RATING RATIONALE
03Mar2022
Ganesh Housing Corporation Limited
Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 31.91 Crs. of Ganesh Housing Corporation Limited
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (24 Feb 2021) |
Present | ||
| Fund Based | 260.10 | 31.91 | Long Term |
BWR B-/Negative
Downgrade/ISSUER NOT COOPERATING* |
BWR BB -
/Negative to Stable Upgrade |
| Grand Total | 260.10 | 31.91 | (Rupees Thirty One Crores and Ninety One lakhs Only) | ||
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK
Brickwork ratings upgrade the rating to BWR BB-/Stable from BWR B-/Negative for the bank loan facilities of Ganesh Housing Corporation Limited.
The upgrade in the rating reflects improved financials, a significant reduction in debt, improved leverage metrics, cash inflow receipts from sales of land parcels, improved cash flows as the company has already received customer advances of Rs.72 crs from the running projects, and monitisation of the land bank resulted in a reduction in debt indeed resulting in improved gearing ratio. The company is a listed company and has provided the NDS and other information required. The rating continues to derive support from the extensive experience of the promoters in the real estate sector, GHCL’s established track record of completed projects, its presence in the Ahmedabad real estate market comprising residential and commercial space, and integrated township.
The Negative outlook was assigned on account of uncertainties of the operations of the company in absence of receipt of the required information by BWR and Continued Non-Cooperation by the company in providing information and submitting NDS.
The outlook has been changed to Stable from Negative based on the fact that the reasons specified above for assigning a negative outlook is no longer in existence i.e the visibility of the project execution is clear as more than 40% of the construction is completed for both the running projects (Malabar county III and Malabar Exotica) and 91% of the units are already sold, the company has provided NDS and has provided all the information required for a review of the rating.
The ISSUER NOT COOPERATING*has been removed as the company has provided all the information required for the surveillance of rating.
*Issuer did not cooperate; based on best available information.
KEY RATING DRIVERSCredit Strengths:
-
Financial Leverage :
The company was established back in 1991 i.e 4 decades ago, the tangible net worth of the company stood at Rs.572 crs as on FY2021. The company has reduced its debt levels to Rs.225.8 crs as on Sep 2021 v/s Rs.663 crs as on March 2019 resulting in an improved gearing ratio to 0.43x as on Sep 2021 v/s 0.81x as on March 2019.
-
Project Details :
Currently, the company has 2 projects under construction Malabar County III, and Malabar Exotica. The company has a project wherein the construction is completed (Maple Tree and trade center) and 96% of its inventory has been sold. However, there are other 3 projects in the pipeline which are expected to commence in the next couple of years. The total cost of the 3 running projects is Rs.1065 crs, of which the promoter equity amounts to Rs.415 crs resulting in a net cost of Rs.650 crs. The company has a total saleable area of 2519922 sq ft and total units of 1356 units. The company has sold 95% of its inventory.
-
Operational details :
The company has ongoing projects which enables company to be at a stage wherein a couple of their projects are always under the advanced stage of construction and a couple of them are under the nascent stage. This combination helps the company to balance its cashflows more efficiently.
-
Location Advantage :
GHCL’s projects are mostly located at strategic locations and a positive real estate market is expected which will fetch better prices and give easy access to the customer with good connectivity.
-
Experienced management and established track record :
GHCL is one of the oldest and largest Real Estate Development companies in Ahmedabad. Since its inception, it has built a presence in Ahmedabad and has developed and sold more than 22 million sq.ft. of real estate space, with another 29.1 million sq.ft. currently under development. Mr.Dipakkumar Patel is the Chairman of the company with approx. more than three decades of experience in the industry. Mr.Shekhar Patel is the Managing Director. The company is listed on BSE and NSE. They are supported by the qualified and experienced management team
-
Cash flows :
In addition to the operating cash flows the company has a land bank which the company sells on a regular interval which supports the cash flows of the company.
-
Industry Outlook :
The real estate business of the company has been concentrated in Ahmedabad city of Gujarat state. The company is into residential as well as commercial space, however, the major penetration is under residential projects. It is expected to grow in the near future which will support the sales of the projects of the company
-
Cyclicality and high level of regulations :
GHCL operates in an industry having high exposure to cyclicality resulting in sales and realisations coming under pressure in an economic downturn. Further, the real estate sector is subject to increased regulatory requirements and is continuously undergoing changes, thus affecting the timely execution of projects and leading to increased costs. However, as the major part of the project under progress are located in strategic locations which mitigate such type risk.
-
Geographic Concentration :
GHCL’s area of operations is concentrated in the city of Ahmedabad, resulting in significant geographical concentration. Any downturn in the area may impact the cash flows adversely.
