| Bansi Mall Management Company Private Limited | ||||
| Rating continues on 'Watch Developing' | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings rating on the long-term bank facility of Bansi Mall Management Company Private Limited (BMMCPL; part of the Future group) remains on ‘Rating Watch with Developing Implications’.
CRISIL Ratings had placed the rating on watch on October 13, 2020, following the company’s application for restructuring all its term loans under the Reserve Bank of India's (RBI's) guidelines issued on August 6, 2020, and the ‘Resolution Framework for Covid-19-related Stress’. The application was made on September 27, 2020. Under these conditions, the management has not honoured its debt repayment obligation due on September 30, 2020 and thereafter. The said repayments are part of the restructuring plan under consideration.
The one-time restructuring (OTR) application was invoked by the lenders on December 14, 2020, and the inter-creditor agreement was signed on January 6, 2021. The company has submitted the final resolution plan to the lenders and is awaiting approval; the plan needs to be implemented within six months of the invocation date of the OTR application. The plan proposes a moratorium on interest and principal payments due till February 2022, which will then be gradually repaid over two years thereafter. Further, the repayment schedule for the existing debt is also proposed to be extended by two years. This is in line with RBI guidelines.
As the application for restructuring was made before the due date of the debt repayment and the lenders have invoked the application, CRISIL Ratings is not treating the missed debt repayment as default. The rating action is in line with CRISIL Ratings' approach to default recognition for entities applying for restructuring under the RBI resolution framework as published in the criteria alert titled 'CRISIL Ratings' approach to Covid-19 related restructuring.'
CRISIL Ratings will continue to monitor developments on the sanctioning of the restructuring plan by the lenders and resolve the watch once the formal approval is received by the company.
The rating continues to take into account weakening of the credit profiles of tenants, which are also group companies, and a modest capital structure. These weaknesses are partially offset by the extensive track record of the promoters in managing malls, need-based financial support from group companies, and the personal guarantee from promoters for the rated loans. |
Analytical Approach CRISIL has taken a standalone view on BMMCPL, as there is no financial linkage with other group companies.
Unsecured loans of Rs 644 crore (as on March 31, 2020) from the promoters have been treated as neither debt nor equity as the loan is interest-free and subordinate to bank debt. The treatment is in line with the ‘Treatment of unsecured loans from promoters’ section in the criteria ‘CRISIL Ratings’ approach to financial ratios. |
Key Rating Drivers & Detailed Description Weaknesses
The company has leased out its entire leasable area to entities of the Future group: Future Lifestyle Fashions Ltd (FLFL; rated ‘CRISIL C/Watch Negative/CRISIL A4’ with rating on non-convertible debentures at ‘CRISIL D’) and Future Retail Ltd (FRL). The credit risk profiles of the tenants have weakened due to the impact of the pandemic, resulting in the company not receiving any rental income since March 2020 and rent waiver being given to tenants till February 2022. This has led to instability and mismatch in cash flow, which is expected to continue over the near term. The company had availed the six-month moratorium provided by the RBI and has now opted for one-time restructuring to tide over the mismatch. Its ability to recover the overdue rental income in a timely manner and formal sanctioning of the restructuring plan by lenders will remain key rating sensitivity factors.
The networth was a negative Rs 187 crore as on March 31, 2020. The company has been highly leveraged historically. However, as on March 31, 2020, the secured bank loan comprised only Rs 188 crore of the total debt, with the rest being unsecured loans extended by related parties. Furthermore, the company does not plan to contract any incremental external debt and intends to reduce overall debt.
As on March 31, 2020, loans and advances to group companies were Rs 197 crore, as against Rs 342-529 crore between fiscals 2014-2018. In line with the undertaking provided to CRISIL Ratings, the company will not be substantially increasing its exposure to group companies in the near term.
Strength
The promoters have been in the retail and mall management businesses for over 25 years through the Future group, which operates retail chains in 95 cities across India, covering about 160 lakh square foot (sq ft). The group has been supporting BMMCPL’s operations since it was acquired by Mr Kishore Biyani in 2006. There is high commitment from the promoters towards this mall, with personal guarantees given by Mr Kishore Biyani and Mr Vijay Biyani for the rated loans. There was Rs 644 crore of outstanding unsecured loan from promoters as of March 2020. Nevertheless, the extent and timeliness of future support will remain key rating sensitivity factors. |
Liquidity: Stretched Liquidity is expected to remain constrained over the medium term. The company has not received any rental income since the lockdown in March 2020 and does not expect to receive any rental income till February 2022 due to rent waiver given to the tenants. Even though the mall reopened on August 5, 2020, footfall is low. The company maintains a debt service reserve account (DSRA) of Rs 5.47 crore (equivalent to two months of debt servicing). However, the DSRA is not sufficient to meet debt obligation which fell due post expiry of the moratorium. The promoter group’s financial flexibility has also weakened. Consequently, the company has approached its lenders for restructuring of term loans. |
Rating Sensitivity factors Upward Factors
Downward Factors
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About the Company BMMCPL was incorporated in 2005 by the promoters of the Future group to develop and manage SOBO Central Mall (formerly Crossroad Mall) at Haji Ali, in Mumbai. It also acts as a special-purpose vehicle for other companies of the Future group. SOBO Central Mall has total leasable area of 1.5 lakh sq ft, which has been entirely rented out to clients such as Future Consumer Enterprises Ltd (FCEL), FRL and FLFL, with FCEL occupying only 1% of the leasable area. |
Key Financial Indicators
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| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||
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