| Strong counterparty profile of NHAI under the HAM framework:
MKHPL derives strength from the strong counterparty profile of the National Highways Authority of India (NHAI), which mitigates revenue and cash flow risks associated with the project. The project is being executed under the Hybrid Annuity Model (HAM), wherein 40 percent of the bid project cost is funded by NHAI during the construction period, while the balance is recoverable through semi-annual annuity payments along with operations and maintenance (O&M) payments over the concession period. The established payment mechanism under the HAM framework, coupled with NHAI's strong credit profile, lends healthy cash flow visibility and supports the project's debt servicing ability. Acuité believes that MKHPL's exposure to traffic risk remains limited under the HAM structure, while the strong counterparty profile of NHAI provides adequate comfort with respect to receipt of annuity and O&M payments.
Operational and financial support from sponsors:
MKHPL is promoted by the partners of D.Y. Uppar & Sons (DYUS), namely Mr. Vijay Kumar Dhareppa Bandi and Mr. Sharan Bandi, who are also the directors and majority shareholders of the SPV, resulting in close management oversight of the project. The project holds strategic importance for the D.Y. Uppar group as it represents its first HAM concession and supports the sponsors ongoing diversification into the roads and highways sector. Further, the entire EPC execution of the project has been entrusted to DYUS, establishing strong operational linkages between the sponsor and the SPV. The sponsors have also demonstrated financial support towards the project through equity infusion and unsecured loan funding during the implementation phase. In addition, the term debt facilities of MKHPL are backed by personal guarantees of the promoters and the joint and several guarantee of D.Y. Uppar & Sons and its partners. The financing documents further stipulate that any shortfall in creation of the prescribed DSRA shall be funded by the sponsors. MKHPL also benefits from the association with KMC Constructions Limited (KMCL), which holds a 26 percent stake in the SPV and has an established track record in the roads and highways sector, thereby providing additional technical expertise and sectoral experience to the project. Acuité believes that the demonstrated financial support, operational integration and guarantee support extended by DYUS strengthen the linkage between the sponsor and the SPV and provide additional comfort towards project implementation and debt servicing.
Moderate financial risk profile:
The financial risk profile of MKHPL is supported by sponsor equity infusion and the project's structured funding arrangement under the HAM framework. The company's net worth improved to Rs.30.14 Cr as on March 31, 2026 (Prov.) from a negative net worth of Rs.3.59Cr as on March 31, 2025, following equity infusion by the promoters during the construction phase. The project has achieved financial closure with sanctioned debt of Rs.263.63Cr and benefits from NHAI construction support of Rs.234.34Cr. Further, as on June 30, 2026, the company had drawn only Rs.36.91Cr against the sanctioned debt, providing adequate funding visibility for the balance project cost. As per the financial model, the project is expected to maintain an average DSCR of around 1.59 times over the debt tenure, reflecting adequate debt servicing capability post commencement of operations. Acuité believes the financial risk profile will remain dependent upon timely completion of the project, adherence to the envisaged funding plan and achievement of the scheduled COD without significant cost overruns.
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| High project execution risk:
The project remains exposed to execution risk associated with its implementation-stage nature. As on June 2026, out of the total project cost of Rs.585.84.Cr, Rs.199.91Cr has been incurred where in the project had achieved physical progress of 18.72 percent and the first two HAM payment milestones had been received. The execution risk is partially mitigated by the right of way of 95 percent, achievement of financial closure and resource mobilisation at the project site. However, timely achievement of the remaining construction milestones and completion of the project within the scheduled COD of December 2027 will remain key monitorable.
Exposure to operational and interest rate risks:
Under the HAM framework, MKHPL is expected to receive semi-annual annuity payments from NHAI during the operational phase, along with interest on the outstanding annuity balance and O&M compensation as per the concession agreement. Consequently, the project's debt servicing ability remains dependent upon the timely receipt of annuity, interest and maintenance-related payments from NHAI. Further, the project is exposed to risks arising from changes in interest rates, operating and maintenance expenses and major maintenance requirements over the concession period. The company is also required to maintain the project in accordance with the prescribed performance standards under the concession agreement, any failure of which could lead to deductions or delays in receivables. Acuité believes that timely receipt of annuity-related payments and effective management of operating and maintenance obligations will remain critical for sustaining the project's debt servicing ability during the operational phase.
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