ICRA has revised the long-term rating on the Rs 11.00 billion long-term loans of Adlabs Entertainment (AEL) to D (pronounced ICRA D) from BB+ (pronounced ICRA double B plus).
 
The rating revision factors in some delays by the company in servicing its debt obligations on account of weak liquidity position. Despite a 53% growth in EBIDTA from Rs 398 million in FY2016 to Rs 607 million in FY2017, the company could not achieve the targeted cash break even.

Description of key rating drivers:

The company's revenues were notably impacted during November and December 2016, its peak season, on account of the demonetisation exercise by the Government of India which had resulted in a drop in footfalls. This further impacted its liquidity position. Apart from seasonality and adverse exogenous factors, the footfalls remain susceptible to discretionary spend by consumers, indirectly impacted by the macro-economic conditions and also remains exposed to climatic risks. The company's ability to deleverage itself through land monetisation, achieve higher footfalls at its theme park and water park, together with early launch of the balance 171 rooms shall be crucial for improving its liquidity profile and timely servicing its debt obligations.

Shares of the company gained Rs 0.70, or 0.91%, to settle at Rs 77.30. The total volume of shares traded was 52,129 at the BSE (Friday).