OESPL Private Limited( Formerly Known as Okaya Energy Systems Pvt.Ltd.)

Brickwork Ratings removes the ratings from the Issuer Not Cooperating category and upgrades the long-term ratings for the Bank Loan Facilities of Rs. 416.44 Crs. of OESPL Private Limited( Formerly Known as Okaya Energy Systems Pvt.Ltd.)

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (12 Jan 2023)	Present
Fund Based	441.77	416.44	Long Term	BWR BB+ /Stable ISSUER NOT COOPERATING* /Downgrade	BWR BBB - /Stable removal from ISSUER NOT COOPERATING* category/Upgraded
Grand Total	441.77	416.44	(Rupees Four Hundred Sixteen Crores and Forty Four 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
Note: *Issuer did not cooperate; based on best available information.

RATING ACTION / OUTLOOK

The ratings of OESPL Pvt. Ltd. (or 'the company') were downgraded and migrated to the Issuer Not Cooperating (INC) category in January 2023 owing to the non-receipt of complete information to enable Brickwork Ratings (BWR) to carry out a surveillance review. The ratings have now been removed from the INC category and upgraded based on the review carried out by BWR.

The upgrade in the ratings also factors in the extensive experience of the promoters, maintenance of the debt service reserve account (DSRA), and escrow account by the company, high occupancy, sound customer profile, and adequate cash flows. The ratings are, however, constrained due to the limited track record of OESPL, Significant intergroup transactions and underlying debt obligations, high gearing, and low current ratio.

BWR believes that OESPL Private Limited'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.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the Promoters :
Although the company does not have a long track record but promoter Mr. Rajesh Gupta who is the Founder, Chairman & Managing Director of the OESPL has an experience of over 27 years in the business. Mr. Gupta was associated with Microtek International Private Limited from inception i.e. 1986 till 2002. Thereafter, he promoted Okaya Power Private Limited. He headed operations from 2002 till 2017. He was part of the Board of Directors in Microtek and Okaya for more than a decade.
Maintenance of debt service reserve account (DSRA) and escrow account :
The lease rentals and common area maintenance charges, parking charges, security deposits, electricity charges of the project ‘Okaya Centre’ is routed through an escrow account maintained with the bank. The withdrawal from account is as per the predefined waterfall mechanism giving priority to debt obligations and last to operational expenses. OESPL also maintains a DSRA equivalent to three months interest and principal.
High occupancy and sound customer profile :
OESPL started its leasing operation in September 2014 and has been leasing space to large Information Technology companies such as Tata Consultancy Services, Kronos Solutions India Private Limited, Tata Projects, BlackBerry, Tavant Technologies, EZOPS Technologies India Private Limited, etc. The total Leasable Super Area in the tower is 7.67 lakhs square feet of which 100% is leased out as on 31st Dec 2022.
Adequate cash flows :
The company has a moderate net cash flow cover of 1.15x in FY22 and the same is expected to remain around 1.16x in FY23, as per BWR's assessment. The average interest service coverage ratio and debt service coverage ratio for the next two years as per BWR estimates are 1.32x and 1.24x which is in the moderate range.

Credit Risks:

Limited track record of OESPL :
Okaya Centre is the first executed project at company level and there have not been any other projects executed in the past. Group companies of OESPL will be executing two projects of 5 Lakh sq. ft. and 10 Lakh sq. ft. in the future. The 5 Lakh sq. ft. project will be executed by Surya Kiran Info Pvt. Ltd. and the latter by four group companies namely Camila Realty Ventures Pvt. Ltd., Grobey Developers Pvt. Ltd., Million Mills Buildwell Pvt. Ltd., Mogan Developers Pvt. Ltd. Both of these projects are in the very early stage of execution.
Significant intergroup transactions and underlying debt obligations :
There are loans and advances given to the group companies to the tune of Rs 299.72 Crs. as on 31 March 2022. Recovery of loans and advances from group companies via monetization of underlying real estate assets is expected by OESPL’s management and it would be critical for the repayment of loans. Timely recovery of these loans and advances from group companies will be a key rating monitorable and sensitive over a period of time.
High gearing and Low current ratio :
The gearing is high as reflected by 10.89 x as on 31 March 2022 due to a low net worth base of Rs 51.36 crs and high debt of Rs 559.11 crs as on 31 March 2022. The current ratio of the company is low at 0.27x in FY22 which has improved from 0.20 x in FY21.

ANALYTICAL APPROACH - Standalone

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

RATING SENSITIVITIES

Positive: The ability of the company to improve its Gearing, Cash accruals, Tangible net worth, Debt protection metrics i.e ISCR and DSCR, Current ratio, and manage liquidity would be key rating sensitivities.

