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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 625.00 | ACUITE AAA | Stable | Assigned | - |
| Total Outstanding | 625.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has assigned its long-term rating of ‘ACUITE AAA' (read as ACUITE triple A) on Rs 625.00 Cr. bank facilities of MEIL Vijayawada Bypass Roadways Private Limited(MVBRPL). The outlook is 'Stable'.
Rationale for rating The assigned rating for MVBRPL derives comfort from the healthy debt coverage metrics and operational nature of the project with a track record of receipt of first three semi-annual annuities without any delay and material deductions. Further, the reputed track record of Megha Engineering and Infrastructures Limited (EPC contractor) in road projects, eliminates the uncertainty around the completion of balance project (4.40%). Moreover, with completion of balance cost and achievement of COD the annuity payments shall increase further (escalated bid project to improve from Rs 1301.02 Cr. to Rs 1411.34 Cr.) which shall provide additional liquidity. Further, availability of a buffer of one month, between the scheduled annuity receipt date and scheduled principal repayment date, along with the creation of to one semi-annual instalment plus interest of two quarters debt service reserve (DSRA) provides additional comfort for repayment of debt obligations. MVBRPL’s projected debt coverage indicators are likely to be robust with a cumulative debt servicing coverage ratio (DSCR) of ~1.30 times during the debt tenure. The rating draws strength from the operational nature of the project, with 60% of the final completion cost to be paid out as semi-annual annuities (along with the interest on the residual annuities payable, at the Bank Rate + 3%). Further, MVBRPL shall receive inflation-adjusted operations and maintenance (O&M) cost over the 15-year operations period from the project owner, National Highways Authority of India, which is a strong counterparty. Acuite notes that MVBRPL has received provisional completion for 95.60% of the project March 2024 and the balance work is in the advance stage of execution with completion timeline on September 30, 2026. These strengths are however partly offset by susceptibility to risks related to delay in receipt of annuity and changes in operational cost & interest rate. |
| About the Company |
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Telangana based, MEIL Vijayawada Bypass Roadways Private Limited was established in 2020, fully owned by Megha Engineering and Infrastructures Limited. The company is a special purpose vehicle (SPV), undertaking the development maintenance and management of six laning of Vijayawada Bypass from Chinna Autupalli to Gollapudi in Vijayawada hereof on Design, Build, Operate and Transfer (DBOT Annuity or "Hybrid Annuity") under concession agreement awarded by National Highway Authority of India. The appointed date was February 18, 2021 and operation period is 17 years including 2 years of construction period. Mr. Krishna Veni Chintapalli, Mr. Rambabu Kola and Mr. Seshagiri Rao Malladi are the directors of the company. The bid project cost is of Rs 1148.40 Cr (Rs 1097.91 Cr incurred till date) and escalated bid project cost is of Rs 1301.02 Cr.
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| Unsupported Rating |
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Not applicable
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of MVBRPL to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Reputed sponsor
The project sponsor is Megha Engineering and Infrastructures Limited (Acuite AA/ Stable) which is reowned EPC player having operations diversified across various sectors such as irrigation, drinking water, roads, power generation & transmission, roads, manufacturing, hydrocarbons, buildings, electric vehicles, city gas distribution, renewables, railways and other infrastructure sectors. The company has presence in nearly 24 countries across the globe. It has an outstanding orderbook of Rs 2,56,830.73 Cr. as on Oct 31,2025 which translates to 6.14 times of FY25 revenue. Furthermore, considering the strong execution track record of MEIL in road construction, the execution risk pertaining to the balance road construction of 4.4% is minimised. Also, sponsor shall support the project for any cashflows mismatches, if required. Strong counter party involving low revenue 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 developed under an annuity-based revenue model, wherein MVBRPL bears no traffic risk and recovers the entire capital cost through biannual annuity payments over a 15-year concession period. Under this model, MVBRPL has received 40 percent of the project cost as construction grants, while the remaining 60 percent will be paid in 30 semi-annual annuity instalments (adjusted for the price index multiple), which has commenced from September 2025. 