Ahmednagar Ghogargaon Road Projects Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 232.96 Crs. of Ahmednagar Ghogargaon Road Projects Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	214.81	Long Term	BWR A - (CE) /Stable Assignment
Non Fund Based	18.15	Short Term	BWR A2 + (CE) Assignment
Non Fund Based	(66.55)	Short Term	BWR A2 + (CE) Assignment
Grand Total	232.96	(Rupees Two Hundred Thirty Two Crores and Ninety Six lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

Ratings with the CE symbol are based on Credit Enhancement in the form of a corporate guarantee from the parent company, the guarantor undertaking the payment of dues at the T-2 date.
The unsupported rating of Ahmednagar Ghogargaon Road Projects Pvt. Ltd, as assessed by BWR without considering the Credit Enhancement, is BWR BB+/Stable

RATING ACTION / OUTLOOK

Brickwork Ratings (BWR) assigns the ratings of the bank loan facilities of Rs. 232.96 Crs of Ahmednagar Ghogargaon Road Projects Pvt. Ltd (the SPV or AGRPL), considering factors such as the project being based on the Hybrid Annuity Model (HAM) with low revenue risk due to built-in indexed annuities in the HAM, track record of GHV (India) Private Limited (GHV, the parent company or the sponsor company) and satisfactory financial performance of the parent company, concession authority being the National Authority of India (NHAI) and the corporate guarantee provided by GHV for the rated facilities. However, the ratings are also constrained by project execution risks, the timely infusion of promoters’ equity, ensuring completion within the estimated costs and any unforeseen likelihood of a delay in future annuity receipts from the NHAI.

The outlook for the SPV is kept at Stable, considering the receipt of the NHAI grants during project implementation, receipt of annuity payments post project completion and parent company's performance likely remaining consistent in the medium term.

KEY RATING DRIVERS

Credit Strengths:

Project being executed under HAM :
The rating draws comfort from the hybrid modified annuity model nature of the project, wherein 43.74% of the project cost (amounting to Rs. 242.00 Crs) is funded by the NHAI during the construction period in the form of construction support. Additionally, in the case of HAMs, there are no traffic revenue risks as post-construction annuities are fixed in the concession agreement. BWR also takes comfort from the fact that the counterparty in this case is the NHAI. Benefits also include indexation done to the Bid Project Cost (BPC) and Operation And Maintenance (O&M) cost to the extent of inflation and interest payments on residual annuity payments during the operational period. However, the timely receipt of annuity during the operational period will remain a key rating monitorable
Experienced promoters in engineering, procurement and commissioning operations :
GHV Group has an established track record of executing EPC contracts. The company has executed contracts worth more than Rs. 4,000 Crs. The company and its promoters have over four decades of experience in successfully implementing EPC projects with government bodies including Public Work Departments (PWD), Maharashtra, and the NHAI.
Satisfactory financial performance of the parent/sponsor company :
As per FY21 consolidated financials, the parent company reported its operating income at Rs. 1125.85 Crs, with an operating profit of Rs. 118.67 Crs. The parent company's tangible net worth as of FY21 stood at Rs. 315.52 Crs with a comfortable debt to equity ratio of 0.43X. The parent company had reported favourable debt protection metrics for FY21, with the ISCR and DSCR at 2.60X and 1.78X, respectively. As per the management, the parent company has reported revenues of Rs. 723.39 Crs during H1FY22 and had an outstanding order book of Rs. 6997.75 Crs as of 25 November 2021, providing medium-term revenue visibility
Corporate guarantee of parent/sponsors :
The parent company has provided an unconditional and irrevocable corporate guarantee to the SPV. In addition, the parent/sponsor company has proved an undertaking letter, wherein the parent company shall arrange the funds to meet debt obligations within T-2 days in the case of a shortfall or mismatch in the funds.

Credit Risks:

Project execution risks :
As of date, the SPV has received the financial closure date from the NHAI. The appointed date is yet to be declared by the NHAI. The SCOD of the project is 730 days from the appointed date. As such, the timely execution of the project is a rating monitorable.
Timely infusion of the promoters contribution towards the SPV :
The parent company's timely infusion of capital towards the SPV as per the timelines agreed upon is a key rating monitorable
Grant and annuity payment receipts from NHAI :
Timely receipt of the upfront grant amounts and annuity payments from the NHAI as per agreed terms in the concession agreement remains a key rating monitorable

ANALYTICAL APPROACH - CE

To arrive at its ratings, BWR has relied on the company’s standalone financials. Furthermore, to arrive at the CE ratings, BWR has relied on the parent company's financial performance. At the standalone ratings, BWR has considered projected financials from FY25 to FY37 based on the annuities expected to be received by the SPV as a part of the concession agreement with the NHAI, provisions of the concession agreement with the NHAI and information/clarifications provided by the company’s management. BWR has applied its rating methodology as detailed in the Rating Criteria.

