­Nam Estates Private Limited (NEPL) is a group company of Embassy Group. The company was established in 1995 and is based out of Bangalore. The company holds the Embassy Springs project in its books.

Embassy Group was incorporated in 1993 by Mr. Jitendra Virwani. The group is one of the leading real estate dev elopers. The group has dev eloped 55+ Million Sq. Ft. In its legacy of expertise spanning 25 years, Embassy Group has cov ered the entire value chain of real estate from land acquisition to the development, marketing and operation of assets. In addition, the Embassy group owns properties in the hospitality segment and is dev eloping industrial parks and warehouses across India. It also has an extensiv e land bank of 1000+ acres across India. The operation spread across Indian and international markets that include Bangalore, Chennai, Pune, Coimbatore, Triv andrum, Serbia and Malaysia. The group from time to time partners wit h sev eral established market players Like, Blackstone, Warburg Pincus, Taurus Inv estments as well as different financial institutions to execute projects.

­To arrive at the rating, Acuité has considered the standalone business and financial risk profiles of NEPL and also factored in the support from Embassy Property development Pvt Ltd (EPDPL) by the way of unconditional and irrevocable guarantee (the guarantee, however, is set to lapse at the time of merger of NEPL with India Bulls Real estate Limited (IBREL)). The analytical approach was revised from a Credit Enhancement (CE) to a standalone rating along with an implicit notch up for the support from the Embassy Group. This was done to bring the analytical approach in line with Acuité’s revised rating criteria w.r.t. credit enhancements.

NEPL and Embassy group undertakes multiple CSR activities and has an existing CSR policy. In FY22, the group has supported for implementing holistic health and hygiene program with focus on preventive healthcare, nutrition and sanitation at government schools in Bangalore. Further, Embassy Group is engaged in multiple ESG initiatives including supporting government schools in Bangalore, public spaces clean up in Bangalore, installation of segregated garbage bins in Bangalore CBD, transformation of 101 under fly-over pillars, among others. Additionally, all the projects undertaken by Embassy Group have IGBC Green Gold Certification or higher. Embassy group has an active engagement towards improvising education, sustainable infrastructure, community engagement and corporate connect. The group aims to facilitate students of Government Schools with a safe learning environment for skill development through holistic interventions in Education, Health and Infrastructure. It has supported more tha 85 government schools through educational and infrastructure interventions, build around 10 new government schools amongst others. Embassy group drives positive change by providing infrastructure-based solutions with new frontline services for environmental sustainability and community healthcare, it promotes grassroot results to global problems in the communities it is a part of. Embassy group is a proud partner of TAICT’s (The Anonymous Indian Charitable Trust) Ecogram Waste Management Project, which aims to catalyse communities to develop and implement strategic infrastructure for sustainable environmental management. It has completed several initiatives of public spaces clean-up, installation of segregated garbage, mobile cancer detection unit amongst others.

• Any inorganic changes to the structure viz. mergers, acquisitions, asset sales, etc.
• Further deterioration in the liquidity position by availing additional debt.
• Timely completion of construction or timely realization of customer advances pending from sold inventory.
• Timely sale of the unsold inventory and realization of its customer advances.
• Sharp decline in cash flow, by slackened salability of project or further delays in project execution leading to high customer risk and cash flow mismatch

­The group operates in real estate business, which to a large extent is illiquid and highly cyclical and it usually takes time monetize these assets. Existing debt of the group includes loans obtained for general corporate purpose and acquisition and are susceptible to refinancing risk. The group in the past has been able to demonstrate moderate financial flexibility and ability to borrow against the value of its investments in various commercial real estate assets and investments. Nevertheless, the company was unable to refinance some of its debt in March 2020 due to the ongoing pandemic. Acuite believes, the liquidity position of the group is likely to remain adequate over the medium term despite the slow pace in picking up of residential luxury project sales.

­Acuité believes that  NEPL will maintain a 'Stable' outlook over medium term on account of established market position of Embassy group in the real estate industry. The outlook may be revised to 'Positive' in case the company generates higher-than-expected cash flows through customer advances and achieves its project completion as per scheduled timelines. Conversely, the outlook may be revised to 'Negative' in case of stretch in the company’s liquidity position on account of escalation of project costs or lower-than-expected sales traction towards ongoing projects, which may further increase the dependence on refinancing of debt.