1 June 2020: The rating assigned to the Mantra Group entities remained constrained in the past due to high external debt, moderate cash flow cover and sizeable reliance on new sales. The rating downgrade factors in ICRA’s expectation of moderation in the credit risk profile of the Mantra Group due to Covid-19.
The impact of the outbreak of Covid-19 pandemic, with the ongoing pan India lockdown, contagion fears, and economic uncertainties, are likely to affect the operations, bookings and cash flows of real estate developers.
Demand is expected to witness moderation and committed receivables from
already booked sales are also expected to get impacted, given that mile-stone based payments may get deferred and some buyers may delay payments on account of economic/income uncertainties. Consequently, cash flows for Mantra Group are expected to witness a sharp reduction in FY2021.
Further, based on the best available information, considering the modest liquidity position, the group may remain more susceptible to the possible cashflow mismatches that might arise during the year due to disruption in operations, leading to increased dependence on refinancing.
As per the last available information and ICRA estimates, the Group has around Rs. 20 crore of interest expenses and Rs. 35 crore principal repayment obligations during FY2021, to be serviced post the RBI forbearance period, from September 2020 onwards.
The rating is based on limited information on the Group’s performance since the time it was last rated in July 2019. The lenders, investors and other market participants are thus advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement with Mantra Buildcrafts LLP, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity’s management has remained non-cooperative.
In the absence of requisite information and in line with SEBI’s Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 01 2016, ICRA’s Rating Committee has taken a rating view based on
the best available information.
About the company:
The Mantra Group is promoted by the family of Late Mr. Puranchand Kishorilal Gupta. The Group entered into the realestate business in 2006 and over the last decade has completed development of around 1.9 mn sqft of area. It has around 4.7 mn sqft of area under development at present. The Group is now developing 11 residential real-estate projects in Pune, with each project being developed through a separate SPV.
Mantra Buildcrafts LLP (MBL), incorporated in 2013, is the SPV executing the ‘Mantra 7 Hills’ project at Kirkatwadi, Pune. Phase-I of the project has a total saleable area of 0.26 mn sqft, out of which 81% share belongs to MBL as a developer. The project was launched in July 2016.