Press Release

Monsoon Palace Resorts Private Limited February 05, 2019 Ratings Amount Facilities Rating1 Rating Action (Rs. crore) CARE BBB-; Stable Long-term bank facilities 4.80 (Triple B Minus; Outlook: Reaffirmed Stable) 4.80 Total (Rupees Four crore and eighty lakh only) Details of facilities in Annexure-1

Detailed Rationale & Key rating Drivers The rating of Monsoon Palace Resorts Private Limited (MPRPL) continues to derive strength from experienced management along with location advantage being present in city which is tourist hub for Indian and International visitors and its tie-up with Whyndam World Wide Inc., (WWW), USA for operations, marketing and management under ‘Ramada’ brand. The rating, further, continues to derive strength from comfortable Occupancy Rate (OR) as well as Average Room Rent (ARR), moderate profitability margins, comfortable solvency position and liquidity position. These strengths, however, continues to offset on account of revenue concentration being a single hotel property and its presence in the highly fragmented and competitive hotel industry. The ability of the company to further increase its scale of operations while maintaining optimum occupancy rate along with improvement in profitability and better management of working capital would be the key rating sensitivities.

Detailed description of the key rating drivers Key Rating Strengths Favorable Location and franchisee of renowned Ramada Group The resort property is situated in Udaipur City which is the major tourist hub for Indian as well as International visitors. The major tourist attractions in the city of Udaipur are , City Palace Complex, Bagore Ki Haveli, Ambrai Ghat, and many more temples which are an hour distance from the hotel. Further, in recent times, Udaipur has also become a key MICE (Meetings, Incentives, Conferences and Exhibitions) destination catering to large incentive tours, corporate residential meetings and weddings. In addition, its franchise agreement with WWW for ‘Ramada’ brands provides brand recognition to hotel of MRHPL with access to global reservation systems which further add in occupancies.

Moderate profitability margins PBILDT margin of the company stood comfortable at 29.81% in FY18, however, declined by 138 bps over FY17 mainly due to higher selling expenses. Further, due to deferred tax provision in FY18, the company has reported net loss of Rs.1.25 crore as against net profit of Rs.0.63 crore in FY17. Further, GCA level of the company has improved from Rs.4.22 crore in FY17 to Rs.4.52 crore in FY18.

Comfortable OR as well as ARR During FY18, OR has marginally declined from 83.84% in FY17 to 80.90% and ARR has declined from Rs.6044 in FY17 to Rs.5950 owing to growing competition. Further, in seasonal period from October 2017 to February 2018, OR stood at 80.63% as against 86.12% in October 2016 to February 2017. In the same time period, ARR declined to Rs.6900 from Rs.7251. With marginally decline in ARR and OR, Total Operating Income (TOI) of the company has also marginally declined by 5.55% in FY18 over previous year.

Comfortable solvency position as well as liquidity profile The capital structure of MPRPL has witnessed continuous improvement in past three financial years ended FY18 on account of scheduled repayment of term loan and stood comfortable marked by an overall gearing of 0.20 times as on March 31, 2018. Further, debt coverage indicators also stood comfortable with Total debt to GCA at 1.28 times as on March 31, 2018 along with interest coverage ratio of 5.77 times in FY18.

1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.

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During FY18, the operating cycle stood negative owing to higher creditors as on balance sheet date. The debtors are related to tours & travel agents and payment are received within one month. Further, cash and bank balance stood at Rs.0.26 crore as on March 31, 2018.

Key Rating Weaknesses Revenue concentration leading to modest scale of operations The scale of operation of the company stood modest at Rs.19.74 in FY18 on account of revenue generated from single hotel.

Cyclical and Competitive nature of the industry with dependence on tourist arrivals Indian hotel industry is highly fragmented in nature with presence of large number of organized and unorganized players spread across all regions. The hospitality industry is highly cyclical in nature and sensitive to any untoward events such as slowdown in the economy. Further, the operation of the hotel depends on arrival of the tourist.

Analytical approach: Standalone

Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Rating Methodology – Hotel Industry Financial ratios – Non-Financial Sector

About the Company Udaipur (Rajasthan) based MPRPL was incorporated as Aravali Hills Resort Private Limited in 1993 by Taldar family. During February 2007, the name of company was changed to its present name of MPRPL with an objective to start a resort in Udaipur. The resort started operations from FY10. Further, in May 2012, MPRPL got the franchisee of “Ramada brand” of Whyndam World Wide Inc, (WWW) USA from its Ahmadabad based master franchisee, Unique Mercantile Private Limited (UMIPL). With it, UMIPL took 45.05% shareholding in the company and remaining is held by Taldar family. However, in FY16, UMIPL has transferred its license to MPRPL which it got under the International License and Training Agreement to provide MPRPL the franchisee of “Ramada brand” of Whyndam World Wide Inc, USA. The resort has 72 rooms which includes 9 suites, 31 premium rooms, 16 super deluxe rooms and 16 deluxe rooms. The resort also has two restaurants as well as a lounge bar which can accommodate around 250 people and a banquet hall having capacity of 150 people. Other amenities in the resort include spa facility, swimming pool, bar & transportation facilities and helipad. (Rs. in crore) Brief Financials (Rs. crore) FY17 (A) FY18 (A) Total operating income 20.09 19.74 PBILDT 6.52 5.89 PAT 0.63 -1.25 Overall gearing (times) 0.37 0.20 Interest coverage (times) 3.02 5.77

Status of non-cooperation with previous CRA: Not Applicable

Any other information: None

Rating History for last three years: Please refer Annexure-2

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.

Analyst Contact Name: Mr Abhishek Jain Tel: 0141-4020213/14 Mobile: +91 9251265875 Email: [email protected]

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About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.

Disclaimer CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.

Annexure-1: Details of Instruments/Facilities Name of the Date of Coupon Maturity Size of the Rating assigned Instrument Issuance Rate Date Issue along with Rating (Rs. crore) Outlook Non-fund-based - LT- - - - 0.50 CARE BBB-; Stable Bank Guarantees Fund-based - LT-Term - - January 2021 4.30 CARE BBB-; Stable Loan

Annexure-2: Rating History of last three years Sr. Name of the Current Ratings Rating history No. Instrument/Bank Type Amount Rating Date(s) & Date(s) & Date(s) & Date(s) & Facilities Outstanding Rating(s) Rating(s) Rating(s) Rating(s) (Rs. crore) assigned in assigned in assigned in assigned in 2018-2019 2017-2018 2016-2017 2015-2016 1. Term Loan-Long Term LT - - - - 1)Withdrawn 1)CARE BB+ (03-Feb-17) (27-Aug-15)

2. Non-fund-based - LT- LT 0.50 CARE - 1)CARE BBB-; 1)CARE BBB-; 1)CARE BB+ Bank Guarantees BBB-; Stable Stable (27-Aug-15) Stable (28-Mar-18) (03-Feb-17)

3. Fund-based - LT-Term LT 4.30 CARE - 1)CARE BBB-; 1)CARE BBB-; 1)CARE BB+ Loan BBB-; Stable Stable (27-Aug-15) Stable (28-Mar-18) (03-Feb-17)

4. Fund-based - LT-Cash LT - - - 1)Withdrawn 1)CARE BBB-; 1)CARE BB+ Credit (28-Mar-18) Stable (27-Aug-15) (03-Feb-17)

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