3 Sept 2021 Amended Rating Rationale JSW GMR Cricket Private Limited (Formerly Known As GMR Sports Private Limited)

3 Sept 2021 Amended Rating Rationale JSW GMR Cricket Private Limited (Formerly known as GMR Sports Private Limited)

Brickwork Ratings reaffirms the rating for the Non-Convertible Debentures issue of Rs.550.00 Crs (O/s Rs. 385.00 Crs) of JSW GMR Cricket Private Limited (JGCPL or the company).

Particulars: Issue amount Previous Amount Present Amount Previous Rating2 Instrument (Rs. Crs) (Rs. Crs) O/s (Rs. Crs)1 ISIN No.# (28-May-2020) Present Rating* INE295P0801 BWR BWR BBB+(CE)/Stable 1 NCD 550.00 440.00 385.00 BBB+(CE)/Stable Reaffirmed Rupees Three Hundred and Eighty Five Crores Total 550.00. 440.00 385.00 Only #Details at Annexure I, *Please refer to BWR website www.brickworkratings.com/ for definition of the ratings 1O/s as of 31-3-2021 Unsupported Rating: BWR BBB-/Stable

BWR has principally relied upon the audited financial results up to FY20, FY21 provisional financials and projected financials of the company, publicly available information and information/clarification provided by the company's management.

Rationale: The reaffirmation of the rating continues to factor in the letter of comfort extended by JSW Techno Projects Management Limited (JTPML) and DSRA shortfall undertaking from JSW Projects Limited (JPL), 50% stake in JGCPL (formerly known as GMR Sports Private Limited), owner of Indian Premier League (IPL) franchise “Delhi Capitals” (formerly known as Delhi Daredevils), being held by JSW Group through its sports venture, JSW Sports Pvt. Ltd., stablenetworth base, future revenue visibility due to the broadcasting and internet rights deal between Star Sports and BCCI (from 2018 to 2022).

However, the rating is constrained by the fact that, JGCPL is highly leveraged and risk inherent in the structure due to provision of Put option after 42 and 54 months i.e in December ‘21 and December ‘22 and balloon principal repayment at the end of the NCD tenor and bullet repayment of the new term loan availed. However, considering the pedigree of JSW Group and other support inherent in the NCD issue, this risk is partly mitigated. 1 The rating is also constrained by the mid-way suspension of IPL 2021 and uncertainty regarding the remaining IPL matches on account of the ongoing second wave of COVID-19 and its implications on JGCPL’s revenue in FY22. However based on cash & cash equivalents o/s as of March 31, 2021 and refund of deposits expected from the group companies in FY21, cash accruals are expected to be adequate vis-à-vis the debt repayment obligations.

The CE suffix to the rating has factored credit enhancement by JSW Promoter Group companies to the NCDs issue, through DSRA shortfall undertaking from JPL and Letter of Comfort (LoC) from JTPML. BWR believes that JGCPL’s business risk profile will be maintained over the medium term. The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term.

Description of Key Rating Drivers: Credit Strengths: Letter of Comfort and DSRA Shortfall Undertaking: DSRA shortfall undertaking support is provided through Shortfall Undertaking executed between JPL (Support Provider) and JGCPL(Company) dated September 13, 2019. As per the terms of issue, the Issuer has to fund DSRA account at least 4 business days prior to the scheduled interest + principal repayment failing which JPL(a 100% Sajjan Jindal family owned entity) to fund the DSRA account at least 2 business days prior to the scheduled interest + principal repayments. The NCD is also backed by the LOC provided by JTPML, which is also a 100% Sajjan Jindal family-owned entity.

Acquisition of 50% stake by JSW Group and presence of family members of Sajjan Jindal in the board: JSW Group through its sports venture, JSW Sports Pvt. Ltd, is holding 50% stake in JGCPL. The Company is a 50:50 JV and both JSW Sports Private Limited (JSPL) and GMR Enterprises Private Limited (GEPL) along with Sukreeda Sports and Entertainment LLP & the individual promoter shareholders have a joint control over the company. Key members of the JSW Group promoter family, i.e. Mr. Parth Jindal and Mrs. Sangita Jindal are on the board of JGCPL. The shareholding pattern of the company as of 31-3-2021 was as JSW Sports Private Limited holding 50% stake, Sukreeda Sports and Entertainment LLP holding 21% stake, GMR Enterprises Private Limited holding 17.08% stake and individual promoters holding 11.92% stake.

