June 12, 2020 Dewas Bypass Tollway Private Limited: Rating reaffirmed Summary of rating action Previous Rated Amount Current Rated Amount Instrument* Rating Action (Rs. crore) (Rs. crore) [ICRA]A+(CE)(Stable); Fund Based – Term Loan 225.0 225.0 Reaffirmed Total 225.0 225.0 *Instrument details are provided in Annexure-1 Rating Without Explicit Credit [ICRA]BBB- Enhancement Note: The (CE) suffix mentioned alongside the rating symbol indicates that the rated instrument/facility is backed by some form of explicit credit enhancement. Earlier, the rating symbol for this instrument/facility used to be accompanied by the (S) suffix. The change in suffix is not to be construed as a change in rating. This rating is specific to the rated instrument/facility, its terms and its structure and does not represent ICRA’s opinion on the general credit quality of the entity concerned. The last row in the table above also captures ICRA’s opinion on the rating without factoring in the explicit credit enhancement Rationale The rating reaffirmation is based on ICRA’s assessment of the credit profile of Dewas Bypass Tollway Private Limited (DBTPL), which is augmented by the financial support expected to ensue from IJM Corporation Berhad (IJM). The latter has provided a Letter of Comfort (LoC) for the Rs. 225-crore bank lines of DBTPL. The letter ‘CE’ in parenthesis suffixed to a rating symbol denotes that the rating is supported by an LoC. This rating is specific to the rated facility, its terms and its structure and does not represent ICRA’s opinion on the general credit quality of the entity concerned. As per the terms of the LoC, IJM confirms to be supportive of DBTPL’s operations and would ensure that DBTPL meets its debt service obligations on the rated term loan on time. IJM has provided a corporate guarantee to the lenders, which would be valid till the end of the second-year post achievement of COD (Commercial Operation Date), after which the LoC would be valid till the entire tenure of the term loan facility. Adequacy of credit enhancement ICRA has assessed the attributes of the Letter of Comfort issued by IJM Corporation Berhad in favour of the said instrument. As per the terms of the LoC, IJM confirms to be supportive of DBTPL’s operations and would ensure that DBTPL meets its debt service obligations on the rated term loan on time. IJM would retain management control and equity stake of more than 51%, directly or indirectly, throughout the tenor of facility. Given these attributes, the LoC provided by IJM is adequately strong to result in an enhancement in the rating of the said instrument to [ICRA]A+(CE) against the rating of [ICRA]BBB- without explicit credit enhancement. The rating of DBPTL would be sensitive to change in the credit profile of IJM. Salient covenants as specified in the facility documents » Any change or reduction in the shareholding shall only be permitted with prior written approval of lenders » At the end of 4th year from the first disbursement and thereafter, lenders shall have the option to sell the facility to the sponsor and the sponsor shall be under an obligation to purchase all amounts outstanding under 1 the facility from the lenders. The lenders shall give a written notice of 60 days to the sponsor to give effect to exercising of this option » Non-maintenance of stipulated balances in escrow account would trigger an event of default. The borrower shall establish with the escrow bank various accounts into which all the inflows to the project shall be deposited and other accounts as may be stipulated by lenders including DSRA shall be maintained » Maintenance of DSCR greater than 1.15 for every financial year commencing from first full year of operations from COD » If the rating of instrument falls below BBB-, additional interest of 1.0% per annum would be levied on the outstanding amount of the facility calculated retrospectively from the date of first drawdown till such credit rating is improved to BBB- Key rating drivers and their description Credit strengths Support from IJM in form of LoC - The rating is based on ICRA’s assessment of the credit profile of Dewas Bypass Tollway Private Limited (DBTPL), which is augmented by the financial support expected to ensue from IJM Corporation Berhad (IJM). The latter has provided a Letter of Comfort (LoC) for the Rs. 225-crore bank lines of DBTPL. As per the terms of the LoC, IJM confirms to be supportive of DBTPL’s operations and would ensure that DBTPL