Rating Rationale
October 10, 2019 | Mumbai
Parsvnath Developers Limited
Rating reaffirmed  
 
Rating Action
Total Bank Loan Facilities Rated Rs.72.06 (Reduced from Rs.74.56 Crore)
Long Term Rating CRISIL D (Reaffirmed)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has reaffirmed its 'CRISIL D' rating on the long-term bank facilities of Parsvnath Developers Limited (PDL). The rating on the bank facility of Rs 2.5 crore has been withdrawn at the company's request and based on the no-dues certificate received from the bank. The rating action was in line with CRISIL's policy on withdrawal of ratings on bank facilities.
 
The rating reflects delays by PDL in servicing its debt obligations in the past 90 days on account of stretched liquidity.
 
The rating also factors in PDL's exposure to cyclicality in the real estate sector. These weaknesses are partially offset by the extensive experience of the promoters.

Analytical Approach

CRISIL has combined the business and financial risk profiles of PDL and its subsidiaries and associates. This is because the entities, collectively referred to as PDL herein, are managed by the same promoters and have fungible cash flow.

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
* Delays in debt servicing in 90 days
PDL has delayed servicing its debt obligations on the cash credit facility following lower-than-expected cash flow from its projects in the past 90 days. However, the company benefits from its available land bank, which, in the past, was monetised for meeting debt obligations. Ability to monetise the land bank again in future will remain a key rating sensitivity factor.
 
Weakness
* Susceptibility to cyclicality 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 for servicing debt obligation, 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 Real Estate (Regulation and Development) Act, 2016, have also constrained demand as buyers have since adopted a 'wait and watch' attitude, increasing funding challenges for developers.
 
Strength
* Extensive experience of the promoters
Benefits from the promoters' experience of over two decades, and the company's well-diversified portfolio, including residential apartments and townships, commercial and retail space, special economic zones (SEZs), information technology (IT) parks, and hotels, should continue to support business risk profile.
 
Liquidity: Poor
Liquidity is Poor due to slowdown in sales and flow of customer advances from projects.
 
Rating sensitivity factors
Upward factor
* Track record of timely servicing of debt for at least over 90 days
* Sustained 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 also undertakes construction activities on contract. 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 5.15 crore sq ft. PDL has pan-India presence, but has undertaken the majority of projects in Delhi and National Capital Region.

Key Financial Indicators
Particulars Unit 2019 2018
Revenue Rs crore 195 195
Profit after tax (PAT) Rs crore (324) (324)
PAT margin % (166.0) (166.0)
Adjusted gearing Times 2.2 2.2
Interest coverage Times 0.42 0.42

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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 Issue size (Rs crore) Rating assigned with outlook
NA Cash Credit NA NA NA 72.06 CRISIL D
NA Long Term Loan NA NA 26-Feb-2019 2.5 Withdrawn

