BWI: Brickwork Ratings Assigns “BWR BBB+” for Raghuleela Leasing and Real Estates Pvt. Ltd. Limited’s Secured Non-Convertible Debt Instruments Issue of INR 500 Crore or INR 5 Billion

Press release from Business Wire India
Source: Brickwork Ratings
Saturday, December 19, 2009 12:25 PM IST (06:55 AM GMT)
Editors: General: Consumer interest, Economy; Business: Advertising, PR & marketing, Banking & financial services, Business services, Commodities & materials, Construction, Financial Analyst, Real estate, Stock exchanges
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Brickwork Ratings Assigns "BWR BBB+" for Raghuleela Leasing and Real Estates Pvt. Ltd. Limited's Secured Non-Convertible Debt Instruments Issue of INR 500 Crore or INR 5 Billion
NCD Issue Rating: BWR BBB+ ; Outlook : Stable

Bangalore, Karnataka, India, Saturday, December 19, 2009 -- (Business Wire India) -- Brickwork Ratings has assigned BWR BBB+ (Pronounced BWR BBB plus) for Raghuleela Leasing and Real Estates Pvt. Ltd. Limited's (RLRE) proposed secured Non-Convertible Debt Instruments (NCD) issue of INR 500 crore or INR 5 billion. Brickwork Ratings' 'BWR BBB+' stands for an instrument that is considered to offer ADEQUATE credit quality / safety in terms of timely servicing of principal and interest obligations. The rating has factored RLRE's promoter background and the promoter group's track record of successful execution of various high profile projects, excellent location of the proposed C-70 project at Bandra-Kurla Complex, Mumbai, which will be the underlying security for the NCD Issue.

Raghuleela Leasing and Real Estates Pvt. Ltd. Limited is a Special Purpose Vehicle (SPV) formed to develop "The Capital" Project at plot no. C-70 at Bandra-Kurla Complex (BKC), Mumbai. The equity holders for the project are:

-- Wadhwa and Associates Realtors Pvt. Ltd. (90%)
-- Vishwaroop Infotech Pvt. Ltd. (9%)
-- Shree Naman Developers Ltd. (1%)

The first two parties in the above agreement are part of the Vijay (Wadhwa) Associates Developers. The Wadhwa group has, over the past 40 years completed a number of projects across Mumbai and Navi Mumbai and has now expanded to Pune. Over the last couple of years they have completed a total of 49 residential projects with total saleable area of over 35 lac sq.ft. In case of commercial real estate they have completed a total of 21 projects with a saleable area of 44 lacs sq. ft. These include commercial projects like The Platina, Trade Centre in BKC as well as IT parks, malls and office spaces across Mumbai.

M/s Raghu Leela Leasing P. Ltd proposes to issue NCD to the extent of Rs. 500 Crore to partly fund its commercial real estate project 'The Capital' which is expected to involve a total cost of Rs 2482 crore. The project cost will be met in the following manner- Rs. 715 crores will be funded by Promoters, Rs. 800 crores in the form of debt through bank loans and NCD issue and the rest from sale of saleable area of about 10 lakh sq. ft. Construction has already started and is expected to be completed by March 2013.

BWR has considered various risk factors and is of the view that the project has average financial risk.

An important stipulation of MMRDA while granting approval is that any delay in construction beyond March 2013 could expose the Company to a heavy monetary fine by them from whom the land has been acquired on lease for 80 years. However, given the reputation for quality work and good track record of the promoters in completing projects in the past, the company is expected to take appropriate steps to ensure completion of the project as per schedule and generate adequate cash flow to service the debts.

Rating Outlook:

The promoter group of Raghu Leela Leasing & Real Estate P Ltd. has a good track record in executing high profile commercial and residential real estate projects in Mumbai and their current projects are a good mix of residential and commercial in up market areas of Mumbai with recent expansion to Pune. The project itself is located at prime location of BKC which is touted to be the next financial hub of Mumbai. The rating is however constrained by the current bearish scenario in commercial real estate, the price risk and funding gaps in case of slowdown in advance sales.

Copyright ©, 2009, Brickwork Ratings.

Brickwork Ratings has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. Brickwork has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. Brickwork does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by Brickwork should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. Brickwork has the right to change, suspend or withdraw the ratings at any time for any reasons.


CONTACT DETAILS
Praveen Prakash, Lead Analyst, Brickwork Ratings, 1-860-425-2742, praveen.prakash@brickworkratings.com
Milind Diwakar, Co-Anaylst, Brickwork Ratings, 1-860-425-2742, milind.d@brickworkratings.com
Anitha G, Media Contact, Brickwork Ratings, 1-860-425-2742, media@brickworkratings.com
K N Suvarna, Director - Business Development, Brickwork Ratings, 1-860-425-2742, kn.suvarna@brickworkratings.com

KEYWORDS
CONSUMER, ECONOMY, MARKETING, BANKING, BUSINESS SERVICES, COMMODITIES, CONSTRUCTION, Financial Analyst, REAL ESTATE, STOCK EXCHANGES

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