Press Release

Press Release

Gayatri Lalitpur Roadways Limited (Revised)

September 07, 2018

Ratings

Facilities

Amount (Rs. crore)

Long-term Bank Facilities

157.99 (reduced from Rs.174.56 crore)

Total Facilities

157.99 (Rs. One hundred Fifty Seven

crore and Ninety Nine lakh only)

Details of instruments/facilities in Annexure-1

Rating1

CARE A; Stable (Single A; Outlook: Stable)

Rating Action Reaffirmed

Detailed Rationale & Key Rating Drivers

The reaffirmation of rating assigned to the bank facilities of Gayatri Lalitpur Roadways Limited (GLRL) is primarily on account of track record of timely receipt of annuities, receipt of final completion certificate and part creation of Debt Service Reserve Account (DSRA). The rating also factor in, experienced promoters, successful completion of first Major Maintenance (MM), low revenue risk on account of annuity nature of project, satisfactory liquidity position. The rating is, however, constrained by the Operation & Maintenance (O&M) risk with the absence of Major Maintenance Reserve Account (MMRA), interest rate risk. The rating also factors in repayment of promoter loans. Timely receipt of annuities, variation in the credit profile of the annuity provider-NHAI and occurrence of any force majeure events are viewed as the key rating sensitivities.

Detailed description of the key rating drivers

Key Rating Strengths

Experienced promoters: GLRL is a special-purpose vehicle (SPV) promoted by Gayatri Projects Limited (GPL) through its subsidiary Gayatri Highways Limited (GHL; holding 51% stake) and Infrastructure Development Finance Company Ltd (IDFC; holding 49%).

Successful completion of first Major Maintenance (MM): GLRL undertook its first MM partially in FY16 and majority in FY17 & FY18 within the envisaged cost (including the escalation cost of 4% as agreed by GPL and GLRL for two years i.e. 2015 and 2016).

Part creation of Debt Service Reserve Account: GLRL has started maintaining funds in the form of fixed deposit (FD) with IDFC Bank Limited to meet the DSRA obligation. GLRL has to maintain six months interest and principal which amounts to around Rs.16 crore and as on June 30, 2018, however, only Rs.5 crore is being maintained and the balance DSRA is expected to be created by FY20.

Receipt of Final Completion Certificate: Main carriageway has been fully completed and traffic is plying on the project highway. NHAI is also collecting toll from the public on the project highway. The company received final completion certificate on November 13, 2017.

Prepayment of principal obligation: GLRL has been prepaying its principal obligation around 9 months ahead of schedule for the last 3-4 years. GLRL has already met the yearly principal repayment obligations for FY19 due for June 2018 and December 2018 on November 24, 2017 and April 03, 2018, respectively, from previous year's closing cash balance.

Low revenue risk on account of annuity nature of project with successful receipt of 17 annuities from NHAI: GLRL received Provisional Completion Certificate (PCC) dated July 31, 2010 after completing 45.22 km out of total length of 49.305 km and started receiving annuity from NHAI from December 8, 2010. During FY18, the company received 16th annuity installment on September 27, 2017 and the 17th annuity installment was received on March 27, 2018. Although, there is a risk of delay in receipt of annuity, comfort is derived from the receipt of revolving Letter of Credit (LC) from NHAI for the entire annuities during the concession period. By virtue of being a quasi-government body, the risk arising from NHAI defaulting on the annuity payments is very low.

Satisfactory liquidity position and debt service indicators: The liquidity position of GLRL is at satisfactory levels. The company had liquid investments and cash balance of Rs.11.18 crore including Rs.5 crore of DSRA in form of fixed deposit as on August 14, 2018, post meeting the principal repayment obligations for FY19.

1Complete definition of the ratings assigned are available at and other CARE publications

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Key rating weaknesses

Operational and maintenance (O&M) risk with absence of funded MMRA: In May 2007, GLRL entered into a fixed price O&M agreement with GPL with an escalation clause at 5% p.a. y-o-y. Since commencement of operations, GLRL has been incurring substantially higher O&M expenses as compared to the contracted amount on account of soft costs incurred by the company. Furthermore, the company does not maintain funded MMRA as the same is not stipulated by the lenders.

Repayment of promoter loans: GLRL has partly repaid the sponsor subordinated loans amounting to Rs.12 crore in FY18.

Interest rate risk: GLRL shall remain exposed to variations in interest rate on the project debt as the loans are subject to interest rate resets. As a result, steep increases in the interest rate will subject the SPV to cash flow risk.

Analytical approach: Standalone

Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE's Policy on Default Recognition Rating Methodology - Infrastructure Sector Ratings Financial Ratios - Non-Financial Sector

About the Company Gayatri Lalitpur Roadways Limited (GLRL) is a special-purpose vehicle (SPV) promoted by promoted by Gayatri Projects Limited through its wholly owned subsidiary Gayatri Highways Limited (GHL; 51%) and Infrastructure Development Finance Company Ltd (IDFC) along with its fund [rated CARE AAA; Stable] (49%) to design, develop, construct, operate, and maintain a road stretch of 49.305 km on NH-26 in Uttar Pradesh on a BOT (Annuity) basis. The concession period for the project is 20 years including 30 months of construction period ending March 02, 2027, with a Commencement Date of March 02, 2007. The project commenced operations on June 11, 2010 against the schedule project completion date of September 30, 2009, as per the Concession Agreement (CA), on account of delay in handing over of Right of Way (RoW) pertaining to service roads by NHAI. The project received final completion certificate on November 13, 2017. As per the CA with NHAI, GLRL will be eligible to receive semi-annual annuity of Rs.23.95 crore from NHAI from 180 days from the occurrence of COD. In spite of delay in achieving the commercial operations, the NHAI has paid the lost annuities to the Company on account of non-availability of ROW. The company has received 17 annuity installments from till March 31, 2018.

Brief Financials (Rs. crore) Total operating income PBILDT PAT Overall gearing (times) Interest coverage (times) A: Audited

FY17 (A) 37.91 24.21 1.89 4.94 1.08

FY18 (A) 36.28 18.75 (1.37) 3.34 0.93

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating History for last three years: Please refer Annexure-2

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at . Investors/market intermediaries/regulators or others are welcome to write to care@ for any clarifications.

Analyst Contact: Name: Mr. Prasanna Krishnan Tel: 040 6900 0500 Mobile: +91 88864 99960 Email: prasanna.krishnan@

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About CARE Ratings:

CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.

Disclaimer

CARE's ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.

In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.

Annexure-1: Details of Instruments/Facilities

Name of the Instrument

Fund-based - LT-Term Loan Fund-based - LT-Term Loan

Date of Issuance

-

Coupon Rate

-

Maturity Date

December 2025 December 2026

Size of the Issue

(Rs. crore)

144.94

Rating assigned along with Rating

Outlook

CARE A; Stable

13.05

CARE A; Stable

Annexure-2: Rating History of last three years

Sr.

Name of the

No. Instrument/Bank

Facilities

1. Fund-based - LT-Term Loan

2. Fund-based - LT-Term Loan

3. Debentures-Non Convertible Debentures

Type

LT LT -

Current Ratings Amount

Outstanding (Rs. crore)

Rating

144.94

CARE A; Stable

13.05

CARE A; Stable

-

-

Rating history

Date(s) & Date(s) & Date(s) & Date(s) &

Rating(s) Rating(s) Rating(s) Rating(s)

assigned in assigned in assigned in assigned in

2018-2019 2017-2018 2016-2017 2015-2016

-

1)CARE A; 1)CARE A- 1)CARE BBB

Stable

(07-Oct-16) (10-Nov-15)

(18-Jul-17)

-

1)CARE A; 1)CARE A- 1)CARE BBB

Stable

(07-Oct-16) (10-Nov-15)

(18-Jul-17)

-

-

-

-

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