Brief Rationale CARE ASSIGNS 'CARE A1+' RATING to THE
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Brief Rationale September 01, 2014 CARE ASSIGNS ‘CARE A1+’ RATING TO THE PROPOSED CP ISSUE OF KONKAN RAILWAY CORPORATION LIMITED Ratings Amount Instrument Ratings1 Remarks (Rs. crore) CARE A1+ Commercial Paper* 350.00 Assigned (A One Plus) Total Facilities 350.00 *The Commercial Paper Issue will be carved/ repaid/ earmarked out of the short term bank lines and subject to the following conditions Commercial paper issue will be subject to availability of firm sanction of short term bank lines from the banks The tenure of the CP will not be greater than the validity of the sanctioned bank lines from the banks The quantum of CP will not exceed the quantum of the sanctioned and unutilized short term bank lines Rating Rationale The ratings assigned to the commercial paper issue of Konkan Railway Corporation Limited (KRCL) derive strength from majority shareholding of the Government of India (GoI) in KRCL and demonstrated support, the significance of KRCL to Indian Railways and the adequate financial flexibility and liquidity of the Corporation. The rating considers the high operational cost and risk of natural calamity affecting the operations of the corporation. KRCL’s ability to arrange financial assistance from the Ministry of Railways (MoR), GoI in a timely manner for meeting its repayment obligations is the key rating sensitivity. Background KRCL was formed in 1990 to construct, operate and transfer a railway track between Roha in Maharashtra and Mangalore in Karnataka on the west coast of India over a distance of 760 kms. It is the first Railway Project in the country to be executed on BOT Principle (Build, Operate and Transfer). GoI is the main shareholder of KRCL holding 51% of the equity share capital and the balance is shared among State Governments of Maharashtra, Karnataka, Goa and Kerala. The Konkan Railway is a non-electrified broad-gauge (1,676 mm) single line, from Roha to Mangalore (760 km) with 59 stations on the line. It was built at a cost of about USD 755 million in one of the toughest terrain with over 2,000 bridges and 91 tunnels. The corporation also undertakes various construction and consultancy projects related to the construction of tunnels, roads, bridges etc for some of the State Governments and various advisory assignments in different railway-related fields. During FY14 (refers to the period April 1 to March 31) based on the provisional results, KRCL reported a PAT of Rs.13.11 crore on a total operating income of Rs.1258.78 crore. For FY13, KRCL reported a net loss of Rs.235.41 crore on a total income of Rs.1,125.93 crore. However, the loss in FY13 was mainly on account of an exceptional item of Rs.172.08 crore which includes provision towards pension liability of earlier years of Rs.139.92 crore and impairment loss of Rs.32.16 crore both of which are non-cash in nature. Analyst Contact Name: Arunava Paul Tel: 022-6754 3667 Email: [email protected] 1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1 Credit Analysis & Research Limited Brief Rationale CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications. Disclaimer: CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. 2 Credit Analysis & Research Limited Brief Rationale CONTACT Head Office Mumbai Mr. D.R. Dogra Mr. Rajesh Mokashi Managing Director Dy. Managing Director Mobile: +91-98204 16002 Mobile: +91-98204 16001 E-mail: [email protected] E-mail: [email protected] Ms. Meenal Sikchi Mr. Ankur Sachdeva Vice President - Bank Loan & Instrument Rating Vice President - Bank Loan & Financial Services Mobile: +91-9819009839 Mobile: +91-9819698985 E-mail: [email protected] E-mail: [email protected] CREDIT ANALYSIS & RESEARCH LIMITED Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 Tel: +91-22-6754 3456 | Fax: +91-22-6754 3457 | E-mail: [email protected] Other Office: 503, Kaledonia, Sahar Road, Near Andheri Railway Station, Andheri (E), Mumbai - 400 069 Tel: +91-22-6144 3456 | Fax: +91-22-6144 3556 AHMEDABAD KOLKATA Mr. Mehul Pandya Ms. Priti Agarwal 32, Titanium, Prahaladnagar Corporate Road, 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) Satellite, Ahmedabad - 380 015 10A, Shakespeare Sarani, Kolkata - 700 071. 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