Press Release Ecostar Goel Properties
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Press Release Ecostar Goel Properties LLP February 26,2021 Ratings Amount Facilities Rating1 Rating Action (Rs. crore) CARE B-; Stable; Rating continues to remain under ISSUER NOT COOPERATING* ISSUER NOT COOPERATING Long Term Bank Facilities 17.50 (Single B Minus; Outlook: category and Revised from Stable CARE B; Stable; (Single B; ISSUER NOT COOPERATING*) Outlook: Stable) 17.50 (Rs. Seventeen Total Facilities Crore and Fifty Lakhs Only) Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated December 02,2019, placed the rating of Ecostar Goel Properties LLP (EGPL) under the ‘issuer non-cooperating’ category as EGPL had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. EGPL continues to be non-cooperative despite repeated requests for submission of information through email letter dated July 31,2020,October 30,2020, February 01,2021,ebruary 11,2021 and numerous phone calls. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE’s opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The ratings have been revised on account of no due diligence conducted and non-availability of information due to non- cooperation by SFP with CARE’s efforts to undertake a review of the rating outstanding. CARE views information availability risk as a key factor in its assessment of credit risk Detailed description of the key rating drivers At the time of last rating on December 02,2019 the following were the rating strengths and weaknesses Key Rating Weaknesses Project execution and funding risk: The total cost of the project for Phase II is estimated at Rs.30.67 crore which is to be funded promoter’s contribution, term loan (applied for sanction) and customer advances in the ratio 0.29:0.57:0.14. The project will be officially launched in the month of August 2017 and is expected to be completed by March 2020. As on March 31, 2017, the firm has incurred around 28.26% of the total project cost which was funded through promoter’s contribution. However, the financial closure for the project has not been achieved increasing the risk of execution. Cyclical nature of the real estate industry: The firm is exposed to the cyclicality associated with the real estate sector which has direct linkage with the general macroeconomic scenario, interest rates and level of disposable income available with individuals. In case of real estate companies, the profitability is highly dependent on property markets. A high interest rate scenario could discourage the consumers from borrowing to finance the real estate purchases and may depress the real estate market. Presence in a competitive environment: The real estate industry in India is highly fragmented with most of the real estate developers having region-specific presence. EGPL also faces competition from other real-estate developers who are coming up with residential projects in Sukhwani Sepia, Paranjpe Azure and DNV Elite Homes and such other upcoming projects. However, the partner’s has a good understanding of the region and its dynamics which partly mitigates this risk. Key Rating Strengths Experienced promoters group in real estate development in Pune: EGPL is a part of Goel Ganga Developments (GDG) which is one of the established real estate groups in Pune. The group has been engaged in real estate business sine past three decades and has completed projects around 80 lsf. Also, the group currently has five ongoing projects with a total saleable area of around 30 lsf. Receipt of approvals and clearances for the project: EGPL has received all the necessary clearances and approvals for the project related to land acquisition and construction. The requisite sanction plan of the buildings of the said project has been approved by the Pimpri Chinchwad Collectorate. Commencement certificate from the Pimpri Chinchwad Municipal Corporation has been received. Further, the said land has also been converted to non-agriculture use. Furthermore, the firm is expected to receive its registration from RERA India in the month of July. Only after receiving the certificate, the firm 1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications *Issuer did not cooperate; Based on best available information 1 CARE Ratings Limited Press Release would be able to advertise, sell or book the flats. Delay in getting registered with RERA India would result in delay in launch of the project and subsequently affect the revenue generating ability of the firm. Strategic location of the project: EGPL is currently developing a project namely Ganga Aurum Park Phase 2 at Tathavade, Pune, which is very well connected to Mumbai Pune Highway. The project is residential project with modern amenities targeting customers from the middle class and business class. In addition, the project is situated in area with easy access to basic civic amenities such as schools, hospitals, colleges, malls, situated and has close proximity to Hinjewadi IT park and Pune Mumbai Expressway. Analytical approach: Standalone Applicable Criteria Policy in respect of Non-cooperation by issuer Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Rating methodology for Real Estate Sector Financial ratios (Non-Financial Sector) About the Company About the Company Established in the year 2011, EGPL is the SPV of Goel Ganga Developments Group(GDG). Goel Ganga Developments is one of the reputed real estate group in Pune. EGPL was established with a view to execute the real estate project, namely, “Ganga Aurum Park” situated in village Tathavade, Pune Brief Financials (Rs. crore) FY17 (A) FY18 (A) Total operating income 18.67 1.22 PBILDT 2.29 1.67 PAT 0.60 -0.18 Overall gearing (times) 2.54 3.40 Interest coverage (times) 1.52 0.99 Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2 Annexure-1: Details of Instruments/Facilities Size of the Name of the Date of Coupon Maturity Rating assigned along with Issue Instrument Issuance Rate Date Rating Outlook (Rs. crore) Fund-based - LT- CARE B-; Stable; ISSUER NOT Proposed fund based - - - 17.50 COOPERATING* limits *Issuer did not cooperate; Based on best available information Annexure-2: Rating History of last three years Current Ratings Rating history Date(s) Date(s) Name of the Type Rating & Date(s) & Date(s) & & Sr. Amount Instrument/Bank Rating(s) Rating(s) Rating(s) Rating(s) No. Outstanding Facilities assigned assigned in assigned in assigned (Rs. crore) in 2020- 2019-2020 2018-2019 in 2017- 2021 2018 1)CARE B; 1)CARE B; 1)CARE CARE B-; Stable; Stable; ISSUER Stable; ISSUER B+; Fund-based - LT- ISSUER NOT NOT NOT Stable 1. Proposed fund LT 17.50 - COOPERATING* COOPERATING* COOPERATING* (26-Jun- based limits (02-Dec-19) (03-Oct-18) 17) *Issuer did not cooperate; Based on best available information 2 CARE Ratings Limited Press Release Annexure 3: Complexity level of various instruments rated for this Firm Sr. Name of the Instrument Complexity Level No. 1. Fund-based - LT-Proposed fund based limits Simple Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications. 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