Crisil assigns PA2 rating to South City Projects

CRISIL has assigned the "PA2" rating to South City Projects Limited (SCPL). The rating indicates SCPL ability to build projects according to specified quality levels and time schedules and to transfer a clear title is high, Crisil said in a release.

The land for the project was acquired from Jay Engineering Works Limited through the BIFR asset sales committee.

SCPL's sales and construction contracts with counterparties and its well-structured site and project documentation factored positively into the rating, said Crisil.

SCPL has received required approvals from the authorities for this residential and commercial project, and has employed industry leaders to construct and execute it.

The rating is also supported by the project's good construction-related parameters in terms of the site plans and structural soundness, the infrastructure at site for execution and the sales and after-sales services planned.

These were in line with industry practices and aided saleability, as reflected in the 65 per cent booking levels for Towers I, II and III (residential).

Healthy initial bookings ensured timely availability of funds during the project execution stage. The rating was partly offset by the fact that the project was at an initial stage of construction. Piling work for Towers I and II was currently underway.

This increased execution uncertainties and construction risks. The rating was constrained by the six month delay in launching the project pending the approval of the site plan by authorities.

SCPL would attempt to make up the delay by constructing the towers simultaneously. SCPL was a mixed development (residential and commercial) project, totalling 3.68 million square feet, located in south Kolkata.

In view of its large size and large financial and market exposure involved, a consortium of five real estate developers would execute the project.

SCPL would come up on a plot measuring 31.41 acres, bought from Jay Engineering Works Ltd.

Kolkata High Court confirmed the sale by its order dated May 23, 2001, in favour of Emami Ltd. SCPL was its nominee.

The project would have four residential towers, one commercial mall, a health club and a school. The project was likely to be completed by October 2008.