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CRISIL’s ratings on the bank facilities of Shiv Sai Infrastructure Pvt Ltd (Shiv Sai; part of the Shiv Sai group) continue to reflect the Shiv Sai group’s moderately weak financial risk profile marked by moderate net worth, weak debt protection measures, limited track record in real estate development, and exposure to risks relating to concentration of revenues in Faridabad (Haryana), and to completion and funding of projects, Shiv Sai I and Ozone Centre. These weaknesses are partially offset by the benefits that the group derives from low saleability risk of, and advance bookings for, its ongoing project, Ozone Park. Further, Shiv Sai has large term loan becoming due for repayment between August and December 2010; the company’s liquidity management and timely repayment of these loans will be key rating sensitivity factors in the near term.
For arriving at the ratings, CRISIL has combined the business and financial risk profiles of Shiv Sai, and Shiv Sai’s wholly owned subsidiaries, SSIPL Pvt Ltd (SSIPL) and SMG Estates Pvt Ltd (SMG). This is because Shiv Sai and its subsidiaries (collectively referred to as the Shiv Sai group) have a common line of business, and Shiv Sai has made significant investments in the subsidiaries.
Outlook: Stable
CRISIL believes that the Shiv Sai will maintain a stable financial risk profile over the medium term, supported by the moderate saleability of its projects and buoyancy in the Faridabad real estate market. The outlook may be revised to ‘Positive’ if the group’s financial risk profile improves considerably owing to better than expected accruals, or if it enters new geographies, while improving its operating margin. Conversely, the outlook may be revised to ‘Negative’ if the group takes on large debt to fund future projects, or faces low offtake on current and future projects.
About the Group
Set up in 2005 by Mr. Sandeep Gupta, Mr.Vikram Dhawan, and Mr Anurag Sharma, Shiv Sai has two on-going real estate projects: Ozone Park Apartments, which has 500 residential units, and Sai Park-I, which has 240 residential units. Ozone Park Apartments, the company’s first project, is expected to be completed by December 2010. SSIPL is a wholly owned subsidiary of Shiv Sai, holding a 30 acres land in Palwal, Faridabad. Shiv Sai acquired SMG for Rs.11.2 crores in 2007 and took over the 3630 sq meter of land. Currently SMG is undertaking a commercial project, ‘Ozone Centre’, having a total construction cost of Rs.31 crores.
Shiv Sai reported a profit after tax (PAT) of Rs.11.3 million on net sales of Rs.445 million for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.16.7 million on net sales of Rs.210.4 million for 2007-08. Shiv Sai had no sales prior to 2007-08.
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Disclaimer: A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings’ rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.
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