Kabra estate and investment consultants

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 6.00 Crs. of Kabra estate and investment consultants

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (03 Nov 2020)	Present
Non Fund Based	6.00	6.00	Short Term	BWR A4+ Reaffirmation	BWR A4 + Reaffirmation
Grand Total	6.00	6.00	(Rupees Six Crores 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

Brickwork Ratings has reaffirmed the short term rating of Kabra estate and investment consultants for Bank loan facilities at BWR A4+. Brickwork Ratings(BWR) has essentially relied on the audited financial statements of Kabra estate and investment consultants upto FY20, provisional statements of FY21, projections upto FY23, adequate cash flow projections, publicly available information and information/clarifications provided by the company’s management and its bankers to arrive at the present ratings. The rating further draws strength from Extensive experience of the partners, Moderate Financial Risk Profile, Timely execution of project and Locational Advantage. The rating is partially offset by Constitution as a partnership firm, Cyclicality in the real estate industry and Inherent risk of execution of projects.

KEY RATING DRIVERS

Credit Strengths:

Extensive experience of the partners :
The management/ partners have an experience of over three decades in the same field and are a part of the established Kabra Group.
Locational Advantage :
Projects situated in a prime location like Andheri West, Vile Parle West- JVPD,Malad West with good connectivity.
Moderate Financial Risk Profile :
The company has adequate cash flow projections. Its TOI is at moderate level of Rs 101.24 Cr as per FY21 (prov) which has decreased by 7.05% as compared to Rs 108.92 Cr in FY20. However, this is expected to be at Rs 3.50 Crs and Rs 304.00 Crs as per the projections of FY22 and FY23 respectively. PAT has declined to Rs 8.67 Cr in FY21 as compared to Rs 18.94 Cr FY20. It is expected to be at Rs 1.70 Cr and Rs 78.07 as per theprojections of FY22 and FY23 respectively. TNW is marginally declined to Rs 48.30 Cr as per FY21 v/s Rs 50.76 Cr in FY20. TNW (A) is at Rs 78.66 Crs in FY21 v/s Rs 92.18 Crs in FY20 on account of the unsecured loans taken from friends and family. The gearing of the company has improved to 1.05 times as per FY21 v/s 1.31 times in FY20. It is expected to be 0.67x and 0.35x as per FY22 and FY23 (proj). Analysed gearing stands 0.26 times as per FY21 v/s 0.27 times in FY20. The net profit margin remains at higher level even though it has declined to 8.56% in FY21 as compared to 17.239% in FY20. It is expected toimprove to 48.57% and 25.68% as per FY22 and FY23 (proj). The operating profit margin remains at higher level even though it has declined to 15.27% in FY21 as compared to 31.33% in FY20. It is expected to improve to 195.14% and 40.58 % as per FY22 and FY23 (proj). The current ratio is at moderate level & has improved to 2.44X in FY21 as compared to 2.09X in FY20. It has expected to decline to 1.53X and2.97X as per FY22 and FY23 (proj).
Timely execution of project :
The execution of project is on time. Kabra Primera which is the on-going project under construction started in October 2017 before the previous project was completed.

Credit Risks:

Constitution as a partnership firm :
The management/ partners have an experience of over three decades in the same field and are a part of the established Kabra Group.
Cyclicality in the real estate industry :
The real estate sector in India is cyclical and volatile, resulting in fluctuations in cash flow because of changes in realisations. The residential real estate sector has remained under pressure due to weak demand and bearish consumer sentiment over the past few years, resulting in refinancing needs. Demonetisation and RERA have also impacted demand as buyers adopt a 'wait and watch' attitude, increasing the funding challenges for developers.
Inherent risk of timely execution of projects :
Projects still face an inherent risk of timely implementation and improvement in the sales velocity.

ANALYTICAL APPROACH - Standalone

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

Going forward the company’s ability to improve the scale of operations, improve and maintain profitability, the debt servicing capability & liquiditywill be the key rating sensitivities.

Positive: The rating will be upgraded if the company is able to achieve significant growth in revenue and improvement in profitability backed by a favourable industry scenario.

Negative: The rating may be downgraded if there is lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios adversely.

LIQUIDITY INDICATORS - Adequate

Current ratio is moderate having increased to 2.44x in FY21 from 2.09x in FY20. It has expected to be at 1.53X and 2.97X as per FY22 and FY23 (proj).
Cash and bank balances is Rs 4.04 Cr as on 20th January 2022. However it was Rs. 1.74 Crs as on March 31 2021 v/s Rs. 2.38 Crs as on March 2020. It has expected to be in the same level at Rs 2.00 Crs and Rs 3.00 Crs as per FY22 and FY23 (proj).
Net Cash Accruals of Rs. 8.98 Crs as on March 31 2021 (prov) v/s Rs. 19.23 Crs as on March 2020. It has expected to be at Rs 2.03 Crs and Rs 78.37 Crs as per FY22 and FY23 (proj).

