Term	BWR BBB - (Stable)
Sub Total	39.84
Non-Fund Based
Bank Guarantee - Sanctioned	02.60	Short Term	BWR A3 +
Sub Total	02.60
Grand Total	42.44	(Rupees Forty Two Crores and Forty Four lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes that  Averina International Resorts Pvt. Ltd.'s. business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. 

The rating assignment of Averina International Resorts Pvt. Ltd., reflects the extensive experience of the promoters in the hospitality industry, established track record of operations, locational advantage of the resort, the growth recorded by the company post Covid pandemic and the expected improvement in the revenue generation and financial risk profile of the company. The Average Room Rate (ARR) and the Revenue per Available Room (RevPAR) of the Holiday Inn Resort Goa improved by 18% and 22% respectively in FY22 compared to the Covid impacted FY21. The occupancy rate also showed improvement in FY22 to record 76%. The revenue from the chain of restaurants also displays a healthy growth thus enabling it to contribute substantially to the revenue generation capacity of the company. The company has also been able to implement effective cost control measures thus enabling it to improve the profitability margins of the company. 

KEY RATING DRIVERS

Credit Strengths:

• Experienced management and established track record of operations :

  The company has been in existence for 36 years which increases the credibility of the company with the top management team consisting of experienced professionals from the hotel industry. The company successfully operates a 5 star resort under the brand name, Holiday Inn Resort Goa by tying up with InterContinental Hotels Group. The resort being located in Goa which is one of the most sought-after tourist spots in India also gives it the added advantage of tourist attraction. The company also operates several restaurants under the brand names, Fisherman's Wharf and The Red Ginger operating out of Goa, Bangalore and Hyderabad which have gained popularity in the recent years.

• Strong financial risk profile of the company :

  The financial risk profile of the company remains healthy supported by improving scale of operations albeit the dip in FY21 due to Covid pandemic. The TNW of the company has improved to Rs 53.32 Crores as on 31 March 2022(Prov.) due to retention of profit by the company and the debt protection metrics DSCR and ISCR have also improved to 1.97 times and 6.71 times mainly due to improving PAT. Gearing also remains comfortable at 0.80 times as on 31 March 2022 (Prov.). The profitability margins are also improving in FY22(Prov.) with OPM increasing to 27.04% and NPM improving to 12.08%. The company does not have any large CAPEX plans as on date and hence the financial risk profile is expected to remain stable.

Credit Risks:

• Impact of Covid 19 pandemic :

  The operations of the company had been severely impacted due to the Covid 19 pandemic and the company operated only for 6 months in a staggered manner in FY21 during the duration October 2020 to March 2021. The revenue of the company dipped by 57% to record Rs 53.42 Crores in FY21. The ARRs and RevPARs reduced by 6% and 13% respectively in FY21 due to the impact of the pandemic. However, post Covid the company has been able to improve the scale of operations substantially on the back of pent-up demand for leisure travelling and consumer spending.

• Intense competition and seasonality associated with the hotel industry :

  The company operates Holiday Inn Resort Goa by tying up with InterContinental Hotels Group which enables it to be associated with the established international brand ensuring the highest standards possible. However, the resort is expected to face competition from several international resorts in the locality. But the established market position of the resort in Goa, mitigates the competition to a large extent. The ARRs and RevPARs during the lean period is bound to reduce to a certain extent due to comparatively reduced room rates, however the maintenances of property and building needs to be carried out on a regular basis which could impact the profitability of the company.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward the company’s ability to improve the scale of operations, thereby strengthening the financial risk profile while maintaining sufficient liquidity position in the company will be the key rating sensitivities.

Positive:

• The rating could be upgraded if the company is able to achieve significant growth in revenue and profit margins while improving its cash accruals thereby strengthening the liquidity position along with improvement in the debt protection metrics, gearing and the overall financial risk profile.

Negative:

• The rating may be downgraded if there is lower than expected revenues affecting the profitability margins or deterioration in its financial risk profile from current level and delay in servicing of debt obligations. 

