Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 145.00 Crs. of Assotech Realty Pvt Ltd
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (14 Mar 2020) |
Present | ||
| Fund Based | 145.00 | 145.00 | Long Term |
BWR BBB- (Stable)
Reaffirmation |
BWR BBB -
/Stable Reaffirmation |
| Grand Total | 145.00 | 145.00 | (Rupees One Hundred Forty Five Crores Only) | ||
Reaffirmation in the rating of bank loans facilities of Assotech Realty Pvt Ltd (ARPL or the company) factors in experience of promoters, established track record of operations of the company and satisfactory progress of its civil construction projects. Overall financial risk profile of the company is moderate with a stable and comfortable debt structure. During FY20 and FY21, the company has been able to generate adequate cash flows to support construction expenses, loan repayments, assured return payments and other overheads. As the company has not proposed any additional debt for the next 12 months, overall debt structure is expected to improve with repayment of the existing debt. The company is expected to generate adequate cash flows to meet construction and overhead expenses and term debt obligations.
The ratings are, however, constrained by high reliance on customer advances to fund the project costs, high competition in the commercial real estate and other business risks associated with the operations of the company.
Outlook: Stable
BWR believes that Assotech Realty Pvt Ltd.'s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.
KEY RATING DRIVERSCredit Strengths:
Mr. Neeraj Gulati, a commerce graduate and CA, is the chief promoter of the company. He started his career in the mid's and completed Tradex Towers, the first commercial Towers of Greater Noida. With this, he has more than 20 years business experience in the real estate sector. Umesh Nagpal, another promoter of the company, started his career with the merchant navy. He has held top management posts in various reputed organisations.
The company has already executed and delivered more than 5 million sq. ft of residential, commercial and service apartments. Completed projects include Windsor Park Indirapuram, Cabana Serviced Residences Indirapuram and Springfields in Greater Noida.
Phase 1 of the project is already operational since 2016 and almost 92% of the saleable area is sold out. The construction of phase 2 is under progress and almost 82% of the area is sold out. Completion certificate in respect of Tower 4 and Tower 5 (Phase 2) is obtained and the remaining tower is expected to be completed by June 2021.
Credit Risks:
As Phase 2 of the project is under construction, timely completion without cost and time overruns is the major risk. In respect of leased space to the hospitality sector, on a revenue sharing basis, realisation of adequate occupancy and revenues amidst slow down in the economy and COVID 19 led disruptions are the key risks. In respect of sold space, timely handover of the space and realisation of sale receivables are the key business risks. In respect of vacant space, finding buyers/tenants with favorable terms amidst high competition and abundance of commercial space, are the key business risks.
The company is heavily dependent on customer advances and booking mobilisations for completion of the project. Of the total project cost of Rs.363 crs, booking advances and loans from FIs are proposed at 80% and 20% respectively. Remaining project cost of Rs.57 crs is proposed to be met entirely through customer advances.
Commercial real estate and leasing industry is characterised with a large quantum of vacant commercial leasable space across cities that weakens the bargaining power of the company. Further, online business, work from home culture, space sharing, business consolidation and urban decongestion have led to disruption in demand for commercial space and has intensified the competition.
For arriving at its ratings, BWR has applied its rating methodology on a standalone basis as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Upward: Rating is sensitive to adequacy of cash flows given company expects to meet the project related and other financial expenses from sale of unsold units and realisation of receivables from sold units. Improvements in cash flows and sale position would support upward rating action.
Downward: Not completing the project within the stipulated timelines and any difficulty in generating net cash flows would result in adverse liquidity situations in the company and attract a downward rating action.
LIQUIDITY INDICATORS - Adequate
Liquidity in the company is adequate with cash flow DSCR at approx. 1x during FY21 with the company utilising opening cash balances of Rs.3.38 crs and COVID 19 emergency line of funding of Rs.19 crs (disbursed amount) to meet cash flow mismatches. The company availed 6M moratorium on interest and loan repayments to ease out cash flows during COVID 19 led cash flow disruptions. During FY22, cash flow DSCR is expected to be around 1.36x with healthy expected cash generation from realisation of sale receivables, sale of unsold space, drawings from undisbursed loans and revenues from Sandal Suites and IndiaMart. Remaining project cost of Rs.57 crs is proposed to be met entirely through customer advances.
ABOUT THE ENTITYARPL is a Delhi based real estate developer. The company was incorporated as Sampada Realty Pvt Ltd. in December 2002 and was later renamed as ARPL in December 2003. The company has already executed and delivered more than 6 million sq. ft of residential, commercial and service apartments. Completed projects include Windsor Park Indirapuram, Cabana Serviced Residences Indirapuram, Springfields Greater Noida and Assotech Business Cresterra Phase 1 in Noida. The company is promoted by Neeraj Gulati and Umesh Nagpal. Both have combined shareholding of 27.60% as on 02 Feb 2021 in the company. Salil Kumar is the other director in the company.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 188.32 | 135.85 |
| EBITDA | Rs.Crs. | 14.88 | 13.98 |
| PAT | Rs.Crs. | -0.31 | 2.77 |
| Tangible Net Worth | Rs.Crs. | 70.28 | 69.21 |
| Total Debt/Tangible Net Worth | Times | 2.10 | 1.99 |
| Current Ratio | Times | 3.74 | 1.69 |
NIL
NIL
ANY OTHER INFORMATIONNIL
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 | 145.00 |
BWR BBB-/Stable
|
14Mar2020 |
BWR BBB- (Stable)
|
11Feb2019 |
BWR BBB- (Stable)
|
NA |
NA
|
| Grand Total | 145.00 | (Rupees One Hundred Forty Five Crores 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 | |
|---|---|
|
Saurabh Agarwal Assistant Manager - Ratings Board : +91 11 2341 2232 saurabh.a@brickworkratings.com |
Ashwini Mital Director - Ratings Board : +91 172 5032 295 / 6 ashwinimital@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Term LoanSanctioned | 62.55 | _ | 62.55 | ||
| 2 | GECLSanctioned | 9.39 | _ | 9.39 | ||
| 3 | COVID Funded Interest Term LoanSanctioned | 4.12 | _ | 4.12 | ||
| 4 | Term LoanSanctioned | 59.30 | _ | 59.30 | ||
| 5 | GECLSanctioned | 9.64 | _ | 9.64 | ||
| Total | 145.00 | 0.00 | 145.00 | |||
| TOTAL (Rupees One Hundred Forty Five Crores Only) | ||||||
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| N.A | 0 |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NIL |
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