ABOUT THE ENTITY

Kabra estate and investment consultants is mainly in Building Construction business and also provides professional consultancy services in Commercial and Residential Properties. It is a part of The Kabra Group of Companies. Other entity of the group is Kabra & Associates.

Kabra Group, a reputed Real Estate organisation in Mumbai shares a strong bond of Trust with its customers since 30 years. Widely spread across various sectors of developing, building, managing property and other allied real estate related services catering to both individual and corporate customers makes it a respected real estate establishment.

A certified company under ISO 9001:2000, Kabra Group is known for setting standards with its Mega Townships, Residential and Commercial Projects across Mumbai's landscape, thus laying the cornerstone of its stringent performance standards which is clearly visible in its extravagant constructions.

Kabra Group has constructed over 65 Lakhs of developed spaces and 15 Lakhs of redeveloped spaces with over 10,000 Satisified Customers.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Provisional)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	101.24	108.92
EBITDA	Rs.Crs.	15.46	34.12
PAT	Rs.Crs.	8.67	18.94
Tangible Net Worth	Rs.Crs.	48.30	50.76
Total Debt/Tangible Net Worth	Times	1.05	1.31
Current Ratio	Times	2.44	2.09

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

N.A

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
Non Fund Based	ST	6.00	BWR A4+ (Reaffirmation)	NA	NA	03Nov2020	BWR A4+ (Reaffirmation)	09Apr2019	BWR A4+ (Reaffirmation)
		NA	NA	NA	NA	18May2020	BWR Advisory ()	NA	NA
Grand Total		6.00	(Rupees Six Crores 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
Shevya Agarwal Rating Analyst shevya.a@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

Kabra estate and investment consultants

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	Indian Bank	Bank Guarantee - Sanctioned	_	4.95	4.95
2	Indian Bank	Bank Guarantee - Proposed	_	1.05	1.05
Total			0.00	6.00	6.00
TOTAL (Rupees Six Crores Only)

Print and Digital Media

The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters 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.

Disclaimer

Brickwork Ratings India Pvt. Ltd. (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by the Reserve Bank of India [RBI], offers credit ratings of Bank Loan facilities, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. [ hereafter referred to as "Instruments"]. BWR also rates NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations.

BWR wishes to inform all persons who may come across Rating Rationales and Rating Reports provided by BWR that the ratings assigned by BWR are based on information obtained from the issuer of the instrument and other reliable sources, which in BWR's best judgment are considered reliable. The Rating Rationale / Rating Report & other rating communications are intended for the jurisdiction of India only. The reports should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in Europe and also the USA).

BWR also wishes to inform that access or use of the said documents does not create a client relationship between the user and BWR.

The ratings assigned by BWR are only an expression of BWR's opinion on the entity / instrument and should not in any manner be construed as being a recommendation to either, purchase, hold or sell the instrument.

BWR also wishes to abundantly clarify that these ratings are not to be considered as an investment advice in any jurisdiction nor are they to be used as a basis for or as an alternative to independent financial advice and judgment obtained from the user's financial advisors. BWR shall not be liable to any losses incurred by the users of these Rating Rationales, Rating Reports or its contents. BWR reserves the right to vary, modify, suspend or withdraw the ratings at any time without assigning reasons for the same.

BWR's ratings reflect BWR's opinion on the day the ratings are published and are not reflective of factual circumstances that may have arisen on a later date. BWR is not obliged to update its opinion based on any public notification, in any form or format although BWR may disseminate its opinion and analysis when deemed fit.

Neither BWR nor its affiliates, third party providers, as well as the directors, officers, shareholders, employees or agents (collectively, "BWR Party") guarantee the accuracy, completeness or adequacy of the Ratings, and no BWR Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Rating Rationales or Rating Reports. Each BWR Party disclaims all express or implied warranties, including, but not limited to, any warranties of merchantability, suitability or fitness for a particular purpose or use. In no event shall any BWR Party be liable to any one for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Rating Rationales and/or Rating Reports even if advised of the possibility of such damages. However, BWR or its associates may have other commercial transactions with the company/entity. BWR and its affiliates do not act as a fiduciary.

BWR keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of BWR may have information that is not available to other BWR business units. BWR has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

BWR clarifies that it may have been paid a fee by the issuers or underwriters of the instruments, facilities, securities etc., or from obligors. BWR's public ratings and analysis are made available on its web site, www.brickworkratings.com. More detailed information may be provided for a fee. BWR's rating criteria are also generally made available without charge on BWR's website.

This disclaimer forms an integral part of the Ratings Rationales / Rating Reports or other press releases, advisories, communications issued by BWR and circulation of the ratings without this disclaimer is prohibited.

BWR is bound by the Code of Conduct for Credit Rating Agencies issued by the Securities and Exchange Board of India and is governed by the applicable regulations issued by the Securities and Exchange Board of India as amended from time to time.