Detailed Rationale CRISIL Ratings has renewed and reaffirmed its ‘CCR A/Stable’ corporate credit rating on Mira Bhayandar Municipal Corporation (MBMC).
The rating continues to reflect MBMC’s strong operating performance, healthy financial risk profile and robust economic base, driven by proximity to Mumbai. These strengths are partially offset by modest collection efficiency, average service arrangements and high dependence on grants from the government of Maharashtra in view of abolition of local body tax (LBT). |
Key Rating Drivers & Detailed Description Strengths: Strong operating performance and healthy financial risk profile The revenue receipts have grown at compound annual growth rate (CAGR) of 10% over the five fiscals through 2021, supported by regular receipt of goods and services tax (GST) compensation and growth in tax and non-tax income. The operating surplus has remained healthy at over 20% per fiscal except for fiscal 2021, which was impacted by the Covid-19 pandemic. Total debt is over Rs 250 crore as on March 31, 2021, and is likely to reduce over the medium term with regular repayment. The corporation has healthy liquidity of Rs 166 crore as on November 30, 2021.
Robust economic base driven by proximity to Mumbai Proximity to Mumbai and Thane, and relatively low cost of living have resulted in the area being gradually developed as an important residential locality. Hence, there is potential for increase in property tax and other user charges.
Weaknesses Moderate collection efficiency and average service arrangements Arrangements are average and cost recovery modest for services such as water supply, solid waste management, and sewerage due to low charges. Collection efficiency of property tax, a major revenue source, was comparatively moderate at 76% in fiscal 2021.
High dependence on state government grants MBMC derived around 80% of its revenue from its own sources in the past, the share of which has gradually come down because of abolition of LBT and introduction of GST. For fiscal 2021, the corporation received GST compensation of Rs 265 crore (~30% of revenue). MBMC has been receiving timely and adequate GST compensation since July 2017, but this will remain a key monitorable. |
Liquidity: Adequate Liquidity is driven by healthy operating surplus of over 20% expected over fiscals 2022 and 2023, which will be sufficient to meet term debt obligation of around Rs 48 crore per year in fiscals 2022 and 2023, and partly fund capital expenditure (capex). Though liquidity was impacted in fiscal 2021, the corporation has built it up to Rs 166 crore as of November 2021. |
Outlook: Stable CRISIL Ratings believes MBMC will maintain its strong operating performance and robust financial risk profile over the medium term, supported by healthy operating surplus. |
Rating Sensitivity Factors Upward Factors
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About the Corporation MBMC was established on February 28, 2002, under the Maharashtra Municipal Corporation (MMC) Act. Before 2002, it was classified as a municipal council. The corporation has jurisdiction over 79.40 square kilometre and provides a range of civic services to around 809,000 people (as per 2011 census).
Under the MMC Act, MBMC’s obligatory duties include water supply, sewerage treatment and disposal, construction of roads and bridges, primary education, hospitals, and development and maintenance of primary infrastructure in Mira-Bhayandar. It also provides discretionary services, including transportation and slum improvement. |
Key Financial Indicators
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Any other information: Not applicable |
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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. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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