Raghuvir Developers & Builders

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 435.55 Crs. of Raghuvir Developers & Builders

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (04 Aug 2021)	Present
Fund Based	303.94	435.55	Long Term	BWR BBB- /Stable Upgrade	BWR BBB - /Stable Reaffirmation
	(0.00)	(5.40)
	(0.00)	(3.97)
	(0.00)	(1.35)
Grand Total	303.94	435.55	(Rupees Four Hundred Thirty Five Crores and Fifty Five 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

BWR has considered the standalone financials of the Firm and essentially relied upon the audited financial statements up to FY21, management and CA certified provisional financials of FY22, projected financials upto FY24 and publicly available information and clarifications provided by the entity’s management.

The rating reaffirmation factors the completion of two projects since past one year, progression in the ongoing projects, its bookings and large ready to move unsold inventories. The The rating is, however, constrained by increased in bank borrowings, project execution risk, the risk with sale ability of the projects. The firm enjoys the established track record of “Raghuvir Group”, the strategic location of the projects being developed by the Firm and financial support by the promoters. Also, the firm has healthy land bank, which provides a flexibility for planning new projects. The firm is exposed to the risk of withdrawal of the capital being a partnership nature of consititution.

The Ability of the firm to successfully complete the projects on time and execute sales of remaining units as well as new bookings will remain the key rating sensitivities. BWR believes that Raghuvir Developers & Builders's business risk profile is likely to be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters and established the presence of the Firm: :
RDB has an established presence in the Surat real estate market since 2006 and till date, the Firm has successfully executed around 28 projects. The Firm is being managed by Mr G. R. Asodaria and five other partners who have extensive experience of more than three decades in the real estate industry. The promoters have been actively supervising the day-to-day activities of the Firm, and have demonstrated their capability to infuse funds when needed.
Advance stage/ Completion of projects and large ready to move unsold inventory: :
The firm has completed a commercial project namely, 'Raghuvir Platinium' in March 2021 and 'Raghuvir Trade Center in September 2021. The construction work of commercial project 'Raghuvir Scarlett' is at advance stage and will be completed by September 2022. Revenue is reported at Rs. 71.05 Crs in FY21 and Rs. 93.98 Crs on provisional FY22 basis. Moreover, at present, RDB has large ready to move unsold inventory of~Rs 946.17 crore in the three completed and 4 ongoing projects. In the ongoing commercial project Also, remaining three residential projects - Raghuvir Spectrum, Satva and Spalex construction work is 40-55% completed and expected to complete by March 2024.
Moderate financial risk profile: :
The financial risk profile of the Firm remains moderate, marked by increase in leverage. Bank borrowings have increased to Rs. 410.16 Crs in FY22 (Prov. ) against Rs. 365.51 Crs. Vis-a-vis the net worth base is comfortable from Rs 285.92 Crs in FY21 with retained profits and additional infusion by partners. Gearing stood low at 1.60x in FY19 against 1.69x in FY20. RDB is expected to repay the debt supported by cash flows supported by the escrow account mechanism. Timely infusion of funds by the promoters and receipt of advances will remain a key rating sensitivity.
Availability of large land bank: :
Raghuvir group and its promoters have a large land bank of around 7 lakh sq. meters approximately in Surat, Ahmedabad & Dholera smart city and Gift city, Gandhinagar. The availability of large land bank provides significant financial flexibility for planning new projects as well as in case of any exigency.

Credit Risks:

Saleability and project completion risks : :
As on 30th April, 2022, the booking status of completed and ongoing projects remained 39% of area booked (2321217 sq. fts out of 5898695 sq. fts) , 38% of units booked (1754 out of 2836 ) However, the saleability risk related to the un-booked units is moderately high and four projects are still under construction. Project execution & completion, without any cost over-run, would be a key monitorable.
Risks associated with the real estate sector and constitution as partnership firm: :
The real estate sector in India is highly fragmented with many players, who have significant presence in their respective local markets which in turn leads to intense competition within the industry. The real estate sector is sensitive to the economic cycle and interest rates. The firm is exposed to inherent risk of the partners’ capital being withdrawn, which may put pressure on the capital structure of the entity.

ANALYTICAL APPROACH - Standalone

BWR has adopted a Standalone approach of the firm while arriving at its ratings. BWR has applied its rating methodology as detailed in the Rating Criteria detailed below in the hyperlinks.

