| Jharkhand Road Projects Implementation Company Limited | ||
| Rating reaffirmed at 'CRISIL C ' | ||
| Rating Action | ||
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| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL C’ rating on the non-convertible debentures (NCDs) of Jharkhand Road Projects Implementation Company Limited (JRPICL).
Persistent delay in receipt of annuities from government of Jharkhand (GoJ) has led to a liquidity crunch, owing to which lenders have agreed to a one-time restructuring on January 20, 2021, under the Covid-19 resolution framework. As per the revised agreement, JRPICL has been granted a one-year moratorium on debt servicing, including the payment due on January 20, 2021. While interest accumulating over the next one year would be payable in January 2022, the principal deferred would be serviced over the remaining maturity period starting from April 2023.
The lenders have also granted time for reinstatement of the debt service reserve account (DSRA) and major maintenance reserve account (MMRA) till April 2023. These have been almost fully depleted over the last year towards debt servicing. The company has not received annuities from the GoJ since February 2020, which has resulted in build-up of overdue receivable of Rs 358 crore as on January 20, 2021. As funds set aside under the MMR were used to service debt, the major maintenance work on two out of five stretches has not yet begun. This could potentially impact the quality of the stretches going forward.
The rating continues to reflect JRPICL’s weak financial risk profile with debt service coverage ratio (DSCR) below 1x, exposure to counterparty risk, operations & maintenance (O&M) risk and major maintenance and legal risk. However, the stable revenue profile, given the annuity-based model, mitigates these weaknesses. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
Major maintenance on three of the company’s five stretches was completed in fiscal 2021. Work on the remaining two stretches has been deferred, as MMR was utilised for debt servicing. Delay in major maintenance on these stretches could strain their quality.
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Liquidity: Poor Liquidity remains weak, amidst non-receipt of annuity payments from GoJ since February 2020, and utilisation of DSRA and MMR towards debt servicing so far in fiscal 2021. As on January 20, 2021, the company had surplus cash and bank balance of only around Rs 1.5 crore. However, post restructuring of the NCD terms, JRPICL has been granted a one-year moratorium on debt servicing, including the payment due on January 20, 2021. While interest accumulating over the next one year would be payable in January 2022, the deferred principal amount will need to be serviced over the remaining maturity period starting April 2023. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company JRPICL was formed as a special-purpose vehicle to develop five road stretches under the Jharkhand Accelerated Road Development Programme (JARDP). These are the Ranchi Patratu-Dam Road, the Patratu Dam-Ramgarh Road, the Ranchi ring road, the Chaibasa Kandra-Chowka Road, and the Adityapur Kandra Road. All the projects have begun commercial operations, and have been receiving annuity payments. ITNL and IL&FS hold 93.43% and 6.57%, respectively, in JRPICL. |
About ITNL ITNL was incorporated in 2000, by IL&FS to consolidate its road infrastructure projects and pursue new ones in surface transportation infrastructure through public-private partnership. ITNL is primarily engaged in development, operation and maintenance of national and state highways. ITNL has diversified into other segments such as mass rapid transport system, urban transportation infra system, car parking and border check-post.
About IL&FS IL&FS is one of India's leading infrastructure development and finance companies. It was promoted by the Central Bank of India (‘CRISIL A+/CRISIL A/Stable’), Housing Development Finance Corporation Ltd (‘CRISIL AAA/FAAA/Stable/CRISIL A1+’) and Unit Trust of India. Over the years, IL&FS has broad-based its shareholding and inducted institutional shareholders, including State Bank of India (‘CRISIL AAA/CRISIL AA+/FAAA/Stable/CRISIL A1+’), Life Insurance Corporation of India, ORIX Corporation - Japan, and Abu Dhabi Investment Authority.
IL&FS and its group companies (including ITNL) are going through severe financial stress and have defaulted on some debt since August 2018. The Government of India had, on October 1, 2018, replaced the board of directors at IL&FS to turn around the group and restore the confidence of financial markets after its default.
Key features of the NCD as per the DTD * Tenure of up to 9 years * Quarterly payment of interest * Quarterly repayment of principal till January 2027, and semi-annual subsequently * Backed by an escrow mechanism with payment waterfall clearly defining priority * Quarterly appropriation to the reserve for each major maintenance expenditure
Terms of restructuring of NCDs approved on 20-01-2021
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Key Financial Indicators (Reported)
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Status of non cooperation with previous CRA: JRPICL has not cooperated with Credit Analysis & Research Ltd. which has classified it as issuer not cooperative vide release dated Jun 30, 2020 and October 27, 2020. The reason provided by Credit Analysis & Research Ltd. is non-payment of the surveillance fees for the rating exercise as agreed to in its Rating Agreement. |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Criteria Details
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