The Outlook on the rating is stable.
Unitech's eight subsidiaries have recently been awarded the license to operate a telecom business in 22 circles by the Department of Telecom (DoT), Government of India. The affirmation is based on a de-risking strategy put in place by Unitech for its entry into the telecom sector. As part of this strategy, the operational risk would be mitigated by a strategic partner who would bring in the required expertise to operate the facilities. The venture is expected to work as a separate entity and has not drawn any material funding from Unitech's balance sheet. The venture is also not envisaged to draw any material support or funding from Unitech's balance sheet in future. Based on the above, Fitch does not expect any material impact on Unitech's balance sheet due to the telecom venture.
Unitech is one of India's largest real estate developers with a comparatively diverse market presence. Having started as a civil consultancy and then operating as a construction company, it now focuses more on real estate development. In FY07, real estate accounted for 87% of its revenue compared with 55% in the previous year. The company made a net profit of INR13.1 billion on revenue of INR33.0bn in FY07. The corresponding figures for H108 were INR7.8bn and INR18.8bn, respectively.
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