Fitch gives BB(ind) to Sai Construction loan

Fitch Ratings said it assigned Sai Construction Private Ltd. a national long-term rating of BB(ind). The outlook is stable.

The agency has also assigned the company's Rs. 900 million long-term loan a BB(ind) rating.

Fitch said the ratings reflect the company's stable rental income from and the sound asset quality of its five lakh square foot real estate property "Sai Radhey" in Pune, which is located near the railway station and adjacent to a five-star hotel (Le Meridien). The ratings derive strength from the company's four-year-long relationship with its clients and the three-year lock-in period in its tenancy agreements.

The ratings are however constrained by the customer concentration risk, with the company's three clients occupying 86% of the total area and contributing about 80% to its rental revenue. Rating concerns also emanate from renegotiation risk as agreements with three of its clients, contributing about 50% to rental revenue, are due for renewal in the financial year ending March 2012.

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