Rating Rationale
January 29, 2021 | Mumbai
Parsvnath Developers Limited
Rating reaffirmed at 'CRISIL D'
 
Rating Action
Total Bank Loan Facilities RatedRs.55 Crore (Reduced from Rs.72.06 Crore)
Long Term RatingCRISIL D (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL has reaffirmed its rating on the long-term bank facilities of Parsvnath Developers Limited (PDL) at ‘CRISIL D’. The rating on the bank loan facility of Rs 17.06 crore, however, has been withdrawn at the company’s request as these limits are closed and there are no dues against it. The rating action is in line with CRISIL's policy on withdrawal of its ratings on bank facilities.

 

The reaffirmation reflects sustained overdues in debt servicing on account of stretched liquidity. PDL is also exposed to cyclicality inherent in the real estate sector. However, it benefits from the extensive experience of its promoters in the real estate industry.

Analytical Approach

For arriving at the rating, CRISIL has combined the business and financial risk profiles of PDL and its subsidiaries and associates. This is because all these entities, collectively referred to as PDL, are managed by the same promoters and have financial linkages. The standalone entity has investments aggregating Rs 475 crores and has given loans & advances of Rs 333 crores to its related parties as of March 31, 2020.

 

Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Weakness:

  • Stretched liquidity reflected by ongoing overdues in the group:

There has been sustained overdues in debt servicing in group on account of stretched liquidity. The group continues to show interest accrued and due of Rs 223 crores as on March 31, 2020. For the rated amount of cash credit facility, the overdues have been upto 30 days in recent months, primarily due to levy of monthly interest. However company is monetizing their projects to reduce its debt exposure. Regularization of debt servicing will remain a key rating sensitivity factor.

 

  • Susceptibility to cyclical demand inherent in the real estate sector

The real estate sector in India is cyclical and volatile, resulting in fluctuations in cash flow because of changes in realisations. In contrast, cash flow, related to project completion and servicing debt, is relatively fixed, and could lead to substantial mismatches. 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.

 

Strengths: 

  • Promoters’ extensive experience

Healthy track record of over two decades in the real estate sector has enabled the promoters to develop a well-diversified portfolio, which includes residential apartments and townships, commercial and retail space, special economic zones (SEZs), information technology (IT) parks, and hotels. It is also engaged in the construction contracting business.

Liquidity:Poor

Liquidity is Poor due to the slowdown in sales and flow of customer advances from projects. However company has been reducing its existing limits in the bank and also reducing the debt at consolidated level through project monetization. The outstanding debt at the group has reduced to Rs 3144.5 crs (as of March 2020) from Rs 4,216.4 crs (as of March 2019).

Rating Sensitivity factors

Upward factors

  • Track record of timely debt servicing for atleast over 90 days
  • Sustainable improvement in financial risk profile.

About the Group

Incorporated in 1990, PDL develops real estate projects and has a well-diversified portfolio of residential apartments, integrated townships, commercial and retail projects, SEZs, IT parks, and hotels. It is also engaged in the construction contracting business. While the company has delivered about 3.17 crore square feet (sq ft) through its 65 completed projects, the ongoing project portfolio comprises around 40 projects spread over about 5.15 crore sq ft. It has pan-India presence, but has undertaken majority of projects in Delhi and the National Capital Region.

Key Financial Indicators

Particulars

Unit

2020

2019

Revenue

Rs crore

1213

913

Profit after tax (PAT)

Rs crore

(363)

(367)

PAT margin

%

(29.96)

(40.26)

Adjusted gearing

Times

7.79

5.88

Interest coverage

Times

0.43

0.47

 

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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. 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

Complexity

Levels

Issue size (Rs crore)

Rating Assigned with Outlook

NA

Cash Credit

NA

NA

NA

NA

55.00

CRISIL D

NA

Cash Credit

NA

NA

NA

NA

17.56

Withdrawn

 

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

Parsvnath Landmark Developers Private Limited

Full

Subsidiary

Parsvnath Infra Limited

Full

Subsidiary

Parsvnath Film City Limited

Full

Subsidiary

Parsvnath Hotels Limited

Full

Subsidiary

PDL Assets Limited

Full

Subsidiary

Parsvnath Estate Developers Private Limited

Full

Subsidiary

Parsvnath Promoters and Developers Private Limited

Full

Subsidiary

Parsvnath Developers Pte. Limited

Full

Subsidiary

Parsvnath Hessa Developers Private Limited

Full

Subsidiary

Parsvnath Buildwell Private Limited

Full

Subsidiary

Parsvnath HB Projects Private Limited

Full

Subsidiary

Parsvnath MIDC Pharma SEZ Private Limited

Full

Subsidiary

Parsvnath Realcon Private Limited

Full

Subsidiary

Parsvnath Reality Ventures Limited

Full

Subsidiary

Vasavi PDL Ventures Private Limited

Full

Subsidiary

Farhad Realtors Private Limited

Full

Subsidiary

Parsvnath Rail Land Project Private Limited

Full

Subsidiary

Suksma Buildtech Private Limited

Full

Subsidiary

Jarul Promoters and Developers Private Limited

Full

Subsidiary

Snigdha Buildwell Private Limited

Full

Subsidiary

Generous Buildwell Private Limited

Full

Subsidiary

Evergreen Realtors Private Limited

Full

Subsidiary

Vardaan Buildtech Private Limited

Full

Subsidiary

Ratan Parsvnath Developers (AOP)

Partial

Joint Venture

Amazon India Limited

Partial

Associates

Home Life Real Estate Private Limited

Partial

Associates

 

Annexure - Rating History for last 3 Years
  Current 2021 (History) 2020  2019  2018  Start of 2018
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 72.06 CRISIL D   --   -- 10-10-19 CRISIL D 28-11-18 CRISIL D CRISIL D
      --   --   -- 16-01-19 CRISIL D   -- --
All amounts are in Rs.Cr.
 
 
Annexure - Details of Bank Lenders & Facilities
Facility Name of Lender Amount (Rs.Crore) Rating
Cash Credit IndusInd Bank Limited 4.56 Withdrawn
Cash Credit State Bank of India 45 CRISIL D
Cash Credit State Bank of India 12.5 Withdrawn
Cash Credit The Karnataka Bank Limited 10 CRISIL D

This Annexure has been updated on 2-Sep-2021 in line with the lender-wise facility details as on 18-Aug-2021 received from the rated entity.

Criteria Details
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
CRISILs Rating criteria for Real Estate Developers
CRISILs Approach to Recognising Default
CRISILs Criteria for Consolidation
CRISILs Bank Loan Ratings

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