| Ashoka Highways (Bhandara) Limited | ||||
| Rating reaffirmed at 'CRISIL A- / Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL A-/Stable' rating on the long-term bank facility and non-convertible debentures (NCDs) of Ashoka Highways (Bhandara) Ltd (AHBL).
Also, CRISIL Ratings has withdrawn its rating on term loan worth Rs 94.48 crore and NCDs worth Rs 92.50 crore based on the withdrawal request from the client and the supporting documents (independent balance confirmation). This withdrawal is in line with the CRISIL Ratings policy on withdrawal of bank loan facilities and debt instruments.
Toll collection during fiscal 2023 was Rs. 97.27 crore vis-à-vis Rs. 80.80 crore during the previous fiscal. Toll collection for April to August 2023 stood at Rs 97.27 crore, 24% higher than in the corresponding period of the previous fiscal, owing to revision in toll rates and improvement in traffic. This is likely to grow at a steady pace going forward.
The rating continues to reflect moderate traffic potential of the project stretch and need-based support from the sponsor. These strengths are partially offset by susceptibility to fluctuations in traffic volume, changes in tolling policy and volatility in interest rate. |
Analytical Approach For arriving at the rating, CRISIL Ratings has taken a standalone view of AHBL. |
Key Rating Drivers & Detailed Description Strengths:
Toll collection on the project stretch remains moderate supported by extensive commercial traffic catering to the agriculture and steel industries, considering its proximity to Bhilai, Chhattisgarh, which has major steel plants and the Ashok Leyland factory.
The project has been operational since October 2010 and witnesses moderate traffic movement. Proximity to Bhilai will continue to support traffic volume and hence revenue over the medium term.
Average debt service coverage ratio (DSCR) is expected over 1.35 times over the remaining tenure of the debt (i.e. till FY26) with repayment of debt and recovery in toll collection factoring provisions for the MMR. Toll revenue is expected to grow 8-10% on-year in fiscal 2024 while average debt to toll revenue ratio is expected at 2.01 times over the remaining tenure of the loan. AHBL completed its second major maintenance in fiscal 2021 at cost of Rs 64 crore, which was funded through internal accrual post meeting debt obligation. The debt service reserve account (DSRA) of Rs 20 crore (equivalent to one quarter of debt obligation) maintained in the form of bank guarantee supports the debt protection metrics.
AHBL receives support from its sponsors: Ashoka Buildcon Limited, Ashoka Concessions Limited and other Ashoka group companies. ABL has provided an unconditional and irrevocable corporate guarantee to the project and will support the project in a timely manner. The track record of the sponsor in maintaining other road projects strengthens the credit risk profile of AHBL. Support from the sponsors was seen in the meeting of major maintenance reserve in fiscal 2016. Need-based and timely support from the sponsors will remain a key rating sensitivity factor.
Weakness:
Toll collection is the only source of revenue for AHBL and depends on toll rate and traffic. Toll rate is linked to the wholesale price index (WPI), which is volatile. Traffic growth is susceptible to toll leakages, seasonal variations in vehicular traffic and economic downturns. As commercial vehicles account for a major portion of traffic on the project stretch, traffic volume remains vulnerable to economic slowdown. Furthermore, changes in government policy―such as the demonetisation of high-value currency notes in November 2016 and the nationwide lockdown to control the pandemic―can adversely impact cash flow and debt protection metrics. The debt contracted for the project (both term loans as well as NCDs) has a floating interest/coupon rate. Although cash flow will be able to partly absorb the impact of fluctuations in interest rates and toll collection, these remain rating sensitivity factors. |
Liquidity: Adequate The debt service coverage ratio (DSCR) is expected to be over 1.35 times over the tenure of the debt (fiscals 2024-2026). ABL and its group companies will provide funding support to plug any shortfalls, given the unconditional and irrevocable corporate guarantee from ABL. Unencumbered cash and equivalent stood at Rs 36 crore as on August 31, 2023. The project maintains a DSRA of Rs 20 crore, equivalent to one quarter of debt obligation, in the form of bank guarantee. |
Outlook Stable The debt protection metrics of AHBL will remain stable over the medium term, supported by moderate growth in toll collection. The company will continue to benefit from the need-based support received from the sponsors. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 2007, AHBL is promoted by ABL and Infrastructure Development Finance Company (IDFC). The company undertakes construction, widening, operation and maintenance of an 80-km stretch on national highway-6 along the Chhattisgarh-Maharashtra border on build, operate and transfer (BOT) basis over a 20-year concession period. The project was completed in May 2010 and tolling commenced in October 2010. |
About the Group ABL undertakes a) BOT road projects; b) engineering, procurement and construction (EPC) projects; c) collection of toll on roads and bridges owned and constructed by third parties; and d) manufacture of ready-mix concrete. The Ashoka group has a portfolio of 21 BOT and hybrid annuity projects. In the EPC division, ABL constructs roads and bridges for its own BOT projects and for third parties. It also executes EPC projects in the power distribution space. |
Key Financial Indicators*
*As per analytical adjustments made by CRISIL Ratings |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
Annexure - Details of Rating withdrawn
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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Criteria Details
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