Moderate net-worth base: Post 50% stake acquisition by JSW Sports Pvt. Ltd., TNW of JGCPL had improved significantly to Rs.80.17 Crs as on March 31, 2019 as against negative networth of Rs.105.75 Crs as on March 31, 2018. As on March 31, 2020, TNW of the Company was moderate at Rs.78.30 Crs. 2 Future revenue visibility due to Central Rights revenue from IPL: Board of Control for Cricket in India (BCCI) as sold the broadcasting & internet rights to Star Sports for 5 IPL seasons to be held from 2018 to 2022, for a total sum of Rs. 16,347.5 Cr. Over and above this, BCCI and the teams would earn from title and on-ground sponsorships. The total of all of these is called Central Revenue. 50% of this amount will go to BCCI. Out of the rest, 45% of the amount will be equally distributed between the 8 teams over a period of5 years and the balance 5% will be distributed among the teams based on the ranking in the IPL league table. Besides the Central Revenue, the teams will earn from Gate Receipts of Home Matches (100% share) and Local sponsorship and merchandising. Due to this, the TOI of the Company for FY21(prov.) stood at Rs.279.86 Crs as against Rs.268.40 Crs in FY20. The Central revenue for FY22 is expected to increase since VIVO has against become a title sponsor of IPL with a sponsorship deal of Rs.440.00 Crs as against Rs.222 Crs by Dream11 (previous year title sponsor).

Improvement in team’s performance in IPL season 2020: There has been improvement in the JGCPL’s team Delhi Capitals' performance as the team was runner up in 2020 IPL as against 3rd position in 2019 IPL (out of eight teams). In IPL 2021 IPL, Delhi Capitals’ team is at the top of table after 29 of 60 league matches of IPL, subsequent to which the League was suspended due to increase in Covid-19 cases.

Credit Concerns: High debt/equity ratio post NCD issue and Availment of new term loan: Post the issuance of the NCD and availment of the term loan, the Company is highly leveraged, the D/E ratio of the company stood at 6.44 times in FY21 (Prov.) and 6.26 times in FY20 resulting in limited financial flexibility. The term loan repayment is due on 31May2021, which is expected to marginally improve the gearing in FY22.

Risks from provision of Put option and balloon repayment at the end of tenor of the NCD and bullet repayment of the new term loan availed: There is provision for Put option at the end of 42 and 54 months from the date of allotment of the NCDs. If the put option is exercised, the company may have to depend on refinancing or support from the JSW Group. The repayment of the NCDs were in staggered manner with 45% of principal payment to be done in the first 54 months and the balance 55% of principal payment to be done at the end of the 60th month from allotment. However, due to prepayment of NCDs in FY19 & FY20, the last redemption is reduced to 42.5%, which is still relatively high. In addition to this the company has availed a term loan of Rs. 100 Crs having a bullet repayment on May 31, 2021. However, considering the resourcefulness of JSW Group and other support inherent in the issue, this risk is partly mitigated.

3 Uncertainty regarding the remaining IPL 2021 league matches: There is uncertainty regarding the balance of IPL 2021 matches due to high COVID cases across the country The company’s revenue profile could be affected if remaining matches are not conducted. However, the BCCI is planning to schedule the matches in Sep 2021 before ICC World T20. Further, based on cash & cash equivalents O/s as of March 31, 2021 and refund of deposits expected from the group companies in FY22, cash accruals are expected to be adequate vis-à-vis the debt repayment obligations.

Liquidity Position (Adequate): As per FY21 (Provisional financials), cash & cash equivalent amounts to Rs. 11.55 Crs and the company also has Current investments which include investments in mutual funds of Rs. 102.86 Crs. As per the terms of issue, the Issuer has to fund DSRA account at least 4 business days prior to the scheduled interest and principal repayment failing which JSW Projects Ltd (a 100% Sajjan Jindal family owned entity) to fund the DSRA account at least 2 business days prior to the scheduled interest + principal repayments.

Analytical Approach For arriving at the rating, BWR has applied its rating methodology as detailed in the rating criteria detailed below (hyperlinks provided at the end of this rationale).

Rating Sensitivities: Positive: ● Sustained increase in revenue, leading to improvement in operating profitability and significant reduction in debt leading to improved financial risk profile. Negative: ● Suspension of the remaining matches of IPL 2021 and weakening of the financial risk profile and/or increment in external debt borrowings resulting in weakening of the capital structure. ● If there is any deterioration in the credit profile of the credit enhancement providers JPL and JTPML.

