Press Release

Elpro International Limited

April 02, 2024

Facilities/Instruments Amount (₹ crore) Rating1 Rating Action

Long Term Bank Facilities 400.00 CARE BBB+; Stable Assigned

Details of instruments/facilities in Annexure-1.

Rationale and key rating drivers

The ratings assigned to the bank facilities of Elpro International Limited (EIL) derives strength from established promoter group
with presence across diverse business verticals, strategic location of the properties, diversified tenant profile comprising reputed
tenants & healthy occupancy level along with improving operational performance, comfortable capital structure marked by
satisfactory total debt to rentals and presence of escrow mechanism and presence of Debt Service Reserve Account (DSRA).

The rating, however, is constrained by risk of non-renewal of expiring lease contracts given relatively short track record of the
retail mall with major renewals being due in FY25 and cyclicality associated with real estate industry with competition from other
developers.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors
• Improvement in occupancy level above 90% in the retail mall while maintaining average lease rentals and Cash Coverage
Ratio (CCR) above 1.50x on a sustained basis.
• Renewal of rental agreement with the lessees of the mall

Negative factors
• Significant delay in receipt of lease rentals on continuous basis.
• Non-renewal of expiring lease contracts leading to moderation in occupancy (< 75%) and cash coverage indicators.
• Any further substantial support given to group companies.

Analytical approach: Standalone

Outlook: Stable
Given healthy occupancy in all the properties (business park and the retail mall) over the years with tenant profile comprising of
reputed tenants, it is expected that the company will maintain occupancy at satisfactory level with timely rent escalation as
anticipated such that the financial risk metrics continue to remain comfortable.

Detailed description of the key rating drivers:

Key strengths
Established promoter group with presence across diverse business verticals: EIL promoted by the Dabriwala family has
been in the real estate development industry for more than two decades. The first generation of the family owned Raniganj coal
mines till its nationalization in the 60s. The second generation (Mr. R.K. Dabriwala) ventured into manufacturing industry and
entered into tie ups with General Electric (GE) to form – EIL (which was primarily into manufacturing of power distribution
equipment’s like surge arrestors, varistors, etc) and with Fenner to form - International Conveyors Limited (CARE BBB; Stable/
CARE A3+) which is engaged in manufacturing of conveyor belts for underground mining.
The third generation of the family, Mr. Surbhit Dabriwala, in the late 90s divested the company’s operational profile by entering
into real estate development industry and also entered into a joint venture (JV) with MetLife for insurance business with around
30% stake which was later diluted when PNB became a part of the JV over the years. The promoter group also runs a school –
Elpro International School under its charitable trust, Hind Charity Trust.

Strategic location of the properties: The company owns 40 acres of land in the Pimpri-Chinchwad area (automotive hub) of
Pune. In its first phase of development in 2007, the company completed its maiden project ‘Elpro Vision Exchange’. Subsequently,
the company completed another three projects ‘Elpro Metropolis’, ‘Elpro Business Bay’ and ‘1Elpro Park’ collectively referred as
One Elpro Park (OEP). It comprises of industrial sheds along with the state-of-the-art infrastructure catering mainly to automotive
engineering companies for setting up their R&D facilities at this business park. In June 2019, the company commissioned its mall

1
Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

1 CARE Ratings Ltd.

 Press Release

– ‘Elpro City Square Mall’, located in the heart of the Pimpri Chinchwad Municipal Corporation (PCMC) spread across 8 lakh square
feet with parking facility for more than 4000 vehicles. The mall accommodates more than 100 outlets of brands across different
categories. The mall also houses 8 reputed fine dining chains along with a multiplex, an entertainment zone and a first of its kind
auditorium-in-a-mall with a seating capacity of over 650 people. The properties are well connected with the International Airport,
Pune’s business centres and residential areas in the vicinity.

