Rating Rationale Brickwork Ratings assigns ‘BWR A3’ for DPJ-DRA Tollways Pvt. Ltd.’s (DPJDRA or the ‘Company’) Bank Credit Facilities of ₹ 21.60 Cr. *Facility Limits (₹ Cr) Non Fund Based Bank Guarantee 21.60 Total 21.60 Tenure Rating Short Term BWR A3 (Pronounced as BWR A Three) INR Twenty One Crores and Sixty Lakhs only Brickwork Ratings (BWR) has assigned the Ratings1 of ‘BWR A3’ for DPJ-DRA Tollways Pvt Ltd.’s bank loan facilities of ₹ 21.60 Cr. The rating “BWR A3” stands for an instrument that is considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry higher credit risk. Outstanding Issues of DPJ-DRA Tollways Pvt. Ltd rated by BWR: Issue* Limits (₹ Cr) NCD 20.00 Total 20.00 Tenure Rating 7 years BWR BBB(Pronounced as BWR Triple B Minus) INR Twenty Crores only *Refer to the rationale dated 26th August, 2014 published in our website. The rating has, inter alia, factored established track record of the sponsors in infrastructure road projects, and the performance required under the Concession Agreement with NHAI, which is only OMT (Operation, Maintenance and Transfer). NHAI has already transferred the said project to the company, toll collection has already commenced, and there is a visible revenue stream. The rating is however constrained by inherent risks associated with the tollbased revenue model, fairly large concession fee payable, and significant major maintenance costs. Background: DPJ-DRA Tollways Private Limited is a Special Purpose Vehicle (SPV) Company incorporated by DPJ and DRA on 23rd April, 2013. DPJ and DRA are the Promoters of the Project and both have successfully positioned themselves in the road and civil construction industry.The purpose of SPV is to undertake the Operation and Maintenance of Lalitpur – Sagar – 1 Please refer to www.brickworkratings.com for definition of the Ratings www.brickworkratings.com 1 15 Oct 2014 Lakhnadon from Km. 99.005 to Km. 415.089 section of NH-26 on OMT basis in the states of Uttar Pradesh and Madhya Pradesh. The company has 4 directors, namely Mr. Girish Jain, Mr. Dinesh Chandra R. Agrawal, Mr. Deepak Jain and Mr. Jagdish Chandra Agrawal. Financial Performance: As per Provisional figures for FY14, the company has achieved net revenue of Rs 25.94crs with a PAT of Rs 1.84crs. Revenues are from toll collection figures from the 4 tolls under the purview of DPJ DRA Tollways. The toll collection started on 06/10/13 and actual toll collection for 177 days till 31/03/14 was Rs 25.94 Crs @ average of Rs 14.7 Lakhs per day, the company has also paid concession fee of Rs 15.88crs for the same period. As per the concession agreement the promoters have also provided performance guarantee of Rs 21.60crs towards NHAI. Credit Risk Assessment: As per the concession agreement, the SPV was required to provide bank guarantee/performance guarantee of Rs 21.60crs to NHAI to ensure that the maintenance works are carried on within stipulated time, in accordance with the provisions of the agreement. Since the SPV was not having sufficient cash flows in the initial days, the promoters had arranged for the BG from their bankers, on behalf of the SPV. Since the project has been completed and toll collections have started, the said corporate guarantee is being substituted by the bank guarantee/performance guarantee sanctioned by Central Bank of India to the SPV itself. Hence carrying out the maintenance works, as scheduled in the concession agreement is important. For this purpose, achieving toll revenues as per projections will be the key. In the event of any shortfall, the company will have to look to the promoters for support. Rating Outlook: The outlook is stable. The company’s ability to complete the project constructions without any time/cost overrun and carryon the routine maintenance as well as major maintenace as per the scheduled timelines mentioned in the concession agreement, achieve the projected revenue and profitablity will be the key sensitivites. Analyst Contact Relationship Contact [email protected] [email protected] Phone Media Contact 1-860-425-2742 [email protected] Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons. www.brickworkratings.com 2 15 Oct 2014