PR

Press Release
BANSAL PATHWAYS N R R - 1 PRIVATE LIMITED
March 29, 2023
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	355.99	ACUITE BB+ \| Stable \| Assigned	-
Total Outstanding Quantum (Rs. Cr)	355.99	-	-

Rating Rationale

Acuite has assigned its long-term rating of 'ACUITE BB+' (read as Acuite double B plus) on Rs. 355.99 crore bank facilities of Bansal Pathways NRR1 Pvt Ltd (BPNRR1). The outlook is 'Stable'.

Rationale for rating assigned
The rating assigned reflects the strong support from its sponsor Bansal Construction Works Pvt Ltd (BCWPL) which has 99.99 percent of shareholding in the company. BCWPL has an established track record of operations of over three decades in engaged in all verticals of the infrastructure construction domain including cash contracts on Engineering Procurement and Construction (EPC) basis, PPP (Public Private Partnership) model through BOT contracts, BOT (Annuity+ Toll) Projects, BOT (Annuity)projects, Hybrid Annuity Mode (HAM) projects for government clients like NHAI and Madhya Pradesh Road development corporation limited (MPRDCL). The ratings also take into account the adequate liquidity position of the company with the presence of a debt service reserve account (DSRA) with waterfall mechanism. However, the rating is constrained by the susceptibility of delay in completion of project thereby leading to delay in receipt of milestone and annuity payments and change in operational and interest cost.

About the Company

Bansal Pathways NRR1 is a SPV of Bansal Group and was incorporated to undertake construction of four lane standalone ring road in Nagpur of 33.50 Km. Such project was initially executed by an SPV of another construction company and BPNRR1 was awarded the project in September 2021 and NHAI approval was received in January 2022. The project was awarded by NHAI under the hybrid annuity mode. The concession agreement was signed for 17.5 years with a construction period of 2.5 years. The scheduled completion date for the project is June 2023.

Standalone (Unsupported) Rating

ACUITE BB/Stable

Analytical Approach

For arriving at the rating, Acuite has considered the standalone business and financial risk profile of Bansal Pathways NRR1 Pvt Ltd (BPNRR1) which is strengthened by the support from its sponsor company Bansal Construction Works Pvt Ltd (BCWPL) whenever required by BPNRR1. Further, Acuite has also considered the corporate guarantee of the promoter company will be available till the perfection of DSRA and personal guarantee of promoters till receipt of 2nd annuity.

Key Rating Drivers

Strengths

Experienced management along with extensive experience of sponsor
The Bansal Group is a civil construction company established in 1980 which undertakes construction of roads and highways apart from other infrastructure development work through Bansal Construction Work (BCW). Later in 2010, the group floated Bansal Construction Work Private Limited to undertake civil construction work and transferred the construction business to BCWPL. The Directors, Mr. Sunil Bansal and Mr. Anil Bansal have over three decades of experience in civil construction and toll road work. Bansal Pathways NRR1 Pvt Ltd (BPNRR1) is a special-purpose vehicle (SPV) and sponsored by Bansal Construction Works Private Limited (BCWPL) in 2021. The SPV has undertaken construction of four lane standalone ring road in Nagpur of 33.50 Km. The funding and technical support is provided by Bansal Construction Works Pvt Ltd. The project has been awarded by NHAI and is executed under Hybrid Annuity mode with a concession period of 17.5 years.
Acuite believes that the company will benefit from the experienced track record of operations of the sponspor- Bansal Construction Works Pvt Ltd in the near to medium term.

Annuity based revenue model
The project being constructed under hybrid annuity model. Under this model, NHAI reimburses 60% of the construction cost on milestone basis thereafter making bi-annual annuity payments over the concession period to the concessionaire. The company does not bear any traffic risk as it recovers whole of the capital cost through annuity. The company has completed physical progress upto 75% and is expected to complete 100% construction by June 2023. Along with annuity payments, interest shall be payable to BPNRR1 on reducing the completion cost net of construction grants at a rate equal to Bank Rate plus 3%. Further, NHAI shall also reimburse Operating and maintenance expense adjusted to Price Index Multiple on the annuity payment dates to BPNRR1.

Waterfall Mechanism in ESCROW account and Debt-service reserve account (DSRA)
BPNRR1 has escrow mechanism through which cash flows from authority is routed and used for payment as per the defined payment waterfall. The company also has to maintain DSRA equivalent to 6 months interest and operating expenses at the time of COD and 6 months equivalent interest and principal is to be maintained on after receipt of 1^st Annuity. Further, corporate guarantee of sponsor is available till the perfection of DSRA. Any shortfall in debt servicing and shortfall in resources required for completion of project are to be met through support from BCWPL.

