Rating Rationale Ganjam Hospitality Private Limited 17 February 2017 Brickwork Ratings reaffirms BWR BB- for the Bank Loan Facilities of Ganjam Hospitality Private Limited Particulars Facility Rated Amount (Rs. Crs) Tenure Rating* Previous Present# Previous Present BWR BB- BWR BB- (Outlook: Fund Based 7.50 9.55 Long Term (Outlook: Stable) Stable) (Reaffirmed) Rs. 9.55 Crores (INR Nine Crores and Fifty Five Total 7.50 Lakhs Only) ^ Please refer to BWR website www.brickworkratings.com/ for definition of the ratings #Annexure I provide bank-wise details of facilities Ratings Reaffirmed Rationale/Description of Key Rating Drivers/Rating sensitivities: The rating reaffirmation of Ganjam Hospitality Private Limited (GHPL) takes into consideration the commencement of operations of the recently constructed Hotel Dwara in Dakshina Kannada, Karnataka and support derived from the strong parentage of the Bangalore based Ganjam Group of companies. The rating continues to factor GHPL’s experienced management, the promoters’ experience of over a decade in successfully managing Ganjam Kalyana Mantapa in Basavangudi, Bangalore and strategic location of the hotel with promising scope for occupancy levels. However, the rating remains constrained by the limited track record of operations of GHPL, average financial profile of the company, small net worth and slightly strained liquidity position, dependence on the promoters’ infusion of funds to service its debt obligations, capital intensive and seasonal nature of the hospitality industry and intense competition in this business. Going forward, the Company’s ability to achieve optimum utilization of added capacities, successfully increase its scale of operations and achieve profits as projected, improve its capital structure and ensure timely debt servicing will be the key rating sensitivities. 1 th 17 Feb 2017 Rating Outlook: Stable BWR believes that Ganjam Hospitality 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. 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 Ganjam Hospitality Private Limited (GHPL), established in 2013 in Bangalore, is engaged in hospitality business. GHPL intends to build hotels in key pilgrimage destinations across South India viz., Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. The Company proposes to establish budget 3 Star category hotels in temple towns/cities like Palani, Guruvayur, Sringeri, Shrirangam, Subramanya, Thiruvananthapuram, Kollur, Thrissur. GHPL completed construction of its Hotel Dwara and commenced its commercial operations in February 2016. It is located 1.5 km from Subramanya, near the Kukke Subramanya Temple, Dakshina Kannada, Karnataka. GHPL has chosen Subramanya as the first pilgrimage destination to establish its hotel in view of the high tourist footfalls attracted almost yearlong. The hotel will follow the Own & Operate model, wherein GHPL shall own the hotel and recruit staff to manage the hotel. GHPL is part of the Bangalore based Ganjam Group, which was founded in 1889 with the objective of manufacturing world class jewelry. GANJAM is one of the reputed regional jewelry houses. The other group concerns of Ganjam are Ganjam Nagappa & Son Private Limited, Electronic Relays (India) Private Limited, Ganjam Nagappa and Son HUF, Ganjam Jewellers Private Limited and Ganjam Nagappa Sons. The Company is managed by Directors- Mr. G.S.Eswar, Mr. G.B. Umesh, Mr. G E Kumar and Mr. G.U. Dushyath. Financial Performance GHPL commenced its commercial operations in February 2016. The company reported operating income of Rs 0.18 Crs and loss of Rs 0.45 Crs in FY 16. Tangible Networth was Rs 2.03 Crores as of March 31 2016. On a provisional basis, GHPL has achieved income of Rs. 0.55 Crs for 10M FY 17. 2 th 17 Feb 2017 Rating History for the last three years (including withdrawn/suspended ratings) Sl. Facility Current Rating Rating Rating Rating No. (Year 2017) History History History Type Amount Rating 2016 2015 2014 (Rs Crs) BWR BB- BWR BB- Not Reviewed (Outlook: Not Fund Long 1 9.55 (Reaffirmation) 30 December Stable) Rated Based Term (Outlook: Stable) 2016 30 March 2015 Hyperlink/Reference to applicable Criteria General Criteria Approach to Financial Ratios Service Sector Analytical Contacts Media [email protected] Rajee R GM- Ratings Relationship Contact [email protected] [email protected] Phone: 1-860-425-2742 3 th 17 Feb 2017 Ganjam Hospitality Private Limited Bank Facilities Annexure I Bank Facility Tenure Amount Rated (Rs. Crs) Oriental Bank of Commerce Term Loan I Long 7.50 Term Loan II Term 2.05 Total Fund Based (FB) 9.55 For print and digital media The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. 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