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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 364.00 | ACUITE C | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 39.00 | Provisional | ACUITE C | Assigned | - |
| Non Convertible Debentures (NCD) | 36.00 | Provisional | ACUITE C | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 439.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed its long term rating of ‘ACUITE C’ (read as ACUITE C) on Non Convertible Debentures (NCDs) issue of Rs.364.00 crore of Lokhandwala Kataria Construction Private Limited (LKCPL). |
| About the Company |
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Mumbai based, LKCPL was incorporated in 1998 and is owned by the Lokhandwala family viz. Mr. Mohammed A Lokhandwala, Mr. Mohammed Moiz Lokhandwala and Mr. Aliasgar Lokhandwala. LKCPL is a part of Lokhandwala Group. The company is currently developing a project by the name of “Minerva” in Mahalaxmi region of Mumbai for the construction of 10 rehabilitation buildings, a School, a maternity/municipal clinic, a welfare Centre, a Balwadi and a saleable building 362 apartments. The project began in May 2011 and is estimated to be completed in December 2023. |
| Analytical Approach: |
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Acuité has considered the standalone business and financial risk profiles of the LKCPL to arrive at this rating |
Key Rating Driver
| Strengths |
| Experienced management and long track record of operations |
| Weaknesses |
| Low financial flexibility along with poor liquidity position |
| ESG Factors Relevant for Rating |
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For the construction industry, it is important to take environmental considerations like ecological and biodiversity impact of its activities and the safety of their employees is of paramount importance. Upholding business ethics and fundamental values is the foremost material issue for the specialized construction industry. On the social front, the company has provided homes for more than eight thousands of families from the weaker sections of society and have also provided medical, educational and other social amenities to them. These include redevelopment projects and beautification of various public spaces in the city. On the governance part, there has been instances of irregularity and delays in various payment including statutory dues and payments in the past and absence of adequate information is observed while conducting the audit showing absence of proper internal control. |
| Rating Sensitivity |
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Timely servicing of debt obligations. |
| Material Covenants |
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None |
| Liquidity Position |
| Poor |
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LKCPL has poor liquidity marked by the negative net cash losses. The company generated cash losses of Rs.(280.32) - (27.10) crore during the last three years through 2021-23. The current ratio of the company stood at 1.61 times as on March 31, 2023. Acuité believes that the liquidity of the company is likely to remain poor over the medium term on account of negative cash losses as against debt repayments over the medium term. |
| Outlook |
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Not Applicable |
| Other Factors affecting Rating |
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None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 224.34 | 15.77 |
| PAT | Rs. Cr. | (280.46) | (393.19) |
| PAT Margin | (%) | (125.02) | (2493.49) |
| Total Debt/Tangible Net Worth | Times | (1.94) | (3.21) |
| PBDIT/Interest | Times | (0.20) | (0.52) |
| Status of Non-cooperation with previous CRA (If Applicable) |
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Not Applicable |
Supplementary disclosures for Provisional Ratings
| Risks associated with the provisional nature of the credit rating |
| 1. Absence of any entity to take appropriate measures to protect the interest of the debenture holders in case of any breach of the trust deed or law. |
| Rating that would have been assigned in absence of the pending steps/ documentation |
| The rating would be equated to the standalone rating of the entity: ACUITE C |
| Timeline for conversion to Final Rating for a debt instrument proposed to be issued |
| The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the proposed debt instrument. Under no circumstance shall the provisional rating continue upon the expiry of 180 days from the date of issuance of the proposed debt instrument. |
| Any Other Information |
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None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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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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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