About the NCDs issue: The NCD was issued on 8-June-2018 and the maturity date is on 8-June-2023. The coupon rate is 11% p.a. payable annually starting from 8-June-2019.The NCD has Put option at the end of 42 and 54 months.

4 About the Company: JSW Group through its sports venture, JSW Sports Pvt. Ltd, is holding 50% stake in JSW GMR Cricket Private Limited (Formerly known as GMR Sports Private Limited). The Company is a 50:50 JV and both JSW Sports Private Limited (JSPL) and GMR Enterprises Private Limited (GEPL) along with Sukreeda Sports and Entertainment LLP & the individual promoter shareholders have joint control over the company. The company owns the IPL franchise Delhi Capitals (earlier called Delhi Daredevils).

Key Financial Indicators (As per BWR calculations):

Key Parameters Units FY19 FY20 Result Type Audited Audited

Total Operating Income ₹ Cr 382.64 268.40 PAT ₹ Cr 22.86 (1.90)

Tangible Net worth ₹ Cr 80.17 78.30

Total Debt/TNW Times 6.14 6.26

Current Ratio Times 0.43 0.55 For FY21 (Provisional financials), the company has achieved total operating income of Rs. 279.86 Crs with Net Loss of Rs. 2.74 Crs

About the Credit Enhancement Providers: JSW Techno Projects Management Ltd: JTPML was incorporated in May 4, 2010. It is 99.80% owned by Mrs. Sangita Jindal (including her nominees) w/o Mr. Sajjan Jindal, Chairman & Managing Director of JSW Steel Ltd. The Company is engaged in strategic investments in JSW group companies along with project management, operation and maintenance/management consultancy services and in manufacturing of industrial gases.

Key Financials of JTPML (As per BWR calculations):

Amounts in Rs. Crs. FY 19 (Audited) FY 20 (Audited) Total Operating Income 619.20 729.67 PAT/Loss 131.65 284.65 Tangible Networth 4537.55 4255.24 Total Debt/TNW 0.84 0.88 Current Ratio 0.51 0.51 5 JSW Projects Limited: JPL operates a 1.2 MTPA (million tonnes per annum ) COREX gas based DRI (Direct Reduction of Iron) Plant, one Coke Dry Quenching (CDQ) plant comprising of four units with aggregate capacity of 3.42 MTPA and 76 megawatt captive power plant based on waste heat recovery from CDQ process. JPL operates these facilities on the basis of BOOT (Build Own Operate Transfer) agreement with JSW Steel Limited; Currently Sajjan Jindal Family Trust is the 100% shareholder of the company.

Key Financials of JPL (As per BWR calculations):

Amounts in Rs. Crs. FY 19 (Audited) FY 20 (Audited) Total Operating Income 687.94 569.69 PAT 203.06 25.06 Tangible Networth 446.57 471.65 Total Debt/TNW 4.25 3.84 Current Ratio 1.29 1.05

Rating History for the last three years (Including withdrawal and suspended):

Instrume S.No Current Rating (2021) 2 nt Rating History /Facility Type (Long Term/Short O/s 1 28May2020 28May2019 30May2018 Term) Amount Rating (₹ Crs) BWR BWR BWR 1. NCD Long Term 385.00 BBB+(CE)/Stabl BWR BBB+(SO)/Sta BBB+(CE)/stabl e BBB+(SO)/Stable ble e Reaffirmed

Total 385.00 (Rupees Hundred and Eighty Five Crores Only)

1O/s as of 31-3-2021 2The “SO” suffix was replaced with “CE” on 14-Sep-2019 in compliance with SEBI guidelines. Unsupported Rating: BWR BBB-/Stable

Status of non-cooperation with previous CRA (if applicable): Not Applicable Any other information: NIL

6 COMPLEXITY LEVELS OF THE INSTRUMENTS: Complex

For more information, visit www.brickworkratings.com/download/ComplexityLevels.pdf Hyperlink/Reference to applicable Criteria ● General Criteria ● Approach to Financial Ratios ● Criteria-credit enhancement

Analytical Contacts

Prashant Mondkar Chintan Lakhani Analyst - Ratings [Director – Ratings] Board:+91 22 2831 1426 Ext:649 Board:+91 22 2831 1426 [email protected] [email protected]

1-860-425-2742 [email protected]

Annexure I: Outstanding Instrument Issue Date ISIN No. Coupon (Rs. Crs) Maturity Date 11% p.a. payable NCD 8-June-2018 INE295P08011 annually 385.00 8-June-2023 outstanding as on 31-Mar- 2021

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