Annexure - List of entities consolidated
Fully consolidated entities
Subsidiaries:
Parsvnath Landmark Developers Pvt Ltd, Parsvnath Infra Ltd, Parsvnath Film City Ltd, Parsvnath Telecom Pvt Ltd, Parsvnath Hotels Ltd, PDL Assets Ltd, Parsvnath Estate Developers Pvt Ltd, Parsvnath Promoters and Developers Pvt Ltd, Parsvnath Developers Pvt Ltd, Parsvnath Hessa Developers Pvt Ltd, Primetime Realtors Pvt Ltd, Parsvnath Buildwell Pvt Ltd, Parsvnath HB Projects Pvt Ltd, Parsvnath MIDC Pharma SEZ Pvt Ltd, Parsvnath Realcon Pvt Ltd, Parsvnath Realty Ventures Ltd, Vasavi PDL Ventures Pvt Ltd, Farhad Realtors Pvt Ltd, Parsvnath Rail Land Project Pvt Ltd, Jarul Promoters and Developers Pvt Ltd, and Suksma Buildtech Pvt Ltd.
Aahna Realtors Private Limited, Afra Infrastructure Private Limited,Anubhav Buildwell Private Limited,Arctic Buildwell Private Limited,Arunachal Infrastructure Private Limited, Bae Buildwell Private Limited, Bakul Infrastructure Private Limited, Banita Buildcon Private Limited, Bliss Infrastructure Private Limited, Brinly Properties Private Limited, Coral Buildwell Private Limited, Dae Realtors Private Limited, Dai Real Estates Private Limited, Dhiren Real Estates Private Limited, Elixir Infrastructure Private Limited
Gem Buildwell Private Limited, Generous Buildwell Private Limited,Himsagar Infrastructure Private Limited, Izna Realcon Private Limited, Emerald Buildwell Private Limited, Evergreen Realtors Private Limited, Jaguar Buildwell Private Limited, Label Real Estates Private Limited, Lakshya Realtors Private Limited, LSD Realcon Private Limited, Mirage Buildwell Private Limited, Navneet Realtors Private Limited, New Hind Enterprises Private Limited, Oni Projects Private Limited, Paavan Buildcon Private Limited, Perpetual Infrastructure Private Limited, Prosperity Infrastructures Private Limited, Rangoli Infrastructure Private Limited, Samiksha Realtors Private Limited, Neelgagan Realtors Private Limited, Sapphire Buildtech Private Limited, Silversteet Infrastructure Private Limited, Springdale Realtors Private Limited, Stupendous Buildtech Private Limited, Sumeru Developers Private Limited, Vital Buildwell Private Limited, Spearhead Realtors Private Limited, Trishla Realtors Private Limited, Yamuna Buildwell Private Limited, Digant Realtors Private Limited.

Associates and joint ventures:
Amazon India Ltd, Vardaan Buildtech Pvt Ltd, Homelife Real Estate Pvt Ltd, and Ratan Parsvnath Developers (AOP).
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Non Convertible Debentures  LT    --    --    --    --  22-06-16  Withdrawn  CRISIL C 
Fund-based Bank Facilities  LT/ST  72.06  CRISIL D  16-01-19  CRISIL D  28-11-18  CRISIL D  18-08-17  CRISIL D  22-06-16  CRISIL C  CRISIL C 
                08-08-17  CRISIL D       
All amounts are in Rs.Cr.
 
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit 72.06 CRISIL D Cash Credit 72.06 CRISIL D
Long Term Loan 2.5 Withdrawn Long Term Loan 2.5 CRISIL D
-- 0 -- Proposed Long Term Bank Loan Facility 175.44 Withdrawn
Total 74.56 -- Total 250 --
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 Bank Loan Ratings
CRISILs Criteria for Consolidation

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000
saman.khan@crisil.com

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000
naireen.ahmed@crisil.com

Vinay Rajani
Media Relations
CRISIL Limited
D: +91 22 3342 1835
M: +91 91 676 42913
B: +91 22 3342 3000
vinay.rajani@ext-crisil.com

Sachin Gupta
Senior Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3023
Sachin.Gupta@crisil.com


Sushmita Majumdar
Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 3162
Sushmita.Majumdar@crisil.com


Ankit Gupta
Rating Analyst - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 8559
Ankit.Gupta@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.


About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers.
 
We are majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.
 
For more information, visit www.crisil.com 


Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets the standards in the credit rating business. We rate the entire range of debt instruments, such as, bank loans, certificates of deposit, commercial paper, non-convertible / convertible / partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.


CRISIL PRIVACY
 
CRISIL respects your privacy. We may use your contact information, such as your name, address, and email id to fulfil your request and service your account and to provide you with additional information from CRISIL.For further information on CRISIL’s privacy policy please visit www.crisil.com.


DISCLAIMER

This disclaimer forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). For the avoidance of doubt, the term “Report” includes the information, ratings and other content forming part of the Report. The Report is intended for the jurisdiction of India only. This Report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the Report should rely on their own judgment and take their own professional advice before acting on the Report in any way.CRISIL or its associates may have other commercial transactions with the company/entity.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the Report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. CRISIL’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL