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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 50.00 | ACUITE C | Downgraded | - |
| Total Outstanding Quantum (Rs. Cr) | 50.00 | - | - |
| Rating Rationale |
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Acuité has downgraded its long-term rating to ‘ACUITE C’ (read as ACUITE C) from ACUITE BB+ (Read as ACUITE double B plus) on the Rs.50.00 Cr bank loans of Pragnya South City Projects Private Limited (PSCPPL).
Reason for downgraded: The rating is downgraded due to delays in servicing of debt obligations in recent past by PSCPPL as confirmed by its respective banker. The account is regularized in the month of March 2023. The rating continues to draw comfort from the experienced management and established track record of operations. |
| About the Company |
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Based in Chennai (Tamil Nadu) and incorporated as a private limited company in 2006, Pragnya South City Projects Private Limited (PSCPPL) is engaged in developing residential apartment, commercial space and integrated township in the real estate sector. Located at Mount Poonamallee Road, Manapakkam, Chennai, PSCPPL is developing a township project on approx. 90 Acres of land. The project site is located near the Old Mahabalipuram Road (OMR). The company was renamed from “L&T South City Projects Private Limited” to “Pragnya South City Projects Private Limited” post purchase of shares of Larsen & Toubro (L&T) by Pragnya Group in March, 2017 for Rs.190 Cr. PSCPPL is an unlisted private subsidiary company of Pragnya Group.
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| About the Group |
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Incorporated in 2003, Pragnya Fund, is a real estate private equity firm focused on developing markets in India and Sri Lanka through its real estate opportunity funds Pragnya Fund I and Pragnya Fund II. The funds are managed by Mr. Subba R Dukkipati and Mr. Gopal Menon. Pragnya Group (including all the project specific entities formed) is in the process of completing over 15 million sq. ft. of Residential, Office Space, Showroom/Retail Space, SEZ, Townships, etc
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| Analytical Approach |
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To arrive at rating, Acuité has considered the standalone business and financial risk profile of Pragnya South City Projects Private Limited (PSCPPL).
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Key Rating Drivers
| Strengths |
| Track record of Pragnya Group in the real-estate sector; promoter’s industry experience and established regional presence
Incorporated in 2010, Pragnya Fund II is a Mauritius-based private equity fund with the principal objective of investing in property development projects through designated special purpose vehicles domiciled in India and Sri Lanka. The fund has been established to enable selective institutional investors, corporate and high net worth individual investors to invest in opportunities within the real estate sector in India and Sri Lanka. Pragnya Fund II is currently invested in Project Platinum, Colombo, Project Hazel, Chennai, Project Habitat Crest, Bangalore, Project Bridge Country, Rajahmundry amongst others. Incorporated in 2015, Pragnya South City Opportunity Fund is a Mauritius-based private equity fund with the principal objective of investing in property development projects domiciled in India and Sri Lanka. The directors of the company are Mr. Naidu Narayana Reddy, Mr. Ajay Kumar Gopal,Mr. Francis O Haokip and Mr. Akshat Asit Pandya. Pragnya Fund II and Pragnya South City Opportunity Fund is the part of Pragnya Group, managed by Mr. Subba R Dukkipati and Mr. Gopal Menon. The managing partners of the group has more than 2 decades of experience in the real estate industry. Acuité believes that promoters’ extensive industry experience and leveraging of its brand equity will lead to mitigation of project risk associated with on-going projects of PSCPPL to an extent over the medium term |
| Weaknesses |
| Delay in servicing of debt obligations
PSCPPL has delayed in the repayment of the term loan facilities in the month of December 2022, January 2023 and February 2023. As on March 2023, the account has been regularized as per the banker confirmation. |
| Rating Sensitivities |
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> Regular servicing of debt obligations
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| Material covenants |
| None |
| Liquidity Position: Poor |
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The liquidity position of the company is marked poor on account of recent past instances of delays in servicing of debt obligations.
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| Outlook |
| Not Applicable |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
| Operating Income | Rs. Cr. | 57.36 | 41.07 |
| PAT | Rs. Cr. | (43.00) | (24.42) |
| PAT Margin | (%) | (74.96) | (59.45) |
| Total Debt/Tangible Net Worth | Times | 2.14 | 2.26 |
| PBDIT/Interest | Times | (0.17) | 0.30 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.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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