Fitch Ratings has today downgraded India-based Ansal Properties & Infrastructure Limited's (API) Long-term Issuer Rating to 'BBB-(ind)' (BBB minus(ind)) from 'A-(ind)' (A minus(ind)), and revised the Outlook to Negative from Stable. The agency has also downgraded the rating of API's INR1000m long-term debt program to 'BBB-(ind)' (BBB minus(ind)) from 'A-(ind)' (A minus(ind)), and its INR1000m short-term debt rating to 'F3(ind)' from 'F1(ind)', of which INR500m is to be carved out of fund-based working capital limits.

Fitch has also downgraded the rating of API's long-term bank loans aggregating INR710m and fund-based working capital limits of INR1721.5m, consisting of cash credit and overdraft, to 'BBB-(ind)' (BBB minus(ind)) from 'A-(ind)' (A minus(ind)) and its short-term bank loans aggregating INR200m and its non-fund based working capital limits of INR1,500m to 'F3(ind)' from 'F1(ind)'.

API's financial results have been adversely affected by the slump in demand for the real estate segment. API's revenues fell 47% during Q2 of FYE09 while EBITDA margins for the quarter declined 700 bp to 21% compared with 28% yoy. For the first six months of FYE09, revenues are down 25% while EBITDA margins fell to 19%, compared with 27% a year earlier.

The Negative Outlook reflects API's reduced liquidity position, with the company facing significant maturities during FY2009 (INR4.1bn, out of which INR1.9bn is in Q409) amid a difficult credit market, resulting in increased refinancing risk. It also reflects potential further negative pressure on cash flow generation and credit metrics stemming from a more adverse real estate sector environment than currently envisaged. In order for the Outlook to be revised to Stable, Fitch will assess API's success in mitigating the refinancing risk and the company's operating performance compared with Fitch's expectations.

The rating continues to reflect API's experience in the real estate market in Northern India and is among the oldest players in the real estate industry with an established brand and track record. The company has development experience of about 32m sq ft over 40 years. API is a pioneer of plotted development and townships with experience in developing some key commercial and retail properties in Delhi and has significant land reserves of about 6000 acres spread across the states of Uttar Pradesh, Haryana, Punjab and Rajasthan.

API, founded in 1967, is a real estate development company based in Delhi. In FY08, on a consolidated basis, API had revenue of INR9.7bn, with EBIDTA of INR2.4bn and net income of INR1.7bn. The net adjusted debt/EBIDTA in FY07 was 4.4x, with total debt/equity of 1x. In the six months ended September 2007, API had revenue of INR3.4bn and net income of INR0.4bn.

Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(ind)' for National ratings in India. Specific letter grades are not therefore internationally comparable.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings is one of the three large global credit rating agencies. Fitch rates 6000 financial institutions, including some 3,200 banks and 2,400 insurance companies, more than 1,700 corporates and 100 sovereigns as well as public finance, sub-sovereigns and structured finance transactions.

Fitch India has four rating offices located at Mumbai, Delhi, Chennai and Kolkata. Fitch is recognised by Reserve Bank of India, Securities Exchange Board of India (SEBI) and National Housing Bank.

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