Established Sponsor Profile
The sponsors for the project, J. M. Mhatre Infra Private Limited (JMMIPL) and Thakur Infraprojects Private Limited (TIPL), have been engaged in the EPC business for over four decades and have collaborated on various projects, establishing a strong presence in Maharashtra. JMMIPL holds 51per cent and TIPL holds 49 per cent of the shares in KRHPL, and both have extended technical and financial support to the project, including a corporate guarantee for the entire loan tenure. The companies also demonstrate strong financial flexibility and maintain an adequate liquidity profile. Further, the total EPC cost has increased from Rs. 946.00 crore to Rs. 962.92 crore where the additional Rs. 16.92 crore to be entirely funded by the sponsors. The revised project cost will be financed through Rs. 126.92 crore of promoter’s contribution, Rs. 396 crore of grant from NHAI, and Rs. 440 crore of external borrowing, which is guaranteed by JMMIPL and TIPL. As of 30th June 2025, Rs. 479.69 crore has been incurred, funded through Rs. 89.70 crore of promoter’s contribution, Rs. 198 crore of NHAI grant, and Rs. 191.98 crore of external borrowing.

Furthermore, the project has faced delays due to late handover and shortage of Right of Way (ROW), as well as heavy floods in July 2023, July 2024, and August 2024, resulting in an extension of 299 days, which has been duly approved by NHAI. Acuité believes that the sponsors’ entrepreneurial experience and long-standing operational track record will continue to support the project's business risk profile over the medium term.

Moderate Implementation Risk
As of June 30, 2025, KRHPL has completed 43.38 per cent physical progress and achieved the second project milestone on 25th July 2024, as against the original scheduled date of 29th April 2024 under Schedule-G. This achievement falls within the grace period of up to 90 days allowed under the agreement. Additionally, NHAI has approved an extension of time (EOT) of 299 days, revising the third project milestone (75 per cent completion) date to September 20, 2025 and the scheduled completion (100 per cent) date to March 19, 2026. Furthermore, the Independent Engineer (IE) has recommended a revised EOT of 371 days (inclusive of the previously approved 299 days), which, if approved by NHAI, will lead to further revision of the aforementioned milestone and completion dates. However, the implementation risk is mitigated to an extent due to the strong support from the sponsors and the presence of a strong counterparty, NHAI.

Low counter party risk
The project has been issued and awarded by the National Highways Authority of India (NHAI), a central government agency that holds strategic importance for the Government of India. It is being developed under an annuity-based revenue model, wherein KRHPL bears no traffic risk and recovers the entire capital cost through biannual annuity payments over a 15-year concession period. Under this model, UGRPPL will receive 40 percent of the project cost as construction grants, while the remaining 60 percent will be paid in 30 semi-annual annuity instalments, likely commencing in October 2026, and adjusted for the Price Index Multiple. In addition to annuity payments, NHAI will reimburse interest on the reducing balance of the completion cost (net of grants) at a rate equivalent to the MCLR of the top five scheduled commercial banks plus 1.25 percent. NHAI will also reimburse the operations and maintenance (O&M) cost of Rs. 5.50 crore, adjusted for the price index on annuity dates. KRHPL will be responsible for operations and maintenance during the concession phase, with financial support from NHAI. The company has already received five milestone payments, the latest being in May 2025. The annuity model includes price index adjustments to mitigate inflation-related risks and partially offset price fluctuation risks.

Waterfall Mechanism in ESCROW account and Debt-service reserve account (DSRA)
KRHPL has an escrow mechanism in place through which cash flows from the Authority are routed and utilized according to a defined payment waterfall. Only surplus cash flows after meeting operating expenses, debt servicing obligations, and provisions for major maintenance expenses can be used at the borrower’s discretion during the concession period. Additionally, the borrower/sponsor is required to maintain a Debt Service Reserve Account (DSRA), which must cover one instalment of principal and 12 months of interest payable. The first part of the DSRA, covering one instalment of principal and six months of interest, is to be created within six months from the date of COD using promoter’s funds. The second part, covering the remaining six months of interest, is to be created within one year from the date of COD out of project cash flows. The adequacy of the DSRA will be assessed after the receipt of the second annuity. Furthermore, the corporate guarantee provided by the sponsors JMMIPL and TIPL remains valid for the entire tenure of the loan.

Exposed to risks such as delay in receiving annuity payments and any changes in operational cost & interest rate.
As per the concession agreement, the company is expected to receive biannual annuity payments upon achieving the Commercial Operations Date (COD). Any delay in the timely receipt of these annuities could adversely impact its debt-servicing ability. In addition to fixed annuity payments, the project will receive interest on the outstanding annuity balance, which is linked to the MCLR of the top five scheduled commercial banks plus a spread. The company is also exposed to risks related to the maintenance of the project. If the prescribed standards and timely maintenance are not adhered to, the annuity payments may be reduced. Any significant delay or deduction in annuity payments could affect the company’s ability to service its debt. Acuité believes that such delays or deductions in annuities would negatively impact the debt-servicing capabilities of KRHPL.