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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 50.00 | ACUITE A | Stable | Assigned | - |
| Total Outstanding | 50.00 | - | - |
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Rating Rationale |
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Acuite has assigned the long-term rating of ‘ACUITE A’ (read as ACUITE A) on the Rs. 50 Cr. bank facilities of Hinduja Realty Ventures Limited (HRVL). The outlook is ‘Stable’.
Rationale for rating: The assigned rating factors in the strong parent support of the company and the financial flexibility it receives for being part of the Hinduja Group. HRVL is the real estate flagship company of Hinduja Group having large parcels of land development unlocking value, growing & diversified revenue base. The rating also draws comfort from company’s moderate leverage and comfortable financial risk profile with adequate liquidity profile. However, the rating is constrained by lower than expected growth in leasing out of Ecropolis property resulting into moderate revenues from the same. The company have not yet lease out the entire property yet majorly due to power issues and the property being in an SEZ. Acuité believes that the company's ability to denotify the SEZ status and lease the entire property will remain a key monitorable going ahead. Further the rating further constrained due to vagaries of cyclicality, regulatory changes and the company also has strong competition from several other organized and unorganised players in the industry. |
| About Company |
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Hinduja Realty Ventures Limited (HRVL) is the flagship real estate company of Hinduja Group wherein Group’s real estate development activities are implemented by the company. The company was incorporated in 1968 and is based in Mumbai. HRVL also has investment in subsidiaries, Associates, Partnership firms, through which it has undertaken various real estate projects, investments and develops various land properties belonging to Hinduja Group in India. The current directors of the company are Mr. Ashok Parmanand Hinduja, Mr. Vishin Gurnani, Mr. Jeet Prakash Chugani, Mr. Prashant Asher and Ms. Vandana Deepak Jaisingh.
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| About the Group |
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Hinduja Group Limited
Hinduja Group Limited Based In Mumbai Is The Holding Company Of Hinduja Group Incorporated In 1995. The Group Entities Include Several Corporates, Viz. Hinduja Realty Ventures Limited, Hinduja Global Solutions Limited, NDL Ventures Limited Etc. Hinduja Group Limited Is A Holding Company And Its Income Is In The Form Of Consultancy Income, Dividends, Interest Income And Share Of Profits From Its Subsidiaries. Hinduja Group Limited Borrows Money And Lends To Its Group Companies. The Current Directors Of The Company are Ms Harsha Ashok Hinduja, Mr Abin Kumar Das, Mr Ashok Parmanand Hinduja,Mr Prashant Asher and Mr Jeet Prakash Chugani. |
| 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 Hinduja Reality Ventures limited, its subsidiaries and associates to arrive at the rating. The consolidation is on account of common line of business, financial flexibility and common management. Further the rating is being notched up on account of support received by the company for being a part of the Hinduja Group Limited.
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| Key Rating Drivers |
| Strengths |
| Strong financial flexibility of the Hinduja group companies
HRVL is a Hinduja group entity and is the holding company for the real estate vertical of the group. The Hinduja group, established in 1918, has global presence across 30 countries. It is one of the largest diversified groups having presence in Automotive, Oil & Gas, Banking & Finance, IT & BPO, Power, Media, Real Estate and Healthcare amongst others. The companies of the Hinduja group have demonstrated an ability to mobilize funds and refinance their existing debt from various banks and large non-banking finance companies at competitive rates. Acuité believes that HRVL’s credit profile will continue to be supported by strong financial flexibility of Hinduja Group of companies. High level of group support to the real estate business The promoters of Hinduja family have a long track record of providing timely financial support to HRVL and its subsidiaries as and when required. Real estate business is strategic in nature and a key focus area for the Group. The real assets of the group are mainly held through HRVL and GOCL Corporation Ltd. and its subsidiaries. The Group has already made a substantial investment in this business not only in the form of equity but also by providing unsecured loan from related parties (Rs. 1262.60 crore as on September 30, 2023) to HRVL. Acuité therefore believes that promoters will continue to support HRVL in the domestic real estate business. Flagship Real estate company of Hinduja Group having large parcels of land development unlocking value Hinduja Realty Ventures Ltd. (HRVL) is the flagship real estate company of Hinduja Group wherein Group’s real estate development activities are implemented by the company. HRVL was incorporated in 1968 and is based in Mumbai. HRVL also has many subsidiaries, Associates, Partnership