| Malur Logistics and Industrial Parks Private Limited | ||||
| 'CRISIL A/Stable' assigned to Bank Debt | ||||
| Rating Action | ||||
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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 A/Stable’ rating to the long-term bank loan facility of Malur Logistics And Industrial Parks Private Limited (MLIPPL; a part of Allcargo group). MLIPPL owns 19.3 lakh sq. ft. of warehouse project situated at Malur, Bengaluru.
The ratings reflect MLIPPL’s steady cash flow, supported by advantageous location of the warehouses and good clientele, and established track record of the sponsors’ group. These strengths are partially offset by moderate debt protection metrics and susceptibility to volatility in interest rates. |
Analytical Approach For arriving at its ratings, CRISIL Ratings has taken a standalone view on the company. |
Key Rating Drivers & Detailed Description Strengths Stable cash flows on account of full occupancy and significant under construction area leased MLIPPL has leased out 100% of total operational leasable area of 16 lakh sq. ft. as on January 31, 2022. The warehouses are located in Malur, Bengaluru and Grade A built-to-suit warehouses with 24x7 security with CCTV cameras, RCC roads, 24x7 electricity and water supply, truck terminals, loading/un-loading zones, fire fighting systems etc. The warehouses are ideally located near Andhra Pradesh and Tamil Nadu border to capitalise on opportunities in southern India as it is within 50 km of many major cities, railway stations and an international airport. Furthermore, the assets are leased to tenants Flipkart, Decathlon and ACCI who occupy 100% of the area, which is typical of warehouse assets.
MLIPPL is constructing further 3.3 lakh sq. ft. of warehouses out of which around 90% is already leased. MLIPPL starts construction once an Agreement to Lease (ATL) is in place. As the warehouses are pre-engineered buildings (PEBs), construction is completed within 8-10 months and construction will be undertaken using loans from promoters, implementation risk is low.
Long term leases ensure low renewal risk The warehouses have a well secured lease structure with lease period of 9-25 years ensuring very low renewal risk. Additionally, two of the tenants Decathlon and ACCI have lock-in periods of 7-9 years which ensure low vacancy risk as well. The weighted average lease expiry (WALE) for the asset is around 19 years which is significantly high. Further, no renewal is coming up till fiscal 2030.
Established track record of sponsor Allcargo Logistics Ltd. has significant experience in construction of warehouses with more than 350 acres under development. The warehouses are Grade A built-to-suit warehouses and compliant with safety and environmental standards. Further, Allcargo Logistics Ltd. has entered into an agreement with BRE Asia Urban Holdings Limited, for transfer of the warehousing asset, which are subject to completion of conditions precedent as per agreement.
Weaknesses Moderate debt protection metrics Average debt service coverage ratio (DSCR) is expected to remain moderate at more than 1.3 times over the tenure of debt due to debt to lease rental ratio of around 6 times. Further, there is a debt cap of Rs 270 crore for the operational area of 16 lakh sq. ft. Debt against to be constructed area of 3.3 lakh sq. ft. is expected to be in the range of additional Rs 50-60 crores and will maintain the debt to lease rental ratio of around 6 times.
Susceptibility to volatility of interest rates MLIPPL’s cash outflow will be susceptible to volatility in interest rates as these are floating in nature. Although cash inflows are expected to be sufficient to absorb the fluctuations in interest rates, any upward revision in interest rates would remain a key monitorable. |
Liquidity: Strong Liquidity is strong with DSCR expected at around 1.3 times for fiscal 2023 and will remain at more than 1.3 times throughout the tenure of the debt. Cash accrual should sufficiently cover the yearly debt servicing obligation of Rs 26-40 crore for the three fiscals through 2025. Liquidity is also supported by cushion available in the form of DSRA of 3 months which is created. |
Outlook: Stable CRISIL Ratings believes MLIPPL’s business risk profile will be supported by stable cash flow, backed by existing lease contracts with reputed companies. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company MLIPPL was incorporated in 2018 and owns and operates a warehousing asset in Malur, Bengaluru. The asset is owned by Allcargo Logistics Ltd (ACL). The Company has also issued Optionally Convertible Debentures (OCDs) to BRE Asia Urban Holdings Limited. It has a leaseable area of around 19.3 lakh sq. ft. out of which 16 lakh sq. ft. is constructed and leased and 3.3 lakh sq. ft. is to be constructed. The warehouse has 3 tenants namely Flipkart, Decathlon and ACCI and occupancy of constructed portion is 100% and to be constructed portion is 90%. |
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 11-Mar-2022 in line with the lender-wise facility details as on 11-Mar-2022 received from the rated entity.
Criteria Details
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