RATING RATIONALE 14 Aug 2020 Gohana Highway Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of ₹. 305.10 Crores of Jind Gohana Highway Pvt. Ltd.

Particulars:

Amount Tenure Rating* Facility** (₹ Cr)

BWR BBB- (CE) (Stable) Fund based 305.10 Long Term Assigned

Total 305.10 INR Three Hundred Five Crores and Ten Lakhs Only

*Please refer to BWR website www.brickworkratings.com/ for definition of the ratings ​ ​ ** Details of Bank facilities is provided in Annexure-I

The rating derives credit enhancement (CE) from the "Unconditional and Irrevocable Corporate Guarantee" provided by "Brij Gopal Construction Company Pvt. Ltd." and has also provided a shortfall undertaking as well as an undertaking to ensure availability of adequate funds to meet the shortfalls in the availability of funds for debt servicing of the SPV before the due date.

Unsupported (standalone) rating as assessed by BWR without considering the credit enhancement is BWR BB (Stable).

RATING ACTION / OUTLOOK Brickwork Ratings (BWR) has assigned BWR BBB-(CE) (Stable) to the bank loan facilities of Jind Gohana Highway Pvt. Ltd. (JGHPL or the company).

The ratings have drawn strength from the Experienced promoters/sponsor company and established track record (especially in the roads/highways segment), achievement of financial closure for the project, escalation clauses being available in the concession agreement with separate O&M payouts, benefits accruing from HAM and, corporate guarantee provided by the parent company.

The ratings are however constrained by the execution risks associated with the project due to its nascent stage of construction, funding risks arising from timing of infusion of equity and debt and receipts of grants instalments. BWR believes that the business risk profile of Jind Gohana Highway Pvt. Ltd. will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term.

www.brickworkratings.com Page 1 of 7 ​ ​ ​

Key features of the guarantee provided by BGCCPL: ● The guarantee is unconditional, irrevocable and absolute. ● The deed of guarantee shall be a continuing one and will remain in force and effect during the validity period. The guarantor has agreed that it shall not be discharged from the obligations until the expiry of the validity period.

KEY RATING DRIVERS

Credit Strengths: ● Experienced promoters/sponsor company and established track record: Brij Gopal ​ Construction Company Pvt. Ltd. is the parent/sponsor Company for the SPV. BGCC has a team of qualified engineers, having vast experience and demonstrated expertise in construction of roads/highways, sewerage, storm water, drain water supply and works management, including ancillary works and housing projects. The company has recently ventured into HAM projects. BWR believes that the parent company’s successful track record of project execution capabilities is expected to support execution of this project.

● Benefits accruing from HAM: The project, being executed under Hybrid Annuity ​ Model, and would benefit inherent to HAM projects such as upfront availability of major portion of RoW, inflation-linked revisions to bid project cost during the construction period and the relatively lower risk of fund mobilisation with 40% of the project cost to be funded by grants from the authority during the construction period. The project will have a stable revenue stream in the form of annuity that would be received post-commissioning (equivalent to 60% of the bid project cost) over the term of the concession period from National Highway Authority of (NHAI). Other benefits include indexation to Operation and Maintenance (O&M) cost to inflation and interest payments on residual annuities during the operational period.

● Corporate guarantee from the parent/sponsor company: BGCCPL (rated BWR ​ BBB+) has provided an unconditional and irrevocable corporate guarantee and has also provided a shortfall undertaking as well as an undertaking to ensure availability of adequate funds to meet the shortfalls in availability of funds for debt servicing of the SPV before the due date

Credit Risks: ● Nascent stage of the project: The project is in its nascent stage. The construction of the ​ ​ ​ project has not begun. The first mobilization grant is yet to be received by the company. The implementation risk is however mitigated by the receipt of RoW by the company for more than 80% of the length of the project.

● Proper Maintenance essential for Receipt of Annuity Payments: The SPV’s source of income includes the annuity, interest on outstanding annuities and annual O&M www.brickworkratings.com Page 2 of 7 ​ ​ ​

payments from the authority concerned. Hence ensuring proper maintenance of roads and ensuring no deduction in annuity receipts will be the key credit sensitivity.

● Promoter’s Contribution: Out of the total project cost, Rs. 104.43 Crs. is to be funded ​ by the promoter's contribution. The promoter is required to bring 50% of the contribution upfront. The sources have been identified, however the promoter is yet to bring the capital. Timely infusion of capital by the promoter to ensure the smooth execution of the project remains a key credit sensitivity.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA For arriving at its ratings, BWR has considered the projected financial statements of Jind Gohana Highway Pvt. Ltd. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES Going forward receipt of the mobilisation grants by NHAI, timely execution and completion of the project, timely receipt of future annuities which is crucial for ensuring the availability of adequate liquidity of the company to meet the debt repayment and timely availability of the funds from the sponsor company in case of shortfall shall be key rating sensitivities.

Positive: If the company achieves the COD as per expected timelines without any cost overrun ​ subsequent to the receipt of mobilisation advances and grants. Negative: In case there is delay in commencement of project causing disruptions in timely execution and resulting increase in costs. Further any deterioration in the sponsor’s credit risk profile could also exert pressure on the rating.