Diversified tenant profile comprising reputed tenants & healthy occupancy level along with improving financial
performance: OEP spread across leasable area of 5.6 lakh sq.ft has been operational for more than 2 decades with almost full
occupancy. The tenant profile of the OEP includes clients like Varroc Engineering Limited, WILO Mather and Platt Pumps Private
Limited (rated CARE A-; Stable/ CARE A2+), etc.
Further, almost 40% of the area has been leased out to Hind Charity Trust (rating revised from CARE BBB-: Stable to CARE BB+;
Stable (INC) vide PR dated August 03, 2023) which is managed by the same promoter group. All the lease contracts stipulate
rent escalation clause of 5% every year or 15% every third year.

The retail mall is spread across leasable area of 5.3 lakh sq.ft out of which the company has sold 1.7 lakh sq. ft. Occupancy of
the mall has witnessed steady improvement from 68% as on Mar 2021 to 85% as on Dec 2023. Out of the total leased area in
the mall of 3.14 lakh sq.ft, around 50% is leased out to top 10 tenants as on Dec 31, 2023. The tenant profile of the mall
comprises reputed tenants like PVR Inox, Shoppers Stop Limited, Lifestyle, Marks & Spencer, Puma, Raymond, etc; with a rent
escalation clause of 15% every third year stipulated in the lease agreement. The steady increase in occupancy levels has reflected
in the improved total operating income of the company which has recorded a y-o-y growth of ~37% in FY23 to Rs.99 crores vis-
à-vis Rs.72 crores in FY22. The average rental (Minimum Guarantee only) currently stands at Rs.90.86 per sq. ft per month for
the mall and Rs.41.88 per sq. ft per month for the OEP. Apart from minimum guarantee rentals, all the lease contracts of the mall
stipulate rent escalation clause of 15% every third year coupled with revenue share component as well. Revenue share from
occupants of the mall has shown steady improvement from Rs.1.01 crore in FY21 to Rs.3.68 crore in FY23. Majority of the lease
renewal contracts of the mall fall due in FY25. Renewal of such agreements remain one of the key rating sensitivities.

Comfortable capital structure marked by satisfactory total debt to rentals: The capital structure of the company is
comfortable marked by overall gearing of 0.10x as on March 31, 2023 as against 0.05x as on March 31, 2022 and 0.94x as on
March 31, 2022.
The company sold 21,34,02,479 shares of PNB MetLife India Insurance Company Limited for cash consideration of Rs. 1323.10
crores at a realised profit of Rs. 1099.71 crores in FY22. As a result, the company’s shareholding in PNB MetLife reduced
significantly from 11.42% in FY21 to 1% in FY22. The company utilized those by investing in blue chip listed equities. As on Dec
31, 2023, the market value of such investments stood at Rs.810 crores. Moreover, the company has extended loans & advances
to its wholly owned subsidiary (incorporated in April 2022 – “Ultra Sigma Private Limited”) amounting to Rs.167 crores as on Mar
31, 2023 (~Rs.83 crores as on Dec 2023). As on December 31, 2023, the total market value of EIL’s investment portfolio stood
at Rs. 1375.86 crores.
The moderation in the overall gearing as on Mar 31, 2023 was owing to availment of loan-against-securities (LAS). In October
2023, the company has availed lease rental discounting (LRD) loan of Rs.145 crores and a DLOD of Rs.55 crores from Kotak
Mahindra Bank against the rentals derived from the mall.
The company has also availed a DLOD of Rs.135 crores from HDFC Bank against the rentals of the OEP. As on date, the current
outstanding of the same stands at Rs.1 crore.
The company has an outstanding LAS facility of Rs. 189 crores as on Dec 31, 2023. The security cover for all LAS facilities is 2x.
The company has pledged listed equity investments having market value of Rs.584 crores out of total listed equity investments
of Rs.810 crores.
Debt to rental for the mall and OEP (considering only fixed rentals and excluding LAS loan) stood at 4.52x and 0.30x as on Dec
31, 2023 and remained satisfactory. Assuming full drawdown of Rs.135 crore DLOD facility, debt to rental for OEP would stand
at 4.14x.