RATING SENSITIVITIES

The rating is sensitive to the timely execution of the project within the estimated cost, timely receipt of government grants during the implementation period and receipt of annuity payments as per the scheduled concession agreement with the NHAI.

Upward: The ratings can move upward if the project is completed as per the expected time frame without cost overruns, along with the timely receipts of the NHAI grants during the construction period, the commencement of regular annuity payments post the achievement of the SCOD and an upward revision in the credit rating of the guarantor (GHV India Private Limited).
Downward: The ratings can move downward if there is a delay in the execution of the works, leading to cost and time overruns, and a delay in the receipts of the NHAI grants and equity contribution during the construction period, along with a downward revision in the credit rating of the guarantor.

LIQUIDITY INDICATORS - Adequate

The company’s liquidity position is adequate. The company’s principal repayment obligations shall commence from FY25 onwards, i.e. post project completion. Expected annuity payments from the concession authority would be routed through an escrow mechanism. Based on future cash flows (annuity receipts), the average debt service coverage ratio for the repayment tenor of the loan arrived at is 1.42X, indicating that the cash flows are adequate for meeting the debt obligations. In addition, the facilities are also backed by a DSRA. Furthermore, the parent company has provided an unconditional and irrevocable corporate guarantee to the SPV for the rated facilities, and an undertaking letter stating that if there is any shortfall in the funds available to the SPV, the parent/sponsor company shall arrange the funds on or before T-2 days to meet debt obligations on the due date.

Furthermore, the parent company has reported an adequate liquidity position. As per the FY21 audited consolidated financials of the parent company, the company has generated net cash accruals of Rs. 59.93 Crs against the debt obligations of Rs. 14.22 Crs. As of 31 March 2021, the cash and bank balances stood at Rs. 97.68 Crs. During 9mFY22 (provisional), the parent company has generated cash accruals of Rs. 60.85 Crs as against the yearly debt obligations of Rs. 8.99 Crs, which reflects the adequate liquidity during the current year.

ABOUT THE ENTITY

Ahmednagar Ghogargaon Road Project Private Limited (AGRPPL or the SPV) is a Special Purpose Vehicle (SPV) incorporated on 8 April 2021 to undertake the project of four laning the Ahmednagar – Mirajgaon – Karmala - Tembhurni section from Ahmednagar to Ghogargaon (existing ch.km 0+000 to existing ch.km 38+775) of NH 561A under Bharatmala Pariyojana on a HAM basis in Maharashtra. The project involves the construction of a 38.77 km highway. The NHAI is a concession authority for the said project. The company is promoted by GHV Group and is a subsidiary of GHV (India) Private Limited.

Project cost: The estimated project cost is Rs. 553.32 Crs, of which the EPC cost is Rs. 507.08 Crs, which is proposed to be funded by promoters’ equity of Rs 96.51 Crs, an NHAI grant of Rs 242.00 Crs, and a term debt of Rs. 214.81 Crs.

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction normally include standard covenants stipulated for bank loan facilities. The rated facilities stipulate routing the cash flows through a designated escrow account, the utilisation of these cash flows through a designated waterfall mechanism and a DSRA for the 6 months of interest and principal obligations post the completion of the project. In addition, the parent company has provided the corporate guarantee for the timely repayment of the obligations.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

Nil

ANY OTHER INFORMATION

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	214.81	BWR A-(CE)/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	18.15	BWR A2+(CE) (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(66.55)	BWR A2+(CE) (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		232.96	(Rupees Two Hundred Thirty Two Crores and Ninety Six lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

Analytical Contacts
Sowmya Yatham Manager - Ratings Board : +91 80 4040 9940 sowmya.y@brickworkratings.com	Vipula Sharma Director - Ratings Board : +91 80 4040 9940 vipula.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Ahmednagar Ghogargaon Road Projects Pvt. Ltd.

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Union Bank of India	Term Loan - Sanctioned	214.81	_	214.81
	Sub-Limit (Bank Guarantee (Sub Limit of Term Loan)) - Sanctioned		(66.55)
2	Union Bank of India	Bank Guarantee - Sanctioned	_	18.15	18.15
Total			214.81	18.15	232.96
TOTAL (Rupees Two Hundred Thirty Two Crores and Ninety Six lakhs Only)

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