| Parsvnath Developers Limited | ||||
| Rating reaffirmed at 'CRISIL D' | ||||
| Rating Action | ||||
| ||||
| 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 The rating on the bank loan facility of Rs 17.06 crore, however, has been withdrawn at the company’s request as these limits are closed and there are no dues against it.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:
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.
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:
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
|
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
|
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)
|
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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
|