| Nirlon Limited | ||||
| Rating reaffirmed at 'Crisil AA+ / Stable' | ||||
| Rating Action | ||||
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| 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 reaffirmed its ‘Crisil AA+/Stable’ rating on the long-term bank facilities of Nirlon Ltd (Nirlon).
Operating income grew 5% to Rs 561 crore in fiscal 2025 due to escalation in rent as per scheduled agreements and healthy occupancy levels in Nirlon Knowledge Park (NKP). One tenant occupying 15% of total leasable area and contributing ~14% gross rentals, vacated approx.1.5 lakh square feet (sq ft) area during last fiscal (in multiple tranches). However, given NKP’s strong track record in maintaining high occupancy and good location, the entire space was successfully leased out to new tenants. As of June 2025, about 3.9% of the area remained vacant, for which letter of intent (LOI) has already been signed with some companies. Occupancy is therefore expected to remain healthy over the medium term. However, timely execution of the LOI and maintaining rentals at or above existing levels will remain a key monitorable.
The financial risk profile also remains comfortable, driven by strong operating performance and moderate leverage. Debt stood at Rs 1,150 crore and the debt to lease rental ratio stood at ~2.05 times as of March 2025 (~2.14 times as of March 2024). Debt service coverage ratio (DSCR) was strong at 4.03 times for fiscal 2025 (2.23 times during the previous fiscal) and is expected to remain so over a major part of the debt tenure. There is bullet repayment for ~75% of the total debt in fiscal 2033, which exposes the company to refinancing risk. However, the loan-to-value (LTV) ratio is expected to be low under 20%, protecting investors from a sudden decline in the value of the property supporting the refinancing ability of the company.
The rating continues to reflect the company’s steady cash flow, supported by the advantageous location of NKP, its healthy occupancy and marquee clientele. The rating also factors in strong debt protection metrics and established track record of the asset. These strengths are partially offset by exposure to geographical and tenant concentration risks and susceptibility to volatility in occupancy and interest rates. |
Analytical Approach Crisil Ratings has taken a standalone view of the business and financial risk profiles of Nirlon as it has only two assets, NKP and Nirlon House, and nil financial linkages with group companies. |
Key Rating Drivers - Strengths Stable cash flow NKP is located in Goregaon East in Mumbai, and is close to the Western Express Highway, one of Mumbai’s arterial highways, the Jogeshwari-Vikhroli Link Road, two railway stations on the western railway line and a metro station. This has made the park an attractive destination for leading global banking and financial services companies such as JP Morgan, Citicorp, Deutsche and BNP Paribas. The committed occupancy of the park has remained above 90% since March 2018 and was healthy at around 100% as on September 30, 2025. The rating also factors in the secure leave-and-license agreements with lock-in and lease periods of 3-5 years and 4-10 years, respectively, and in-built escalations of 15% every 3-5 years for most licensees.
Strong debt protection metrics Backed by low debt, the debt-to-lease rental ratio stood at 2.05 times as on September 30, 2025 (2.14 times a year ago). DSCR for fiscal 2025 was strong at 4.02 times and the average DSCR should remain strong throughout the tenure of the debt except in fiscal 2033 in which there is a bullet repayment of ~75% of the total outstanding debt. The lease rental discounting loan (Rs 1,150 crore as on September 30, 2025) has a tenure of 10 years, with a moratorium on principal repayment for the first five years and part debt repayment during the remaining tenure, thus exposing the company to refinancing risk. Nevertheless, the LTV ratio is expected to be low under 20%, protecting investors from a sudden decline in the value of the property. The company has no capital expenditure (capex) in the near future, and hence, is unlikely to contract incremental debt. However, an increase in debt in the absence of an additional revenue stream could impact the financial risk profile and hence, remains a key rating sensitivity factor.
Established track record Nirlon benefits from its track record of over a decade of managing, leasing and marketing the property, which has resulted in healthy occupancy, even during the Covid-19 pandemic. Nirlon has a professional management team with vast experience looking after the administrative and daily operations. The company has strong relationships with all stakeholders-lenders, tenants and creditors. Additionally, the management follows a proactive approach towards asset maintenance to ensure tenant retention and quality. |
Key Rating Drivers - Weaknesses Exposure to geographical and tenant concentration risk As the company has a single asset (NKP), it faces high geographical concentration risk. The top seven licenses contribute to ~85% of gross lease rentals (as of September 2025), also exposing the company to tenant concentration risk; the largest licensee contributes to 40% of gross lease rentals (as of September 2025). While these risks are mitigated by longstanding relationships with tenants and secured leave-and-license agreement terms, with the presence of a notice period and security deposit of 6-9 months, if any of these tenants vacate the premises, it may be difficult to find an alternative within the stipulated time for the entire office space. The company has been able to almost re-lease the entire area vacated by one of the key tenants in the recent past. However, any further vacancies and re-leasing of the same will remain a key monitorable.
Susceptibility to volatility in occupancy and interest rates Cash inflow is susceptible to volatility in occupancy or realisations (a function of rentals per sq ft), while cash outflow is fixed, except fluctuations in interest rates (as they are floating). Around 31% of the area will be up for renewal over the three fiscals through 2029. Timely renewal or leasing of this area at similar or better terms will be crucial. Although cash flow could partially absorb the impact of fluctuations in interest rates and occupancy levels, these will remain key rating sensitivity factors. |
Liquidity Strong DSCR is expected to remain strong throughout the tenure of debt except during fiscal 2033 wherein there is bullet repayment for ~75% of the facility exposing the company to refinancing risk. Nevertheless, the LTV ratio is expected to be less than 20%, reducing the refinancing risk. Liquidity is further supported by a debt service reserve account (DSRA) equivalent to one month of debt servicing obligation, fully undrawn overdraft facility of Rs 80 crore and cash and equivalent of Rs 294 crore (excluding DSRA) as on August 31, 2025. The company has been providing an annual dividend of Rs 234 crore over the past three fiscals and is expected to continue going forward as well in the absence of any major capex. |
Outlook Stable Nirlon will continue to benefit from stable cash flow, backed by long-term leases with reputed clients and strong financial risk profile. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company Nirlon owns and operates NKP. The park has total leasable area of 30.6 lakh sq ft and has been developed in a phase-wise manner with the final phase (Phase V), comprising 11.6 lakh sq ft, receiving the occupation certificate in fiscal 2022. The company has track record of collecting rentals for over 10 years. It also owns undivided interest of 75% in Nirlon House, located in Worli, Mumbai (leasable area of 0.5 lakh sq ft).
The company is majority owned by Government of Singapore Investment Corporation with 63.9% shareholding through its affiliate, Reco Berry Pvt Ltd (as on March 31, 2025). |
Key Financial Indicators*
*Crisil Ratings-adjusted numbers |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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Criteria Details
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