Rating Rationale
March 11, 2025 | Mumbai
Haraparvati Realtors Private Limited
Rating migrated to ‘Crisil A/Negative'
 
Rating Action
Total Bank Loan Facilities RatedRs.195 Crore
Long Term RatingCrisil A/Negative (Migrated from 'Crisil A+ (CE) /Stable')
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

Crisil Ratings has migrated its rating on the long-term bank facilities of Haraparvati Realtors Pvt Ltd (HRPL) to ‘Crisil A/Negative’ from ‘Crisil A+ (CE) /Stable’.  The rating migration is driven by the withdrawal of Corporate Guarantee given by Salarpuria Properties Pvt Ltd (SPPL; rated 'Crisil A+/Stable')

 

The revision in outlook is driven by the drop in occupancy of Salarpuria Aura to 16% as on Dec’24 from 84% in Dec’23, leading to a reduction in lease rentals. This was majorly due to leased space vacated in Dec’24 by one tenant, which occupied ~64% of the total leasable area. At its current occupancy, the cash flow from lease rentals will not be enough to service the debt obligation of the company. However, the company has ~Rs 140 crores worth of outstanding loans and advances to related parties as on 31st Mar’24 which can be recalled in case of any requirement. Of this, it has got inflow of ~ Rs 18.50 crores till Dec’24 and the said inflow will be available going forward also, in order to meet the debt obligations. Further, the rating factors in support from the parent Salarpuria Sattva Property Limited and the Salarpuria Sattva group, who are expected to support the company to service its debt repayment obligation till the time the company increases its occupancy to so that it can meet the debt repayment obligation by itself. Given the strong track record of the Salarpuria Sattva group and the assets’ location at ORR, Sarjapur, Bangalore the company is expected to able to lease the asset within 6-18 months.

 

The overall rating of HRPL reflects the rating of the parent company and the Salarpuria Sattva group, strong market position of the group along with a strong financial risk profile as a result of a comfortable debt to cash flow from operations (CFO) from residential business.

 

The rating continues to factor in the strong operational, financial and managerial support from the Salarpuria Properties Pvt Ltd and Salarpuria Sattva group. These strengths are partially offset by the high customer concentration risk and inherent risk in the real estate sector.

Analytical Approach

The rating is based on the standalone business and financial risk profiles of HRPL and factors in benefits of strong support from the parent, Salarpuria Properties Pvt Ltd. and the Salarpuria Sattva Group

Key Rating Drivers & Detailed Description

Strength:

  • Strong operational, financial and managerial support from Salarpuria Sattva group: HRPL benefits from the strong parentage of the Salarpuria-Sattva group, which has an established track record of over three decades, with a strong brand presence in the real estate market. The group has developed over 759 lakh square feet (sq ft) of residential and commercial space, mostly in Bengaluru and Hyderabad, of which ~58% is in the commercial segment. The company benefits from the sponsor group’s extensive experience and proper asset maintenance, which has ensured healthy occupancy and quality. Group also has strong financial risk profile and financial flexibility which will help HRPL service its debt in a timely manner.

 

  • Loans and advance to parent group entities: HRPL has ~Rs 140 crores worth of outstanding loans and advances to the group entities as on 31st Mar’24 which can be recalled in case of any requirement. Of this, it has got inflow of ~ Rs 18.50 crores till Dec’24. Further, this provides cushion to the liquidity position of the company to meet the debt obligations.

 

Weaknesses:

  • Exposure to vacancy risks due to high customer concentration risk: The entire area is occupied by three tenants, thus leading to high revenue concentration and contract renewal risks. However, these tenants are established corporates, who are likely to continue to occupy the property, having borne the large fit-out costs. Additionally, with no leases due to expire till fiscal 2026, renewal risk is lower. However, if any of them vacates the premises, and new agreements are not signed on time, debt protection metrics may weaken. This remains a key rating sensitivity factor.

 

  • Exposure to inherent risks in the real estate sector: Rental collection (key source of revenue) is susceptible to economic downturns, which may constrain the tenants' business risk profile and, therefore, occupancy and rental rates. The committed occupancy of the asset has come down from 84% in Dec 2023 to 16% as on Dec 2024, While majority of the tenants are established corporates and may continue to occupy the property, any industry shock leading to vacancies may make it difficult to find alternate lessees within the stipulated time. Emergence of competing facilities in the vicinity could also have the potential to cannibalise tenants or rental rates. These could adversely impact cash flow, and hence, will be key rating sensitivity factors.

Liquidity: Strong

The company has Rs. 3.7 crores on unutilized overdraft limits as on 31st December 2024.
 

Additionally, any shortfall in funding is expected to be covered by the Salarpuria Sattva group, which has strong liquidity.

Outlook: Negative

The outlook is based on the decrease in occupancy of Salarpuria Aura from 84% in Dec 2023 to 16% as of Dec 2024

Rating sensitivity factors

Upward factors:

  • Upgrade in the rating of Salarpuria Properties Pvt Ltd by 1 or more notches
  • Increase in occupancy rate to 70% or above or reduction in debt through prepayments, thereby strengthening surplus generation and debt protection metrics

 

Downward factors:

  • Downgrade in the rating of Salarpuria Properties Pvt Ltd by 1 or more notches
  • Continuation of weak debt protection metrics owing to lower-than-expected cash flow, driven by lower vacancy rate or drawdown of any incremental debt

About the Company

HRPL, held equally by the Salarpuria-Sattva group and the Kothari group, is a special-purpose vehicle formed to develop Aura, a commercial real estate project with 5.10 lakh sq ft of leasable area at Sarjapur in Bengaluru. HRPL has completed the project and has been generating lease rental income since the first half of fiscal 2016.

About the Parent Group

The Salarpuria-Sattva group was founded by the late Mr G D Salarpuria in 1986 in Kolkata. Mr Bijay Agarwal, managing director, manages the operations of the group. The group has been involved in the construction and development of real estate for 37 years. SPPL and Sattva Developers Pvt Ltd are the two flagship companies of the group. The other group entities are mainly involved in individual projects. It has ISO 9001:2008, 14001:2004, and 18001:2007 certifications. Till August’24, 759 lsf of built up area has been developed, of which, around 58% comprises commercial development (in Bengaluru and Hyderabad). The group also has presence in Pune (Maharashtra), Coimbatore (Tamil Nadu), and Goa.

Key Financial Indicators

Particulars

Unit

2024

2023

Operating income

Rs crore

53

33

Profit after tax (PAT)

Rs crore

30

10

PAT margin

%

57

31

Adjusted debt/adjusted Networth

Times

0.60

0.97

Adjusted interest coverage

Times

4.88

2.62

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Overdraft Facility NA NA NA 51.64 NA Crisil A/Negative
NA Proposed Long Term Bank Loan Facility NA NA NA 99.53 NA Crisil A/Negative
NA Term Loan NA NA 31-May-26 43.83 NA Crisil A/Negative
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 195.0 Crisil A/Negative   -- 15-04-24 Crisil A+ (CE) /Stable 20-01-23 Crisil A+ (CE) /Stable 31-03-22 Crisil A+ (CE) /Stable Crisil A/Stable
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Overdraft Facility 51.64 Central Bank Of India Crisil A/Negative
Proposed Long Term Bank Loan Facility 99.53 Not Applicable Crisil A/Negative
Term Loan 43.83 Central Bank Of India Crisil A/Negative
Criteria Details
Links to related criteria
Criteria for Real estate developers, LRD and CMBS (including approach for financial ratios)
Basics of Ratings (including default recognition, assessing information adequacy)
Criteria for factoring parent, group and government linkages

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