RATING RATIONALE
19 Feb 2020
Anjani Developers
Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.29.50 Crs. of Anjani Developers
Particulars| Facility** | Amount (Rs.Crs) | Tenure | Rating* |
|---|---|---|---|
| Fund Based | |||
| Term Loan Proposed | 29.50 | Long Term | Provisional BWR BB - (Stable) |
| Sub Total | 29.50 | ||
| Grand Total | 29.50 | (Rupees Twenty Nine Crores and Fifty lakhs Only) | |
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable
BWR has principally relied upon the management certified financials upto FY19, projected financials upto March 2025, publicly available information and information & clarifications provided by management.
The rating draws comfort from the group's track record, experienced management and the ability of the partners to bring additional capital as per business requirement. However, the rating continues to remain constrained due to demand slowdown in the real estate sector, timely execution of project without any cost overrun coupled with improved sales velocity for commercial space and inherent risk associated with real estate sector.
BWR believes that Anjani Developers 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 DRIVERS
Credit Risk:
- Risk associated with the sector: The Company is exposed to the cyclicality inherent in an intensely competitive real estate sector, which may result in fluctuations in cash inflows because of volatility in sales. Further, the Real Estate sector as a whole is experiencing short term slow down with decline in new launches and expected price rationalization on account of recent policy measures such as RERA and GST. However, Group’s established track record and market standing are expected to support its business and mitigate these risks to some extent.
- Execution and project completion risk: The construction cost of the ongoing project is funded through a mix of debt and equity. Any delay in funding would pose a challenge in timely execution of project. Project execution and completion, without any cost and time over run, would be the key driver.
Credit Strength:
- Group's track record: Avadh group is in the business of real estate development for more than 2 decades and has completed many commercial and real estate projects including River View Heights, Avadh Shangrila, Avadh Kimberly among many others.
- Moratorium period of 36 months: The proposed term loan includes a moratorium period of 36 months which will ensure that the construction will get completed as planned and loan serviced from the projected Sales of Commercial space.
For arriving 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
Positive:
- Timely execution of project.
- Timely sale of commercial space at envisaged price.
Negative:
- Delay in execution of project.
- Delay in sale of commercial spaces or sale at substantial discount.
The Business Entity was formed in 2017 at Surat, Gujarat, Anjani Developers is special purpose entity formed to construct commercial complex named Avadh Textile Market - II at Surat. It will have total of 574 units with construction area of 309,414 Sq ft. AD is a part of Avadh group which is veteran construction firm, engaged in creating innovative residential and commercial buildings and construction sites at Surat, Palsana, Bardoli, Vapi and Navsari. AD is mainly managed and controlled by partners Mr. Lavjibhai Daliya, Mr. Jayantilal Babariya, Mr. Maganbhai Lakhankiya and Mr. Prakash Narola all of whom are having extensive experience in real estate development.
Project Details:
AD is developing a commercial project named Avadh Textile Market II with total construction area of 309,414 Sq Ft. having a total of 574 units. It is expected to be completed by December 2022. The project is registered under Real Estate (Regulation & Development) Act,2016 having registration number PR/GJ/SURAT/SURAT CITY/SUDA/CAA05947/270819 which is valid till 31st March 2028. The total cost of the project is projected to be Rs. 72.19 Crs. which is planned to be funded through partner's capital of Rs. 14.57 Crs., unsecured loans of Rs. 10.97 Crs., term loan of Rs.29.50 Crs and advances from customers. Total expected sale value of the project is Rs. 77.35 Crs.
Company Financial Performance:
As on 31st Dec 2019 the company has incurred a total cost of Rs.16.94 Crs., including land cost of Rs.7.75 Crs., which is funded by partner's capital of Rs.10.69 Crs., advances from customers of Rs.2.26 Crs and Creditors of Rs.3.77 Crs.
KEY FINANCIAL INDICATORS
| Key Parameters | Units |
FY 18-19 (Unaudited) |
FY 17-18 (Unaudited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 0.00 | 0.00 |
| EBITDA | Rs.Crs. | 0.00 | 0.00 |
| PAT | Rs.Crs. | 0.00 | 0.00 |
| Tangible Net Worth | Rs.Crs. | 10.11 | 2.45 |
| Total Debt/Tangible Net Worth | Times | 0.05 | 0.00 |
| Current Ratio | Times | 40.77 | 1.62 |
- The proposed term loan facility will have a tenure of 60 months. It will be repayable in 24 monthly installments after 36 months of moratorium period.
RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)
| S.No | Current Rating (2020) | Rating History | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Facilities | Tenure | Amount (Rs.Crs) | Rating | |||||||
| Total | 29.50 | (Rupees Twenty Nine Crores and Fifty 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.
For More Information Contact:| Analytical Contacts | Investor Contacts |
|---|---|
|
Siddharth Shah Lead Analyst siddharth.s@brickworkratings.com |
Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com |
|
Dileep Narayan Singh dileep.s@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 | 29.50 | _ | 29.50 |
| Total | 29.50 | |||
| TOTAL (Rupees Twenty Nine Crores and Fifty lakhs Only) | ||||
| 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 |
Ratings are not a recommendation or suggestion ,directly or indirectly, to you or any other person, to buy sell, make or hold on any investement,loan or security or to undertake any investement strategy with respect to any investment,loan or security or any issuer.
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.