Allahabad Bypass Pathways Private Limited Instrument Term Loans Non-Fund Based Facilities Amount In Crore 78.50 48.60 Rating Action As on October 2014 [ICRA]BBB- (SO) (Stable Outlook) (Assigned) [ICRA]BBB- (SO) (Stable Outlook) (Assigned) ICRA has assigned the long-term rating of [ICRA]BBB- (SO) (pronounced ICRA triple B minus Structured Obligation) to the Rs. 78.50 crore fund based limits and Rs. 48.60 crore non fund based limits of Allahabad Bypass Pathways Private Limited (ABPPL). The long term rating carries a Stable Outlook. The letter SO in parenthesis suffixed to a rating symbol stands for Structured Obligation. An SO rating is specific to the rated issue, its terms, and its structure. SO ratings do not represent ICRA’s opinion on the general credit quality of the issuers concerned. The SO (structure obligation) rated bank facilities of ABPPL are credit enhanced by an unconditional and irrevocable corporate guarantee issued by Prakash Asphaltings and Toll Highways Limited (PATH – rated [ICRA]BBB- (stable outlook)/ [ICRA]A3). The [ICRA]BBB- (SO) rating for the instrument addresses the servicing of the bank lines to happen as per the underlying terms of the instrument and the guarantee agreement for the same. The rating also assumes that the guarantee will be duly invoked by the lender, as per the terms of the instrument and guarantee agreements, in case there is a default in payment by the borrower. The rating takes into account an unconditional and irrevocable corporate guarantee issued by PATH for meeting the debt obligations of the company. Besides drawing comfort from the guarantee, the rating is supported by the strength of the promoters (PATH) and fixed-price Engineering, Procurement, and Construction (EPC) agreement which reduce cost overrun risk to an extent. The rating is however constrained due to lower than anticipated toll collections since the commencement of operations in April 2014 and ABPPL’s exposure to interest rate risk due to floating interest rates. While assigning the rating, ICRA has also noted that while the debt for the project has been tied-up, ABPPL exposure to funding risk remains as a part of promoter’s contribution is yet to be received; timely receipt of these would be crucial for smooth progress of the project. Further, the ability of the company to complete the project within budgeted time and cost will be other key rating sensitivity factors. Company’s Profile ABPPL is a SPV incorporated in July 2013 by Prakash Asphaltings & Toll Highways Limited (PATH) for undertaking an Operations and Maintenance (OMT) based toll road project on Allahabad Bypass, National Highway-2 from 158.00 km to 242.71 km. The shareholding in the SPV is 100% held by PATH which is involved in the construction and maintenance of various infrastructure projects as a Developer, Contractor and on Joint Venture basis. The Concession Agreement (CA) for the project was signed in December 2013, however due to certain operational problems with NHAI, the Appointed Date for the project was fixed at April 25, 2014 and the company started the toll collection on the same day. The construction of the road has already been completed and hence all the necessary approvals and clearances are in place. The scope of the project work largely involves construction of 5 toll plaza, 3 medical aid and 3 traffic aid post, creation of the green belt, completion of the metal crash barrier work on 8 km road stretch, resurfacing of service with bituminous concrete, provide for road signage and undertake the operation and maintenance including toll collection. The financial closure for the project has been achieved and project work commenced in April 2014. The scheduled construction period is 24 months with scheduled COD being March 2016. The project involves a planned capital outlay of Rs. 105.98 crore proposed to be funded by debt of Rs. 78.50 crore and promoter’s contribution of Rs. 27.48 crore. October 2014 For further details please contact: Analyst Contacts: Mr. Rohit Inamdar, (Tel No. +91-124-4545847) [email protected] Relationship Contacts: Mr. Vivek Mathur, (Tel. No. +91-124-4545310) [email protected] © Copyright, 2014, ICRA Limited. All Rights Reserved. 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