firms, through which it has undertaken various real estate projects, investments and develops various land properties belonging to Hinduja Group in India. Growing & Diversified Revenue Base HRVL has diversified revenue base with income from real estate development and investment income. The revenues from real estate development comprises of property development and management. The company has invested in various group companies including listed and unlisted, through which it earns dividend income and interest income on account of its equity investments and loans and advances. The operating revenue of the company has seen significant growth of 54.34% in FY23 and stood at Rs. 209.67 Cr. as compared to Rs. 135.85 Cr. in FY22. The majority of revenue is from the dividend and interest income from investment. Moderate capital structure and financial risk profile The capital structure has been moderate with overall gearing at 1.80x as on March 31, 2023 with a net worth base of Rs. 865.73 cr. On excluding related parties and borrowings within the Hinduja Group, overall gearings stood at 0.43x as on March 31, 2023. The company’s coverage indicators improved however it ramined moderate as is apparent from ICR & DSCR which stood at 1.80 times & 1.43 times respectively, in FY23 as compared to 1.37 times and 1.00 times in FY22. |
| Weaknesses |
| Slow paced growth in ecropolis project
The key project under development is “ECOPOLIS” IT/IT SEZ at Bangalore developed by HRVL. The company is in the process of developing and setting up project ECOPOLIS- IT/IT SEZ comprising of three buildings namely block 2, block 3 and multi level car parking (MLCP). The company has received occupancy certificate on May 2016 for Block 3 and MLCP. However it is not fully functional due to inadequate power supply and other incomplete infrastructure facilities. Presently it has one tenant Axa Business Services Pvt Ltd in second floor of E3 wherein 73,465 sq. ft. is leased out of total 1.5 mn sq ft leasable area. MLCP is not being utilised in entirety despite having tenant. The company is in the process of denotification of its SEZ status to attract tenants and the timelines for the same is one year. The ability of the company to denotify the SEZ status and find lessee for the entire project remains a key rating monitorable. Susceptibility to cyclicality and regulatory risks impacting real estate industry HRVL is exposed to the risk of volatile prices on account of frequent demand supply mismatches in the industry. The Real Estate sector is currently witnessing moderation in demand on account of large amounts of unsold inventory and high borrowing costs. This is primarily attributable to the high residential property prices due to persistent rollover of bank debt, which has had a cascading effect on the overall financing costs. Given the high degree of financial leverage the high cost of borrowing inhibits the real estate developers' ability to reduce prices. Further, the industry is exposed to regulatory risk, which is likely to impact players such as HRVL, thereby impacting its operating capabilities. |
| Rating Sensitivities |
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| All Covenants |
| Not Applicable |
| Liquidity Position |
| Adequate |
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HRVL is having adequate liquidly on account of being subsidiary of Hinduja group and its commitment of the group to support the real estate segment in case of any financial distress. The repayment of borrowings of HRVL are supported by timely infusion of funds by HGL thereby insuring timely debt repayments. The average bank limit utilization stood at 48 percent for the past trailing 7 months ended October 2023. Further, the liquidity is also supported by company’s holdings in listed entities. Further the company has sufficient land bank at consolidated level giving the company additional comfort. Company has sufficient cash accruals of Rs. 74.48 Cr. in FY23 against debt repayment obligation of Rs. 19.20 Cr. Acuité believes that continued ownership of the company by the Hinduja group and their timely support will remain critical.
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| Outlook: Stable |
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Acuité believes that the outlook on HRVL will remain 'Stable' over the medium term on account of significant support from the Hinduja Group. The outlook may be revised to 'Positive' in case of significant increase in lease rental than envisaged and long term lease contract with reputed clientele. Conversely, the outlook may be revised to 'Negative' in case of any significant delay in finalizing lease contracts and lower occupancy levels resulting in deterioration of financial risk profile.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 209.67 | 135.85 |
| PAT | Rs. Cr. | 70.87 | 15.53 |
| PAT Margin | (%) | 33.80 | 11.43 |
| Total Debt/Tangible Net Worth | Times | 1.89 | 2.26 |
| PBDIT/Interest | Times | 1.80 | 1.37 |
| Status of non-cooperation with previous CRA (if applicable) |
| Brickworks vide its PR dated 02/12/2022 has downgraded the rating to BWR BB+ and flagged the company as issuer not cooperating. |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt Support) | ||||||||||||
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