“Ind-Ra has taken a consolidated view of ASL and its subsidiaries - Arihant Abode Limited, Arihant Aashiyana Private Limited, Arihant Gruhnirman Private Limited, and Arihant Vatika Realty Private Limited - collectively known as the Arihant group while assigning the ratings owing to the moderate legal, and strong operational and strategic linkages among them,” company share Ind-Ra’s rationale.
It further said, the companies operate in the same line of business and have a common management. Currently, there is no corporate guarantee given by the parent to the subsidiary or vice versa. However, historically, the parent (ASL) had provided corporate guarantees for the bank facilities of its subsidiaries. Since the group shares a common brand name Arihant, this increases the possibility that in case of a stress in liquidity in any of the group company, other companies would extend financial support.
“The ratings reflect Arihant group’s long operational track record of executing real estate projects, and moderate offtake and execution risks. However, the ratings are constrained by the group’s moderate financial risk as the funding of the projects is largely dependent on customer advances,” it added.