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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 163.50 | ACUITE BBB- | Stable | Assigned | - |
| Total Outstanding | 163.50 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 163.50 Cr. of bank loan facilities of Alekhya Property Developments Private Limited (APDPL). The outlook is 'Stable'.
Rationale for rating assigned The rating assigned reflects the promoter i.e. Adarsh Group's extensive experience in the real estate sector since 1988 and its proven track record in completion of nearly 12 million square feet of residential and commercial projects. Acuite takes note of group's low funding risk, supported by strong customer collections and an additional buffer from undisbursed bank loans amounting to Rs. 110 Cr. out of a total sanctioned amount of Rs. 495 Cr. Additionally, it take into account the low demand risk associated with these projects, as nearly 90% of the total saleable area across all three companies has already been sold. Further, the group has consistently pre-paid its debt obligations ahead of the scheduled repayment dates. Additional comfort is drawn from the cash fungibility across the projects under the three companies; Akarshak Realty Private Limited, Shreshta Infra Projects Private Limited and APDPL, which aids in debt servicing. However, the rating is constrained by geographical concentration risk and intense competition in the industry coupled with its susceptibility to real estate cyclicality and regulatory risks. Furthermore, the group has proposed a composite scheme of arrangement for the merger and demerger of certain entities within the group. Any significant impact on financial risk position of APDPL due to the proposed scheme will remain as key rating monitorable. |
| About the Company |
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Incorporated in 2011, Alekhya Property Developments Private Limited (APDPL) is a group company of Adarsh Group. The directors of the company are Mr. B M Jayeshankar, Mr. B M Karunesh and Ms. Nidhi Jayashankar. APDPL, is a sister concern of Adarsh Developers which is into developing properties at prime locations in Bangalore. APDPL is currently developing residential project “Adarsh Lakefront Phase-1”in Bangalore. The project has a total of 344 units.
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| About the Group |
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Shreshta Infra Projects Private Limited (SIPPL) is a group company of Adarsh Developers which is into development and construction of properties at prime locations in Bangalore. The company is currently managed by Mr. B M Jayeshankar and Mr. Sudha Shankar. SIPPL is a sister concern of Adarsh Developers which is into developing properties at prime locations in Bangalore. It is developing a residential villa project “Sanctuary” in Kodati, Bangalore and a plotted land project under name “Savana”.
Bangalore based Akarshak Realty Private Limited (ARPL) was incorporated in the year 2011. The company is engaged in the business of real estate & land development activities. It is currently developing a residential project name Welkin Park Apartments in Choodasandra, Bengaluru. The present directors of the company are Mr. Bilidale Madaiah Karunesh, Ms. Sudha Shanker, Mr. Bangalore Visweswara Ravikumar and Ms. Nidhi Jayashankar. |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has consolidated the business and financial risk profile of Akarshak Realty Private Limited, Shreshta Infra Projects Private Limited and Alekhya Property Developments Private Limited, together referred as Adarsh group. Rationale for consolidation being common management, common line of business, cash flow fungibility between projects three companies for servicing their debt obligation.
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| Key Rating Drivers |
| Strengths |
| Experienced management and long track record of operations
Adarsh Group (group) is a Bangalore based residential and commercial real estate developer established in 1988, promoted by Mr. BM Jayeshankar and Mr. BM Karunesh. The group is a well-established brand name in Bangalore and has an experience of executing 12 mn. sq ft of residential and commercial projects over the past three decades. It also has presence in hospitality industry through Adarsh Reality and Hotels Private limited (ARHPL). The group has long-standing operational track record in the real estate sector with highly experienced promoters who are actively involved in operations. The group is currently executing projects of Welkin park under ARPL, Adarsh Savana and Adarsh sanctuary under SIPPL and Adarsh Lakefront under APDPL. These projects are located at prime location in Bangalore city such as Yelahanka, Choodasandra, Sarjapur Road and Bellandur. The locations are well developed both residential and commercially with further scope of development. Acuité believes that the promoters have demonstrated execution capabilities with a reputation for timely completion. Promoters' industry experience is expected to support in a successful sale of the units in the on-going project. Moderate project risk The ongoing projects have a total saleable area of 54.01 lakh Sq. fts, with total project cost of Rs.1,621 Cr. The project cost is funded through customer advances and bank loan. The funding risk remains moderate as the group has already completed debt tie up with lenders for an amount of Rs.495 Cr. The group has incurred about 49 percent of project cost until December 31, 2024 against which it has already received the bookings of 90 percent of total units and received customer advances of around 64 percent of the sales consideration as on December 31, 2024. Acuite believes that timely receipt of customer advances and on time completion of the projects will remain a key rating monitorable. |
| Weaknesses |
| Geographical concentration risk and intense competition in the industry |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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Liquidity of the group is aided by collections from customers and disbursement of bank loan. Moreover, liquidity is further strengthened by incremental collections from customers and financial flexibility from the promotors and undisbursed bank loan of around Rs.110 Cr, which adds to the advantage to the group. In addition, under the terms of the sanction, the cash flows from the project - AWP Villas, being developed by Adarsh Developers are also pledged as collateral for the term loan facility obtained by the group which shall further improve the liquidity. Hence, liquidity is expected to be remain adequate over the medium term. |
| Outlook : Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 531.72 | 197.40 |
| PAT | Rs. Cr. | 142.61 | (284.83) |
| PAT Margin | (%) | 26.82 | (144.29) |
| Total Debt/Tangible Net Worth | Times | (6.42) | (3.36) |
| PBDIT/Interest | Times | 3.09 | (1.57) |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite) |
| Not applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Real Estate Entities: https://www.acuite.in/view-rating-criteria-63.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||
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