meets its debt service obligations on the rated term loan on time. IJM has provided a corporate guarantee to the lenders, which would be valid till the end of the second-year post achievement of COD (Commercial Operation Date), after which the LoC would be valid till the entire tenure of the term loan facility. Liquidity position: Adequate DBTPL’s liquidity is Adequate. The debt repayment for FY2021 stands at Rs. 0.45 crore. The company maintains DSRA of Rs. 5.5 crore in the form of Bank Guarantee (BG) from the sponsor, IJM Corporation Berhad, which is equivalent to one quarter of debt servicing obligation. Further, the LoC provider is expected to infuse funds in case of shortfall in debt servicing. Rating sensitivities Positive triggers: The crystallisation of scenarios for rating upgrade is unlikely over the medium term. Nevertheless, in case of significant improvement in the credit profile of the LoC provider – IJM Corporation Berhad, there could be a scenario for rating upgrade. Negative triggers: Negative pressure on the rating could arise if there is material deterioration in credit profile of the LoC provider and/or if there is weakening of linkages with the LoC provider and/or if there is a delay in support from LoC provider. 2 Analytical approach Analytical Approach Comments Corporate Credit Rating Methodology Applicable Rating Methodologies BOT Toll Road Projects in India Approach for rating debt instruments backed by third-party explicit support Parent/Group Company: IJM Corporation Berhad (IJM) The rating is based on ICRA’s assessment of the credit profile of Dewas Parent/Group Support Bypass Tollway Private Limited (DBTPL), which is augmented by the financial support expected to ensue from IJM Corporation Berhad (IJM). The latter has provided a Letter of Comfort for the Rs. 225-crore bank lines of DBTPL. Consolidation/Standalone Standalone About the company Incorporated on February 2017, Dewas Bypass Tollway Private Limited (DBTPL) is a special purpose vehicle (SPV) promoted by the Malaysian construction firm IJM Corporation Berhad and its investment companies to undertake the project of widening and upgrading Dewas Bypass Road from KM 0.00 at Ujjain Dewas Junction and ending at KM 19.80 at Indore Junction from two-lane to a four/six-lane highway in Madhya Pradesh on a Design, Build, Operate and Transfer (DBOT) basis. The project was awarded by Madhya Pradesh Road Development Corporation Limited (MPRDCL) based on a competitive bidding on February 27, 2017. The project has a concession period of 25 years, commencing from October 10, 2017. The project received provisional COD on January 10, 2020. Tolling operations began on January 11, 2020. The average per day toll collections for the months of January, February and March 2020 stood at Rs. 0.08 crore, Rs. 0.09 crore and Rs. 0.08 crore respectively. Key financial indicators Not applicable. Tolling operations began on January 11, 2020 up till which DBTPL was a project stage company Status of non-cooperation with previous CRA: Not applicable Any other information: None 3 Rating history for past three years Current Rating (FY2021) Rating History for the Past 3 Years Instrument Amount Amount Rating FY2020 FY2019 FY2018 Type Rated Outstanding 12-Jun-2020 22-April-2019 NA 22-Mar-2018 30-Nov-2017 Provisional [ICRA]A+(S) [ICRA]A+(S) 1 Term Loan Long Term 225.0 225.0 [ICRA]A+(CE) (Stable) NA [ICRA]A+(S) (Stable) (Stable) (Stable) Amount in Rs. Crore Complexity level of the rated instrument ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The classification of instruments according to their complexity levels is available on the website www.icra.in 4 Annexure-1: Instrument details Date of Amount Instrument Issuance / Coupon Maturity Rated Current Rating and ISIN Name Sanction Rate Date (Rs. crore) Outlook NA Term Loan August 2017 - March 2035 225.0 [ICRA]A+(CE)(Stable) Source: DBTPL 5 Analyst Contacts Shubham Jain Rajeshwar Burla +91 124 4545 306 +91 40 4067 6527 [email protected] [email protected] Shreyans Talawat +91 22 6169 3368 [email protected] Relationship Contact L Shivakumar +91 22 6114 3406 [email protected] MEDIA AND PUBLIC RELATIONS CONTACT Ms. Naznin Prodhani Tel: +91 124 4545 860 [email protected] Helpline for business queries: +91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm) [email protected] About ICRA Limited: ICRA Limited was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency. 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