LIQUIDITY POSITION

Liquidity remains adequate with healthy cash and bank balance at Rs 17.49 Crores as on 31 March 2021 albeit dipping slightly to Rs13.80 Crores as per FY22(Prov.). The cash and bank balance is expected to improve to Rs 16.68 Crores due to increase in the bank balance. Conversion cycle remains negative indicating healthy working capital turnover position of the company. Current Ratio remains low at 0.83 times as on 31 March 2021 and is dipping slightly in FY22(Prov.) on account of the slight dip in cash and bank balance. Current Ratio is again expected to increase to 0.99 times as on 31 March 2023(Est.) mainly due to increase in the cash and bank balance and trade receivables. The company generates approximately 40% of the total revenue from the operation of its six restaurants which usually procure materials on a credit period, which increases the trade payables value. However, the receivables are always low since majority of the payments are performed on a real time basis. Hence the receivables value will be lower than the payables value, due to which the current ratio for the company tends to be on the lower end. The debt protection metrics, ISCR and DSCR remains healthy at 2.03 times and 1.06 times as on 31 March 2021 despite the drastic reduction in the revenue recorded and the parameters are improving to 6.71 times and 1.97 times as on 31 March 2022 (Prov.) due to improvement in the operating profit and net profit. NCA are sufficient to cover the debt obligations of the company and in FY23 (Est.) also the NCA are expected to remain sufficient to cover the debt obligations of the company. SOD limit utilization remains high at 85.21%.

PROFILE

The company, Averina International Resorts Pvt. Ltd. was incorporated in 1986 and since 1992 the company is engaged in a franchise agreement with the InterContinental Hotels Group, to operate the resort, Holiday Inn Resort Goa which is a beach facing five-star resort operating in Cavelossim, Goa enabling it to become a part of the established brand, Holiday Inn. The franchise agreement gets renewed at the end of the corresponding tenure and currently the agreement is valid till 2028 which will be subsequently renewed at the end of the agreement term on mutually agreed terms. The company also operates a chain of restaurants in Bangalore, Goa and Hyderabad under the brand names, Fisherman’s Wharf and The Red Ginger which have gained popularity in the recent years. Mr. Francis Xavier Sebastian Furtado is the Managing Director of the company with nearly four decades of experience in the hospitality industry. Mr. Cyril Ignatius Noronha, Mr. Jayesh Madhavji Parmar, Mr. Eugene Jose Noronha, Ms Savitha Dasilva and Ms Sonali Helena Gracias Furtado are the other Directors of the company who also possess several years of experience in the same line of industry.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	53.43	124.52
EBITDA	Rs.Crs.	9.66	25.25
PAT	Rs.Crs.	-1.83	7.64
Tangible Net Worth	Rs.Crs.	40.44	42.16
Total Debt/Tangible Net Worth	Times	1.12	1.01
Current Ratio	Times	0.87	0.88

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2022)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2021	2020	2019
Fund Based
1	Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing Term Loan - Out-standing vehicle loan - Out-standing vehicle loan - Out-standing vehicle loan - Out-standing Secured OD - Sanctioned	Long Term	00.49 00.73 02.15 02.54 02.54 02.71 07.09 05.10 04.58 01.79 02.06 02.06 06.00	BWR BBB- (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	02.60	BWR A3+	NA	NA	NA
Total			42.44	(Rupees Forty Two Crores and Forty Four lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

• General Criteria
• Approach to Financial Ratios
• Services Sector
• Short Term Debt

For More Information Contact:

Analytical Contacts
Nimmy Anand Lead Analyst nimmy.a@brickworkratings.com	Nagaraj K Associate Director - Ratings B : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

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	0.49	_	0.49
2	Union Bank of India	Term Loan - Out-standing	0.73	_	0.73
3	Union Bank of India	Term Loan - Out-standing	2.15	_	2.15
4	Union Bank of India	Term Loan - Out-standing	2.54	_	2.54
5	Union Bank of India	Term Loan - Out-standing	2.54	_	2.54
6	Union Bank of India	Term Loan - Out-standing	2.71	_	2.71
7	Union Bank of India	Term Loan - Out-standing	7.09	_	7.09
8	Union Bank of India	Term Loan - Out-standing	5.10	_	5.10
9	Union Bank of India	Term Loan - Out-standing	4.58	_	4.58
10	Union Bank of India	Bank Guarantee - Sanctioned	_	2.60	2.60
11	Union Bank of India	vehicle loan - Out-standing	1.79	_	1.79
12	Union Bank of India	vehicle loan - Out-standing	2.06	_	2.06
13	Union Bank of India	vehicle loan - Out-standing	2.06	_	2.06
14	Union Bank of India	Secured OD - Sanctioned	6.00	_	6.00
Total			39.84	2.60	42.44
TOTAL (Rupees Forty Two Crores and Forty Four lakhs Only)