ICRA has assigned IPO Grade 3, indicating average fundamentals, to the proposed initial public offering of Brigade
Enterprises Ltd (BEL). ICRA assigns IPO gradings on a scale of IPO Grade 5 to IPO Grade 1, with Grade 5 indicating
strong fundamentals and Grade 1 indicating poor fundamentals.

BEL is proposing a public issue of 16.6 million equity shares of face value Rs. 10/- each, through 100% book building
route. The company proposes to use the proceeds from the proposed IPO to fund the construction and development of
its ongoing projects and acquire land.

The IPO grade assigned by ICRA reflects BEL’s established position in the Bangalore real estate market, its healthy
booking in its on-going projects and its strong return indicators as reflected by return on capital employed (ROCE) of
36% and return on net worth (RONW) of 49% in FY2007. The grading also favorably factors in the company’s
experienced promoters and strong management information systems and its track record of timely execution of
projects with adequate quality standards. The grading is however constrained by BEL’s concentration mainly in
Bangalore market, exposing it to single market risk and the comparatively low land bank, which in turn may require
BEL to replenish its land bank at a higher cost going forward, which could impact margins and profitability. Moreover,
the grading takes into consideration cyclical nature of the real estate industry and increasing funding requirements of
the company to meet its commercial construction commitments.

Going forward, though BEL’s development plans are significant as compared to what it has executed in the past, the
company has taken adequate steps to reduce execution risk through measures like tying-up with reputed contractors
and scaling up its manpower resources. Moreover, with healthy bookings in its on-going projects and quick turnaround
arising out of speedy construction, BEL’s profitability and return indicators are expected to remain healthy in the
medium term.

Company Profile

BEL was originally set up in 1990 as a partnership firm called Brigade Enterprises. Brigade Enterprises was converted
to a Private Ltd Company in 1995. Subsequently, the status of the company was converted to a public company in July
2007. So far BEL has completed and delivered around 67 projects aggregating to around 6.7 million sqft of space
comprising residential (71% of total developed area), Commercial (IT Parks/Office Buildings – 26%) and hospitality
ventures (3%). BEL has established itself as one of the major diversified real estate developers in Bangalore. Besides
Bangalore BEL has taken up few projects in Mysore and has recently initiated some development activities in other
parts of South India including Mangalore, Hyderabad, Chennai. For the financial year 2007, BEL reported an operating
income of RS.4099.8 million and Profit after tax of Rs. 714.9 million.