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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 325.00 | Provisional | ACUITE C | Assigned | - |
| Total Outstanding | 325.00 | - | - |
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Rating Rationale |
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Acuite' has assigned its long term rating of 'Provisional ACUITE C' (read as Provisional ACUITE C) on the Rs.325.00 Cr proposed Non-Convertible Debentures of Prateek Realtors India Private limited (PRIPL).
The rating on the proposed Rs. 325.00 Cr. NCD is provisional and the final rating is subject to the following documentation:
The rating assigned takes into account the established track record of the group and promoters in the real estate development industry for more than ten years. The group has established to develop affordable group housing project Grand City having 40 acres’ land area located at Siddhartha Vihar, Ghaziabad. However, the rating is constrained by geographical concentration in the revenue profile, past delays in completion of the project and susceptibility of cyclicality in completion of real estate projects. Further, the company had also defaulted in its payment of NCD. Going forward, Acuite' expects the financial risk profile and liquidity of the company to improve with refinancing through the issue of NCD of Rs.325 Crore. |
| About the Company |
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Delhi based Prateek Realtors India Private Limited (PRIPL) was incorporated on 16th Dec 2009. It is promoted by Mr. Prashant Kumar Tiwari (& family) who holds 100% of the company directly or through group companies (Prateek Buildtech India Private Limited – 93% and Prashant Kumar Tiwari – 7%). PRIPL is a Real Estate Development company which is developing affordable Group Housing Project Grand City having 40 acres’ land area and ~8.3 mn saleable area (Phase 1: 3.1 mn square feet, Phase 2: 2.0 mn square feet, Phase 3: 3.1 mn square feet), located at Siddhartha Vihar, Ghaziabad. The First 2 phases of project were launched in 2015 and are nearing completion, 3rd phase of project is yet to be launched. Prateek Group has substantial presence in Noida and Ghaziabad and has delivered 7.9 mnsft (6 projects) in Delhi NCR. The current director of Company is Mr. Prateek Tiwari and Mr. Prasant Kumar Tiwari.
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| Unsupported Rating |
| None |
| Analytical Approach |
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Acuite has considered the standalone approach on the business and financial risk profile of Prateek Realtors India Private Limited (PRIPL) to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Experienced Promoters with established track record of operations
Prateek group was incorporated in 2005. The promoter of the company Mr. Prashant Tiwari has experience of more than a decade in this line of business. The group has substantial presence in Noida and Ghaziabad and has delivered 7.9 mnsft (6 projects) in Delhi NCR such as The Royal cliff, Prateek Fedora, Prateek laurel, Prateek wisteria and Prateek Edfice, and Prateek Stylome. The company is developing affordable Group Housing Project Grand City having 40 acres’ land area and ~8.3 mn saleable area (Phase 1: 3.1 mn square feet, Phase 2: 2.0 mn square feet, Phase 3: 3.1 mn square feet), located at Siddhartha Vihar, Ghaziabad. The cost of construction for Phase 1 and Phase 2 is Rs.1291 crores. |
| Weaknesses |
| High Dependence on refinancing for sustainability of operations
PRIPL has liquidity issues due to delay in project construction. There have been delay in repayments of existing NCD's issued by Asia Real Estate II India Opportunity Trust.In order to re finance its loan obligation, group is planning to issue NCDs to clear the dues and complete the project. However, successful refinance is dependent upon the compliance of various precedent conditions laid down in the term sheet. Timely refinance of the debt would be the key rating sensitivity. Susceptibility to Real Estate Cyclicality, Geographical concentration and regulatory risks The real estate industry in India is highly fragmented with most of the real estate developers having a city-specific or region-specific presence. Most of SIPL’s past and ongoing projects are located in Delhi NCR - This increases PRIPL’s susceptibility to geographical concentration risk. The real estate industry is cyclical in nature of business and subject to price and interest rate risk, among others. Further, the industry is also exposed to regulatory risk, which can impact project execution. |
| ESG Factors Relevant for Rating |
| Not Applicable |
| Rating Sensitivities |
| Timely refinancing by issuance of NCD. |
| Liquidity Position |
| Poor |
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The liquidity position is poor due to cashflows of the company being inadequate to service the repayment obligation. Hence, PRIPL has defaulted in its repayment of NCD. However, with the debt refinancing and issuance of proposed NCDs, liquidity of PRIPL may improve in near to medium term. PRIPL is mainly dependent on collection of receivables from sold units, NCD proceeds and sale proceeds from unsold units for project funding and NCDs repayment obligation. Timely collection of these receivables from old units will be key monitor able for the assessment of liquidity position of PRIPL.
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| Outlook |
| Not applicable. |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 138.88 | 70.37 |
| PAT | Rs. Cr. | (114.41) | (117.27) |
| PAT Margin | (%) | (82.38) | (166.66) |
| Total Debt/Tangible Net Worth | Times | (6.41) | (15.47) |
| PBDIT/Interest | Times | (5254.95) | (1281.49) |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable. |
| Any other information |
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Supplementary disclosures for Provisional Ratings
Risks associated with the provisional nature of the credit rating In case there are material changes in the terms of the transaction after the initial assignment of the provisional rating and post the completion of the issuance (corresponding to the part that has been issued) Acuité will withdraw the existing provisional rating and concurrently assign a fresh final rating in the same press release, basis the revised terms of the transaction. Rating that would have been assigned in absence of the pending steps/documentation The structure would have become null and void for the instrument. The rating of the instrument would have been equated to the standalone rating of the issuer (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 instrumen |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.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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