| Vista SKS Infraproject Private Limited | ||||
| 'Crisil BBB+/Stable' assigned to Bank Debt | ||||
| 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 assigned its ‘Crisil BBB+/Stable’ rating to the long-term bank facility of Vista SKS Infraproject Private Limited (Vista).
The rating factors in the inherent benefits of the hybrid annuity model (HAM) and the low funding risk for the project, and the expected operational and financial support from the sponsor, SKS Infra Projects Pvt Ltd (SKSIPPL; ‘Crisil A-/Stable/Crisil A2+’). The rating also reflects the comfortable debt service coverage ratio (DSCR) of Vista, along with the presence of escrow mechanism. These strengths are partially offset by exposure to implementation risk, given the nascent stage of the project. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of Vista. |
Key Rating Drivers & Detailed Description Strengths: Inherent benefits of HAM: Benefits of HAM include 80% right of way (ROW) assured on the appointed date and cost escalation assurance provided by the Ministry of Road Transport and Highways of India in the construction and operational stages. HAM also allows for issue of the provisional commercial operations date (COD) upon completion of construction on the land made available up to 180 days from the appointed date, thereby allowing for full annuities to be paid as if all works of the project have been completed. The concessionaire will be required to complete construction on the remaining land whenever it is made available post provisional COD. Furthermore, the HAM concession agreement allows for change in scope on land not available within 180 days of the appointed date, thereby reducing completion cost and the corresponding annuity and operation and maintenance (O&M) payments, while facilitating on-time completion of the project
Vista has signed a fixed-price, fixed-time engineering, procurement, and construction contract with SKSIPPL, which has four decades of experience in the roads and highways industry and a strong track record of project execution within the budgeted time and cost. The project should benefit from the inherent benefits of HAM and the strong project-execution capabilities of SKSIPPL.
Low funding risk and expected operational and financial support from the sponsor: The total project cost is Rs 642 crore, to be funded through debt of Rs 282.91 crore. Funding risk is low as financial closure was achieved. Morth will pay 40% of the project cost in 10 equal installments of 4% each during the construction period and the balance 60% in 30 biannual payments over 15 years from the COD.
Furthermore, the sponsor has provided an undertaking for financial support if there is any cost overrun or for cash flow mismatch during the construction and operational phases. The sponsor has also extended corporate guarantee till receipt of the second annuity. Apart from any cost overrun in the construction phase, the sponsor will also support the project with termination shortfall requirement; moreover, it will meet any shortfall in debt servicing. SKSIPPL has financial flexibility to support its project, if needed and had liquid funds of nearly of over Rs 50 crore as on February 2025. Vista will also benefit from the strong operational and financial support of SKSIPPL.
Comfortable DSCR along with the presence of escrow mechanism: Average DSCR is expected at 1.24 times for the tenure of the loan. Vista has an escrow mechanism through which cash flow from Morth is routed for payment as per the defined payment waterfall. Moreover, after achievement of COD, Vista has to create a debt service reserve account (DSRA) equivalent to six months of debt obligation (interest and principal payment), which ensures priority of term loan repayment.
Weakness: Exposure to implementation risk given the nascent stage of the project: Financial closure was achieved and construction expected to start in April/May 2025, indicating the nascent stage of the project. The project implementation risk is mitigated to an extent by the fixed-price, fixed-time contract with SKSIPPL as well the sponsor’s strong project execution capability. That said, timely completion of the project with no major cost overrun, and timely receipt of grant from Morth will remain key sensitivity factors. |
Liquidity: Adequate Project is under construction. Funding risk is low because the company has tied up with bank for loan of Rs 282.91 Crores. Balance will be funded through equity infusion as per the requirement of the project. The average DSCR over the debt repayment period is expected to be around 1.24 times. Major maintenance reserve will be carved out from the surplus cash flow from each annuity. |
Outlook: Stable Crisil Ratings believed Vista will maintain its stable DSCR over the medium term, backed by steady cash inflow. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company Vista was incorporated in Feb-2024 as special purpose vehicle (SPV) by SKSIPPL for Construction of Raebareli Ring Road Phase-II with four lane configurations (Design Length 21.888 km) for Rae-Bareli City in the state of Uttar Pradesh on HAM basis
The total project cost is Rs.642 crore. The project would be funded by Morth to the extent of 40% of project cost during the construction phase, while the balance 60% would be paid out as annuity during the operational phase over the 15 years post COD. Construction of the project will start from April-25 onwards. |
Key Financial Indicators
*Company was incorporated in Feb 2024 currently has no operations |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
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. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
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Criteria Details
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