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

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 441.77 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 (27 Jan 2021)	Present
Fund Based	452.39	441.77	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
Grand Total	452.39	441.77	(Rupees Four Hundred Forty One Crores and Seventy 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) has reaffirmed the long term rating of OESPL Private Ltd. The ratings assigned to OESPL’s bank facilities continue to derive strength from its extensive experience of the promoters and management, escrow mechanism for servicing of debt and maintenance of debt service reserve account (DSRA), no project execution risk at present and sufficient cash flows of the project ‘Okaya Centre’ at Noida. However the rating also considers the limited track record of the company, project concentration in terms of single project, significant loans and advances extended to the group companies /related parties and high upcoming debt maturities and gearing of the company. The outlook continues to be stable on account of revenue visibility from agreements with tenants till extend upto FY30. Stable Outlook also reflects company’s overall debt protection metrics which are expected to remain in moderate range in the short-to-medium term due to the expectations that additional area of 70490 square feet will be leased out during FY23 which will increase the scale of operations moderately. Comfort is also drawn from the demonstrated track record of non-core asset monetisation to support the cash flows for debt servicing of other than LRD (lease rental discounting) loans.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience :
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, Black Berry, Tavant Technologies, EZOPS Technologies India Private Limited etc. The total Leasable Super Area in the tower is 7.67 lakhs square feet of which 96% is leased out as on 30th Dec 2021 which is further expected to increase upto 98% in FY23.
Adequate cash flows :
The company has moderate net cash flow cover of 1.15x in FY21 and same is expected to remain around 1.14x in FY 22, as per BWR's assessment. Average interest service coverage ratio and debt service coverage ratio for next two years as per BWR estimates is 1.22x and 1.02x which is in 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.
Non undertaking of Mining activity in FY22 :
The revenues in FY21 has reduced to Rs. 65.22 Cr. as compared to Rs. 72.63 Cr. in FY20 due to reduction in common area maintenance charges and reduction in income from mining to Nil in FY21 from Rs. 8.07 Cr. in FY20. The company has not undertaken mining and trade sales activity in FY22 and does not plan to undertake mining and trading activity in the next financial year as well. As per BWR's estimates, total operating income in FY22 is expected to remain at Rs. 52 Cr.
Significant intergroup transactions and underlying debt obligations :
There are loans and advances given to the group companies to the tune of Rs 486.24 crs as on 31 March 2021. Recovery of loans and advances from group companies via monetisation of underlying real estate assets is expected by OESPL’s management and it would be critical for the repayment of loans from non banking financial institutions worth Rs 112.86 crs. outstanding as on 6th Jan 2022 in OESPL’s books. According to management, the company has monetized Neemrana property of which Rs. 29 Cr. is still receivable in Q4 of FY22 which will be utilised to pay off the JM Financial loan. The company has also monetized a school plot in sector-134 Noida from which Rs. 18 Cr. will be paid to the JMF in Jan'22. Apart from that, assets worth Rs. 63.04 Cr. are available for monetisation under various group companies viz. Avighna Promoters and Developers Pvt. Ltd., Oxifresh Real Developers Pvt. Ltd., Terrestrial Software Pvt. Ltd. to meet JMF loan obligations on a timely basis. Timely recovery of these loans and advances from group companies will be a key rating monitorable and sensitivity over a period of time.
High gearing and Low current ratio :
The gearing (analysed) is high as reflected by 12.06 x as on 31 March 2021 due to low net worth base (analysed) of Rs 55.30 crs and high debt (analysed) of Rs 666.60 crs as on 31 March 2021. The current ratio of the company is low at 0.20 x in FY21 which has deteriorated from 0.49 x in FY20. Though this risk is offset by the fact that gearing (analysed) is expected to improve in FY 22 to 6.78 x due to unsecured loans infusion (considered quasi equity) by promoters to tune of Rs 13 crs in FY 22.

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 overall credit profile, viz. gearing, cash accruals, tangible net worth, debt protection metrics i.e ISCR and DSCR via debt reduction alongwith sustained improvement in revenues would be key positive rating drivers.

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

LIQUIDITY INDICATORS - Adequate

OESPL has a cash cover of 1.15x in FY21 against its debt service obligations and the same is expected around 1.14x in FY22. The company has generated cash surplus of Rs. 26.18 crs. in FY21 against Rs. 20.18 x in FY20. ISCR and DSCR for FY21 is at 1.05 x and 1.10 x respectively which is expected to be at 1.10 x and 1 x in FY22 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 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.

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 IT/ ITES hub and development 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 most 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, 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 31.03.2021.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	65.22	72.63
EBITDA	Rs.Crs.	40.81	43.07
PAT	Rs.Crs.	15.92	8.37
Tangible Net Worth	Rs.Crs.	35.65	19.78
Total Debt/Tangible Net Worth	Times	19.25	34.59
Current Ratio	Times	0.20	0.49

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 (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	441.77	BWR BBB-/Stable (Reaffirmation)	27Jan2021	BWR BBB- Stable (Reaffirmation)	27Jan2020	BWR BBB- Stable (Reaffirmation)	NA	NA
Grand Total		441.77	(Rupees Four Hundred Forty One Crores and Seventy 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
Arjun Gupta Ratings Analyst arjun.g@brickworkratings.com	Tanu Sharma Director - Ratings tanusharma@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	441.77	_	441.77
Total			441.77	0.00	441.77
TOTAL (Rupees Four Hundred Forty One Crores and Seventy Seven lakhs Only)

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