Negative: Any material deterioration in the debt protection metrics from the current levels, or further deterioration in the revenue levels will be a negative factor.

LIQUIDITY INDICATORS - Adequate

OESPL has a cash cover of 1.04x in FY22 against its debt service obligations and the same is expected around 1.16 x in FY23. The company generated a cash surplus of Rs. 23.97 Crs. in FY22. ISCR and DSCR for FY22 are at 1.37x and 1.04x respectively which are expected to be at 1.61x and 1.16 x in FY23 as per the BWR's estimates. Going forward, we expect the liquidity of the company to remain adequate in the short and medium term on account of adequate cash cover, maintenance of the DSRA account, transactions being routed through an escrow account maintained with the bank, predefined waterfall mechanism giving priority to debt obligations with the JM Financial loan being repaid by monetizing the company's assets. The liquidity also gets support from above 90% floor occupancy which is expected to increase in the next financial year. The group companies of OESPL are Franklin Infratech Pvt Ltd, Mogan Developers Pvt. Ltd., Oxifresh Real Developers Pvt. Ltd., Scion Real Estates Pvt. Ltd., Terrestrial Software Pvt. Ltd., Surya Kiran Info Pvt. Ltd., and Unitech Hi-Tech Projects Pvt. Ltd. There is no operational linkage between the group company and the parent company. OESPL Pvt. Ltd. has given loans and advances of Rs. 191.48 crores as of December 31, 2022, to its group companies.

ABOUT THE ENTITY

OESPL PRIVATE LIMITED (Earlier known as Okaya Energy Systems Private Limited) is a private limited Company, incorporated on 26th May 2005. OESPL has been maintaining the IT/ ITES hub and developing of IT/ ITES infrastructure, as per the norms and guidelines of Noida. In the year 2014, OESPL started its leasing operation and thereafter, the building has been leased to India’s top IT Companies such as Tata Consultancy Services, Kronos Solutions, Tavant Technologies, EZOPS Technologies, etc. Mr. Rajesh Gupta and his wife Mrs. Saroj Gupta are promoters of the company holding 80% and 20% shares respectively. At present, the directors of the company are Mr. Rajesh Gupta, his son Mr. Deepanshu Gupta and Mr. Mahesh Kumar who has been appointed as an additional director on 31.03.2022. The company was involved in the Trading of Almonds and Copper till FY21, which the company discontinued in FY22 and is not planning to continue in the future.

The group companies of OESPL are Franklin Infratech Pvt Ltd, Mogan Developers Pvt. Ltd., Oxifresh Real Developers Pvt. Ltd., Scion Real Estates Pvt. Ltd., Terrestrial Software Pvt. Ltd., Surya Kiran Info Pvt. Ltd., and Unitech Hi-Tech Projects Pvt. Ltd. The group companies are not doing any other business except acquiring real estate assets. As informed by the management, the group companies are profitable as on date. None of the group companies has a client relationship for the purpose of this LRD transaction.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 21-22 (Audited)	FY 20-21 (Audited)
Operating Revenue	Rs.Crs.	55.83	65.22
EBITDA	Rs.Crs.	35.63	40.81
PAT	Rs.Crs.	15.70	15.92
Tangible Net Worth	Rs.Crs.	51.36	35.65
Total Debt/TNW	Times	10.89	19.25
Current Ratio	Times	0.27	0.20

KEY COVENANTS OF THE FACILITY RATED

OESPL has to maintain debt service reserve account (DSRA) equivalent to three months interest and principal.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2023)			2023 (History)		2022		2021		2020
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	416.44	BWR BBB-/Stable (removal from ISSUER NOT COOPERATING* category/Upgraded)	12Jan2023	BWR BB+ Stable (ISSUER NOT COOPERATING* /Downgrade)	10Jan2022	BWR BBB- Stable (Reaffirmation)	27Jan2021	BWR BBB- Stable (Reaffirmation)	27Jan2020	BWR BBB- Stable (Reaffirmation)
Grand Total		416.44	(Rupees Four Hundred Sixteen Crores and Forty Four 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
Pallav Kumar Goel Rating Analyst pallavkumar.g@brickworkratings.com	Ravi Rashmi Dhar Associate Director - Ratings ravi.d@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

OESPL Private Limited( Formerly Known as Okaya Energy Systems 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	Yes Bank	Lease Rental Discounting - Sanctioned	416.44	_	416.44
Total			416.44	0.00	416.44
TOTAL (Rupees Four Hundred Sixteen Crores and Forty Four lakhs Only)

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