Weaknesses

Susceptibility of delay in completion of project
The project is under construction phase and is 75 percent complete as on December 2022. The SPV has received 2 out of the 3 milestone payments. The company expects to receive the last milestone payment on completion of the project. Further, Rs. 58 crore of NHAI grant and Rs. 87.28 crore of undisbursed term loans are also available for completion of the project.
Acuite believes that timely completion of project will remain a key rating sensitivity.

Susceptibility to risks related to delay in receipt of annuity and changes in operational cost & interest rate
As per the concession agreement, the company is expected to receive a semi-annual annuity after completion of the construction. Any delay in timely completion and receipt of the annuity could adversely impact debt-servicing ability. Along with fixed annuities, the project will receive interest payments on the balance annuities that are linked to the bank rate plus 3%. Further, the company is exposed to risks related to maintenance of the project. If the prescribed standards are not met, annuity payment may be reduced. Any significant delay and deduction in annuities could impact the debt servicing ability of the company. However, strong track record of sponsor, who is also the O&M contractor, is expected to mitigate this risk.

Rating Sensitivities

Timely completion of project
Timely receipt of annuity payments from the Government
Significant deterioration in the sponsor's credit profile

Material covenants

None

Liquidity Position

Adequate

Liquidity position of BPNRR1 is adequate marked by strong funding and technical support from its sponsor BCWPL. The project has also achieved two of its three milestones during the construction period and the last milestone is expected to be achieved in line with the COD. Further, Rs. 58 crore of NHAI grant and Rs. 87.28 crore of undisbursed term loans are also available for completion of the project. The term loans availed from banks also enjoy a moratorium and principal repayments start from February 2024.
Acuite believes that the liquidity position of the company is likely to remain adequate on account of the continued funding support from its sponsor and likely achievement of COD as per the terms of concession agreement thereby leading of timely receipt of annuity.

Outlook: Stable

Acuité believes that the outlook on BPNRR1’s rated facilities will remain ‘Stable’ over the medium term on account of strong support of sponsors. The outlook may be revised to 'Positive' in case of significant improvement in the construction of the project and improvement in cash flows through timely receipt of annuity. Conversely, the outlook may be revised to 'Negative' in case of delays in achieving the scheduled completion date thereby leading to delay in receipt of the milestone payments or lack of timely support from the sponsor.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	0.00	0.00
PAT	Rs. Cr.	0.00	0.00
PAT Margin	(%)	0.00	0.00
Total Debt/Tangible Net Worth	Times	11.62	0.00
PBDIT/Interest	Times	0.00	0.00

Status of non-cooperation with previous CRA (if applicable)

None

Any other information

None

Applicable Criteria

• 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

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 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.

Rating History :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	Not Applicable	Proposed Long Term Bank Facility	Not Applicable	Not Applicable	Not Applicable	150.00	Simple	ACUITE BB+ \| Stable \| Assigned
India Infrastructure Finance Company Ltd.	Not Applicable	Term Loan	Not available	Not available	Not available	28.12	Simple	ACUITE BB+ \| Stable \| Assigned
Mumbai District Central Co-Op Bank Ltd	Not Applicable	Term Loan	Not available	Not available	Not available	25.81	Simple	ACUITE BB+ \| Stable \| Assigned
IDBI Bank Ltd.	Not Applicable	Term Loan	Not available	Not available	Not available	4.05	Simple	ACUITE BB+ \| Stable \| Assigned
India Infrastructure Finance Company Ltd.	Not Applicable	Term Loan	Not available	Not available	Not available	65.78	Simple	ACUITE BB+ \| Stable \| Assigned
Mumbai District Central Co-Op Bank Ltd	Not Applicable	Term Loan	Not available	Not available	Not available	54.51	Simple	ACUITE BB+ \| Stable \| Assigned
IDBI Bank Ltd.	Not Applicable	Term Loan	Not available	Not available	Not available	27.72	Simple	ACUITE BB+ \| Stable \| Assigned

Contacts

Analytical	Rating Desk
Aditya Gupta Vice President-Rating Operations Tel: 022-49294041 aditya.gupta@acuite.in Deepti Bhandarkar Analyst-Rating Operations Tel: 022-49294065 deepti.bhandarkar@acuite.in	Varsha Bist Senior Manager-Rating Operations Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.