Rating Rationale
July 31, 2024 | Mumbai
Suyog Gurbaxani Funicular Ropeways Limited
'CRISIL BBB/Stable' assigned to Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.35 Crore
Long Term RatingCRISIL BBB/Stable (Assigned)
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1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has assigned its ‘CRISIL BBB/Stable’ rating to the long-term bank facility of Suyog Gurbaxani Funicular Ropeways Limited (SGFRL).

 

The rating reflects the strategic location of the ropeway, experience of, and need-based support from, the promoters. Rating also factors in moderate debt service coverage ratio (DSCR). These strengths are partially offset by susceptibility to fluctuations in toll collection and interest rates.

Analytical Approach

CRISIL Ratings has treated unsecured loans of Rs.61.50 Crores as on 31st March 2024 as debt

Key Rating Drivers & Detailed Description

Strengths:

  • Strategic location of the ropeway and dynamic pricing model to aid cash flow: More than 1.5 lakh tourists visit Saptashrungi shrine each year. Ropeway provides easy access to shrine for tourists. The Saptashrungi project primarily has a Funicular Ropeway System consisting of 2 Air Conditioner funicular vehicles/coaches which can carry 60 passengers/devotees at a time. The shopping complex, forming a part of the project, provides the facility of more than 50 shops providing various buying avenues to the visitors including food shops. The parking facility built in the vicinity of the funicular ropeway, has a capacity of more than 150 vehicles including four wheelers and two wheelers. Lastly, the company also has constructed a hotel which houses 28 guest rooms & dormitories, a multi cuisine restaurant and a coffee shop. Besides providing an experience, this ropeway reduces travel time significantly, which should support traffic volume.

 

  • Experience of the promoters and availability of need-based support: SGFRL enjoys the strong support of promoters which has experience of commissioning and maintaining of furnicular ropeway. This has enabled the promoters to gain experience of funicular ropeway management in different geographies and varied terrains. The promoters’ track record strengthens the credit risk profile of SGFRL. Promoters expected to provide need-based operational and funding support to the company.

 

  • Comfortable DSCR: Average DSCR is expected to be around 1.1-1.3 times over the tenure of the debt driven by repayment of debt and recovery in toll collection factoring provisions for the major maintenance reserve (MMR). Being a furnicular ropeway, the company is expected to have comparatively lower major maintenance requirement. The debt service reserve account (DSRA) equivalent to one quarter of debt obligation is maintained in the form of fixed deposits, which supports liquidity of the company. Furthermore, Promoters expected to provide need-based operational and funding support to the company, albeit protection metrics for the project stretch are expected to be self-sufficient over the tenure of the debt.

 

Weaknesses:

  • Susceptibility to fluctuations in toll collection and interest: Toll collection is the only source of revenue for SGFRL and depends on toll rate and traffic. Traffic growth is susceptible to seasonal variations in no of visitors and economic downturns. As devotees are the major portion of traffic on the project stretch, traffic volume remains vulnerable to economic slowdown. Furthermore, changes in government policy or unforeseen circumstances, such as the Covid-19 pandemic, can adversely impact cash flow and debt protection metrics. Although cash flow will be able to partly absorb the impact of fluctuations in interest rates and toll collection, these remain rating sensitivity factors.

 

  • Stretched Receivables: SGFRL has done EPC contract work for Haji Malang Gad, Tal-Ambernath, Dist-Thane and have already booked revenue of Rs.42 Crores in FY 24. Company expecting another Rs.20-25 Crores in FY 25 and FY 26. The inflow of receivables will add cushion to the liquidity where in, any delay in receipt will lead to further stretch in receivables. Overall inflow of EPC contract income will remain key monitorable.

Liquidity: Adequate

Cash and cash equivalents were healthy at around Rs 11 lacs as of 31st March 2024, and the DSCR is expected to remain healthy at around 1.1-1.3 times over the medium term. Liquidity is further supported by a corporate guarantee provided by Suyog Telematics Limited (CRISIL BBB/Stable/CRISIL A3+), which is likely to provide any need-based support in case of any exigencies. Promoters will also provide timely funding support in case of any exigency or in case of any shortfall. Also, the project maintains a DSRA equivalent to three months of principal and interest obligations.

Outlook: Stable

Debt protection metrics will remain stable over the medium term, supported by moderate growth in toll collection. The company also benefits from the need-based support of its promoters.

Rating Sensitivity factors

Upward factors:

  • Sustenance of healthy traffic leading to average DSCR above 1.5 levels considering EPC contract income
  • Sustenance of financial risk profile with reduction in debt levels and adequate cash surplus

 

Downward factors:

  • Lower toll collection and higher-than-expected operating expenses resulting in average DSCR falling below 1.1 times on a sustained basis.
  • Delay in support or change in stance of support from the promoters, or change in the credit risk profile of the parent

About the Company

SGFRL, formerly known as Suyog Gurbaxani Funicular Ropeways Private Limited, was incorporated in 2010. The company has been awarded the work to design, engineer, procure, finance, construct, operate and maintain Funicular Ropeway on Build, Operate & Transfer (BOT) basis at Saptashrungi Gad, Vani, Kalwan, Nashik, Maharashtra, and to charge and collect the toll fees as per concession agreement (dated 12 January, 2010), executed with Government of Maharashtra, Public Works Department. The concession period of the project is 15 November, 2009 to 14 June, 2030. The company has completed the project and has started collection of toll with effect from 03 July, 2018. The project is spread over an area of 10 acres, which houses the funicular ropeway system, a shopping mall, a parking facility and a hotel facility. SGFRL’s registered office is located in Mumbai, Maharashtra.

 

SGFRL is promoted by Mr. Rajkumar Gurbaxani (Whole Time Director), Mr. Omprakash Gurbaxani (Non-Executive Non-Independent Director) and Mr. Shivshankar Lature (Non-Executive Non-Independent Director).

Key Financial Indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

63.12

17.83

Reported profit after tax

Rs crore

05.59

0.01

PAT margins

%

8.86

1.76

Adjusted Debt/Adjusted Net worth

Times

5.51

6.47

Interest coverage

Times

3.04

2.45

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

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Annexure - Details of Instrument(s)

ISIN Name of the instrument Date of
Allotment		 Coupon
Rate (%)		 Maturity
Date		 Issue size
(Rs. Crore)		 Complexity
Level		 Rating assigned
with outlook
NA Overdraft Facility NA NA NA 2 NA CRISIL BBB/Stable
NA Term Loan NA NA Mar-2028 10.56 NA CRISIL BBB/Stable
NA Term Loan NA NA Mar-2028 20 NA CRISIL BBB/Stable
 NA Proposed Long Term Bank Loan Facility NA NA NA 2.44 NA CRISIL BBB/Stable
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 35.0 CRISIL BBB/Stable   --   --   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Overdraft Facility 2 Axis Bank Limited CRISIL BBB/Stable
Proposed Long Term Bank Loan Facility 2.44 Not Applicable CRISIL BBB/Stable
Term Loan 10.56 Axis Bank Limited CRISIL BBB/Stable
Term Loan 20 Axis Finance Limited CRISIL BBB/Stable
Criteria Details
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
The Infrastructure Sector Its Unique Rating Drivers
Rating Criteria for Toll Road Projects

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