GHCL, which is a listed entity is analysed on a consolidated basis as the company has 2 subsidiaries and major income in FY2020 and FY2021 has been from the subsidiaries. For arriving at its ratings, BWR has considered GHCL’s audited financials upto FY2021, key financial details for the period April to December 2021 (Provisional), publicly available information, and information/clarifications provided by the Company.
RATING SENSITIVITIES
Positive: Improvement in revenue and timely servicing of scheduled debt repayments and overall improvement in operating performance of the company will be credit positive.
Negative: Any dilution in expected cash flows coupled with deterioration in operating performance will be credit negative.
LIQUIDITY INDICATORS - Adequate
The liquidity of the company is adequate which is marked by a cash and bank balance of Rs.10.41 crs. The company has reduced its debt to Rs.225.8 crs crs as on Sep 2021 from Rs.663 crs as on March 2019 leading to improved Total debt/TNW to 0.43X as on Sep 2021. The company has CPLTD of Rs.78 crs and Rs.42 crs in FY2022 and FY 2023 respectively which is expected to be paid through the operating cash flows and other cash inflows.
ABOUT THE ENTITYGanesh Housing Corporation Ltd (GHCL) (GHCL) is a public limited company engaged in the construction of residential and commercial projects in and around Ahmedabad. GHCL was incorporated in 1991 and is promoted by Mr.Shekhar Patel and his family. Till date, the company along with its various SPVs has developed 22 million square feet of projects with 85% of all the development in the residential sector.
Currently, the company has 2 projects under construction Malabar County III, and Malabar Exotica. Apart from these, the company has more 3 projects namely Malabar Luxuria, IT SEZ, and Smile city which are expected to commence in FY2023.
Malabar County III
This project was launched in February-2021. It is a 2.50 BHK affordable housing project situated at Nirma University, Ahmedabad. There is a total of 288 units, of which 284 units are booked. Total revenue of ~Rs.128 crore is expected from this project.
Malabar Exotica
This project was launched in July-2021. It is a 3.50 BHK project and consists of 224 units, situated at Nirma University, Ahmedabad. Of the total 224 units, 186 units have been booked. Total revenue of ~Rs.165 crore is expected from this project.
9M Dec 2021: On a consolidated basis, the company has recorded revenue of Rs.228 crs and EBITDA of Rs.82 crs. On a standalone basis, the company has recorded revenue of Rs.16.19 crs.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 4.22 | 1.71 |
| EBITDA | Rs.Crs. | -9.83 | -23.76 |
| PAT | Rs.Crs. | -46.92 | -63.28 |
| Tangible Net Worth | Rs.Crs. | 654.11 | 700.99 |
| Total Debt/Tangible Net Worth | Times | 0.43 | 0.46 |
| Current Ratio | Times | 2.47 | 2.88 |
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
| Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 31.91 |
BWR BB-/Negative to Stable
(Upgrade) |
24Feb2021 |
BWR B-Negative
(Downgrade/ISSUER NOT COOPERATING*) |
26Feb2020 |
BWR BB-Negative
(Downgrade) |
30Jul2019 |
BWR BBB-Stable
(Downgrade) |
| 0.00 |
NA
|
NA |
NA
|
NA |
NA
|
25Nov2019 |
BWR BB+Stable to Negative
(Downgrade) |
||
| Grand Total | 31.91 | (Rupees Thirty One Crores and Ninety One 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- General Criteria
- Approach to Financial Ratios
- Rating Criteria - Rating of Real Estate - Residential Projects
- What Constitutes Non-Cooperation
| Analytical Contacts | |
|---|---|
|
Heta Mehta Senior Manager - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 heta.m@brickworkratings.com |
Bal Krishna Piparaiya Senior Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 piparaiya.bk@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 | Karur Vysya Bank | Term LoanSanctioned | 0.93 | _ | 0.93 |
| 2 | Others | Term LoanProposed | _ | _ | 0.00 |
| 3 | PNB Housing Finance Limited | Term LoanSanctioned | 11.08 | _ | 11.08 |
| 4 | Tamilnad Mercantile Bank Limited | Term LoanSanctioned | 19.90 | _ | 19.90 |
| 5 | Yes Bank | Term LoanSanctioned | _ | _ | 0.00 |
| Total | 31.91 | 0.00 | 31.91 | ||
| TOTAL (Rupees Thirty One Crores and Ninety One lakhs Only) | |||||
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| Gatil Properties Private Limited | 71.09 | 100 | Subsidary |
| Madhukamal Infrastructure Private Limited [Formerly known as Essem Infra Private Limited | 100 | 100 | Subsidary |
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