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Dhanlaxmi Infrastructure Pvt Ltd October 12, 2018 Ratings Facilities Amount Rating1 Rating Action (Rs. crore) Long-term Bank Facilities 131.27 CARE A-(SO); Stable Assigned [Single A Minus (Structured Obligation); Outlook: Stable] Total facilities 131.27 (Rs. One Hundred and Thirty One Crores and Twenty Seven Lakhs only) Details of instruments/facilities in Annexure-1

Detailed Rationale & Key Rating Drivers The rating assigned to the above Lease Rental Discounting (LRD) is based on the credit enhancement in the form of ring fencing of lease rentals of VR Surat Mall through an escrow mechanism supported by creation of DSRA. The rating derives strength from the company being part of VR group which is 23:77 joint venture between Xander and APG, favourable location of property with good brand recall aiding in increasing footfall on Y-o-Y basis, healthy occupancy of the mall with around 97% of area leased out to a diversified client base. The ratings strengths are partially offset by inherent lease agreement renewal & occupancy risk, revenue concentration from a single asset and vulnerability of cash flow to any decline in rentals and rise in interest rates. Going forward, ability to maintain healthy occupancy of the mall and timely collection of rentals along with occurrence of escalation would be the key rating sensitivities. Further exposure to group companies by availing additional debt would weigh negatively on credit profile of company.

Detailed description of the key rating drivers Key Rating Strengths Company being part of VR group, a JV between Xander and APG: DIPL is wholly owned subsidiary of Moribus Holding Pte Limited which is further held 100% by Virtuous Retail (VRSA). VRSA is 23:77 JV between Xander (through Virtuous Retail Pte Limited) and APG, a Dutch Pension Fund. The group at present operates 4 retail malls in with total leasable area of around 2 msf. The group has plans to construct additional retail malls in near to medium term.

Healthy occupancy of mall aided by favourable location VR Surat’s occupancy level has been improving on Y-o-Y basis and is 97% occupied, at present. The mall is occupied with diversified client base of 117 tenants with anchor tenants being Inox, Shoppers Stop, Zara, Westside, Marks and Spencer’s etc. The mall is situated at Dumas Road on Surat. The mall is located near to Dumas beach and on the way to Surat airport. Surat lacks the presence of good quality malls in the city and the VR mall is expected to stand benefit out of limited competition. Favourable location alongwith good brand recall value has helped in increasing occupancy and footfalls at the mall on Y-o-Y basis.

Structured Payment Mechanism: The servicing of debt is made out of the lease rentals being received from VR Surat Mall. For timely debt servicing, a structured payment mechanism through a escrow account with prescribed waterfall mechanism is put in place. The structure is backed by creation of DSRA of 2 months principle and interest. Company has also executed Power of attorney in the favour of trustee (acting on behalf of lender), in case of default.

Key Rating Weaknesses Inherent renewal risk for lease agreements: The company has entered into long term leases with tenants with lease period ranging from 5-9 years. The mall is exposed to lease renewal risk post expiry of lease. Further, the tenant can also leave the premises post lock-in period, however, would be required to give notice period of 4-6 months. Majority of the leases are expiring in FY23and timely renewal of these leases/ scouting of new tenants without rent loss will be critical from credit perspective.

High revenue concentration from a single asset: The company generates all its cash flows from a single asset (VR-Surat mall), leaving it exposed to risk of a market downturn in the area or new competing malls in that area. Further, the Surat City is largely known for textile and diamond establishment and any prolonged slowdown in these industries may also impact the mall profitability.

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

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Analytical approach: Standalone financial risk profile of company is considered along with credit enhancement in the form of presence of escrow mechanism and DSRA maintenance.

Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE's policy on Default Recognition Financial Ratios-Non Financial Sector

About the Company Dhanlaxmi Infrastructure P Limited (DIPL), wholly owned subsidiary of Moribus Holding Pte Limited, is part of Virtuous Retail (VR) group. The company operates retail mall ‘VR Surat’ with leasable area of 4.42lsf in Surat, Gujarat. The mall is operational since 2013 and has present occupancy level of around 97%.

Brief Financials (Rs Crore) Brief Financials FY17 (A) FY18 (A) Total operating income 58.72 53.06 PBILDT 28.84 25.35 PAT 7.89 3.76 Overall gearing (times) 0.72 0.99 Interest coverage (times) 2.80 2.18

Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable 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: Himanshu Jain Tel: 080-46625528 Mobile: 8123793395 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.

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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 Fund-based - LT-Lease - - March 2025 131.27 CARE A- (SO); rental discounting/ Rent Stable Receivables Financial

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-Lease LT 131.27 CARE A- - - - - rental discounting/ Rent (SO); Receivables Financial Stable

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

CHENNAI PUNE Mr. V Pradeep Kumar Mr.Pratim Banerjee Unit No. O-509/C, Spencer Plaza, 5th Floor, 9th Floor, Pride Kumar Senate, No. 769, , - 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]

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