RATING SENSITIVITIES

Positive: Substantial increase in sales velocity and profitability and increase customer advances and infusion of the fund by the promoters be key rating positives.

Negative: Lower than expected sales, deterioration in gearing, rise in debt, delay in the project execution, withdrawal of USLs will be key rating sensitivities.

LIQUIDITY INDICATORS - Adequate

The liquidity position of the firm is adequate, given the debt repayments and the pending project cash against the committed collection and booking. Since past year, the firm's long term borrowing has increased with launch of new projects and repayment of existing loans. Customer advances of Rs. 297.21 Crs has been collected from ongoing and completed projects upto 30th April 2022. The Firm has an investment in shares of Rs. 73.65 Crs as on 31 March 2022 (Prov) and Promoters have infused the additional capital of Rs. 25.07 Crs as on 31st March 2021 to support its near term working capital requirement. The firm has construction cost to be incurred of Rs. 164.38 Crs by the end of March 2024 against which expected to receive customer advances of Rs. 191.12 Crs from the booked units in the near term. RDB has large ready to move unsold inventory. This indicates that the construction will be completed in a timely manner from the funds available in the form of receivables, unsold inventories and bank loans, promoters financial support. Debt principal repayment obligations are approx Rs.134.10 Crs and Rs.147.22 cr for FY23 and FY24, respectively. . Considering construction of one project is at advance stage of completion and the timely receipt of the customer advances is crucial for credit rating.

ABOUT THE ENTITY

Raghuvir Developers & Builders (RDB) was established in 2006, as a partnership for the construction of real estate projects both residential and commercial in the Surat city, Gujarat. It is managed by Mr. G. R. Asodaria, Mr. Hitesh Ponkia, and other four partners. The Firm has a huge land bank having current market value of Rs. 1891 crs spread in an area of 7 lakh sq. meters approximately in Surat, Ahmedabad & Dholera smart city and Gift city, Gandhinagar. All the residential projects of the Firm are RERA approved and compliant.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	71.05	80.61
EBITDA	Rs.Crs.	64.45	46.61
PAT	Rs.Crs.	15.50	4.01
Tangible Net Worth	Rs.Crs.	285.92	245.35
Total Debt/Tangible Net Worth	Times	1.60	1.69
Current Ratio	Times	6.15	9.79

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

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	435.55	BWR BBB-/Stable (Reaffirmation)	04Aug2021	BWR BBB- Stable (Upgrade)	15May2020	BWR BB+ Stable (Assignment)	NA	NA
FB SubLimit	LT	(5.40)	BWR BBB-/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(3.97)	BWR BBB-/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
		(1.35)	BWR BBB-/Stable (Reaffirmation)	NA	NA	NA	NA	NA	NA
Grand Total		435.55	(Rupees Four Hundred Thirty Five Crores and Fifty Five 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
Kunjal Dabhi Rating Analyst Board : +91 79 66174046 / 47 kunjal.r@brickworkratings.com	Vidya Shankar Principal Director - Ratings Board : +91 80 4040 9940 vidyashankar@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Raghuvir Developers & Builders

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	Bank of Baroda	Term Loan - Out-standing	250.24	_	250.24
2	Canara Bank	Term Loan - Sanctioned	65.00	_	65.00
3	Central Bank of India	Term Loan - Out-standing	27.00	_	27.00
4	Central Bank of India	GECL - Sanctioned	4.25	_	4.25
5	Central Bank of India	Common Covid Emergency Line of Credit (CCECL) - Out-standing	7.30	_	7.30
6	Indian Bank	Mortgage Loan - Out-standing	6.75	_	6.75
7	The Kalupur Commercial Co-op Bank Limited	Term Loan - Sanctioned	25.60	_	25.60
8	The Kalupur Commercial Co-op Bank Limited	Over Draft - Sanctioned	5.40	_	5.40
9	The Sarvodaya Sahakari Bank	Loans against Property - Out-standing	4.01	_	4.01
10	UCO Bank	Term Loan - Sanctioned	40.00	_	40.00
Total			435.55	0.00	435.55
TOTAL (Rupees Four Hundred Thirty Five Crores and Fifty Five lakhs Only)

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