Presence of DSRA albeit some delay in receipts of lease rentals from the tenants: EIL raises monthly invoices for lease
rentals in the first week of every month for both – mall and OEP while debt obligations (incl. principal and interest) fall due by
15th of every month thereby reducing the risk of any mismatch in the cash flows from operations to a certain extent. The lease
rental collection from its tenants is regular in case of mall while payments pertaining to OEP are being received with some delays
in case of few of the tenants. Timely collection of lease rentals from OEP tenants remain one of the key rating monitorable.
As on December 31, 2023, the average monthly rental income from the mall is Rs 3.69 crores as against EMI of Rs.2.53 crores
whereas the average monthly rental income from the OEP is Rs.2.72 crores (including monthly non escrowed rentals of around
Rs.1.30 crores) as against EMI of Rs.1.30 crores (assuming full drawdown).

2 CARE Ratings Ltd.

 Press Release

As per the term of sanction, EIL shall deposit the lease rental income along with receipts of car parking charges, fit-out charges
and common area maintenance, etc in the escrow account which shall be first utilized towards payment for taxes and statutory
payments, interest and principal repayment of LRD loan and then towards followed by payment of operational, administrative and
maintenance expenses. Further, EIL is required to maintain DSRA equivalent to ensuing 3 months principal and interest
repayment. As on Dec 31, 2023, the o/s balance of DSRA stood at Rs.6.68 crores for the retail mall and Rs.0.50 crores for OEP.

Key weaknesses
Risk of non-renewal of expiring lease agreements given relatively short track record of the retail mall: The retail
mall generally enters into leave and license agreements with the lessees for a tenure of five years with a rent escalation clause
of 15% after every third year. Since the mall became operational in FY19, majority of the tenant agreements are to set expire
within the next 9 months which leaves the mall exposed to the risk of non-renewal of lease agreements. However, the renewal
risk is mitigated to a large extent due to lower lease rental rates as compared to the similar malls in the vicinity, reputed tenants
coupled with increasing occupancy over the years.

Cyclicality associated with real estate industry with competition from other developers: The capital-intensive real
estate industry is highly cyclical in nature. The industry which was battered hard in 2008 after the turbulence in the global financial
markets had shown signs of recovery until 2016 when the sector was once again hit badly with the demonetization move, followed
by regulations such as RERA and the Insolvency & Bankruptcy Code. This resulted into significant liquidity crunch for the sector
owing to subdued demand as well as slow rate of approvals. With the improvement in macro-economic conditions in the country,
the real estate sector is expected to attain a gradual recovery. Fundamentals for the commercial real estate have improved with
visible improvement in business sentiments. Further, the company faces moderate competition from existing as well as new
developments which may provide spaces with modern amenities at competitive rates.

Liquidity: Adequate
The liquidity position is adequate with projected net cash inflows expected to be sufficient to meet debt repayment obligations in
in FY24. As on December 31, 2023, the average monthly rental income from the mall is Rs 3.69 crores as against EMI of Rs.2.53
crores whereas the average monthly income from the OEP is Rs.2.72 crores as against EMI of Rs.1.30 crores (assuming full
drawdown).
As on Dec 31, 2023; the o/s balance of DSRA stood at Rs 6.68 crores for retail mall and Rs.0.50 crores for OEP (equivalent to 3
months EMI). The average utilization of Kotak Mahindra DLOD limit for the last 5 months ended Feb 2024 stood at around 90%.
As on December 31, 2023, the company has free liquid investments of around Rs. 394 crores which aids liquidity position.

