RATING RATIONALE
21 Oct 2019
B.M. Gupta Developers Pvt. Ltd.
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.30.00 Crs. of B.M. Gupta Developers Pvt. Ltd.
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Term Loan Proposed | 30.00 | Long Term | BWR B (Stable) |
| Sub Total | 30.00 | ||
| Grand Total | 30.00 | (Rupees Thirty Crores Only) | |
**Details of Bank facilities are provided in Annexure-I
Note: The facility is not sanctioned it is proposed. RATING ACTION / OUTLOOK : Stable
Brickwork Ratings has assigned the rating of BWR B (Outlook: Stable) to the proposed bank loan facility of B.M. Gupta Developers, the rating factors in the extensive experience of the promoters, construction of new projects, and locational advantage. However, the rating is constrained by high dependence on advances from customers and bank borrowings, timely project execution risk, and industry risk.
KEY RATING DRIVERS
Credit Strengths:
- Extensive experience of the promoters :
The key promoters of the company, Mr. Radhey Shyam Gupta, Mr. Vijay Kumar Gupta, Mr. Ripu Daman Gupta and Mr. Ravi Shankar Gupta have extensive experience of over three decades in the real estate development business. The promoters bring in expertise and experience from the group companies of B.M Gupta Developers, the other group companies are into commercial real estate which has helped the company to establish its footprints in the market.
- Construction of new projects :
The company is currently implementing three projects namely "Elegant City", "Elegant Heights", and "Antriksh Towers". The Elegant City is a 52-acre project of which 42 acres have already been developed with state-of-the-art facilities like LT & HT, underground cables, sewage treatment facility, wide roads, and fully developed and spacious parks. Elegant Heights is a high rise apartment of 25 in numbers with rich specifications and modern building techniques.
- Locational Advantage :
The said projects are near BMG Mall, BMG Cinemas, Everest Plaza which is a locational advantage for the projects and is these locations are easily reachable from the location of the project.
Credit Risks:
- High dependence on advances from customers and bank borrowings :
Viability of the projects depend on the ability to sell the units as per the desired projections.
- Timely project execution risk :
The project is in the construction stage and since any time overruns may lead to an increase in project cost.
- Industry risk :
Real estate market is characterized by its sluggish and cyclical nature and regulatory intervention.
For ariving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the company to complete the projects in time thereby turning aside cost and time overrun, to improve the capital structure by inducing additional capital, achieve the projected revenue and profitability margins, and manage liquidity would be the key rating sensitivities.
Positive- The rating outlook may be revised to positive f the company is able to achieve significant growth in revenue and profitability backed by favorable industry scenario.
Negative- The rating outlook may be revised to negative if the revenues go down and profit margins show lower than expected figures.
LIQUIDITY POSITION
The liquidity of the company is repressed by cash and cash equivalents of INR 0.08 crores in FY 2019. The current ratio and quick ratio of 1.05x and 1.00x respectively in FY 2019 are inadequate. The overall liquidity position of the company is poor.
PROFILEIncorporated in 2008, BM Gupta Developers is a Rewari-based private limited company engaged in the business of residential real estate development. The company is building three projects in the segment of township and affordable housing which under the name of "Elegant City", "Elegant Heights", and Antriksh Towers". The key promoters of the company are Mr. Radhey Shyam Gupta, Mr. Vijay Kumar Gupta, Mr. Ripu Daman Gupta, and Mr. Ravi Shankar Gupta.
KEY FINANCIAL INDICATORS| Key Parameters | Units |
FY 18-19 |
FY 17-18 |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 3.92 | 3.41 |
| EBITDA | Rs.Crs. | 0.99 | 0.88 |
| PAT | Rs.Crs. | 0.41 | 0.60 |
| Tangible Net Worth | Rs.Crs. | 9.77 | 9.36 |
| Total Debt/Tangible Net Worth | Times | 4.04 | 1.49 |
| Current Ratio | Times | 1.05 | 1.00 |
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2019) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | 2018 | 2017 | 2016 | ||||
| Fund Based | ||||||||||
| 1 | Term Loan - Proposed | Long Term | 30.00 | BWR B(Pronounced as BWR Single B )(Outlook: Stable) | NA | NA | NA | |||
| Total | 30.00 | (Rupees Thirty 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 : For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Akshay Rastogi Ratings Analyst B : +91 11 2341 2232 akshay.r@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com |
|
| 1-860-425-2742 | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
|---|---|---|---|---|
| 1 | Term LoanProposed | 30.00 | _ | 30.00 |
| Total | 30.00 | |||
| TOTAL (Rupees Thirty Crores Only) | ||||
Note: The facility is not sanctioned it is proposed.
| Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
|---|---|---|---|---|---|
| NA | NA | NA | NA | NA | NA |
| Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
|---|---|---|---|
| NA | NA | NA | NA |
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Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of India. Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.