­Acuité has consolidated the business and financial risk profile of Sumit Woods Limited (SWL), Mitasu Developers Private Limited (MDPL, currently 100% subsidiary of SWL), Sumit Chetna Venture (SCV), Sumit Snehashish Ventures, Sumit Snehashish Joint Venture, Sumit Kundil Joint Venture (SKJV), Sumit Pramukh Venture and associate Sumit Reality Private Limited together referred to as the 'Sumit Group'. The consolidation is in view of the similar line of business and common ownership.

­Experienced promoter and long track record of operations
SG, founded and managed by Mr. Mitaram R. Jangid, is a well-established group with a business history spanning more than three decades in real estate development projects. The group has three ongoing projects at different stages of execution, Sumit Bells Plot A is located in Goa and is nearing completion, Sumit Gurukrishna is located in Vile Parle, East, Mumbai and is expected to get complete by September 2025 and Sumit Param is located in Borivali West, Mumbai and started recently in July 2024. The total project cost of Sumit Bells Plot A is Rs.12.95 Cr, Sumit Gurukrishna is Rs.141.66 Cr. and Sumit Param is Rs.365.59 Cr.

Acuite believes that the extensive management experience, timely execution of projects and prime locations of the ongoing projects will adequately support the business risk profile of the group.

Timely completion of past projects and healthy sales and collection traction in ongoing projects
SG has managed the timely completion of projects in the past. It has an unsold inventory of 9 units as of September 2024 from its completed projects, Sumit Plumeria and Arcenciel. SG has three ongoing projects; of these, two are based out of Mumbai and one is based out of Goa. Sumit Gurukrishna and Sumit Param are based in Mumbai. Project Sumit Gurukrishna has already sold 69.61% of its total saleable area as of June 2024 and Sumit Param was recently launched in July 2024. As on date sales made is low in Sumit Param but is expected to grow significantly over the near term. Goa-based project Sumit Bells Plot A has registered low sales traction; however, it is expected to improve, as the project is nearing completion. The percentage area sold in Sumit Bells Plot A is 50%.

Acuite believes the healthy sales and collection traction will help in mitigating the execution risk of ongoing projects to some extent.

­Dependency on customer advances and execution risk
SG is currently executing three projects (one of them nearing completion), for which all of the required clearances have already been obtained. The total cost of these projects is ~Rs.520.20 Cr. of the total cost, Rs.332.84 Cr. (63.98%) is expected to be incurred through customer advances. The balance will be funded through a mix of debt and equity. As of June 2024, the group has incurred total cost of Rs.122.41 Cr. on the three ongoing projects out of which Rs. 67.34 Cr. is funded through customer advances. The group's ability to execute projects as per schedule is highly dependent on the timely receipt of customer advances, which form a major portion of the total funding requirement of the projects. Any decline in sales and collection traction will adversely impact the timely completion of projects. Also, reduced collections will result in a deterioration in the financial risk profile and liquidity position.

Susceptibility to Real Estate Cyclicality and Regulatory Risks
The real estate industry in India is highly fragmented with most of the real estate developer having a city-specific or region-specific presence. 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.