Applicable criteria
Definition of Default
Liquidity Analysis of Non-financial sector entities
Rating Outlook and Rating Watch
Financial Ratios – Non financial Sector
Rating methodology for Debt backed by lease rentals

About the company and industry

Industry classification
Macro Economic Indicator Sector Industry Basic Industry
Consumer Discretionary Realty Realty Real Estate related services

Elpro International Ltd. (EIL) was incorporated in July 1962 as a public limited company, in technical and financial collaboration
with General Electric, USA (“GE”). Headquartered in Pune, its operations included manufacturing and distribution of power
distribution equipments like Surge Arresters and Disconnecting Switches (Isolators), with manufacturing set-up located in Pimpri-
Chinchwad area, near Pune. Over the past years, the company has divested its Isolator set-up in Hyderabad to Siemens Ltd and
has scaled down its operations in Pune and has ventured into real estate development of the 40 acres of land in Pimpri-Chinchwad
area owned by it, in phases. Currently, 99.56% of the total leasable area (5.62 lakh sqft) is leased out in the OEP and 85% of
the total leasable area (3.14 lakh sqft) in the retail mall.

3 CARE Ratings Ltd.

 Press Release

Brief Financials (₹ crore) March 31, 2022 (A) March 31, 2023 (A) 9MFY24(UA)
Total operating income 72.43 98.94 83.05
PBILDT 34.80 34.96 49.70
PAT 989.16 41.30 24.44
Overall gearing (times) 0.05 0.10 -
Interest coverage (times) 1.53 7.61 3.34
A: Audited UA: Unaudited; Note: ‘the above results are latest financial results available’

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating history for last three years: Please refer Annexure-2

Covenants of rated instrument / facility: Detailed explanation of covenants of the rated instruments/facilities is given in
Annexure-3

Complexity level of various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

Rating
Date of
Maturity Size of the Assigned
Name of the Issuance Coupon
ISIN Date (DD- Issue along with
Instrument (DD-MM- Rate (%)
MM-YYYY) (₹ crore) Rating
YYYY)
Outlook
CARE BBB+;
Fund-based - LT-Term Loan - - 15-09-2035 145.00
Stable
Fund-based - LT-Working CARE BBB+;
- - - 255.00
Capital Limits Stable

Annexure-2: Rating history for the last three years

Current Ratings Rating History

Date(s) Date(s) Date(s) Date(s)

Name of the
Sr. and and and and
Instrument/Bank Amount
No. Rating(s) Rating(s) Rating(s) Rating(s)
Facilities Type Outstanding Rating
assigned assigned assigned assigned
(₹ crore)
in 2023- in 2022- in 2021- in 2020-
2024 2023 2022 2021
CARE
1 Fund-based - LT-Term Loan LT 145.00 BBB+;
Stable
CARE
Fund-based - LT-Working
2 LT 255.00 BBB+;
Capital Limits
Stable
LT: Long term

Annexure-3: Detailed explanation of covenants of the rated instruments/facilities : Not Applicable

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level
1 Fund-based - LT-Term Loan Simple
2 Fund-based - LT-Working Capital Limits Simple

4 CARE Ratings Ltd.

 Press Release

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any
clarifications.

Contact us
Media Contact Analytical Contacts

Mradul Mishra Arindam Saha

Director Director
CARE Ratings Limited CARE Ratings Limited
Phone: +91-22-6754 3596 Phone: +91-033-40181631
E-mail: [email protected] E-mail: [email protected]

Relationship Contact Punit Singhania

Associate Director
Saikat Roy CARE Ratings Limited
Senior Director Phone: +91-033-40181620
CARE Ratings Limited E-mail: [email protected]
Phone: +91-22-6754 3404
E-mail: [email protected] Subham Churiwala
Rating Analyst
CARE Ratings Limited
E-mail: [email protected]

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise capital
and enable investors to make informed decisions. With an established track record of rating companies over almost three decades,
CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise, backed by the
methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in developing bank debt
and capital market instruments, including commercial papers, corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has
no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the
terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

For the detailed Rationale Report and subscription information,

please visit www.careedge.in

5 CARE Ratings Ltd.