Press Release

Press Release

May 21, 2024

JIJAU INFRASTRUCTURE MU PROJECT PRIVATE LIMITED
Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	38.20	ACUITE BBB \| Stable \| Assigned	-
Bank Loan Ratings	18.00	ACUITE BBB \| Stable \| Reaffirmed	-
Total Outstanding	56.20	-	-

Rating Rationale

Acuité has assigned its long-term rating of ‘Acuité BBB’ (read as Acuité triple B ) on the Rs.38.20 Cr. bank facilities of Jijau Infrastructure MU Project Private Limited (JIMUPPL). The outlook is 'Stable'.
Further, Acuité has reaffirmed its long-term rating of ‘Acuité BBB’ (read as Acuité triple B ) on the Rs.18.00 Cr. bank facilities of Jijau Infrastructure MU Project Private Limited (JIMUPPL). The outlook is 'Stable'.

Rationale for rating
The rating assigned considers the completion of project along with all the milestone payments received from PWD and also six annuity payments has been received by the JIMUPPL till date. The rating also considers the strong financial risk profile of the sponsor as seen by the self-funded nature of the project. Further, the rating factors in the adequate liquidity of the company in the form of DSRA created equivalent to 12 months instalments and 6 months interest payments along with escrow mechanism. However, the rating is constrained by the risk related to delay in receipt of future annuity payments and changes in operational and interest cost, which could affect the debt serving capabilities of JIMUPPL.

About the Company

Jijau Infrastructure MU Projects Private Limited (JIMUPPL), a SPV, setup by Jijau Constructions Road Builders Private Limited to undertake development of Hybrid Annuity Package No. MU-2 in the State of Maharashtra awarded by Public Works Department (PWD) of the Government of Maharashtra. The company entered into Concession Agreement (CA) on August 2018 with the PWD. Under the CA, it upgraded the Khambala - Telonda - Kasa - Talwada - Vikramgad -Pali road and Wada Devgaon road in Palghar District on a Hybrid Annuity Mode. The Current directors of the company are Mr. Dhiraj Nilesh Sambare, Mr. Tejaswini Nilesh Sambare, Mr. Nirja Nilesh Padwale and Mr. Prajwal Hiraman Patil.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Jijau Infrastructure MU Project Private limited to arrive at the rating.

Key Rating Drivers

Strengths

Established track record of sponsor
The sponsor for the project is Jijau Construction Road Builders Private Limited. The company is into EPC business since 2009. Over the years the company has established its presence in the Mumbai, Palghar and Thane districts of Maharashtra. The net-worth of the sponsor stands at Rs.99.61 crore as on 31^st March 2023. JIMUPPL is a self-funded project by the sponsor entity without any borrowings from banks. The company in FY23 has taken a bank borrowing by way of discounting of future annuities which is to be received by the company from PWD Maharashtra.
Acuite believes that the healthy financial risk profile of the sponsor will support JIMUPPL if require going ahead.

Strong counter party linked revenue profile
The company entered into a concession agreement with PWD Maharashtra for improvement to roads in Palghar district in Maharashtra in August 2018. The company achieved COD in February 2021. The concession is granted to JIMUPPL for 10 years after the COD was received and during the concession, semi-annual annuity payments would be paid by PWD Maharashtra. The company has till date received six annuities until February 2024. Along with annuity payments, interest shall be payable to JIMUPPL on reducing balance of completion cost at a rate equal to applicable bank rate plus spread. PWD Maharashtra shall also reimburse the O&M bid quote adjusted to Price Index Multiple on the annuity payment dates to JIMUPPL.

Waterfall Mechanism in ESCROW account and Debt-service reserve account (DSRA)
The repayments for term loan will be recovered from escrow account created by bank. JIMUPPL has escrow mechanism through which cash flows from Authority is routed and used for payment as per the defined payment waterfall. Only surplus cash flow after meeting operating expense, debt servicing obligation, and provision for major maintenance expense, can be utilised as per borrower’s discretion during the concession period. The debt service coverage ratio (DSCR) is expected to remain over unity for the tenure of the loan. The company maintains DSRA in the form of fixed deposits to mitigate any unforeseen risk related to delay in annuity receipt etc.

Weaknesses

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 a semi-annual annuity. Any delay in timely receipt of the annuity could adversely impact debt-servicing ability. Along with fixed annuities, the project will receive interest payments on the balance annuities at a rate equivalent of prevailing bank rate plus spread. Further, the company is exposed to risks related to maintenance of the project. If the prescribed standards and timely maintenances of the project are not performed, it will significantly affect the annuity payments. And with any significant delay or deduction in annuities could impact the debt servicing ability of the company.
Acuite believes that any delay or deduction in annuities will affect the debt servicing capabilities of the JIMUPPL.

Rating Sensitivities

Timely receipt of annuity payments from PWD Maharashtra going forward
Timely support from the sponsor for O&M activities.

Liquidity Position

Adequate

JIMUPPL’s liquidity position is adequate marked by receipt of the last annuity. The company has faced a slight delay in receiving the last 2 annuity payment. Company has received the sixth annuity in the month of February 2024. The DSCR is expected to be adequate and will remain above unity going forward. The company has maintained DSRA in form fixed deposits. However, the Company needs to make provision for MMR expenses which are to be incurred. Additional fund support from the sponsor will be keenly watched for any Incremental expense related to O&M and major maintenance expenses.
Acuité expects the liquidity of JIMUPPL is likely to remain adequate backed by receipt of the annuities from the government and the significant amount of DSRA creation by JIMUPPL.

Outlook: Stable

Acuité believes that the outlook on JIMUPPL’s rated facilities will remain ‘Stable’ over the medium term on account of steady flow of semi-annual annuity from the government. The outlook may be revised to 'Positive' in case of significant improvement in free cash flow from operations. Conversely, the outlook may be revised to 'Negative' in case of delays in receipt of the annuity or lack of timely support from the sponsor as and when needed.

Other Factors affecting Rating

Acuité has considered DSRA equivalent to 12 months instalments and 6 months interest payments and escrow mechanism, as specified in the loan sanction letter while arriving at the rating.

Key Financials

Particulars	Unit	FY 23 (Actual)	FY 22 (Actual)
Operating Income	Rs. Cr.	47.44	18.54
PAT	Rs. Cr.	2.40	4.00
PAT Margin	(%)	5.05	21.55
Total Debt/Tangible Net Worth	Times	4.01	3.53
PBDIT/Interest	Times	1.79	2.41

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
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.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
12 Jan 2024	Proposed Long Term Bank Facility	Long Term	1.13	ACUITE BBB \| Stable (Assigned)
12 Jan 2024	Term Loan	Long Term	16.87	ACUITE BBB \| Stable (Assigned)
28 Oct 2021	Proposed Long Term Bank Facility	Long Term	54.00	ACUITE BB+ (Downgraded & Withdrawn & Issuer not co-operating* from ACUITE BBB \| Stable)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Bank of Maharashtra	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2030	16.87	Simple	ACUITE BBB \| Stable \| Reaffirmed
Bank of Maharashtra	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	31 Mar 2030	1.13	Simple	ACUITE BBB \| Stable \| Reaffirmed
Bank of Maharashtra	Not avl. / Not appl.	Term Loan	Not avl. / Not appl.	Not avl. / Not appl.	30 Sep 2029	38.20	Simple	ACUITE BBB \| Stable \| Assigned

Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Parth Patel Analyst - Rating Operations Tel: 022-49294065 parth.patel@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.