| Future Parking Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL A- / Stable / CRISIL A2+ ' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A-/Stable/CRISIL A2+’ ratings on the bank facilities of Future Parking Pvt Ltd (FPPL).
The ratings continue to reflect the strong operational, financial and management support from the parent, Apollo Hospitals Enterprise Ltd (AHEL; ‘CRISIL AA+/Stable/CRISIL A1+’). FPPL remains strategically important to the flagship Chennai hospital, and AHEL has also provided a letter of comfort for its bank guarantee.
The ratings also factor in the moderate business risk profile, marked by modest albeit stable revenue and benefits from a favorable location. The ratings also benefit from the strong association with AHEL. These strengths are partially offset by the small scale of operations and the modest financial risk profile. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has applied its parent notch-up framework to factor in the extent of distress support available from AHEL. Furthermore, based on CRISIL’s revised criteria, the 1% non-cumulative redeemable preference shares of Rs 21 crore issued by AHEL has been treated as 50% equity and 50% debt because of high residual maturity of more than 10 years. |
Key Rating Drivers & Detailed Description Strengths:
AHEL operates the physical health check department of its Wallace Garden hospital from the commercial complex of FPPL and hence, the company remains strategically important to its parent. Furthermore, the multi-level car parking (MLCP) facility is critical for visitors to the hospital. Hence, AHEL is likely to continue to extend support to the company on account of its strong business and commercial association. AHEL has full management control of FPPL, with all members of the latter’s board being from the Apollo group. Additionally, AHEL has sought approval from the Corporation of Chennai (CoC), for increasing its shareholding in FPPL to 100%, from the existing 49% and the same is awaited.
FPPL runs a seven-storey MLCP facility and a four-storey commercial complex in the vicinity of AHEL’s flagship hospital at Wallace Garden, Chennai. The facility is being operated on a land parcel received from CoC under a design-build-operate-transfer (DBOT) agreement for a concession period of 20 years (till September 2030). The commercial complex has been leased to AHEL for carrying out its hospital operations at a predetermined lease rental with an escalation of 15% after every three years. This ensures a stable source of revenue, contributing to over 85% of the total sales. In fiscal 2023, revenue from rental income is expected to increase by ~15% yoy in line with the lease agreement. However, operating revenue during fiscal 2023 is expected to be in line with previous fiscal due to one-time insurance income recorded in previous fiscal, and the company is expected to declare higher than expected losses of ~Rs 2.5 cr in current fiscal, due to loss on insurance claim of Rs 0.8 cr.
Weaknesses:
FPPL only has an MLCP facility and commercial building in Chennai. Presence at a single location make the company more susceptible to disruptions arising from local factors. Assured annual payment to CoC, of around Rs 0.7-0.8 crore (with an escalation of 7.2% per annum), may further strain the cash flow during any such disruption. However, the commercial complex, which generates steady lease rental income from AHEL, mitigates this risk.
Revenue and profitability are low; also. net losses may persist mainly due to high depreciation. The tangible networth is expected to become negative in the current fiscal and over the medium term, due to continuing losses at the net level. Net cash accruals expected to be modest due to higher losses in fiscal 2023 but expected to improve over the medium term. The company did not have any external debt as on December 31, 2022 as operations are supported by preference shares and an interest-free long-term deposit from AHEL. |
Liquidity: Adequate Cash accrual expected to be modest in the near term, though external debt obligation is nil. Liquidity is aided by cash and equivalents of ~Rs 2 crore as on Dec 31, 2022, and an unutilized overdraft facility of Rs 1 crore. There are no capital expenditure plans over the near to medium term. |
Outlook Stable CRISIL Ratings believes operations of FPPL will remain stable, and AHEL will continue to provide operational and financial support. |
Rating Sensitivity factors Upward factor:
Downward factors:
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About the Company In March 2009, CoC awarded the consortium of AHEL and Marg Ltd, a project to develop an MLCP on a DBOT basis, for a concession period of 20 years, including two years of construction. CoC also provided the right to develop a commercial complex along with the MLCP facility, for the entire DBOT period.
FFPL was set up as a 49:51 joint venture between AHEL and Marg Ltd to develop a fully automated MLCP project at Wallace Garden. The MLCP is a seven-storey structure located close to AHEL’s hospital. The project, which commenced in January 2016, accommodates 250 four-wheelers and 325 two-wheelers. The facility largely caters to visitors to the hospital. Furthermore, as per the concession agreement with the CoC, FPPL was awarded the right to develop a commercial complex of 35,000 square foot along with the MLCP facility. The commercial block was handed over to AHEL, which set up a health checkup facility with operations commencing from April 2016. |
Key Financial Indicators*
*CRISIL Adjusted Numbers |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
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 04-Apr-2023 in line with the lender-wise facility details as on 17-Aug-2021 received from the rated entity
Criteria Details
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