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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 365.00 | ACUITE BBB- | Stable | Assigned | - |
| Total Outstanding | 365.00 | - | - |
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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. 365 Cr. of bank loan facilities of Ashar Ventures. The outlook is 'Stable'.
Rationale for rating assigned The rating assigned takes into account the long-standing experience and established track record of Ashar group for more than two decades in real estate business. The group has completed 22 projects with more than 4.8 million sq. ft. of area in residential, commercial and retail spaces in Mumbai. Further, rating also draws comfort from the locational advantage of the firm's current project, located at Thane, Maharashtra having a healthy sales and collection traction. However, the rating is constrained by risks associated towards project completion as the construction of one of its project is still at a nascent stage. Further the rating also factors the firm’s operations which are susceptible towards inherent cyclicality in the real estate industry. |
| About the Company |
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Based in Thane, Ashar Ventures was established on 01st April 2013. Mr. Ajay Ashar, Max Motors Private Limited and Toscano Infrastructure Private Limited are the partners of this firm. The company is engaged in Construction of Residential and Commercial Projects. The firm is a part of Ashar Group which was established in 2001. Mr. Ajay Ashar is also the Chairman and Managing Director of the group.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuite has considered the standalone business and financial risk profile of Ashar Ventures to arrive at the rating. |
| Key Rating Drivers |
| Strengths |
| Established tracked record with experienced management.
Ashar Group is a Mumbai based commercial and residential real estate developer promoted by Mr. Ajay Ashar. The group has a more than two decades of experience as a real estate developer through various projects executed under the various group entities. The Ashar Group is a well-established group in Thane, Mumbai with a history of delivering more than 4.5 million sq. ft. of commercial and residential area. Currently the firm is engaged in development of three residential buildings namely Ashar Axis, Ashar Pulse and Ashar Arize, of which Acuite has considered the two projects Ashar Axis and Ashar Pulse for the rating exercise. Both the projects are being constructed with a total saleable area of more than 0.6 million sq. ft in total. The location of the projects is very well developed both residentially and commercially with a lot of scope for further development. Commercial complexes, including supermarkets, schools, restaurants, hospitals, fitness centres and banks, are abundant in the closest vicinity of the proposed location. Acuité believes that the promoters have demonstrated good execution capabilities with a reputation for quality and timely completion in the past. Promoters' industry experience is expected to support in a successful sale of the units in the on-going project. Moderate Project Risk The project risk of the above-mentioned projects stands moderate due to low funding risk, moderate implementation risk and moderate demand side risk. The project Ashar Axis with a total saleable area of 116004 sq. ft. of which 64 percent inventory stands to be sold out with 91 percent construction cost being already incurred till December 2023. Whereas, project Ashar Pulse with a total saleable area of 490916 sq. ft. in which 27 percent inventory is sold with 19 percent construction cost being incurred till December 2023. The funding risk for both the projects stands low, as the total project cost will be funded majorly from the partners contribution and sanctioned bank loan, whereas the balance will be funded through the collections from customer advances. Acuité believes that timely infusion of funds from promotors, timely funding of bank loan and receipt of customer advances will be a key monitorable. |
| Weaknesses |
| Completion Risk
The construction of the project Ashar Pulse started on October 2022. The project is expected to get completed by December 2028. While there are inherent project risks as being in nascent stage of construction, the risk is mitigated to some extent as the group has established track record of completion of projects in timely manner. However, any delay in completion of the project may led to cost and time overruns which will remain a key rating sensitivity going ahead. Susceptibility to Real Estate Cyclicality, Regulatory Risks and intense competition in the industry The real estate industry in India is highly fragmented with most of the real estate developers, having a city specific or region-specific presence. The risks associated with real estate industry are cyclical in nature and directly linked to drop in property prices and interest rate risks, which could affect the operations. Given the high level of financial leverage, the high cost of borrowing prevents the real estate's developers' from significantly reducing prices to boost sales growth. Moreover, the industry is also exposed to certain regulatory risks linked to stamp duty and registration tax directly impacting the demand and thus the operating growth of real estate players. Furthermore, the group would continue to remain exposed to intense competition from larger players in region like Hiranandani Group, Godrej Properties and Lodha group amongst others. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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Liquidity is aided by infusion from promotors, disbursement of bank loan and collection from customers. Moreover, liquidity can be further strengthened by higher collections from customers, which already stood at ~Rs.106.76 Cr. till December 2023 for the both the projects. The liquidity is also supported by the financial flexibility the firm receives from the promotors. The firm is expected to have adequate liquidity over the medium term with an expected DSCR of above unity in a base case scenario
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| Outlook: Stable |
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Acuité believes that the outlook on Ashar Ventures will continue to remain 'Stable' business risk profile over the medium term on the back of experienced promoters and strong brand presence in the real estate industry. The outlook may be revised to 'Positive' in case of higher-than-expected advances from customers resulting in adequate cash flows for early completion of the project and prepaying the debt. Conversely, the outlook may be revised to 'Negative' in case of any undue delay in completion of the project, or less-than-expected bookings and advance leading to stretch on its liquidity.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 628.96 | 9.51 |
| PAT | Rs. Cr. | 158.31 | 4.02 |
| PAT Margin | (%) | 25.17 | 42.26 |
| Total Debt/Tangible Net Worth | Times | 0.83 | 36.82 |
| PBDIT/Interest | Times | 7.04 | 1.98 |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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| Rating History : |
| Not Applicable |
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