CRISIL downgrades Marathon Nextgen

MUMBAI: CRISIL has revised its real estate project rating on Marathon Nextgen Realty Ltd’s Marathon ERA IV project to ‘PA3’ from ‘PA2’. The revised rating indicates the developer's ability to build the project as per the specified quality level and time schedule, and to transfer a clear title is ‘adequate’.

The revision is driven by significant expected delay in obtaining the occupancy certificate, leading, in turn, to delay in project completion. The delay in obtaining the OC is due primarily to the mill land issue, and process of compliance with Development Control Rule–58 applicable to mill lands in Mumbai.

CRISIL treats the receipt of the OC as a pre-requisite for completion of projects. The legal proceedings for land conveyance can commence only after the developer has obtained the OC.

CRISIL has also revised its real estate developer rating on Marathon Realty Ltd to ‘DA3’ from ‘DA3+’. It has considered the combined track record and financial flexibility of all Marathon group companies; this is owing to the common management and strong operational linkages they share.

The rating remains driven by Marathon’s moderate experience in executing small and medium real estate projects. The rating also reflects Marathon’s strong financial flexibility, marked by unutilised bank lines, unsold stock of developed property, comfortable internal cash accruals, and sizeable customer advances. The rating remains constrained by delays in project completion, significant revenue concentration risks, and unfavourable sales agreement for customers.