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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 348.04 | ACUITE BBB | Stable | Reaffirmed | - |
| Bank Loan Ratings | 21.96 | - | ACUITE A3+ | Reaffirmed |
| Total Outstanding | 370.00 | - | - |
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In the original PR dated July 3, 2024 the statement regarding delay in milestone under "Rationale for Rating" was erroneously captured which has now been revised in this version. |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) and the short-term rating of ‘ACUITE A3+’ (read as ACUITE A three plus) on the Rs 370 Cr. bank facilities of PRA Gola Ormanjhi Highway Private Limited (PRA PGOHPL). The outlook is ‘Stable’.
Rationale for Rating The rating derives comfort from the financial and operational support from Barbrik Project Limited and PRA India Private limited, referred as Barbrik group (rated at Acuité A /Stable/A1) to PRA PGOHPL. The rating also factors in the fact that the project is being developed on a hybrid annuity model (HAM) where revenue risk is low post-commencement of project execution. Moreover, the company has achieved financial closure to fund its project and also received its appointment date at June 21, 2023. The company has achieved 27.13 per cent physical progress up to 30.04.2024. Post this, up to 35 percent of work has been completed as well as billed. There were delays in achieving the second milestone due to not receiving the ROW for forest land and encumbrance free land, also some portion of project highway segments were affected and change of scope were there, totalling a length of 9.12 kms. |
| About the Company |
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PRA PGOHPL was incorporated by Barbrik Projects Limited and PRA India Private Limited. Barbrik Project Limited (76%) and PRA India Private Limited (24%) has entered into a HAM agreement with NHAI for development of four laning with paved shoulder of section from km 53.600 (Gola on NH-320) to km 81.446 (Ormanjhi on NH-320 B) having a design length of 27.846 Km in the state of Jharkhand on design, build, operate and transfer (DBOT Annuity or Hybrid Annuity). Barbrik Projects Ltd is the lead sponsor and PRA India Private Limited is the EPC Contractor for PRA PGOHPL. The group has executed large number of road projects issued by NHAI, MoRTH and State government agencies in EPC mode. Historically Barbrik group has executed similar kinds of road projects. PRA Gola Ormanjhi Highway Private Limited was incorporated in 2022. The Directors of the company are Mr. Rajesh Kumar Agrawal and Mr. Ayush Agrawal.
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| About the Group |
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Barbrik Project Limited (BPL) was established as a partnership firm in 1985 and subsequently converted into a private limited company in 2008. The entity has been promoted by the Agarwal family of Chhattisgarh and is engaged in the construction of roads, bridges and highways. The company is a registered contractor for Public Works Department (PWD) of Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha and Bihar along with National Highway Authority of India (NHAI) and State Highway Authority of Jharkhand (SHAJ). The company is also engaged in undertaking logistic service for Central Coalfield Limited, Northern Coalfield Limited and Adani Enterprises Limited. Currently, the company is managed by Mr. Ramesh Kumar Agarwal, Mr. Rajesh Kumar Agarwal, Mr. Dhruv Kumar Agarwal, Mr. Kanhaiya Lal Agarwal, Mr. Ayush Kumar Agarwal and Mr. Sourabh Agarwal.
Chhattisgarh based, PRA India Private limited (PIPL) was incorporated in 2019 by Mr. Rajesh Kumar Agrawal. The company is engaged in civil construction work and currently undertakes projects subcontracted by Barbrik Project Limited. |
| Unsupported Rating |
| ACUITE BB-/ Stable |
| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of PRA GOLA ORMANJHI HIGHWAY PRIVATE LIMITED ( PRA PGOHPL)) and notched up the standalone rating by factoring in the financial and operational linkages with Barbrik Project Limited and PRA India Private Limited (rated at Acuité A/Stable/A1).
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| Key Rating Drivers |
| Strengths |
| Strong parentage
PRA PGOHPL was promoted by Barbrik Project Limited and PRA India Private Limited (rated at Acuité A/Stable/A1) in January 2024. Barbrik Project Limited is the lead sponsor and PRA India Private Limited is the EPC Contractor for PRA PGOHPL. PRA Group is a reputed EPC player in Chattisgarh and has almost four decades of experience in construction of roads and highways. The current order book of Barbrik group comprises of 75 percent of orders related to construction, upgrading and widening of highways issued by NHAI, MORTH,PWDs and SHAJ. The group has executed similar kinds of road projects in EPC mode. This reduces implementation risk partially. Moreover, the group has strong financial flexibility as reflected from its healthy financial risk profile and adequate liquidity profile. Total project cost is around Rs 783.92 Cr. which is funded through Rs 92.59 Cr. of promoter contribution, Rs 345.5 Cr. of grant from NHAI as per concession agreement and remaining Rs 345.82 Cr. from external borrowing which has been guaranteed by both the sponsors. The company has availed Rs.33.92 Cr. from the external borrowing.
Low Revenue Risk PRA PGOHPL has signed an agreement with NHAI for contractual payment in form of grants and annuities. The project cost is Rs. 732 Cr. (excluding GST). PRA PGOHPL will receive 40 percent of project cost in form of grants during the construction period. The remaining 60 percent of project cost shall be payable in the form of 30 semi-annuities spread over a period of 15 years post achievement of commercial operation date (COD). The project has an escalation clause which helps the company to mitigate the material fluctuation risk. The annuities will also include interest on remaining completion cost. The interest will be calculated on average MCLR rate plus 1.25 percent. Low funding risk PRA PGOHPL is eligible for mobilization advance from NHAI. The mobilization advance will be around 10% of the project cost which will be paid in two equal instalments. The mobilization advance will carry average MCLR rate plus 1.25 percent. The mobilization advance shall be adjusted against the grant from NHAI. Moreover, the company has tie up with Union Bank of India and Canara Bank for Rs 345.82 Cr. of term loan of which Rs.33.92 Cr. has been disbursed post May 2024. |
| Weaknesses |
| Susceptibility to risks related to the tender-based nature of operations and competition
SPV remains exposed to inherent cyclicality in the construction industry and volatility in profits . Though industry prospects seem healthy over the medium term with increased central government focus on the infrastructure sector (especially roads and highways), most of the projects are tender-based and players face intense competition and bid aggressively for contracts. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
| The company has adequate liquidity profile marked by strong resource mobilization from its parent entity. |
| Outlook: Stable |
| Acuité believes the outlook on company will remain ‘Stable’ over the medium term backed by steady cash flow of annuity from the project along with strong sponsor support. The outlook may be revised to ‘Positive’ in case of significant progress in the project. Conversely, the outlook may be revised to ‘Negative’ in case of any time or cost overrun due to delay in getting requisite approvals. |
| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 0.00 | 0.00 |
| PAT | Rs. Cr. | (4.36) | (0.01) |
| PAT Margin | (%) | 0.00 | 0.00 |
| Total Debt/Tangible Net Worth | Times | 1.55 | 0.18 |
| PBDIT/Interest | Times | (0.93) | 0.00 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm |
| Note on complexity levels of the rated instrument |
| In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to Acuité Ratings & Research Limited www.acuite.in the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in. |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||
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