Rating Rationale

Entertainment City Limited

​10 Jan 2019

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of ₹. 707.91 Crs. of
Entertainment City Limited.

Particulars

Amount (₹ Crs) Rating*

Facility Tenure
Previous Present Previous Present

BWR BBB+(SO) BWR BBB+(SO)

(Pronounced as BWR (Pronounced as BWR Triple B
Fund Long
800.00 707.91 Triple B Plus) Plus) (Structured Obligation
based Term
(Structured Obligation) Outlook:Stable
Outlook:Stable [Reaffirmation]

Total 800.00 707.91 INR Seven hundred Seven Crores and Ninety One Lakhs Only
*Please refer to BWR website ​www.brickworkratings.com/​ for definition of the ratings

Ratings: Reaffirmed

Rationale/Description of Key Rating Drivers/Rating sensitivities:

BWR has principally relied upon the audited financial results of the company upto FY18, projected
financial upto FY20, publicly available information and information/ clarifications provided by the
company.

The rating reflects ECL’s stable and robust accruals, high level of occupancy levels, stable footfalls for
The Great India Mall(TGIP) and Garden Galleria Mall and considerable increase in footfall for water park
in the current year, locational advantage, good reputation in the Delhi NCR Region and escrow
mechanism. The company has also maintained DSRA for one quarter of debt obligation as a backup to
any shortfall. The rating is, however, constrained by declining profitability margins, and above average
leverage levels.

​10 Jan 2019

Description of Key Rating Drivers

Credit Strengths:
● Experienced Promoters:- ​Majority owner of Entertainment City Ltd.(ECL) is International
Amusement Ltd(IAL), the promoter of Appu Ghar(The first amusement park in India). the rating
also draws comfort from size and scale of the project with the existing tenant profile.
● Diversified Revenue Sources and presence of escrow account:- Entertainment City has various
income sources which include, rental income from Garden Galleria, The Great India Mall,
Decathlon(Building No - AV-01B), Kidzania(Building No - AV 109), Common area maintenance
charges from currently occupied tenants and sublessees, income from Amusement Park and other
income from activation signages and kiosks, parking charges etc. All the revenue generated from
various resources has to be routed through an escrow account maintained by the bank.
● Locational advantage:- ​Project is located opposite to Noida Sector - 18 market which is a prime
commercial and retail hub. Project has access to the Delhi Metro Sector 18 and Botanical Garden
metro station, providing the site excellent connectivity and accessibility to Noida and all parts of
NCR. Also the amusement park industry enjoys high entry barriers with the kind of investment
required to set up the new one.
● Robust cash flows with expected increase in with upcoming Tramline and INOX:- ​At
present the company has cash flows enough to meet the debt obligation in the near future. The
cash flow is expected to go up as Trampoline is expected to become operational in November
2019. INOX is expected to become operational in April 2020 which will enhance the cash flows
of FY 2020 and FY 2021.

Credit Risks:
● Decline in profitability margins:- ​Profitability margins of the company declined during FY18
due to sharp increase in SG&A expenses which is a key area of concern.
● Above average leverage level:- ​The company has outstanding long term liability of more than
Rs 700.00 Crs against a tangible net worth of Rs. 363.39 Crs as on 31st March 2018. The
company has given loans and advances of Rs.141 crs. to related parties ,which if reduced from
TNW would further increase the leverage level. Generating moderate levels of cash flows to meet
the financials obligation and operational expenses at the same time will be the key rating
sensitivity.

​10 Jan 2019

Analytical Approach

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria
detailed below (hyperlinks provided at the end of this rationale).

Rating Outlook: Stable

BWR believes the ​Entertainment City Limited ​business risk profile will be maintained over the medium
term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. The rating
outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement. The
rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than
expected figures.

About the Company

ECL, incorporated in February 2002, is a subsidiary of International Amusement Ltd (IAL). ECL operates
Entertainment City at Noida in Uttar Pradesh. The company was allotted 147.48 acres of land in 2002 on
a 90-year lease for developing an amusement-cum-entertainment park and for other commercial purposes.

ECL developed the project in three phases and has - 1.72 million square feet of Floor Space Index (FSI)
available for development after phase 3. The first phase saw development of a shopping mall, The Great
India Place, and the Teen Zone of the amusement park named Worlds of Wonder, covering 44 acres.

The second phase covered a shopping mall, Gardens Galleria, and completion of the amusement and
waterpark, on 84 acres of land. The third phase included a Trampoline and 10-screen Inox complex
envisaged to be operational during the end of year 2019 and mid of 2020 respectively.

The strategic and day to day management of the Company lies with Managing Directors, Mr. Monny
Vijeshwar and Mr. Rana Rajesh Kumar Gangahar under the guidance of Shri Gian Vijeshwar, Chairman
of the Company and founder of Appu Ghar, Delhi.

Company Financial Performance

The company reported operating income of Rs. 178.12 Crs with a net profit of Rs. 0.11 Cr in FY18
against an operating income of Rs. 180.53 Crs with a net profit of Rs. 2.08 Crs in FY17. As per the
management, the company has already cloaked ~Rs 126.00 Crs of revenue during first half of FY19.

​10 Jan 2019

Rating History for the last three years

Instrument
S.No Current Rating ( 2019) Rating History
/Facility

Amount 2017
Type Rating 2018 2016
(₹ Crs) Sep

Fund Based

BWR BBB+(SO)
Stable
(Pronounced as BWR BBB+
Long
1. LRD 707.91 BWR Triple B NA (SO) NA
Term
Plus(Structured Stable
Obligation))
(Reaffirmation)

₹ Seven Hundred Seven Crores and Ninety One

Total 707.91
Lakhs Only

Status of non-cooperation with previous CRA (if applicable)- NA

Key Financial Indicators

Key Parameters Units 2017 2018

Result Type Audited Audited

Operating Revenue Rs Crs 180.53 178.12

EBITDA Rs Crs. 76.99 45.93

PAT Rs. Crs 2.08 0.11

Tangible Net worth Rs. Crs 363.15 363.39

Total Debt/Tangible Net worth Times 1.81 2.01

​10 Jan 2019

Hyperlink/Reference to applicable Criteria

● General Criteria

● Approach to Financial Ratios

● Service Sector

● Short Term Debt

For any other criteria obtain hyperlinks from website

Analytical Contacts Media

RK Sharma media@brickworkratings.com
Sr. Director-Ratings
Relationship Contact
analyst@brickworkratings.com bd@brickworkratings.com

Phone: 1-860-425-2742

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Note on complexity levels of the rated instrument:

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at​ ​www.brickworkratings.com/download/ComplexityLevels.pdf​ ​ Investors queries can be sent ​to ​info@brickworkratings.com​.

About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers
Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI
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​10 Jan 2019

DISCLAIMER

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine
the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without
any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any
such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or
hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents.
BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

​10 Jan 2019