ORIENTAL NAGPUR BYPASS CONSTRUCTION PVT.

LIMITED
Ratings Facilities Long-term Bank Facilities Total Facilities Rating Rationale The rating draws support from the financial strength and technical expertise of the promoters, availability of significant Right of Way (RoW) and satisfactory progress achieved on the project, fixed-price Engineering, Procurement and Construction (EPC) contract with Oriental Structural Engineers Pvt. Ltd. (OSE) and the sponsors undertakings towards funding of the project cost overrun and shortfall in the resources, if any. The rating is however constrained by the project execution risk the project being in the construction phase, pending approval for the diversion of forest land and complexity of the project involving the construction of three Railway Over Bridges (ROB). The rating further factors in the inherent revenue risk associated with a tollbased road project. Timely receipt of the construction grant from National Highways Authority of India (NHAI), timely receipt of pending RoW, completion of the project without cost or time overrun and growth in the toll rate and traffic as envisaged shall remain the key rating sensitivities. Background ONBC is a Special Purpose Vehicle (SPV) promoted by OSE (rated CARE A/CARE A1) with 26% stake and Oriental Tollways Private Limited (OTPL, 74% stake) for augmentation of two-lane carriageway of the existing section of NH-7 from km 652.0 to km 704.2 to a four-lane carriageway including the construction of new four-lane bypass of 42.8 km and maintenance of existing four-lane carriageway of NH-7 from km 14.6 to km 36.6 under National Highways Development Programme (NHDP) Phase II of NHAI (Rated CARE AAA) on Design, Build, Finance, Operate and Transfer (DBFOT - Toll) basis. As per the Concession Agreement (CA) signed between NHAI and ONBC in October 2009, the concession period is 27 years (including a construction period of 2.5 years) from the Appointed Date (which is April 03, 2010). The scheduled completion date for the project is September 29, 2012. The total project cost of Rs.1971.3 cr is being financed with the promoters equity of Rs.227.4 cr, grant from NHAI aggregating Rs.455.2 cr, senior debt of Rs.1238.7 cr and subordinate debt of Rs.50 cr with a debt-equity ratio of 1.89x. Credit Risk Assessment Experienced and resourceful Promoters OSE has completed a number of projects pertaining to the infrastructure development, specializing in the highways and runways. OSE has experience in the construction and operation of roads and highways through its following SPVs, all of them on BOT basis and are currently operational: Rewa Pathways Pvt. Ltd., Oriental Pathways (Nagpur) Pvt. Ltd. (OPNL rated CARE BBB-), Oriental Pathways (Agra) Pvt. Ltd. (OPAL rated CARE BBB) and Oriental Pathways (Indore) Pvt. Ltd. (OPIL rated CARE BBB). OSE achieved a turnover of Rs.749 cr with a PAT of Rs.57 cr for FY10 and had a networth of Rs.536 cr as on March 31, 2010. OSE also had an outstanding order book of Rs.5,009 cr as at January 31, 2011. OTPL is a wholly owned subsidiary of OSE and holds minority stake in OPNL, OPIL and OPAL. Availability of substantial RoW and progress achieved on the project ONBC has received ROW for approximately 66% of land as on July 4, 2011 while the acquisition of balance land including the forest land is under process with the State and Central governments. ONBC has also received all the major clearances including the environmental clearances from various authorities. As per the LE report for the month of June 2011, the physical progress of the project has been measured at 62.69% against the scheduled progress of 39.37% (4 months ahead of the scheduled date) while financial progress was 64.12%. Further, as on July 04, 2011, ONBC has spent Rs.1154 cr funded through the equity contribution of Rs. 228 cr, debt aggregating Rs.752 cr and grant from NHAI of Rs.174 cr. Amount (Rs. crore) 1013.68 1013.68 Ratings1 CARE BBB [Triple B] Remarks Assigned

Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications

Fixed price EPC contract ONBC has entered into a fixed price development contract with OSE at an agreement price of Rs.1784 cr. The contract has relevant clauses to claim requisite damages from the developer in case of non-fulfilment of obligations by the developer. Sponsors undertaking to fund any cost overruns The promoters have provided that any overrun in the project cost, over and above the base case project cost shall be arranged by them. Further, the promoters have provided an undertaking to fund any shortfall in the resources including non-receipt of grant from NHAI. Project Execution risk and pending approvals for the forest land Though the present progress on the project is satisfactory, risks pertaining to the residual project implementation as well as the land acquisition remain. ONBC has received RoW for 66% of land while the clearance for remaining land is still awaited. Also, there are some bottlenecks with regard to the land acquisition for ROB no. 1 and2 which could affect the progress of the project. Revenue risk associated with the toll projects Being a toll-based project, ONBC is exposed to the inherent revenue risks arising from the traffic fluctuations and annual revision of the toll rates. To provide cushion for the debt payments against such variability in the revenue, the CLA requires ONBC to maintain a DSRA equivalent of one quarters repayment obligations.
DISCLAIMER CAREs 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.

CARE is headquartered in Mumbai, with Offices all over India. The office addresses and contact numbers are given below:

HEAD OFFICE: MUMBAI

Mr. D.R. Dogra Managing Director Cell : +91-98204 16002 E-mail : dr.dogra@careratings.com Mr. P N Sathees Kumar Executive Vice President Marketing Mobile: +91-9820416004 mail:sathees.kumar@careratings.com Mr. Rajesh Mokashi Dy. Managing Director Cell : +91-98204 16001 E-mail: rajesh.mokashi@careratings.com Mr. Ankur Sachdeva Vice President Marketing (SME) Mobile: +91-9819698985 E-mail: ankur.sachdeva@careratings.com

4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai 400 022 Tel.: (022) 67543456 Fax: (022) 67543457 Website: www.careratings.com

OFFICES
Mr.Mehul Pandya Regional Manager 32 TITANIUM Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015. Tel: 079 4026 5656 Mobile: 98242 56265 E-mail: mehul.pandya@careratings.com Mr. Pradeep Kumar Regional Manager Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Tel: 044 2849 7812/2849 0811 Mobile: 98407 54521 E-mail: Pradeep.kumar@careratings.com Mr. Sukanta Nag Regional Manager 3rd Floor, Prasad Chambers (Shagun Mall Building) 10A, Shakespeare Sarani Kolkata - 700 071. Tel: 033 2283 1800/1803 Mobile: 98311 70075 E-mail: sukanta.nag@careratings.com Mr.Sundara Vathanan Regional Manager Unit No. 8, I floor, Commander's Place No. 6, Raja Ram Mohan Roy Road, Richmond Circle, Bangalore - 560 025. Tel: 080 2211 7140 Mobile: 98803 60878 E-mail: sundara.vathanan@careratings.com Mr. Ashwini Jani Regional Manager 401, Ashoka Scintilla 3-6-520, Himayat Nagar Hyderabad - 500 029. Tel: 040 40102030 Mobile: 91600 74789 E-mail: ashwini.jani@careratings.com Ms.Swati Agrawal Regional Manager 3rd floor, B-47, Inner Circle Near Plaza Cinema Connaught Place New Delhi 110 001. Tel: 011 2331 8701/2371 6199 Mobile: 98117 45677 E-mail: swati.agrawal@careratings.com