Press Release

D.B. Malls Private Limited

April 03, 2019

Ratings Amount Facilities Rating1 Rating Action (Rs. crore) CARE A-; Stable Revised from CARE BBB; 194.10 (reduced from 215.80) Long-term Bank Facilities [A Minus; Outlook: Stable

Stable] [Triple B ; Outlook: Stable] 194.10 Total Facilities (Rs. One hundred ninety four crore and ten lakhs only) Details of instruments/facilities in Annexure-1

Detailed Rationale & Key Rating Drivers

The revision in the rating assigned to the bank facilities of D. B. Malls Pvt. Ltd. (DBM) takes into account consistently high occupancy levels of the mall and reduced lease renewal risk as demonstrated by lease renewals in FY19 at significantly higher rates. The rating also derives strength from strong parentage of Dainik Bhaskar (DB) group, strategic location of D. B. City Mall and a well-diversified and reputed clientele base.

The rating is, however tempered by leveraged capital structure and support extended to group companies.

Ability to maintain high occupancy levels; rollover of tenants falling due in FY 20, increase in debt levels and any further of support to group companies remain the key rating sensitivities.

Detailed description of the key rating drivers Key Rating Strengths Management Risk D B Malls Private Limited (DBM) is a part of Dainik Bhaskar (DB) Group which is well known for its association with print media through D B Corp Ltd (DBCL; rated CARE AAA/Stable/ A1+) which is one of the leading print media companies in . The promoters of DBCL have been in the print business for almost five decades, since the first edition of DB was launched in 1958. Over the years the group has not only become the dominating publishing house in a newspaper title in the northern states of the country but also has entered into various ventures viz. FM radio, textiles, power generation, Cable TV, Real Estate, etc.

Favourable location of the mall with stable footfalls DB City Mall is the first and biggest mall in the city of (Madhya Pradesh). The mall is located at the heart of the city at Hoshangabad Road, Arera Hills which is well connected to the airport and railway station both within 15 mins drive. Also the upcoming Bhopal metro will have a stop right in front of the mall which augurs well for future footfalls. The mall has a total built-up area of 13.5 lakh square feet and leasable area of 8.43 lakh square feet spread across retail outlets, commercial offices and a 5 star Courtyard by Marriott Hotel. The mall’s annual footfalls have increased at a CAGR of 4% in the last 5 years while the annual mall sales have grown at a CAGR of 6% in the last 5 years from FY14 to FY18.

High Occupancy and Lease tie ups with diversified and well reputed brands DBM had tied up leasing for ~96% (~8.05 lsf) of the total leasable area of 8.43 lsf as on March 2018. The property is leased out to around 181 retail clients and 20 corporate tenants significantly diversifying the risk of termination of the lease agreements at the same time. Some of the top brands include , Marks and Spencer, Cinepolis, Westside etc in retail and Tata Consultancy Services, Tata Communications, Reliance Jio, Bhopal’s Passport Seva Kendra , and Pricewaterhouse Coopers in corporate.

Lease renewal risk; however the mall has demonstrated renewal of lease with significantly higher rates

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Roughly 60% of the mall revenue comes from rentals; CAM income is ~20-22% while revenue share from various tenants is ~5-6%.The Company is moving from longer tenure lease agreements of 9 years to shorter term agreements of around 3-5 years for vanilla brands. This gives flexibility in choosing tenants and increasing rents. In YTD FY19 ~ 82814 sqft area was renewed. As of FY18 the top 10 tenants accounted for 22 percent of total revenue showing granularity in income. A sizeable chunk(20% of total leased space) is getting renewed in FY20.

Key Rating Weaknesses

Leveraged capital structure albeit improvement in debt servicing indicators DBM enjoys PBILDT margin in the range of 65% - 75%. As of 9MFY19, PBILDT margin was 69% (70% in FY18) while the PAT margin improved to 23% in 9MFY19 (14% in FY18). The Interest coverage improved to 3.11x in 9MFY19 in FY18 and 2.25x in FY17. The overall gearing improved significantly to 5.23x as on March 31, 2018, however continues to be high.

Corporate guarantee extended to Deligent Hotels Corporation Pvt Ltd and support to other group companies As on March 31, 2018; DBM has extended corporate guarantee to the tune of Rs.31.30 crore for loans availed by Deligent Hotels Corporation Pvt Ltd (DHC), a group company. DHC is a five star hotel and is an integrated part of the D B City Mall. DHC began operations during FY13.The average occupancy in the last five years FY15-FY18 has remained 77.61%. The ARR in the same period has grown by 13%. However, DHC continued to report losses in FY18.

In FY18, DBM increased investment in Optionally Fully Convertible Debentures of Writers and Publishers Pvt. Ltd. (a group company of DB group) by Rs. 12.03 crores. The total investment in the OFCD is Rs.32.63 crores as at FY18. Any further support to group companies remain critical to credit profile of DBM.