LIQUIDITY POSITION: ADEQUATE The sponsor has adequate cash accruals to bring in the required equity towards the project. Further the debt has been sanctioned and financial closure has been achieved. The balance cost of the project would be funded from the grants receivable from NHAI. The term loan repayments are not expected to begin before fiscal 2022 for the required debt.. The borrower shall maintain in the debt service reserve account (DSRA), an amount equivalent to the next six months of interest and principal in respect of debt amount.

COMPANY PROFILE Jind Gohana Highway Pvt. Ltd. is an SPV formed by Brij Gopal Construction Company Pvt. Ltd. incorporated. The company entered into a 17 years concession agreement (including two years of construction period) on 7th June 2019 with the NHAI. The project is of Redesigning, Rehabilitation and Upgradation to 4 Laning of Jind - Gohana (Pkg-1) Section (Greenfield Alignment) from Km 0.000 to Km 40.601 (Length 40.601 Km) of NH-352A in the State of under Bharatmala Pariyojana under NH (O) on Hybrid Annuity Model (HAM). The project’s construction is yet to start. www.brickworkratings.com Page 3 of 7 ​ ​ ​

The total project cost is Rs. 732.03 Crs. and which is to be funded by promoter’s equity of Rs. 104.43 crores, term loan of Rs. 305.10 crores and NHAI grant of Rs. 322.50 crores.

KEY FINANCIAL INDICATORS Key Parameters Units FY21 FY22 FY23 FY24 Result Type Projected Projected Projected Projected Total Operating Income (Rs. Crs.) 0.00 73.08 74.32 74.87

EBITDA (Rs. Crs.) (1.11) 64.54 65.66 66.09 PAT (Rs. Crs.) (9.74) 0.28 1.67 2.91 Tangible Net Worth (Rs. Crs.) 94.8 95.00 96.7 99.6

Total Debt/Tangible Times 3.22 3.07 2.86 2.61 Net Worth

SPONSOR/PARENT COMPANY PROFILE Brij Gopal Construction Company Pvt Ltd (BGCCPL) was originally started as a partnership firm by Mr. Ram Gopal Goyal and his sons Mr. Vikram Goyal, Mr. Rajan Goyal and Mr. Raman Goyal in 1999. The partnership firm was then converted into a private limited company in 2009 and all the business of the firm was then transferred to BGCCPL. It is essentially an EPC contractor with operations in roads/highways, sewerage, storm water, drain water supply, works management including ancillary works and housing projects. The company has recently ventured into HAM projects as well.

For detailed rationale on Brij Gopal Construction Company Pvt. Ltd., click here. ​ ​

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED: The terms of sanction ​ normally includes standard covenants stipulated for bank loan facilities.

NON-COOPERATION WITH PREVIOUS RATING AGENCY IF ANY: NA ​

www.brickworkratings.com Page 4 of 7 ​ ​ ​

RATING HISTORY FOR THE LAST THREE YEARS Facilities Current Rating Rating History

Amount Tenure Rating 2019 2018 2017 (₹ Cr)

Long BWR BBB- (CE) (Stable) Fund Based 305.10 NA NA NA Term Assigned

Total 305.10 INR Three Hundred and Five Crores and Ten Lakhs Only

COMPLEXITY LEVELS OF THE INSTRUMENTS For more information, visit www.brickworkratings.com/download/ComplexityLevels.pdf ​

Hyperlink/Reference to applicable Criteria ● General Criteria ● Approach to Financial Ratios ● Short Term Debt ● Infrastructure Sector ● Credit Enhancement Based on Corporate Guarantee

Analytical Contacts Investor and Media Relations

Umang Pardasani Ratings Analyst Board: +91 80 4040 9940 Ext: 370 Liena Thakur [email protected] Assistant Vice President - Corporate Communications Vipula Sharma M : +91 84339 94686 Director – Ratings [email protected] ​ Board: +91 80 4040 9940 [email protected]

www.brickworkratings.com Page 5 of 7 ​ ​ ​

Jind Gohana Highway Pvt. Ltd. ANNEXURE I Details of Bank Facilities rated by BWR

Sl. Name of the Bank Type of Long Term Total No. Facilities ( Cr) ( Cr) ₹ ₹ ​

1. Punjab National Bank Term Loan 200.00 200.00 (Lead Consortium Member)

2. Consortium Member Term Loan 105.10 105.10

TOTAL 305.10

Total Rupees Three Hundred and Five Crores and Ten Lakhs Only.

For print and digital media The Rating Rationale is sent to you for the sole purpose of dissemination through your print, digital or electronic media. While it may be used by you acknowledging credit to BWR, please do not change the wordings in the rationale to avoid conveying a meaning different from what was intended by BWR. BWR alone has the sole right of sharing (both direct and indirect) its rationales for consideration or otherwise through any print or electronic or digital media.

About Brickwork Ratings : Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] ​ registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitisation Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partners. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, , Chennai, Hyderabad, Kolkata, Mumbai and along with representatives in 150+ locations.

DISCLAIMER Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and

www.brickworkratings.com Page 6 of 7 ​ ​ ​

BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.

www.brickworkratings.com Page 7 of 7 ​ ​ ​