IBC Knowledge Park Private Limited (IBCKPPL)

April 25, 2024

Ratings

Amount
Rating Complexity
Instrument / Facility (Rs. Ratings
Action Indicator
Crore)
Long Term Fund Based IVR A/ Stable
Bank Facilities – Lease (IVR Single A
1177.43 Assigned Simple
Rental Discounting with Stable
(LRD) Outlook)
1177.43
(Rupees One Thousand One Hundred
Total
Seventy-Seven Crore and Forty-Three Lakh
only)

Details of Facilities are in Annexure 1

Detailed Rationale
The rating assigned to the bank facilities of IBC Knowledge Park Private Limited factors in the
experience of promoters and management team, master lease agreement with the clients,
strategic location of the property, reputed lessees minimising counter party risk, stable
cashflow from lease rentals and healthy occupancy level, escrow mechanism and DSRA
support.

The ratings, however, are constrained by substantial exposure in group companies’ client
concentration risk & renewal risk of master lease agreement and susceptibility to cyclicality
inherent in the Real Estate sector.

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Key Rating Sensitivities:
- Upward Factors
Significant change in macroeconomics factors.

- Downward Factors
Any company related and/or external factor leading to less than projected cash
flows will lead to a rating downgrade.

List of Key Rating Drivers with Detailed Description

Key Rating Strengths

Experienced promoters and management team
The company IBC Knowledge Park Private Limited is established by Mr. Yunus Zia, Mrs.
Sharmeen Yunus, Mr. Danish Sheriff, Mr. Azeem Sheriff. The promoters have a vast industry
knowledge, having worked in the real estate market for over twenty years . Together with a
knowledgeable management group, the promoters oversee the company's daily operations.
Due to the promoters' vast experience, they have been able to secure leasing agreements
from notable companies.

Master lease agreement with the clients

IBCKPPL currently operates two software technology parks, IBC Knowledge Park,
Bannerghatta Road and Diamond District, Bangalore. There follows a Master Lease
Agreement between IBC Knowledge Park Private Limited (Lessor) and its multiple tenants
(Lessee).

Strategic location of the property

IBCKPPL’s existing assets are in strategic locations, near Koramangala (IBC Knowledge Park,
Bannerghatta Road) and Domlur (IBC Knowledge Park, Diamond District) and proximity to the
vibrant neighborhood of Koramangala and MG road surrounded by hotels and retail

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destinations wherein there is healthy demand for commercial office spaces. The quality
development with amenities, favourable location of the project and competitive rental rates
lead to reduced occupancy risks.

Reputed lessees minimising counter party risk

IBCKPPL has built and maintained long standing relationships with reputed MNC’s that include
Reliance Projects and Property Management Services Limited, Ather Energy Private Limited,
Bharti Airtel Limited, BCD Travel India, Ingersoll Rand Tech and Services Private Limited,
Medi Assist Healthcare, Think and Learn, NEC Technologies, Rambus Chip Technologies,
Temenos India, Phasorz Technologies Private Limited, etc. Having reputed tenants helps
minimizing counter party credit risk in lease rental discounting type of structures.

Stable cash flow from lease rentals supported by healthy occupancy rate
IBCKPPL leases its space to approximately 80 MNC’s and maintaining healthy relationships
with them, which provides a consistent monthly flow of income. The total income of the
company stood at INR 250.07 crore as on March 31, 2023, as against INR 229.24 core as on
March 31, 2022. Total income is estimated to be around INR 300.00 crore as on March 31,
2024. Projections indicate a promising outlook, with a constant increase in Lease Rental
Receivables over the years. Additionally, occupancy rates at around 93% for both buildings
continue to be healthy.

Escrow mechanism and DSRA support

The company has maintained DSRA for instalment and interest, as per the sanction term
equivalent to maximum of 6 months’ repayment with the lender banks. An Escrow account is
maintained by the Company in which rental incomes are deposited directly by the tenants.