Liquidity Analysis: The company receives rental on monthly basis and term loan repayments are quarterly.The Company has cash and bank balances of Rs. 16 crores as at FY18.

Analytical approach: Standalone

Applicable Criteria

Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Financial ratios – Non-Financial Sector

About the Company

D B Malls Private Limited (DBM) incorporated in June 2006, is a part of Dainik Bhaskar (DB) Group with the promoters holding 100% equity stake. DBM owns and operates DB City Mall, which is the first and biggest mall in the city of Bhopal (Madhya Pradesh, India) which started operations in August 2010. The mall has a total built-up area of 13.5 lakh square feet and leasable area of 8.54 lakh square feet spread across retail outlets, commercial offices and a five star hotel. The mall houses over 219 Indian and international brands/outlets and is located in the heart of the city and is well connected to the airport, railway station, etc and enjoys good adjoining infrastructure. Brief Financials (Rs. crore) FY17 (A) FY18 (A) Total operating income 78.77 83.28 PBILDT 56.71 58.62 PAT 37.40 12.07 Overall gearing (times) 7.80 5.23 Interest coverage (times) 2.25 2.91 A: Audited

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

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

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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. Pulkit Agarwal Tel: 022-67543505 Email: [email protected]

**For detailed Rationale Report and subscription information, please contact us at www.careratings.com

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 (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 Issuance Coupon Maturity Size of the Issue Rating assigned Instrument Rate Date (Rs. crore) along with Rating Outlook Fund-based - LT- - - FY 26 194.10 CARE A-; Stable Term 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. Fund-based - LT-Term LT 194.10 CARE A-; - 1)CARE BBB; 1)CARE BBB- - Loan Stable Stable (13-Apr-16) (22-Mar-18) 2)CARE BBB; Stable (10-Apr-17)

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CONTACT Head Office

Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: + 91 98190 09839 Cell: + 91 98196 98985 E-mail: [email protected] E-mail: [email protected]

Ms. Rashmi Narvankar Mr. Saikat Roy Cell: + 91 99675 70636 Cell: + 91 98209 98779 E-mail: [email protected] E-mail: [email protected] CARE Ratings Limited (Formerly known as Credit Analysis & Research Ltd.) Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 Tel: +91-22-6754 3456 | Fax: +91-22-6754 3457 | E-mail: [email protected]

AHMEDABAD Mr. Deepak Prajapati JAIPUR 32, Titanium, Prahaladnagar Corporate Road, Mr. Nikhil Soni Satellite, Ahmedabad - 380 015 304, Pashupati Akshat Heights, Plot No. D-91, Cell: +91-9099028864 Madho Singh Road, Near Collectorate Circle, Tel: +91-79-4026 5656 Bani Park, Jaipur - 302 016. E-mail: [email protected] Cell: +91 – 95490 33222 Tel: +91-141-402 0213 / 14 BENGALURU E-mail: [email protected] Mr. V Pradeep Kumar Unit No. 1101-1102, 11th Floor, Prestige Meridian II, KOLKATA No. 30, M.G. Road, - 560 001. Ms. Priti Agarwal Cell: +91 98407 54521 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) Tel: +91-80-4115 0445, 4165 4529 10A, Shakespeare Sarani, Kolkata - 700 071. Email: [email protected] Cell: +91-98319 67110 Tel: +91-33- 4018 1600 CHANDIGARH E-mail: [email protected] Mr. Anand Jha SCF No. 54-55, NEW First Floor, Phase 11, Ms. Swati Agrawal Sector 65, Mohali - 160062 13th Floor, E-1 Block, Videocon Tower, Chandigarh Jhandewalan Extension, New Delhi - 110 055. Cell: +91 85111-53511/99251-42264 Cell: +91-98117 45677 Tel: +91- 0172-490-4000/01 Tel: +91-11-4533 3200 Email: [email protected] E-mail: [email protected]

CHENNAI PUNE Mr. V Pradeep Kumar Mr.Pratim Banerjee Unit No. O-509/C, , 5th Floor, 9th Floor, Pride Kumar Senate, No. 769, Anna Salai, - 600 002. Plot No. 970, Bhamburda, Senapati Bapat Road, Cell: +91 98407 54521 Shivaji Nagar, Pune - 411 015. Tel: +91-44-2849 7812 / 0811 Cell: +91-98361 07331 Email: [email protected] Tel: +91-20- 4000 9000 E-mail: [email protected] COIMBATORE Mr. V Pradeep Kumar CIN - L67190MH1993PLC071691 T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore - 641 037. Tel: +91-422-4332399 / 4502399 Email: [email protected]

HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: [email protected] 4 CARE Ratings Limited