Reliance Infrastructure Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 82.61 Crs. of Reliance Infrastructure Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (05 Oct 2020)	Present
Fund Based	292.00	82.61	Long Term	BWR D Reaffirmed	BWR D Reaffirmation
Grand Total	292.00	82.61	(Rupees Eighty Two Crores and Sixty One 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

RATING ACTION / OUTLOOK

The rating reaffirmation, inter alia, factors in the ongoing continuous defaults and delays in making payments to the bank loan facilities, arbitration amount recievable from DAMEPL, deterioration in the credit profile and weakening of financial and debt servicing profile of the company, Further, some of the SPVs/ Subsidiaries companies rated by BWR continues to remain in default and rated at BWR D. The company has overdues and delayed payments to various banks as on FY21. However, the rating continues to factor the experience of promoters in the Engineering and Construction (E&C) segment in power, roads, metro and other infrastructure sectors, completed and present ongoing EPC projects, Power distribution companies in Delhi and road projects. It has also presence in defence sector.

KEY RATING DRIVERS

Credit Strengths:

Experienced promoters: :
R-Infra is the flagship company of group (Reliance ADAG group) and is promoted by Mr. Anil D. Ambani. It has been in the Engineering and Construction (E&C) segment in power, roads, metro and other infrastructure sectors, completed and present ongoing EPC projects, Power distribution companies in Delhi and road project
Diversified EPC portfolio :
It is one of the integrated service providers in the EPC and project management services provider for undertaking turnkey contracts including coal-based thermal projects, gas-based power projects, metro, rail, and road projects. Some of the major projects under EPC segment are Bithnok TPP (1x250 MW) & Barsingsar TPSE (1x250 MW), Rajasthan, worth of Rs.3675 Crs project on turnkey basis, Uppar Thermal Power Project (2x800) in Tamil Nadu, Kudankulam Nuclear Power (KKNP – 3&4) for Design & E&C of common services systems, Mumbai metro line 4, Versova – Bandra Sea link etc. It also has two subsidiary company i.e. BSES Rajdhani for supplying power to South and West Delhi, and BSES Yamuna for supplying power to East and Central Delhi. It also has toll road assets across India, most of which are in completed stage. Some of the major toll road projects are NK Toll, DS Toll, TD Toll, TK Toll, SU Toll, GF Toll, JR Toll, HK Toll, PS Toll and DA Toll Roads. However, some of them continue to be in default due to delays in loan repayment

Credit Risks:

Delay in timely servicing of debt obligations: :
The company and some of its subsidiaries continue to delay servicing the debt obligations to the banks.
Delays in receiving arbitration amount: :
The dispute between Delhi Airport Metro Express Private Limited (DAMEPL), a subsidiary of Reliance Infrastructure Limited (Reliance Infra) and Delhi Metro Rail Corporation (DMRC) arising out of the termination by DAMEPL of the Concession Agreement for Delhi Airport Metro Express Line Project (Project) was referred to arbitral tribunal, which vide its award dated May 11, 2017, granted arbitration award for a sum of Rs 4,662.59 crore on the date of the Award in favour of DAMEPL.. Hon’ble Supreme Court vide its judgment dated September 9, 2021, upheld the arbitral award in favour of DAMEPL and directed DMRC to pay damages of Rs.2,950 crore plus interest upto the date of payment to DAMEPL. As per this SC order the Arbitral award became an enforceable and binding decree.DAMEPL has filed an Execution Petition on September 12, 2021 claiming an amount of Rs 7,045.41 crore as on 10th September, 2021. Further, the Hon’ble Delhi High Court by an interim order dated December 6, 2021, allowed DMRC to deposit Rs. 1000 crore within 48 hrs into an escrow account. The same was deposited in the account which was further used to reduce the debt of DAMEPL. The arbitration award amount remains a key rating sensitivity.

ANALYTICAL APPROACH - Consolidated

BWR has taken a consolidated view on the company’s operational and financial performance, promoter’s contribution and all the current business segments while arriving at the rating.For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, receipt of arbitration money from DMRC, ensuring all the dues to be clear to the banks, execution of ongoing projects in a timely and efficient manner, maintaining collection and billing efficiencies for its power distribution business, adequate collection of tolls for its road projects, and generation of adequate operating and net profit from the consolidated business will be key monitorable and sensitivities for the company

Upward: Timely debt servicing and substantial improvement in the operational and financial profile resulting in higher revenues and cash accruals.

Downward: The company fails to generate adequate revenues and operational efficiencies, deterioration in the overall financial profile, and further delays in receipt of Arbitration money

LIQUIDITY INDICATORS - Poor

The company’s cash and cash equivalents were at Rs.925.87Crs as of FY21. The company’s liquidity remains poor with Rs.1107.00 Crs cash accruals generated during FY21 as against the annual debt repayment of Rs.5050.65 Crs in FY21. Furthermore, the company has overdues and delayed payments worth Rs.3254.99 Cr of principal and Rs.1028.92 Crs of interest to various banks. Further, the total overdue amount stood at Rs.4283.91Crs (on a Consolidated basis) as of March 2021.

ABOUT THE ENTITY

R-Infra is the flagship company of group (Reliance ADAG group) and is promoted by Mr. Anil D. Ambani. The company has operations in the Engineering and Construction (E&C) segment in power, roads, metro and other infrastructure sectors, completed and present ongoing EPC projects, Power distribution companies in Delhi and road projects. It is one of the integrated service providers in the EPC and project management services for undertaking turnkey contracts including coal-based thermal projects, gas-based power projects, metro, rail, and road projects. Some of the major projects under EPC segment are Bithnok TPP (1x250 MW) & Barsingsar TPSE (1x250 MW), Rajasthan, worth of Rs.3675 Crs project on turnkey basis, Uppar Thermal Power Project (2x800) in Tamil Nadu, Kudankulam Nuclear Power (KKNP – 3&4) for Design & E&C of common services systems, Mumbai metro line 4, Versova – Bandra Sea link etc. It also has two subsidiary company i.e. BSES Rajdhani for supplying power to South and West Delhi, and BSES Yamuna for supplying power to East and Central Delhi. It also has toll road assets across India, most of which are in completed stage. Some of the major toll road projects are NK Toll, DS Toll, TD Toll, TK Toll, SU Toll, GF Toll, JR Toll, HK Toll, PS Toll and DA Toll Roads.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	1689.15	1319.07
EBITDA	Rs.Crs.	-45.50	-28.46
PAT	Rs.Crs.	-70.83	1172.68
Tangible Net Worth	Rs.Crs.	10375.54	10446.19
Total Debt/Tangible Net Worth	Times	0.37	0.55
Current Ratio	Times	1.48	1.85

RATING HISTORY FOR THE PREVIOUS 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	82.61	BWR D (Reaffirmation)	NA	NA	05Oct2020	BWR D (Reaffirmed )	28Jun2019	BWR D (Downgrade/ISSUER NOT COOPERATING*)
		NA	NA	NA	NA	NA	NA	15Feb2019	BWR C (Downgrade/ISSUER NOT COOPERATING*)
Grand Total		82.61	(Rupees Eighty Two Crores and Sixty One 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
Nikhil Jaideo Meshram Ratings Analyst nikhil.jm@brickworkratings.com	Vipula Sharma Director - Ratings Board : +91 80 4040 9940 vipula.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Reliance Infrastructure 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	Canara Bank	Term Loan	82.61	_	82.61
2	IDFC First Bank Limited	Term Loan	_	_	0.00
Total			82.61	0.00	82.61
TOTAL (Rupees Eighty Two Crores and Sixty One lakhs Only)

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