Brickwork Ratings reaffirms/revises the ratings for the Bank Loan Facilities of Rs.18.29 Crs. of Shreenathji Developers
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||||
|---|---|---|---|---|---|---|---|
| Previous | Present | Previous(22 Nov 2019) | Present | ||||
| Fund Based | |||||||
| Term Loan Sanctioned | 23.29 | 18.29 | Long Term | BWR BB /Stable Reaffirmation | BWR BB /Stable Reaffirmation | ||
| Sub Total | 23.29 | 18.29 | |||||
| Grand Total | 23.29 | 18.29 | (Rupees Eighteen Crores and Twenty Nine lakhs Only) | ||||
The reaffirmation of the rating factors an adequate experience of the partners in the industry, the group’s track record of executing real estate projects successfully, the strategic location in Surat, Gujarat, and the completion of the project before schedule. The Firm has repaid a part of the loan availed for the project. The resultant finance cost-saving has partially offset the challenges posed by the sluggish market conditions and a slow down in the real estate sector, as also competition from the presence of established players in the market.
OUTLOOK: STABLE The ratings have been assigned a stable outlook as the Firm’s business risk profile is expected to be maintained over the medium term. The outlook may be revised to positive in case of better realization of sales as compared to projections. It may be revised to negative if sales realization for the remaining units is at a lower than expected price.
KEY RATING DRIVERSBWR has essentially relied upon the audited financial statements of Shreenathji Developers of FY18,FY19,FY20 and projected financial statements of FY21,FY22, publicly available information and information / clarifications provided by the entity’s management.
Credit Strengths:
Shreenathji Developers promoter group has been in the real estate sector for more than a decade. The promoters have built a reputation for completing projects with adequate quality and in a timely manner.
The commercial project named “Avadh Textile Market” project has been completed, The funding risk of the project is also low with sanction available for term loans.
Strategic location in Surat, Gujarat. Surat is Textile Hub and the project is catering to the Textile segment.
Credit Risks:
Firm is currently implementing new real estate commercial project 'Avadh Textile Market ' Though the funding for the project is fully tied up, the project, the salability remains to be seen. Further the project is in early phaseof execution partly imparting risks related to implementation. Real estate sales have been subdued in recent times becauseof exposure to investor-driven markets and the impact of RERA, sales velocity remains critical for the new project.
The real estate segment in India is cyclical and has volatile prices, opaque transactions, and a highly fragmented market structure because of several regional players. Further, on account of Covid 19, there has been a slowdown in sales and collections from customers.
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 ability of the company to scale up its operations and to improve its profit margins while maintaining its gearing at low would be the key rating sensitivities.
Upward: The rating may be positively revised if there is further growth in revenue and profit margins while maintaining a healthy overall financial profile.
Downward: The rating may be adversely affected if there is deterioration in capital structure, profit margins, and any delays in payment of its debt obligations.
Liquidity is stretched, The entity is having low debt protection metrics, ISCR & DSCR stood at 1.61x & 0.58x in FY19-20.
The firm has low cash balances of Rs.0.41cr. The company is regular in its repayment obligations as confirmed by Bank. The Company has a current ratio of 7.44 for FY19- 2020.
M/s Shreenathji Developers was established on 02.10.2015 to develop a commercial project named “Avadh Textile Market” with built-up area of approx 5,76,511.11 Sq feet situated at Plot No. 75, Survey No. 35, City Survey No. 2175, O. P. No. 44, T. P. S. No.8, Village Umrawada, Taluka - Puna (Surat City), Surat Kadodara Road, Surat - 394210. The Group is lead by Mr. Lavjibhai Daliya one of the main promoters and founder of the group. The group is one of the leading players of Surat city in the construction sector. The group has developed both residential and commercial projects in Surat, Ahmedabad, Navsari, Bardoli, Amreli, and Vapi.
| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 55.71 | 26.38 |
| EBITDA | Rs.Crs. | 4.80 | 6.15 |
| PAT | Rs.Crs. | 2.19 | 1.83 |
| Tangible Net Worth | Rs.Crs. | 35.78 | 64.27 |
| Total Debt/Tangible Net Worth | Times | 0.64 | 0.64 |
| Current Ratio | Times | 8.52 | 7.44 |
Not Applicable.
Not Applicable.
ANY OTHER INFORMATIONNot Applicable.
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | Rating History (2020) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | NA | |||||||
| Fund Based | |||||||||||
| Term Loan - Sanctioned | Long Term | 18.29 | BWR BB/Stable | NA | |||||||
| Grand Total | 18.29 | (Rupees Eighteen Crores and Twenty Nine lakhs Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2019) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 22Nov2019 | |||||||
| Fund Based | |||||||||||
| Term Loan - Sanctioned | Long Term | 18.29 | BWR BB/Stable | BWR BB/Stable | |||||||
| Grand Total | 18.29 | (Rupees Eighteen Crores and Twenty Nine lakhs Only) | |||||||||
| Facilities | Current Rating (2021) | Rating History (2018) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount | Rating | 05Jul2018 | |||||||
| Fund Based | |||||||||||
| Term Loan - Sanctioned | Long Term | 18.29 | BWR BB/Stable | BWR BB/Stable | |||||||
| Grand Total | 18.29 | (Rupees Eighteen Crores and Twenty Nine 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 Criteria| Analytical Contacts | |
|---|---|
|
Urvi Shah Rating Analyst urvi.s@brickworkratings.com |
Dileep Narayan Singh Director Ratings dileep.s@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Term LoanSanctioned | 18.29 | _ | 18.29 | ||
| Total | 18.29 | 0.00 | 18.29 | |||
| TOTAL (Rupees Eighteen Crores and Twenty Nine 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 |
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