| Adani Ports and Special Economic Zone Limited | ||||||||
| Issuer not cooperating, based on best-available information | ||||||||
| Rating Action | ||||||||
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| 1 crore = 10 million | ||||||||
| Refer to annexure for Details of Instruments & Bank Facilities | ||||||||
| *Issuer did not cooperate; based on best-available information | ||||||||
| Please note that the rating(s) are based on best available information with the credit rating agency: the entity whose debt is being published via this press release did not provide the requisite information needed to conduct the rating exercise and is therefore classified as 'non-cooperative'. Non-Cooperation by Issuer CRISIL has been consistently following up with Adani Port and Special Economic Zone Limited (APSEZ) for information through letters and emails, apart from telephonic communication. CRISIL had, through its letter dated February 28, 2017, informed the company of the extant guidelines and requested for cooperation. However, the issuer has continued to be non-cooperative. 'The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as they are arrived at without any management interaction, and are based on best available or limited or dated information on the company.' |
| Detailed Rationale |
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CRISIL has reaffirmed its 'CRISIL AA-/Stable/CRISIL A1+' ratings on the bank facilities of APSEZ. Rating on the company's Rs 1592.0 crore short-term facility has been removed from 'Notice of Withdrawal' and that on the Rs 200.0 crore non-fund-based facility has been placed on 'Notice of Withdrawal' for 90 days, in line with CRISIL's revised withdrawal policy. |
| Analytical Approach |
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For arriving at the ratings, CRISIL has combined the business and financial risk profiles of APSEZ and all its subsidiaries. All the companies, together referred to herein as APSEZ, operate under a common management team, and have operational and financial linkages. For debt calculation, CRISIL has included the USD 453 million (equivalent to about Rs 3000 crores, outstanding as on March 31, 2016, of total debt of USD 800 million [equivalent to about Rs 5300 crores]) guarantee provided by APSEZ for the borrowings of Mundra Ports Pty Ltd, which is owned by the same promoters. Against this guarantee, APSEZ has received a counter indemnity from Abbot Point Port Holding Pte Ltd. |
| Key Rating Drivers & Detailed Description |
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Strengths * Dominant market position among private sector ports in India: APSEZ, along with its subsidiaries, is India's largest private sector port. Its market share improved to 14.1% in fiscal 2016 from 4.7% in fiscal 2010. The company benefits from presence across the west and east coasts of India with capacity of over 300 million metric tonne per annum (mmtpa). APSEZ handles diverse cargo, including containers, chemicals, coal, and fertilisers. * Healthy operating profitability: APSEZ has strong operational efficiency, reflected in superior average turnaround time and pre-berth time, which is comparable with international ports. The strong operational efficiency arises from its natural deep draft, which ranges from 17.5-32.0 metres. This allows super cape size, very large container carriers, very large crude carriers, post panamax and super post panamax carriers to dock alongside its berth, thereby reducing cost for the end consumer. Furthermore, it also has good rail, road, and air connectivity. Its strong operating efficiency results in strong profitability, reflected in operating margin of 65% in fiscal 2016, compared to 62% in fiscal 2014. * Robust financial flexibility: APSEZ has significant financial flexibility, with a track record of raising funds from national and international investors, banks, and financial institutions. Financial flexibility is also enhanced by healthy cash generation ability. The company also maintains ample liquidity. It had cash and cash equivalent of Rs 1560 crore as on March 31, 2016. Weaknesses * Leveraged capital structure: Debt increased to Rs 26,600 crore as on March 31, 2016, from Rs 18,000 crore as on March 31, 2013, due to large capex of Rs 12,400 crore and increase in working capital requirement by Rs 8200 crore over the 3 fiscals. As a result, the ratio of debt to networth remained high, at 2.07 times as on March 31, 2016. However, with ramp-up in volumes and in cash flow of subsidiary ports, and limited capex plan, capital structure should improve over the medium term. * Exposure to promoter companies: Loans and advances (including business advances) to promoter companies remained high, at about 12% of capital employed as on March 31, 2016. The return on these exposures has been low, affecting return on capital employed (RoCE). As on September 30, 2016, exposure to related parties declined by Rs 1500 crore. |
| Outlook: Stable |
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CRISIL believes the financial risk profile of APSEZ will remain healthy over the medium term driven by high cash accrual in subsidiary ports. |
| About the Group |
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APSEZ is India's largest port operator, with 10 ports across the eastern and western seaboards. The company handled 152 million tonne (MT) of cargo in fiscal 2016. Its flagship port at Mundra is India's largest and handled 109 MT of cargo. The company also operates a multi-product port-based special economic zone (SEZ) at Mundra. |
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
| Annexure - Details of Instrument(s)^ | ||||||||||||||||||||||||||||||||||||||||||
** Equivalent to Rs 103.14 crores *** Equivalent to Rs 146.25 crores ^Issuer did not cooperate; based on best-available information |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| *Issuer did not cooperate; based on best-available information | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
** Equivalent to Rs.103.14 crores *** Equivalent to Rs.146.25 crores #Equivalent to Rs.1.16 crores | ||||||||||||||||||||||||||||||||||||||||||||||||
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