| Persipina Developers Private Limited | ||||
| Rating Reaffirmed | ||||
| 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 rating on the bank facilities of Persipina Developers Private Limited (Persipina, part of Niranjan Hiranandani family group) at ‘CRISIL BBB+/Stable’. CRISIL Ratings has also withdrawn its rating on proposed bank facilities of Rs 64.6 crore upon request from the company. The withdrawal is in line with CRISIL Ratings’ policy.
CRISIL Ratings has taken a note of news reports regarding Enforcement directorate (ED) searches at premises of Hiranandani group entities. The searches were conducted regarding alleged contravention of the FEMA (Foreign Exchange Management Act) provisions with respect to two of its housing projects in Panvel and Chennai. CRISIL Ratings will continue to engage with the management and monitor the developments.
The rating continues to reflect expectation of strong operational, managerial, and financial support from the promoters, and moderate financial risk profile. These strengths are partially offset by exposure to project implementation risks and cyclicality inherent in the real estate industry. |
Analytical Approach CRISIL Ratings has taken a standalone view on the business and financial risk profiles of Persipina, which holds land parcels earmarked for development of an integrated township – Hiranandani Fortune City – spread over 588 acres, in Panvel.
CRISIL Ratings has also treated unsecured loans from the promoters, totaling Rs 1,201 crore as on March 31, 2023 (Rs 1151 crore as on September 30, 2023) as neither debt nor equity. This is because these funds are subordinated to external debt, do not have any scheduled interest or repayment date, and are unlikely to be repaid, unless excess profit is generated by the project. |
Key Rating Drivers & Detailed Description Strengths: Strong operational, managerial and financial support from the promoters: Persipina benefits from strong linkages with the promoters, and their extensive experience in the real estate sector. Hiranandani Fortune City is a large township project, being developed by the promoter group, and hence, is strategically important to them. There is a demonstrated commitment to the project from promoters through continued infusions & prepayment of debt through monetization of assets. The project will continue to benefit from the operational, financial and managerial support it derives from the promoters. This has enabled the project to prepay debt despite weak cash flow from operations in the past.
The promoters have a strong track record, specifically in implementation of large townships, similar to Persipina’s project. As of June 2023, the Hiranandani core group, of which Persipina’s promoter, Mr Niranjan Hiranandani is a 50% partner, has developed and delivered over 250 lakh sq ft, mostly in the residential segment, and has around 30 lakh sq ft of projects under construction or planned in the development business. Presence of over three decades in the real estate segment, has enabled the promoters to develop highly saleable projects, undertake quality construction, and maintain strong relationships with key clients.
The promoters are also committed to ensure timely servicing of the company’s debt. Need-based funding support from the promoters is expected to continue but remains a monitorable.
Moderate Financial risk profile: The financial risk profile of the company has improved with gradual reduction of debt. The outstanding debt as on September 30, 2023, was Rs 515 crore, down from Rs 787 crore as of March 31, 2022. Committed receivables of the launched area in Phase II stood at Rs. 403 crore which is sufficient for balance cost of Rs. 350 crore. Consequently, the debt level is expected to further reduce going forward. The management has articulated that the company will become net-debt free over the medium term. Any slowdown in demand leading to higher-than-expected incremental debt will remain a key rating sensitivity factor.
Weaknesses: Exposure to project implementation risks Persipina is executing a township project with overall saleable area of 139.2 lakh sq ft (including commercial development). The entire project is being executed in multiple phases with Phase I completed in fiscal 2023 & Occupancy Certificate (OC) for all the buildings in Phase I is received. Company has launched carpet area of 5.35 lakh sq. ft. in phase II of the project in Q1 fiscal 2024 & has earmarked carpet area of 35.0 lakh sq. ft. to be developed in Phase II gradually. Persipina remains subject to project implementation risks relating to construction of Phase II. Timely launch of the further area in second phase and sustenance of saleability of the same will remain a key rating sensitivity factor.
Susceptibility to cyclicality inherent in the real estate sector Cyclicality in the real estate sector could result in fluctuations in cash inflow and volatility in sales. In contrast, cash outflow, such as for debt servicing, is relatively fixed. Any decline in demand for ongoing projects could result in lower collections and impact cash flows. |
Liquidity: Adequate Committed receivables from the launched area in phase II stood at Rs 403 crore which would be sufficient to meet the balance construction cost of Rs 350 crore. Future sales and collections are expected to be sufficient to meet the pending infrastructure development cost and debt servicing obligations. Further, the company had cash and cash equivalents of Rs 158 crore as on September 30, 2023. Liquidity is further supported by expectation of financial support from the promoter group, if required; the promoters have infused Rs 1933 crore in the company till September 30, 2023. Persipina is exposed to refinancing risk with scheduled repayment of Rs 306 crore in fiscal 2025. Nevertheless, this is mitigated by the company’s track record of refinancing in the past, association with the Niranjan Hiranandani family group and healthy performance of its project. |
Outlook: Stable CRISIL Ratings believes that the company will continue to benefit from healthy salability in its township project, while maintaining a low leverage. Also, company will benefit from its association with the promoter group, and receive need-based support from them, over the medium term. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Persipina is a 100% subsidiary of Evita Constructions Pvt Ltd, which is in turn wholly owned by Mr Niranjan Hiranandani and his wife, Ms Kamal Hiranandani. It was incorporated in 2007 to undertake real estate development projects and took over the project, Hiranandani Fortune City, from Hirco Plc. in 2014 in an auction initiated by its lenders.
The company is implementing an ITP on 588 acres on the old Mumbai-Pune Expressway in Panvel, MMR. The project comprises residential, commercial, and retail units. The total saleable area of the township will be around 139.2 lakh sq. ft, of which 34.5 lakh sq. ft is completed and sold (98%) in phase I. The company launched 5.35 lakh sq. ft carpet area in phase II in Q1 2024 and is expected to launch another 5 lakh sq. ft carpet area in Q4 2024. Persipina is developing the basic infrastructure during the initial stages, similar to the model followed by the Hiranandani core group for its Powai and Thane (both situated in MMR) projects. The overall cost of the entire township project will be Rs 7467 crore, expected to be completed over the next 10-15 years; the company has incurred Rs 3733 crore till September 30, 2023.
Mr Niranjan Hiranandani is also the promoter, with 50% ownership, of the Hiranandani core group. The core group undertakes real estate development and focuses mainly on development of large, mixed-use, township projects in MMR. The group is one of the early developers to have undertaken township development projects, such as Hiranandani Gardens in Powai and Hiranandani Meadows and Hiranandani Estate in Thane. |
Key Financial Indicators
Company follows project completion method for revenue recognition and the financials are not meaningful |
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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