RATING RATIONALE
27Jan2021
Dhoot Infrastructure Projects Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.110.00 Crs. of Dhoot Infrastructure Projects Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
|---|---|---|---|---|---|---|---|
| Fund Based | |||||||
| Lease Rental Discounting Proposed | 110.00 | Long Term | Provisional BWR BBB - /Stable Assignment | ||||
| Sub Total | 110.00 | ||||||
| Grand Total | 110.00 | (Rupees One Hundred Ten Crores Only) | |||||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK
Dhoot Infrastructure Projects Ltd (DIPL or the Company) is engaged in leasing and renting its commercial space under Time Tower and Time Esplanade mall in Gurgaon. DIPL propose to avail LRD (Lease Rental Discounting) facility of Rs.110 crs for a period of 15 years, against the lease receivables from Time Esplanade mall and proceeds are proposed to be utilised to repay the existing debt and to meet other business purposes. Rating assigned to the proposed LRD facility derives strength from Reputed clientele, group support, commencement of mall operations, inflow of lease rentals and improvement in tenancy position. Few of the tenants such as More Retail, Haldia Energy Ltd and Shyam Ferro Alloys Ltd have already occupied the space and Cinepolis, Pantaloons, Market Ninety Nine, Modi-Mundipharma, Go Fashion and Hi Design are few of the reputed names with whom LoI has already been entered into and would be converted to lease within next 3-4 months.
With a longer tenure of the proposed facility and lower periodical debt obligations as compared to the lease inflow, BWR expects overall liquidity and the debt serviceability of the company to improve going forward. Further, the promoters of the company have undertaken to infuse additional funds in the business to meet any shortfall.
As per the proposed terms of the sanction, the company is required to maintain Escrow Account to route entire lease rentals and one month DSRA and provide security cover of 1.50x to the lender to secure the loan proceeds. Therefore, Escrow account mechanism, DSRA reserve of one month and security cover would provide enhanced credit strengths to the facility.
The rating are, however, constrained by moderate tenancy and occupancy level, lack of track record of mall performance and high competition in the commercial real estate.
Rating assigned is provisional as the current rated facility of Rs.110 crs is a proposed loan whose terms of sanction are yet to be finalised and assignment of rent receivables and other primary and collateral securities is yet to take place.
Outlook: Stable
BWR believes the Dhoot Infrastructure Projects 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 outlook may be revised to 'Positive' in case the occupancy level and cash flows of the company show sustained improvement. The rating outlook may be revised to 'Negative' if the company is not able to hand over the space to proposed tenants and cash flows of the company show lower than expected figures.
KEY RATING DRIVERSBWR has essentially relied upon the audited financial statements of Dhoot Infrastructure Projects Ltd. of FY18,FY19,FY20 and projected financial statements of FY21,FY22, publicly available information and information / clarifications provided by the entity’s management.
Credit Strengths:
-
Reputed Clientele :
Lease Agreements/LOI has been entered into with Cinepolis, More Retail, Reliance Digital, Modi-Mundipharma and 5 other different brands of repute.
-
Group Strength :
DIPL is part of Dhoot group, which started in 1962 by Mr. Kedar Nath Dhoot. Dhoot Group has expanded its business to sectors as diverse as Real Estate, Infrastructure, Power, Aviation, Manufacturing, Finance, Education, Environment, Healthcare and Hospitality. Dhoot group has experience in completing approx. 19 residential and commercial real estate projects in NCR, Mumbai, Chennai, Kolkata and Indore.
-
Completion of project :
Occupation certificate in respect of project completion has already been obtained and handing over of the space to tenants has begun.
-
Occupancy Level :
Against the total constructed space of 6.09 lakh sq. ft lease agreements for 1.63 L sq. ft have already been entered into and letter of intent has already been signed for another 0.82 lakh sq. ft.
Credit Risks:
-
Key Business risks :
Timely handover of space to the tenants, Conversion of LoIs to actual lease at agreed terms, adequate footfalls to generate sufficient rent under revenue sharing, improvement in tenancy position under current market situations etc are few of the key business risks.
-
High Competition :
Commercial real estate and leasing industry is characterised with presence of large quantum of vacant commercial leasable space across cities that weakens the bargaining power of the company. Further, online business, work from home culture, space sharing, business consolidation and urban decongestion have led to disruption in demand for commercial space and has intensified the competition.
For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Upward: Conversion of existing LoI (Letters of Intent) to actual lease agreements with initially agreed terms, improvement in tenancy position and occupancy levels, growth in monthly inflow of lease rentals, improvement in cash flows and liquidity and overall financial risk profile would support positive rating action.
Delay in handover of premises, shortage of funds against projections, higher vacancy levels, high tenant turnout and negative cash flows mismatches would attract adverse rating action.
COVID 19 Impact: COVID-19 delayed the completion of the project by 4-5 months, which in turn has delayed the handling over the constructed space to tenants, because of which timely inflow of lease rentals could not happen. Against the expected completion by March 2020, completion and occupation certificate was obtained in August 2020 and only after this actual handing over of premises to tenants began in Sept 2020. Company obtained moratorium on loan repayments during March to August 2020 as announced by RBI under COVID-19 Regulatory package. The company do not propose OTR (One Time Restructuring) under one time loan recast window as announced by RBI under COVID 19 relief.
LIQUIDITY INDICATORS - Adequate
The company has proposed to avail LRD of Rs.110 crs for a total tenure of 180 months (15 years). The loan would be utilised to repay existing TL of Rs.70 crs from BoB and other business purposes. The extended tenure of 180 months would reduce the monthly/quarterly loan obligations and ease out the cash flows of the company. On project basis, against proposal repayment liabilities of Rs.1.32 crs during FY21 and Rs.4.16 crs during FY22 of the proposed LRD of Rs.110 crs, lease rental inflows of Rs.10.60 crs and Rs.37.76 crs respectively are expected. On a total business basis, against total repayment liability of Rs.3.18 crs and Rs.6.21 crs during FY21 and FY22 respectively, total lease rental inflow of Rs.13.38 crs and Rs.40.54 crs respectively are expected.
ABOUT THE ENTITYM/s Dhoot Infrastructure Pvt Ltd. (DIPL), established on 13.06.2005 and promoted by Mr. Pawan Kumar Dhoot, is engaged primarily in real estate activities across India. DIPL is part of Dhoot group, which started in 1962 by Mr. Kedar Nath Dhoot. Dhoot Group has expanded its business to sectors as diverse as Real Estate, Infrastructure, Power, Aviation, Manufacturing, Finance, Education, Environment, Healthcare and Hospitality. Dhoot group has experience in completing approx. 19 residential and commercial real estate projects in NCR, Mumbai, Chennai, Kolkata and Indore. DIPL is currently engaged in leasing and renting a newly developed retail cum commercial complex named as “Time Esplanade” (earlier named as Time Arcade) in Gurgaon, Haryana.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 1.06 | 18.76 |
| EBITDA | Rs.Crs. | Not Available | Not Available |
| PAT | Rs.Crs. | Not Available | Not Available |
| Tangible Net Worth | Rs.Crs. | 128.64 | 128.27 |
| Total Debt/Tangible Net Worth | Times | 1.18 | 0.90 |
| Current Ratio | Times | 5.78 | 5.07 |
N.A
STATUS OF NON-COOPERATION WITH PREVIOUS CRA
CRISIL B+ (Stable) for Rs.4.20 crs on 16 Oct 2020.
ANY OTHER INFORMATIONN.A
RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | Rating History (2021) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 11Jan2021 | |||||||
| Fund Based | |||||||||||
| Lease Rental Discounting - Proposed | Long Term | 110.00 | BWR BBB-/Stable | BWR BB +/Negative (Withdrawn) | |||||||
| Grand Total | 110.00 | (Rupees One Hundred Ten Crores Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 06Mar2020 | 17Jun2020 | ||||||
| Fund Based | |||||||||||
| Lease Rental Discounting - Proposed | Long Term | 110.00 | BWR BBB-/Stable | BWR BB +/Stable (INC) | BWR BB +/Negative | ||||||
| Grand Total | 110.00 | (Rupees One Hundred Ten Crores Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 19Dec2018 | |||||||
| Fund Based | |||||||||||
| Lease Rental Discounting - Proposed | Long Term | 110.00 | BWR BBB-/Stable | BWR BB +/Stable | |||||||
| Grand Total | 110.00 | (Rupees One Hundred Ten Crores Only) | |||||||||
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 | |
|---|---|
|
Saurabh Agarwal Senior Rating Analyst Board : +91 11 2341 2232 saurabh.a@brickworkratings.com |
Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Lease Rental DiscountingProposed | 110.00 | _ | 110.00 | ||
| Total | 110.00 | 0.00 | 110.00 | |||
| TOTAL (Rupees One Hundred Ten Crores Only) | ||||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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