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 bank rate plus 3.00 percent spread. NHAI will also reimburse the operations and maintenance (O&M) cost of Rs. 271.42 Cr. adjusted for the price index. The annuity model includes price index adjustments to mitigate inflation-related risks and partially offset price fluctuation risks. MVBRPL will be responsible for operations and maintenance during the concession phase, with financial support from NHAI. The company has already received five milestone payments, three annuity receipts as per the schedule date with no delays. Explicit waterfall mechanism through escrow account coupled with creation of DSRA As per the sanction term, the SPV is required to create DSRA equivalent to one semi-annual instalment plus interest of minimum two quarters wherein 50 percent upfront DSRA from 1st disbursement and balance amount in two instalments from sequent immediate two annuities to be created. Therefore, as on date, 75% of DSRA amounting to Rs 37.50 Cr has been created as on December 31,2025 is created. Further, balance DSRA shall be created on receipt of fourth annuity. In the event of delay in receiving any annuities, the instalment plus interest shall be recovered out of DSRA for regular repayment as DSRA shall be replenished by collection in subsequent months. Any shortfall in the DSRA shall be made good from the amount lying in the escrow account after satisfying waterfall mechanism as per the concession agreement. MVBRPL shall maintain escrow account for cashflow management. Its receipts from the NHAI are routed through an escrow account with a well-defined cash flow. NHAI is to deposit all annuities, proceeds from termination amount/penalty received from authority, security enforcement or any insurance proceeds and so on into the escrow account. The O&M annuities and other income shall be deposited into the escrow account and withdrawals shall be permitted after embarking the amount required for servicing of debt and as per terms of agreement. Acuité believes that presence of such well-defined waterfall mechanism through escrow ensures prioritizing of withdrawals and prompt debt repayments. |
| Weaknesses |
| Susceptibility to risks related to delay in receipt of annuity or exposure to risk related to O&M and interest rate fluctuations
As per the concession agreement, the company is entitled to receive a semi-annual annuity over the concession period. However, any delay in the timely receipt of these annuity payments could adversely affect its debt servicing capacity. In addition to fixed annuities, the project is also eligible to receive interest on outstanding annuity amounts, calculated at the prevailing bank rate plus an applicable spread. Therefore, the project’s cash flows and returns are exposed to the interest rate risk and are dependent on the spread between the RBI’s Bank Rate and the interest rate charged by lenders. Furthermore, the company is also exposed to risks associated with the maintenance of the project and failure to adhere to prescribed maintenance standards or delays in timely upkeep could lead to deductions in annuity payments, thereby significantly impacting the company’s cash flows. |
| Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix) |
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MVBRPL maintains a Debt Service Reserve Account (DSRA) equivalent to one semi-annual instalment plus interest of minimum two quarters along with ESCROW mechanism.
Stress case Scenario Acuité believes that, given the presence of DSRA and waterfall payment in ESCROW mechanism, MVBRPL will be able to service its debt on time, even in a stress scenario. |
Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
| Not applicable
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| Potential triggers (individual or collective) for a downward rating action: |
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| Liquidity Position |
| Adequate |
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MVBRPL 's liquidity position is adequate marked by timely milestone payment received from NHAI, while executing the project and timely receipt of annuity payments from Sep 2024 onwards. Acuité expects the liquidity of MVBRPL is likely to remain adequate backed by consistent support from NHAI in terms of annuity payments and DSRA maintained by the company equivalent to six months interest and one principal instalment. The cash flow from operations is expected to be sufficient to meet the debt servicing obligations with a cumulative DSCR of nearly 1.30 times during the tenure of the rated instrument. The cash and bank balance stood healthy at Rs 78.78 Cr. as on March 31,2025.
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| Outlook-Stable |
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 141.15 | 180.83 |
| PAT | Rs. Cr. | 46.34 | 2.33 |
| PAT Margin | (%) | 32.83 | 1.29 |
| Total Debt/Tangible Net Worth | Times | 2.06 | 3.60 |
| PBDIT/Interest | Times | 4.00 | 1.15 |
| Status of non-cooperation with previous CRA (if applicable) |
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None
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| Any other information |
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None
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| 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 |
| Note on complexity levels of the rated instrument |
Rating History : |
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Not applicable
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