Gupta Housing Pvt Ltd

Brickwork Ratings revises and downgrades the ratings for the Bank Loan Facilities of Rs. 10.88 Crs. of Gupta Housing Pvt Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (15 Apr 2020)	Present
Fund Based	22.50	10.88	Long Term	BWR BB (Stable) Reaffirmed	BWR BB - /Stable Downgrade
Grand Total	22.50	10.88	(Rupees Ten Crores and Eighty Eight lakhs 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

Brickwork Ratings has downgraded the long term rating at BWR BB- (Stable) for the Bank Loan Facilities of Rs. 10.88 Crs of Gupta Housing Pvt. Ltd. BWR believes that Gupta Housing 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 revenues and profit show sustained improvement backed by a favourable industry scenario. The rating outlook may be revised to 'Negative' if the revenues and profit margins show lower than expected figures.

The project - Aden Court Residential is a luxury project & may face a delay in sale of the remaining inventory in view of the changed environment due to COVID-19.

The client has not submitted NDS for the month of July, 2021 and the Banker has not provided feedback despite repeated follow-ups.

The Projected figures provided during the last rating exercise in April 2020 for FY20 and FY21 were not achieved by the company. The company Projected TOI of Rs. 23.79 Crs. in FY20 and Rs. 53.21 Crs. in FY21, but the company has achieved TOI of Rs. 19.36 Crs. in FY20 and the company has provided provisional financials for FY21 and TOI achieved is Rs. 19.29 Crs. The company has not achieved OPM and NPM as projected for FY20 and FY21, also the PAT as projected remains unachieved. Profit and cash accruals may not be sufficient for servicing the repayment of the term loan.

BWR has essentially relied upon the audited financial statements of Gupta Housing Pvt. Ltd. for FY18, FY19 and FY20, and provisional of FY21, and publicly available information and information / clarifications provided by the entity’s management.

The rating is impacted by the stretched financial risk profile and the projected figures not achieved. Also, since the business is time-sensitive and was affected by the impact of Covd-19 pandemic and the site was stalled resulting in slight delay in completion of the project & obtaining Occupation Certificate (OC).

Going forward the ability of the company to improve its margins, scale of operations, working capital cycle, gearing, along with strengthening its overall financial risk profile would be its key rating sensitivity.

KEY RATING DRIVERS

Credit Strengths:

Well qualified promoters and their experience :
The promoters / directors have experience of more than decade in the industry.
Stagnant revenue :
TOI is almost stagnant to Rs. 19.29 Crs in FY21 v/s Rs. 19.36 Crs in FY20.
Moderate debt protection metrics :
Debt protection metrics is moderate with ISCR standing at 17.54x in FY21 v/s 1.04x in FY20, whereas DSCR is standing at 0.12x in FY21 v/s 0.44x in FY20.
Strategic location of the project :
The project is located at Plot No. 541/C, Adenwala Road, King Circle, Five Gardens, Mumbai- 400 019, which is at prime location in Mumbai from where commuters can travel to all three suburbs of Mumbai i.e. Central, Harbor & Western.

Credit Risks:

Weak profit margins :
Profit margins are moderate with NPM and OPM standing at 3.16% and 3.04% respectively in FY21 v/s 1.21% and 23.28% respectively in FY20. Though NPM is moderate but OPM is weak in FY21, and OPM has declining trend over 2 years.
Weak gearing :
The gearing of the company is weak with Total Debt/TNW is standing at 15.45x in FY21 v/s 22.74x in FY20, whereas TOL/TNW stands 17.57x in FY21 v/s 21.79x in FY20.
Exposure to market risk and inherent risks in the real estate industry :
The real estate segment is volatile, resulting in fluctuations in cash flows on account of volatility in realization and sales. Cash out flow for the project and debt obligation are relatively fixed which can lead to substantial cash flow mismatch. Maintaining the sales velocity and pricing as envisaged and healthy collection efficiency remain critical for achieving desired profitability and avoiding cash flow mismatches.
Geographical concentration of operating of the company :
Most of the projects of the company are located in Maharashtra which shows concentration about the project location.

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward the ability of the firm to improve its margins and debt servicing metrics, improve its scale of operations along with strengthening its overall financial risk profile would be its key rating sensitivity.

Positive: The rating will be upgraded if the company is able to maintain/improve its financial risk profile by improving its scale of operations, profitability and coverage ratios.

Negative: The rating may be downgraded if there is a decline in revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.

LIQUIDITY INDICATORS - Stretched

The cash and cash equivalents stood at Rs. 0.96 Crs, in FY21. The current ratio stands at 8.62x in FY21. The funding support from the friends and family by way of unsecured loan and ploughing back of profits has supported liquidity and such funding support will be available whenever required. There is no working capital limit with the company.

ABOUT THE ENTITY

The Gupta Housing Private Limited (GHPL), incorporated in 2011, is engaged in the business of development of real estate. In totality company carries more than 13 years of experience in same lines of business especially in development of housing projects.
The company is developing a project named Aden Court and Land is located at Plot No. 541/C, Adenwala Road, King Circle, Five Gardens, Mumbai- 400 019, which is at prime location in Mumbai from where commuters can travel to all three suburb of Mumbai i.e. Central, Harbor & Western.

Project is having very famous landmark at King Circle which is located, from where commuters can reach to Navi Mumbai, Central Mumbai & South Mumbai easily.

Aden Court project is 100% completed with lift installation and other essential work. Plumbing and electrician work is going on. The company is expecting Occupation Certificate for the Aden Court Project by the end of August, 2021.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	19.36	19.48
EBITDA	Rs.Crs.	4.51	5.41
PAT	Rs.Crs.	0.23	0.81
Tangible Net Worth	Rs.Crs.	1.88	1.64
Total Debt/Tangible Net Worth	Times	22.74	27.19
Current Ratio	Times	4.83	6.03

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	10.88	BWR BB-/Stable (Downgrade)	15Apr2020	BWR BB (Stable) (Reaffirmed)	NA	NA	14Aug2018	BWR BB (Stable) (Assigned)
Grand Total		10.88	(Rupees Ten Crores and Eighty Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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
Mita Ghanshyam Gupta Ratings Analyst mita.g@brickworkratings.com	Sushil Kumar Chitkara Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Gupta Housing Pvt Ltd

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Indian Bank	Term Loan - Sanctioned	10.88	_	10.88
Total			10.88	0.00	10.88
TOTAL (Rupees Ten Crores and Eighty Eight lakhs Only)

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