Rodium Realty Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 25.00 Crs. of Rodium Realty Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Oct 2019)	Present
Fund Based	43.88	25.00	Long Term	BWR BB + /Stable Assignment	BWR BB + /Stable Reaffirmation
Grand Total	43.88	25.00	(Rupees Twenty Five Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

BWR has reaffirmed the rating of Rodium Realty Ltd ("RRL" or "The Company"). BWR has essentially relied upon the company’s audited financial results up to FY20, quarterly results up to Q3 FY21, projected cash flows as well as publicly available information, and the information/ clarifications provided by the company. The rating draws strength from the experienced management and their understanding of the industry dynamics, favorable location of the ongoing project, and sufficient cash flow visibility to service the maturing debt obligations. The rating is, however, constrained on account of the salability risk of the new project, the competition faced by the company from other players operating in the market, and the decline in the revenue and profitability of the company.

KEY RATING DRIVERS

Credit Strengths:

Experienced Management :
The management of RRL has experience of over two decades in the real estate business and comprises professionals from various fields. Due to the long-standing presence in the industry, the promoters have established healthy relationships with clients and suppliers, which should support business risk profile.
Favourable location of the ongoing project :
The ongoing project is being constructed in Matunga, which is one of the prime locations in Mumbai. The place is well connected with other regions of Mumbai and is well known for housing a number of notable educational institutions. The company has also signed the redevelopment of society in Kandivali West in Mumbai which is also strategically located within close proximity to educational institutions, shopping, recreation, etc.
Sufficient cash flows visibility to service the debt obligations :
The expected cash flows from the project are sufficient to discharge the debt obligations. The company has already completed one of its project X’Point, which is in the sales phase and has received CC for its another project “X’enus”, wherein the slab work in undergoing, and advances from customers are being received. The project is estimated to be completed by June 2022. As of now, the company has completed around 20% of its project. The estimated cash flows from the sale of unit in X'Point and advances from the ongoing project would be sufficient to discharge the debt obligations. The company has already repaid one of its loans in full during FY20-21.

Credit Risks:

Competition from other players in the market :
There also exists Competition from the other luxury residential apartment developers who are already in the market at the site of development. Residential Real estate is highly influenced by economic cycles and government intervention, hence it is important for companies to have efficient marketing to attract potential buyers. Increasing interest rate scenario may increase in cost of project.
Susceptibility to cyclicality inherent in the real estate industry :
The real estate sector in India is cyclical and affected by volatile prices, opaque transactions, and a highly fragmented market structure. Hence, the business risk profile will remain susceptible to risks arising from any industry slowdown. The reduction in the stamp duty will, however, push the sales of the company.
Exposure to risk related to salability for new project :
The company is currently implementing real estate project ' X’enus ' at an estimated total cost of Rs. 43.80 crore. Though the funding for the project is fully tied up, the project, the salability remains to be seen. Further the project is in the phase of execution partly imparting risks related to implementation. The operating performance will remain susceptible to the flow of advances from customers.
Declining revenue :
There has been a decline in the revenue recorded by the company in FY20-21 up to Q3. The company has recorded TOI of Rs 8.22crs till Q3 FY21 and is estimating to record ~Rs 4-5crs in Q4 FY21. The decline, however, has been as the company has not recognized the revenue for the X'enus project due to the percentage completion method. Further, the construction was also halted for three months due to the COVID 19 pandemic.

ANALYTICAL APPROACH - Consolidated

For arriving at its ratings, BWR has assessed the consolidated financials of Rodium Realty Ltd (RRL) and has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

The ability of the company’s ability to sell the inventory, timely completion of ongoing projects within the estimated cost and ability to service debt would be the key rating sensitivities of the company.

Positive: The rating may be upgraded in case there is an Increase in bookings and collections resulting in a considerable increase in cashflows and reduction in debt on a sustainable basis.

Negative: The rating may be downgraded if there is lower than expected booking and consequent delay in cash flows, thus impacting liquidity and any simultaneous launch of new projects increasing the overall projects related risks.

LIQUIDITY INDICATORS - Adequate

The liquidity profile of the company is adequate. The cash and cash equivalents stood at Rs. 3.52crs as of March 20. The current ratio stood at 1.32x for FY20. The term loan debt repayments of the company for FY22 are estimated to be discharged through the advances received from the under-construction project- X'enus and from the sales of existing inventory in the X'Point project, which are estimated to be sufficient against the debt repayment of ~4 crs in FY 21-22.

ABOUT THE ENTITY

Rodium Realty Ltd. (RRL), a listed public limited company, is engaged in real estate development projects in Mumbai, Maharashtra in both the residential and commercial space with its registered office situated in the same city. Established in 1993 as Vishal Cotspin Ltd in 1993, Company was renamed to RRL post takeover from Mr Deepak Chheda, Mr Shailesh Shah, Mr Rohit Dedhia and Mr Harish Nisar in November 2009

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	37.85	39.63
EBITDA	Rs.Crs.	4.62	14.16
PAT	Rs.Crs.	0.05	2.21
Tangible Net Worth	Rs.Crs.	16.03	12.82
Total Debt/Tangible Net Worth	Times	5.50	8.51
Current Ratio	Times	1.29	1.30

KEY COVENANTS OF THE FACILITY RATED

Nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2021)			2020		2019		2018
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	25.00	BWR BB+/Stable	NA	NA	11Oct2019	BWR BB+ (Stable)	NA	NA
Grand Total		25.00	(Rupees Twenty Five Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Srishti Kaushik Rating Analyst srishti.k@brickworkratings.com	Sushil Kumar Chitkara Associate Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Rodium Realty Ltd

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Term Loan - Sanctioned	25.00	_	25.00
Total		25.00	0.00	25.00
TOTAL (Rupees Twenty Five Crores Only)

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