Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 6.90 Crs. of August Ventures Pvt. Ltd.
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (05 Jul 2022) |
Present | ||
| Fund Based | 8.09 | 6.90 | Long Term |
BWR BB/Stable
Reaffirmation |
BWR BB
/Stable Reaffirmation |
| Grand Total | 8.09 | 6.90 | (Rupees Six Crores and Ninety lakhs Only) | ||
Brickwork Ratings reaffirms the long-term rating at 'BWR BB/Stable' for the bank loan facilities of August Ventures Pvt Ltd, considering factors such as the company's extensive track record, the promoter's substantial business experience, a sound sale ability of its residential projects and healthy financial risk profile. However, the rating is constrained by exposure to risks related to execution of real estate development projects and exposure to inherent risks and established players in the real estate sector. Going forward, the ability of the company to increase revenues, improve its profitability margins, strengthen its financial risk profile will remain the key rating sensitivities.
The rating outlook has been assigned as "Stable" as BWR believes that August Ventures Pvt Ltd business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.
Credit Strengths:
Mr. Biju P John (Chairman & Managing Director), with a wealth of over two decades' experience in the Real estate industry, oversees the company's daily operations and management.
The company's tangible net worth witnessed a growth, rising from Rs. 32.93 Crores in FY21 to Rs. 38.92 Crores in FY22. The financial profile of the company remained comfortable with Increase in profitability margins with net profit margins at 25.24% in FY22 as against -6.42% in FY21 and Operating margins at 33.06% in FY22 as against 16.45% in FY21. The Company remained healthy with comfortable debt protection metrics levels, ISCR at 8.79 times and DSCR at 1.40 times as of FY22 and gearing ratio stood at 0.29 times as on FY22.
The organization holds a significant number of assets in Bengaluru and has multiple projects awaiting necessary approvals. Any potential delays in project completion, unexpected cost overruns, or a decrease in demand could negatively impact the cash flow, potentially necessitating additional debt raising to fulfill obligations.
The projects within the residential portfolio are anticipated to exhibit a moderate level of market demand in the short run. The cyclical nature of the domestic real estate sector introduces variations in cash inflow due to the inherent volatility in market demand and actual proceeds. Meanwhile, fixed outflows such as construction costs and debt repayment persist. The presence of well-established entities in the sector implies that lower-than-anticipated demand might lead to reduced collections, consequently exerting an adverse influence on cash flow.
The analytical approach used is Standalone. BWR has essentially relied upon the Audited financials of FY22 and Provisional financials of FY23 and projections of FY24 and FY25, publicly available information and clarifications provided by the management.
RATING SENSITIVITIES
Going forward the company's ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquidity will be the key rating sensitivities.
Positive:
The rating will be upgraded if the company is able to achieve significant growth in revenue and improvement in profitability backed by a favorable industry scenario.
Negative:
The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.
The company's liquidity position is adequate marked by EBITDA and net cash accruals, adequately covering debt servicing obligations. The entity reported net cash accruals of Rs.6.82 crores and comfortably cover the debt repayment obligations. The company's receivable days has been under 20 days. The current ratio for FY 22 (Audited) and FY23 (Provisionals) stood at 5.65 times and 5.52 times respectively... Hence, the Liquidity of the company is assessed to be "Adequate".
ABOUT THE ENTITYAugust Ventures Private Limited was incorporated in the year 2002 and is promoted and managed by its Chairman cum Managing Director Mr. Biju P. John. The head office of the company is located on Campbell Road, opposite St. Philomena's Hospital, Bangalore. The company is into building premium quality residential living and commercial spaces (real estate) business in Bangalore. By acquiring the trademarks "LAMBRETTA and LAMBRO" from Scooters India Limited, the company is set to successfully diversify its business into the Automobile sector.
The company is a member of CREDAI.The company’s project, August Park was the first CARE award winning residential projects amongst CREDAI affiliated builders as the Best Green Residential Building in Bangalore Zone. August Park also has the distinction of becoming the first residential building in Bengaluru zone to be certified “GOLD” by IGBC.
Real Estate Regulatory Authority Karnataka Project Permanent Registration Number: PRM/KA/RERA/1251/446/PR/171014/000242.
| Key Parameters | Units |
FY 20-21 (Audited) |
FY 21-22 (Audited) |
FY 22-23 (Provisional) |
|---|---|---|---|---|
| Operating Revenue | Rs.Crs. | 8.87 | 23.71 | 20.45 |
| EBITDA | Rs.Crs. | 1.46 | 7.84 | 5.74 |
| PAT | Rs.Crs. | -0.57 | 5.98 | 3.44 |
| Tangible Net Worth | Rs.Crs. | 32.93 | 38.92 | 42.36 |
| Total Debt/TNW | Times | 0.96 | 0.29 | 0.28 |
| Current Ratio | Times | 13.87 | 5.65 | 5.52 |
The terms of sanction include standard covenants normally stipulated for such facilities.
No outstanding ratings with other CRAs
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2023) | 2022 | 2021 | 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 6.90 |
BWR BB/Stable
(Reaffirmation) |
05Jul2022 |
BWR BBStable
(Reaffirmation) |
19May2021 |
BWR BBStable
(Reaffirmation) |
NA |
NA
|
| Grand Total | 6.90 | (Rupees Six Crores and Ninety lakhs Only) | |||||||
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 | |
|---|---|
|
Likith M S Rating Analyst likith.ms@brickworkratings.com |
Suryanarayan N Chief Manager - Ratings suryanarayan.n@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
|---|---|---|---|---|---|---|
| 1 | Federal Bank | Lease Rental DiscountingOut-standing | 6.34 | _ | 6.34 | |
| 2 | Federal Bank | Loans against PropertyOut-standing | 0.56 | _ | 0.56 | |
| Total | 6.90 | 0.00 | 6.90 | |||
| TOTAL (Rupees Six Crores and Ninety lakhs Only) | ||||||
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