Brickwork Ratings downgrades the ratings for the Bank Loan Facilities of Rs. 20.77 Crs. of Rodium Realty Ltd
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (04 Mar 2021) |
Present | ||
Fund Based | 25.00 | 20.77 | Long Term |
BWR BB+/Stable
Reaffirmation |
BWR BB
/Stable Downgrade |
Grand Total | 25.00 | 20.77 | (Rupees Twenty Crores and Seventy Seven lakhs Only) |
BWR has downgraded the long-term rating to BWR BB/Stable for the bank loan facilities of Rodium Realty Ltd ("RRL" or "The Company"). BWR has essentially relied upon the company’s audited financial results up to FY22, projected cash flows as well as publicly available information, and the information/ clarifications provided by the company.
The downgrade in rating factors in the low traction in the selling of the new units for the past 12 months ending March 22, susceptibility of the cash inflows from the customer advances & delays in the ongoing project, and the competition faced by the company from other players operating in the market. The rating is further constrained by the shortfall in the envisaged performance of the company wherein the cashflow projections Shared by the company during the previous rating review have not been met by a substantial margin.
The rating continues to factor in the experienced management and their understanding of the industry dynamics and the favorable location of the ongoing project.
KEY RATING DRIVERSCredit Strengths:
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.
The ongoing projects "Xenus" & "Xline" are being constructed in Matunga & Kandivali respectively which are one of the prime locations in Mumbai.
Xenus is strategically located near Matunga(C.R.) station while Xline is located near Kandivali station and both the projects are in close proximity to educational institutes, shopping, dining, and recreational centers.
The cash flow projections submitted by the client to BWR during the last review were missed by substantial margins. Also, there have been muted sales visible from the sales velocity due to low traction in the selling of the new units for the past 12 months ending March 22.
The company is currently implementing the real estate project ' X’enus ' & 'Xline' at an estimated total cost of Rs. 47.80 Cr & Rs. 31.79 Cr respectively. Though the funding for both the projects is partly tied up, the salability remains to be seen. Further the project Xline is in the phase of execution partly imparting risks related to implementation. For “X’enus” the slab work till 18 of 20 floors is completed, and for "Xline" the piling has started. The operating performance will remain susceptible to the flow of advances from customers.
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. Over the past few months due to high inflation, the cost of the raw materials used in construction such as steel and cement have seen a sharp rise in price, which resulted in an increase in home prices. Also with the increase in interest rate, the cost of home loans has increased which will affect the consumer sentiments.
Further the project Xenus was expected to be completed by June 2022 but is delayed and for which the company has received RERA extension till 30 December 2022.
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.
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 a 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 - Stretched
The liquidity profile of the company is stretched.
The cash and cash equivalents stood at Rs. 1.49 Cr whereas the current ratio stood at 1.31x as of March 22. The OD average utilization for the last 6 months stands high at 99.63%.
The liquidity is stretched given there has been low traction in the selling of the new units for the past 12 months ending March 22. In addition to this, going forward, a significant amount of the cash flow is expected to be received from selling the unsold units.
ABOUT THE ENTITYRodium Realty Ltd. (RRL), a listed public limited company, is engaged in real estate development projects in Mumbai, Maharashtra in both the residential and commercial spaces with its registered office situated in the same city. Established in 1993 as Vishal Cotspin Ltd in 1993, the company was renamed RRL and taken over by Mr. Deepak Chheda, Mr. Shailesh Shah, Mr. Rohit Dedhia, and Mr. Harish Nisar in November 2009.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 12.89 | 16.00 |
EBITDA | Rs.Crs. | -0.52 | -0.92 |
PAT | Rs.Crs. | -0.37 | -2.75 |
Tangible Net Worth | Rs.Crs. | 12.85 | 13.33 |
Total Debt/Tangible Net Worth | Times | 6.77 | 5.11 |
Current Ratio | Times | 1.27 | 1.30 |
Key Parameters | Units |
FY 21-22 (Audited) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 12.89 | 16.00 |
EBITDA | Rs.Crs. | -0.53 | -0.93 |
PAT | Rs.Crs. | -0.67 | -2.80 |
Tangible Net Worth | Rs.Crs. | 13.10 | 13.58 |
Total Debt/Tangible Net Worth | Times | 7.00 | 5.02 |
Current Ratio | Times | 1.31 | 1.33 |
The terms of sanction include standard covenants normally stipulated for such facilities.
NA
ANY OTHER INFORMATIONNil.
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 | 20.77 |
BWR BB/Stable
(Downgrade) |
04Mar2021 |
BWR BB+Stable
(Reaffirmation ) |
NA |
NA
|
11Oct2019 |
BWR BB+Stable
(Assignment) |
Grand Total | 20.77 | (Rupees Twenty Crores and Seventy Seven 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 CriteriaAnalytical Contacts | |
---|---|
Akash Puran Singh Patwal Ratings Analyst akashpuran.p@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 |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Capri Global Capital Limited | Term LoanSanctioned | 20.77 | _ | 20.77 | |
Total | 20.77 | 0.00 | 20.77 | |||
TOTAL (Rupees Twenty Crores and Seventy Seven lakhs Only) |
Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate (%) | Maturity Date | ISIN Particulars |
---|---|---|---|---|---|
Not Applicable (NA) | 0.00 | 0 | NA |
Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
---|---|---|---|
Rodium Housing LLP | 99.95 | Full Consolidation | Subsidiary |
81 Estates LLP | 75 | Full Consolidation | Subsidiary |
Contour Developers LLP | 80 | Full Consolidation | Subsidiary |
Readystage LLP | 75 | Full Consolidation | Subsidiary |
Fluid Realty LLP | 75 | Full Consolidation | Subsidiary |
Xperia Realty LLP | 99 | Full Consolidation | Subsidiary |
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