CRISIL has assigned its ‘B-/Negative/P4’ ratings to DG Estates Pvt Ltd’s (DGEPL’s) bank facilities. The ratings reflect DGEPL’s exposure to risks related to the timely commissioning of its hotel project and the ability to service its debt in a timely manner. CRISIL notes that the principal repayment as per the re-scheduled terms would start from August, 2010 coinciding with the commencement of its hotel project leaving little headroom for the cash flows to stabilise. This rating weakness is partially offset by the benefits that DGEPL derives from its resourceful background of promoters.

Outlook: Negative
CRISIL believes that DGEPL’s credit risk profile will be constrained over the near term by its large term loan repayment obligation commencing from August 2010 vis-à-vis the expected cash accruals from its hotel project. The outlook may be revised to ‘Stable’ if the project is completed without significant cost and time overruns and generates higher than expected occupancy levels over the near term. Conversely, the rating may be downgraded, if there is significant delay in the completion of the project, thereby jeopardising the debt servicing ability of the company.

About the Company
DGEPL was incorporated in 2001 by Mr. Deepak Gambhir and Mr. Yogesh Gambhir and was later acquired by its current promoters, Mr. Sushil Goyal, Mr. Gagan Goyal, Mr. Suresh Bansal, and Mr. Amit Bansal. The company is setting up a three-star hotel at Hari Nagar, New Delhi, with a capacity of 57 double bedrooms and other amenities. The company is setting up the hotel to cater to the demand expected from the Commonwealth Games 2010 that are to be hosted in New Delhi in October 2010. The hotel is expected to commence operations in August 2010.