Comfortable financial risk profile

The capital structure of the company remained comfortable marked by overall gearing of 2.07x
in FY23 (FY22: 2.10x) and TOL/TNW of 1.84x in FY23 (FY22: 1.86x). Debt protection matrix
was moderate marked by ISCR of 1.79x in FY23. However, the adjusted tangible net worth
becomes negative due to exposure in group companies in the form of equity investment &
inter companies deposit and advances.
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Key Rating Weakness
Client concentration risk & renewal risk of master lease agreement
Out of the total 93% occupancy almost 23% is leased out to 5 tenants namely- Reliance
Projects and Property Management Services Private Limited, Alten Calsoft Labs India,
Rambus Chip Technologies (India) Private Limited, Ingersoll Rand Tech & Services Private
Limited and BCD Travels Private Limited. This leads to client concentration risk as any non-
renewal of existing clients, or any downward revision of rentals can jeopardize the company’s
cashflows.

Substantial exposure in group companies

IBCKPPL has significant exposure in its group companies/ subsidiaries in the form of Equity
and Debt infusion. Any adverse performance/development in group companies can impact the
surplus liquidity position of the IBCKPPL as it has a strong moral obligation towards them.

Susceptibility to cyclicality inherent in the real estate sector

The real estate sector is volatile in nature with an inherent liquidity risk associated to it. There
may be fluctuations in cash flows due to delayed realization & changes in regulatory
requirements market preferences.

Analytical Approach: Standalone

Applicable Criteria:

Financial Ratios & Interpretation (Non-Financial Sector)

Criteria of assigning rating outlook
Lease Rental Discounting (LRD) - Rating Methodology
Complexity Level of Rated Instruments/Facilities

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Liquidity: Adequate

The liquidity profile is adequate backed by stable rental inflows which are sufficient to cover
the maturing debt obligations. Also, the rated loan is backed by liquidity support in the form of
DSRA as per the sanction term. The firm maintains cash and cash equivalent amounting to
INR 149.78 Crore as on March 31, 2023.

About the company

IBC Knowledge Park Pvt Ltd (IBCKPPL), a real estate business based in Bangalore, was
founded in 2002 and specializes in the development and leasing of commercial spaces.The
company's two commercial properties in Bangalore's IBC Knowledge Park Diamond District
(Total Leasable Area- 4.53 lakh square feet) and IBC Knowledge Park Bannerghatta Road
(Total Leasable Area- 19.18 lakh square feet) are leased, providing earnings. The combined
leasable area of the two properties is 23.71 lakh square feet. The company is in the process
of further construction of around 6.00 lakh square feet of leasable area which is expected to
be completed by FY26. The construction will be funded by internal accruals.

Financials (Standalone):
INR in Crores
For the year ended* / As on 31-03-2022 31-03-2023
Audited Audited
Total Operating Income 228.52 248.70
EBITDA 183.09 185.08
PAT 65.34 57.03
Total Debt 1207.66 1306.56
Tangible Net worth 574.93 631.41
EBIDTA Margin (%) 80.12 74.42
PAT Margin (%) 28.51 22.80
Overall Gearing ratio (X) 2.10 2.07
*Classification as per INFOMERICS’ standards

Status of non-cooperation with previous CRA: Nil

Any other information: N.A.

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 Rating History for last 3 years:

Current Ratings (Year 2024-25) Rating History for the past 3 years
Amount Date(s) & Date(s) & Date(s) &
Sr. Name of
outstandin Rating(s) Rating(s) Rating(s)
No. Facilities Type Rating
g/Proposed assigned assigned assigned
(Rs. Crore) in 2023-24 in 2022-23 in 2021-22
Term Loan
(Lease Long IVR A/ - -
1. 1177.43 -
Rental Term Stable
Discounting)

Name and Contact Details of the Rating Team:

Name: Amit Bhuwania

Tel: (022) 62396023

Email: [email protected]

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For more information visit www.infomerics.com

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Disclaimer: Infomerics ratings are based on information provided by the issuer on an ‘as is where is’ basis.
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Annexure 1: Details of Facilities:

Name of Facility Date of Coupon Maturity Size of Rating

Issuance Rate/ IRR Date Facility Assigned/
(INR Outlook
Crore)
Long Term Fund
Varies up to IVR A/
based Bank 1177.43
2039 Stable
Facilities (LRD)* - -
*LRD- Lease Rental Discounting

Annexure 2: List of companies considered for consolidated analysis: NA.

Annexure 3: Facility wise lender details

https://www.infomerics.com/admin/prfiles/len-IBCKnowledge-apr24.pdf

Annexure 4: Detailed explanation of covenants of the rated 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.