| Celebi Airport Services India Private Limited | ||||||
| Rating outlook revised to 'Stable'; Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities of Celebi Airport Services India Private Limited (CASI) to 'Stable' from 'Negative' while reaffirming the rating at 'CRISIL BBB’. The short term rating has been reaffirmed at ‘CRISIL A3+’.
The revision in outlook reflects an expected improvement in the business risk profile of CASI, backed by revival in the airline sector in fiscal 2023, post turbulence in the aviation industry over fiscals 2021 and 2022. The aviation industry was severely hit by the Covid-19 pandemic, which led to travel restrictions and a slump in demand. CASI has an established market position and is one of the few players, engaged in ground-handling operations in India. Overall operating performance has revived in fiscal 2022, with estimated revenue of Rs 200 crore and operating margin over 8.0%. Scale and profitability are likely to reach pre-pandemic levels in fiscal 2023.
The ratings also factor in the stable financial risk profile, despite the large debt-funded capital expenditure of Rs 125 crore planned in fiscal 2023. Equity infusion of around Rs 34.4 crore, by the parent in the first quarter of fiscal 2023, should support the financial risk profile. Timely funding, completion and offtake of capex, along with no cost overruns, remain critical. Liquidity is also aided by the large, unencumbered cash and bank balance of around Rs 20 crore as on March 31, 2022.
The ratings continue to reflect the strong support from the parent, Çelebi Hava Servisi Anonim Sirketi (Celebi Hava) and the comfortable financial risk profile of CASI. These strengths are partially offset by the moderate cash flow and susceptibility to regulatory changes. |
Analytical Approach CRISIL Ratings has calculated the base rating for the parent, using the corporate methodology criteria of S&P Global Ratings (S&P). It has mapped the S&P criteria with its criteria, and applied its notch-up criteria to arrive at the ratings of CASI. |
Key Rating Drivers & Detailed Description Strengths: Strong operational, marketing, and financial support from the parent: CASI is a wholly owned subsidiary of Celebi Hava, which is the largest ground-handling and cargo management services provider, based in Turkey. Longstanding association of the parent with several foreign airlines, has helped CASI secure and sustain relationships with international carriers. The parent will continue to extend marketing, operational and financial support.
Comfortable financial risk profile: Over the past few fiscals, CASI has undertaken sizeable debt-funded capital expenditure (capex) towards asset addition, primarily at the Bengaluru, Hyderabad, Kannur and Kochi airports. However, the financial risk profile was comfortable, with gearing below 0.90 time for last five fiscals ending March 31, 2022. The ratio could moderate around 1.0 times as on March 31, 2023, on account of large capex of Rs 125 crore. Debt protection metrics are also adequate, marked by interest coverage and net cash accrual to adjusted debt ratios of over 2.0 times and 0.20 time, respectively, in fiscal 2022.
Weaknesses: Susceptibility to regulatory changes: Government policies play a significant role in the ground-handling industry. The Airports Economic Regulatory Authority sets the regulations and tariffs. Regulatory response to the pandemic will continue to impact business operations of CASI. The current guidelines permit only three players to manage ground handling in each airport, till a certain number of passengers annually. Any increase in competition may exert further pressure on the margin.
Moderate operating cash flow: CASI derives around 70% of its revenue from international airlines and 30% from domestic players. While international flight operations were suspended for the past two years, passenger inflow was supported by government initiatives such as the Temporary Air Bubbles arrangement and Vande Bharat Mission. Cash flows however were partially supported by moderate recovery in domestic air traffic volume. International flights have resumed from March 27, 2022, and hence, CRISIL ratings expects operating cashflow to reach pre-Covid levels during fiscal 2023. Cash flows will be further driven by timely commencement of operations in new airport at Goa. Hence, operating cash flow should comfortably cover the incremental working capital and debt obligation over the medium term. |
Liquidity: Adequate Current liquidity is sufficient to meet the near-term debt obligation. However, recovery in cash flows depends on improvement in air passenger traffic volume and sustenance of the business model of CASI. Though net cash accrual was stretched against the large debt obligation in fiscal 2022, debt has been serviced via cushion in bank limit and the large, unencumbered cash balance. Net cash accrual of Rs 30-45 crore should comfortably cover the debt obligation of Rs 25-27 crore per annum in the near term. Bank limit of Rs 22.5 crore was unutilized for the 24 months ending March 31, 2022. The company maintains a debt service reserve account (DSRA) and escrow accounts with banks. Unencumbered cash balance was estimated at Rs 20 crore as on March 31, 2022. |
Outlook: Stable CRISIL Ratings believes CASI will continue to benefit from its established market position in ground-handling operations at airports and the expected revival in the airline industry. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Incorporated in 2009, CASI is a ground-handling operator at the Delhi, Ahmedabad, Bengaluru, Kochi, Hyderabad and Kannur airports. It is a wholly owned subsidiary of Çelebi Hava, which provides ground-handling and cargo management services in Turkey. |
About the Parent Çelebi Ground Handling Inc. was originally founded on February 1, 1958, at Ankara Esenboga Airport by Ali Cavit Çelebioglu. It is the first privately-owned ground handling services company in the Turkish aviation industry. The company operates ground-handling at 24 airports in Turkey, which together account for almost 90% of the domestic air traffic. Çelebi Ground Handling made its initial public offering in 1996 and its shares are traded on the Istanbul Stock Exchange under the symbol ‘CLEBI’. |
Key Financial Indicators
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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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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 Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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This Annexure has been updated on 31-May-2022 in line with the lender-wise facility details as on 17-Aug-2021 received from the rated entity.
Criteria Details
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