JHV Construction Company Private Limited

November 09th, 2023

Ratings
Instrument / Amount Ratings Rating Complexity
Facility (Rs. crore) Action Indicator
Long Term Bank IVR BB-/Stable (IVR Double B Simple
63.94 Assigned
Facilities Minus with Stable Outlook)
Short Term Bank IVR A4 Simple
2.00 Assigned
Facilities (IVR A Four)

Total 65.94 (Rupees Sixty-Five Crore and Ninety-Four Lakh Only)

Details of Facilities are in Annexure 1

Detailed Rationale

The ratings assigned to the bank facilities of JHV Construction Company Private
Limited draw comfort from its experienced promoters, moderate debt protection
metrics, favourable location of the hotel and franchisee & management arrangement
with Hilton for a tenure of 22 years. However, these rating strengths are partially offset
by nascent stage of the project, risk related to project execution and stabilisation of
the project, low operating profitability in the already existing business and cyclical
nature of the industry.

Key Rating Sensitivities:

Upward Factors
- Timely competition of project within the estimated cost and achieving projected
operating parameters.
Downward Factors

- Significant delay in commencement of operations with significant cost overruns.

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List of Key Rating Drivers with Detailed Description

Key Rating Strengths

Experienced of the Promoters

JHV Construction Company Pvt Ltd is promoted by Mr. Hira Lal Jaiswal and Mr.
Abhishek Jaiswal. The promoters have rich experience of more than two decades in
the industry. Longstanding presence of the promoters in the industry has helped the
company to establish strong relationships with customers.

Favourable Location of commercial property

The Hotel project is situated at Varanasi’s City’s Commercial Center. Hotel is easily
accessible by Road, Airport and Railway. The hotel is expected to benefit from
paucity of five-star hotel and increase in tourism expected because of it being
spiritual city.

Franchise and Management arrangement with Hilton for tenure of 22 years

JHVCCL operational risk is likely to be mitigated to a large extent by the franchise-

cum-management agreement with USA-based luxury hotel chain “Hilton” for a term of
22 years. Hotel is expected to enjoy benefits like advertising, promotional programs
for the hotel on a global basis and access to Hilton’s reservation system and customer
base.

B. Key Rating Weaknesses

Risk related to project execution and stabilisation of operations

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The company is executing hotel project which involves constructions of 144 rooms,
restaurant and other amenities in Varanasi (UP) at total project cost of Rs. 97.28 crore
which will be funded through promoters contribution of Rs. 17.22 Crore and term loan
of Rs.59 crore and unsecured loan of Rs. 21.06 Crore. The hotel has commenced its
banquet operations in October 2022. The Completion of the project within envisaged
cost and timelines will be crucial. Further, achievement of envisaged revenues and
profitability will also be key monitorable.

Exposure to risks relating to cyclicality and other external factors:

Cyclicality in hotel industry could lead to fluctuations in cash inflow because of volatility
in general economy and exogenous shocks, which may impact the debt servicing
ability of the company. JHV Construction Company Private Limited will remain
susceptible to the inherent cyclicality in the hotel and tourism industry. The company
is also likely to face competition from other 5-star hotels located in Varanasi.

Analytical Approach: Standalone

Applicable Criteria:
Rating Methodology for Infrastructure Companies
Financial Ratios & Interpretation (Non- Financial Sector)
Criteria of assigning rating outlook

Liquidity – Adequate

The company’s liquidity is expected to remain adequate on the expectation of sufficient

cushion in cash accruals vis-à-vis debt repayments. The current ratio of the company
stood above unity at 1.05x as on March 31st, 2023. The unencumbered cash and bank
balance as on March 31, 2023, stood at Rs. 1.95 Crore.

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 About the Company

JHV Construction Pvt. Ltd. was incorporated in 1989. The Company has long
experience in setting up real estate projects and have successfully completed several
projects in Mumbai. Having developed a strong foothold in construction and real
estate, the company has entered into the Hospitality Industry by setting up of a five-
star hotel property in Varanasi, Uttar Pradesh.

The Company has set up 144 rooms hotel in Varanasi, which is under franchise
agreement with the Hilton Group. Company has executed franchise agreement with
Hilton Hotel for 22-year lease i.e. it would end on year 2041.

Financials (Standalone):
(Rs. Crore)
For the year ended* / as on 31-03-2022 31-03-2023
Audited Audited
Total Operating Income 8.68 10.95
EBITDA 2.04 1.52
PAT 1.52 0.94
Total Debt 53.47 66.06
Tangible Net Worth 27.82 34.74
Ratios
EBITDA Margin (%) 23.45 13.85
PAT Margin (%) 17.49 8.55
Overall Gearing Ratio (x) 1.92 1.90
*Classification as per Infomerics` standards

Status of non-cooperation with previous CRA: None

Any other information: Not Applicable

Rating History for last three years:

Sr. Name of Current Ratings (Year 2023-24) Rating History for the past 3 years
No. Instrument/Facili Type Amount Rating Date(s) & Date(s) & Date(s) &
ties outstanding Rating(s) Rating(s) Rating(s)
(Rs. Crore) assigned assigned assigned
in 2022-23 in 2021-22 in 2021-
22
Long Term Fund Long IVR BB-/
1. 63.94 -- -- --
Based Facilities Term Stable
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Sr. Name of Current Ratings (Year 2023-24) Rating History for the past 3 years
No. Instrument/Facili Type Amount Rating Date(s) & Date(s) & Date(s) &
ties outstanding Rating(s) Rating(s) Rating(s)
(Rs. Crore) assigned assigned assigned
in 2022-23 in 2021-22 in 2021-
22
Short Term Fund Short
2. 2.00 IVR A4 -- -- --
Based Facilities Term

Name and Contact Details of the Rating Analyst:

Name: Vipin Jindal
Tel: (011) 45579024
Email: vipin.jindal@infomerics.com

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accepted and presumed to be free from misstatement, whether due to error or fraud. We are not responsible for
any errors or omissions or for the results obtained from the use of such information. Most entities whose bank
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facilities/instruments. In case of partnership/proprietary concerns/Association of Persons (AOPs), the rating
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of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans
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Annexure 1: Details of Facilities

Name of Facility Date of Coupon Maturity Date Size of Rating

Issuance Rate/ IRR Facility Assigned/
(Rs. Outlook
Crore)
Term Loan - - April 2028 44.97 IVR BB-/ Stable
Term Loan - - April 2028 3.99 IVR BB-/ Stable
Term Loan - - April 2028 9.98 IVR BB-/ Stable
CC - - - 5.00 IVR BB-/ Stable
BG - - - 2.00 IVR A4

Annexure 2: List of companies considered for consolidated analysis: Not Applicable.

Annexure 3: Facility wise lender details

https://www.infomerics.com/admin/prfiles/len-JHV-nov23.pdf

Annexure 4: Detailed explanation of covenants of the rated instrument/facilities: Not

Applicable

Note on complexity levels of the rated instrument: Infomerics has classified instruments
rated by it on the basis of complexity and a note thereon is available at www.infomerics.com.