Press Release

Press Release

November 30, 2023

GODAVARI GAS PRIVATE LIMITED
Rating Downgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	1.00	ACUITE C \| Downgraded	-
Bank Loan Ratings	335.00	ACUITE D \| Downgraded	-
Bank Loan Ratings	4.00	-	ACUITE A4 \| Downgraded
Bank Loan Ratings	50.00	-	ACUITE D \| Downgraded
Total Outstanding	390.00	-	-

Rating Rationale

Acuite has downgraded its long-term rating to ‘ACUITE D' (read as ACUITE D) from Acuite A- (read as Acuite A minus) and also downgraded the short term rating to 'ACUITE D' (read as ACUITE D) from ACUITE A2+ (read as ACUITE A two plus) on the Rs.385.00 Cr bank facilities of Godavari Gas Private Limited (GGPL).

Acuite has also downgraded the long term rating to 'ACUITE C' (read as ACUITE C) from Acuite A- (read as Acuite A minus) and also downgraded the short term rating to 'ACUITE A4' (read as ACUITE A four) from ACUITE A2+ (read as ACUITE two plus) on the Rs.5.00 Cr bank facilities of Godavari Gas Private Limited (GGPL).

The downgrade is on account of written feedback received from one of the lenders and verbal confirmation from the company stating delays upto 7-8 days for the past 6 months for the repayment of interest on term loans. This delay is on account of cost and time overrun because of slow execution due to delay in capital infusion by the promoters.

About the Company

GGPL was incorporated in 2016 as a joint venture between Andhra Pradesh Gas Distribution Corporation Limited (APGDC) and Hindustan Petroleum Corporation Limited (HPCL). The company is engaged in distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in the districts of East Godavari and West Godavari in Andhra Pradesh. The project cost for laying of infrastructure in two districts for first 5 years is Rs 475 Cr which is funded through Rs 335 Cr of Term loan and Rs 140 Cr of Equity share capital.

Unsupported Rating

Not Applicable

Analytical Approach

To arrive at rating, Acuité has considered the standalone business and financial risk profile of GGPL.

Key Rating Drivers

Strengths

Experienced management
Godavari Gas Priavte Limited (GGPL) is incorporated as a joint venture of APGDC (Andhra Pradesh Gas Distribution Corporation Limited) and HPCL (Hindustan Petroleum Corporation Limited) in year 2016. Andhra Pradesh Gas Distribution Company holds 74% stake in GGPL and Hindustan Pteroleum Corporation Limited holds 26% stake in the company.

Weaknesses

Delay in repayment of interest
The company has been facing significant liquidity pressure, which has impeded its ability to meet its interest repayment in a timely manner.

Time overruns
The project has witnessed cost and time overrun because of slow execution due to delay in capital infusion by the promoters. Hence this resulted into increase in interest during construction period. Project cost is increased to around Rs 513 Cr from Rs 475 Cr. The additional cost will be funded by promoters.

Rating Sensitivities

Timely servicing of debt obligation
Any further cost overrun and time overrun.

All Covenants

None

Liquidity Position

Stretched

The liquidity position of the company is stretched as the company has defaulted on the timely servicing of its debt obligations.

Outlook: Not Applicable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 22 (Actual)	FY 21 (Actual)
Operating Income	Rs. Cr.	27.50	10.09
PAT	Rs. Cr.	(0.26)	(4.76)
PAT Margin	(%)	(0.94)	(47.14)
Total Debt/Tangible Net Worth	Times	2.20	2.76
PBDIT/Interest	Times	1.67	0.28

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

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Trading Entitie: https://www.acuite.in/view-rating-criteria-61.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

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
21 Dec 2022	Bank Guarantee	Short Term	22.00	ACUITE A2+ (Reaffirmed)
	Bank Guarantee	Short Term	28.00	ACUITE A2+ (Reaffirmed)
	Bank Guarantee	Short Term	4.00	ACUITE A2+ (Reaffirmed)
	Term Loan	Long Term	175.00	ACUITE A- \| Stable (Reaffirmed)
	Working Capital Demand Loan	Long Term	1.00	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	160.00	ACUITE A- \| Stable (Reaffirmed)
23 Sep 2021	Bank Guarantee	Short Term	4.00	ACUITE A2+ (Reaffirmed)
	Term Loan	Long Term	175.00	ACUITE A- (Reaffirmed)
	Term Loan	Long Term	160.00	ACUITE A- (Reaffirmed)
	Working Capital Demand Loan	Long Term	1.00	ACUITE A- (Reaffirmed)
	Bank Guarantee	Short Term	28.00	ACUITE A2+ (Reaffirmed)
	Bank Guarantee	Short Term	22.00	ACUITE A2+ (Reaffirmed)
17 Apr 2020	Bank Guarantee	Short Term	22.00	ACUITE A2+ (Reaffirmed)
	Bank Guarantee	Short Term	28.00	ACUITE A2+ (Reaffirmed)
	Bank Guarantee	Short Term	5.00	ACUITE A2+ (Assigned)
	Term Loan	Long Term	175.00	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	160.00	ACUITE A- \| Stable (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Canara Bank	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	28.00	Simple	ACUITE D \| Downgraded
Canara Bank	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	22.00	Simple	ACUITE D \| Downgraded
Indusind Bank Ltd	Not Applicable	Bank Guarantee/Letter of Guarantee	Not Applicable	Not Applicable	Not Applicable	4.00	Simple	ACUITE A4 \| Downgraded
Canara Bank	Not Applicable	Term Loan	30 Mar 2017	8.50	30 Sep 2032	175.00	Simple	ACUITE D \| Downgraded
Canara Bank	Not Applicable	Term Loan	30 Mar 2017	8.50	30 Sep 2032	160.00	Simple	ACUITE D \| Downgraded
Indusind Bank Ltd	Not Applicable	Working Capital Demand Loan (WCDL)	Not available	Not available	Not available	1.00	Simple	ACUITE C \| Downgraded

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Khushi Shah Analyst - Rating Operations Tel: 022-49294065 khushi.shah@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in 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. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.