Rating Rationale Malabar Commercial Plaza Pvt Ltd 8 Jan 2019
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of ₹. 250.00 Crores of Malabar Commercial Plaza Private Limited (MCPPL)
Particulars
Facility Amount (₹ Crs) Tenure Rating*
BWR BBB+ (SO# ) (Pronounced as BWR Triple B Plus) Fund Based 250.00 Long Term Outlook.Stable (Structured Obligation)
Total 250.00 INR Two Hundred Fifty Crores Only *Please refer to BWR website www.brickworkratings.com/ for definition of the ratings
Structured Obligation: # The suffix “SO” (Structured Obligation) indicates the credit enhancement based on the DSRA account maintenance for the amount equivalent to three months of principal and interest on the term loan and escrow mechanism under which all the present/future receivable to be routed through bank.
Rationale/Description of Key Rating Drivers/Rating sensitivities: BWR has essentially relied upon audited financials result up to FY 17, provisional financials of FY 18, projected financials, publicly available information and information/clarification provided by company’s management.
The rating takes comfort from promoters backed by Kerala based Malabar Group, revenue generation started from April 2018 due to COD of Phase I of the project achieved in March 2018 and Occupancy by area of 86% along with long term lease agreement. The rating strengths are partially offset by highly competitive nature of business, vacancy risk and project execution risk associated with Phase II of project which is yet to be constructed.
Going forward, renting out remaining area followed by achieving projected turnover, improving footfalls for sustaining the sales of tenants and generating sufficient cash flow for the timely repayment of debt obligation will be key ratings sensitivities.
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Description of Key Rating Drivers
● Credit Strengths:
Promoters backed by Kerala based Malabar Group: The company is promoted by Mr. Ahammed M P, the Chairman and Managing Director of Malabar Gold Private Limited and a promoter of Malabar group.
Revenue generation started from April 2018 due to COD of Phase I of the project achieved in March 2018. As on Aug 2018, company has reported revenue of rs. 21.16 Crs prisionally.
Area occupancy is at 86% along with long term lease agreement of 5 to 10 year and lock in period of 3 years. The occupancy by units is 66%
● Credit Risks:
Highly competitive nature of business considering many small established shopping centers are located near by area and projected to increase competition from the upcoming malls during next few years.
Vacancy risk: Since, the majority of the tenants are franchisee business owners of retails brands,with lower footfalls the vacancy risk is high as it impacted by business growth.
Project execution risk associated with Phase II of project which is yet to be constructed considering finalisation of the plan for the same is not yet done.
Analytical Approach 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 Outlook: Stable BWR believes the Malabar Commercial Plaza Pvt Ltd 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 revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
About the Company
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Malabar Commercial Plaza Private Limited was company incorporated in 2006 by Kerala based Malabar Group, for the purpose of developing Mall across the state. It is promoted by Malabar Group know for its companies Malabar Developers, Malabar Gold & Diamonds. The company operates a 6.40 lakh sq. ft. of mall named “Mall of Travancore” in Travancore Kerala. Mall of Travancore (MOT) consist of Phase I and Phase II. Phase I was launched on 23 Mar 18 and Phase II is expected to be operational by 2020. Plan for Phase II in not yet finalised as the same is proposed to completed without additional loans. Mall of Travancore is situated at NH Bypass, Chakkai Junction, close to International Airport of Trivandrum. Mall is spread across a vast expanse of 7 acres with built up area of 6.4 lakhs sq ft. It has around 50000 sq ft open area designed for people. It has capacity to occupy 150 Tenants in 3 floors out of which as on date it has 99+11 (at final stage) Tenants it means it has 73% occupancy ratio as on Sep 2018 based on showrooms and area wise 85% sqft area is occupied. The mall has over 1000+ Car parking with 1200 two wheelers spaces.It has 7 multiplex, 11 indoor rides, 9D theatre, 60+ video games Kiosks. Mall has a mix of top International, National and local well know brands based in Kerala.
Malabar Group is conglomerates with their flagship company named Malabar Gold Private Limited (CRISIL BBB+). The Malabar group is one of the leading jewellery retailers of India. It started operations in 1993 as a partnership firm of Mr. M P Ahammed and his team of entrepreneurs. The group opened its first showroom named Malabar Jewellers, in Calicut, Kerala, in 1993. It manufactures jewellery for both the domestic retail and export segments. The group has 44 entities (37 private limited companies and 7 LLPs) in India that retail gold jewellery. As on March 31, 2018, it has 96 gold jewellery showrooms in India and 215 globally. The group also has presence in the hospitality and real estate businesses.
Company Financial Performance During FY18 (Audited), company has reported revenue of Rs. 0.65 Crs. The COD of mall was achieved in March 2018. Hence, FY19 will be first full financial year for the business.
Key Financial Indicators Key Parameters Units 2017 2018
Result Type Audited Audited
Operating Revenue ₹ Cr 0.00 0.65
EBITDA ₹ Cr -0.17 -1.92
PAT ₹ Cr -0.30 -5.62
Tangible Net worth ₹ Cr 9.33 3.71
Rating History for the last three years
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S.No Facility Current Rating 2018 Rating History
Type Amount (₹ Crs) Rating 2017 2016 2015
BWR BBB+ (SO) 1 Fund Based Long Term 250.00 NA NA NA (Stable)
Total 250.00 ₹ Two Hundred Fifty Crores Only
Hyperlink/Reference to applicable Criteria
● General Criteria
● Approach to Financial Ratios
● Infrastructure Sector
For any other criteria obtain hyperlinks from website
Analytical Contacts Media
Bal Krishna Piparaiya [email protected] CGM-Ratings Relationship Contact [email protected] [email protected]
Phone: 1-860-425-2742
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About Brickwork Ratings Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI
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DISCLAIMER
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.
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