ICRA has revised the rating assigned to the Rs. 150 Crores fund-based limits of Ganesh Housing Corporation Ltd. (GHCL) from LBBB (pronounced L triple B) to [ICRA]BB+ (pronounced ICRA double B plus). The outlook on the long-term rating is negative. The rating action takes into account GHCL's debt-funded acquisition of land for its township project which has translated into high debt repayment burden on the company relative to its cash accruals in the past. Though GHCL plans to fund its debt obligations through the customer advances from its future residential projects, most of these projects have recently been launched and are mostly unsold as on date. Moreover, ICRA factors in the fact that the company has to write down SEZ land sales of Rs. 160 Crores which was made to Abir Investments in FY2009. Though GHCL plans to write down this land sale in a phase-wise manner against profits from other projects/sale of land, ICRA expects the company's profits and accruals to remain subdued in the short to medium term on account of the same. Nevertheless, rating derives comfort from the company's low cost land bank and its established presence in the Ahmedabad real estate market. Moreover, ICRA also favorably factors in low debt requirements for the company's residential projects which are funded solely through customer advances/internal accruals. ICRA however notes that the company's township project is in early stages which expose it to cost overruns; such overruns if funded by debt can further deteriorate the capital structure in the company. Going forward, ability of the company to generate enough cash accruals from its projects/land sales for meeting its debt obligations while maintaining profitability will remain the key rating sensitivity.