Press Release

Adani Agri Logistics (Harda) Limited

January 06, 2020
Ratings
Amount 1
Facilities Ratings Rating Action
(Rs. crore)
Long term bank
- - Withdrawn
facilities*
Revised from CARE BBB+;
CARE A-; Stable/ CARE A2+
Long term/short-term Stable/ CARE A3+
2.15 (Single A Minus; Outlook:
bank facilities (Triple B Plus; Outlook- Stable/
Stable/ A Two Plus)
A Three Plus)
2.15
Total (Rupees Two Crore
Fifteen Lakh Only )
Details of facilities in Annexure-1
*CARE has withdrawn the rating assigned to the term debt, as there is no outstanding against the said facility and no due
certificate is received from the lender.

Detailed Rationale & Key Rating Drivers

The revision in the rating assigned to the bank facilities of Adani Agri Logistics (Harda) Limited (AALL-Harda) takes into
cognizance prepayment of the entire term debt of AALL-Harda through infusion of unsecured loans from ultimate parent,
Adani Ports and Special Economic Zones Limited (APSEZ; rated CARE AA+; Stable). Change in ultimate parentage from
Adani Enterprises Limited (AEL; rated CARE A; Stable/CARE A1) to APSEZ post stake sale of entities operating in agri
logistics business of AEL in March 2019 has enhanced financial flexibility of AALL- Harda given strong credit profile of
APSEZ and its established presence in ports and logistic segment.
The rating continues to take into account the operational status of its agri-warehousing facility of AALL-Harda with
established track record of receipt of storage charges and variable charges from Madhya Pradesh Warehousing and
2
Logistics Corporation [MPWLC; an undertaking of Government of Madhya Pradesh (GoMP )] and the established track
record of Adani group in agri-warehousing segment. The ratings further factor good mix of fixed and variable income with
fixed charges contributing around 70% in its total revenue along with a provision for revision in storage charges every
year to the extent of 75% of the Wholesale Price Index (WPI) movements.

The ratings, however, continue to remain constrained by inherent counterparty risk as well as operation and maintenance
(O&M) risk.

Rating Sensitivities:
Positive Factors:
 Improvement in the credit profile of the counterparty i.e. GoMP
Negative Factors:
 Significant delay in receipt of storage and variable charges and operational issues faced by the company
 Deterioration in the credit profile of the counterparty i.e. GoMP

Detailed description of the key rating drivers

Key Rating Strengths
Strong Parentage of APSEZ along with established track record in the ports and logistics segment
AALL-Harda drives strength from being a fellow subsidiary of APSEZ post acquisition of stake from AEL. APSEZ is the
largest player in India in the ports sector in terms of cargo handling and presence in multiple locations. Over the past few
years, APSEZ has diversified from a single port entity having presence on Western coast to one with multi-port operations
spread across both Western and Eastern coasts of India along with building an established presence in the integrated
logistics services sector. Further, the credit profile of APSEZ is strong marked by healthy profitability, strong operating
efficiency, diversified cargo mix, demonstrated project execution capabilities and comfortable liquidity.
Entities operating in agri logistics business has track record of operations in managing food-grain (mainly wheat and rice)
storage and handling (S&H) services to Food Corporation of India (FCI, rated CARE AA; Stable) and other state authorities.
The ultimate parentage of APSEZ along with experience in agri-warehousing business is expected to provide AALL-Harda
with the required financial flexibility and technical/managerial resources for ensuring its smooth operations.

1
Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.
2
Entity guaranteed by GoMP is rated ‘CARE A- (CE); Stable’
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 Press Release

Prepayment of entire term debt leading to significant improvement in the financial risk profile
Pursuant to the strategy of the ultimate sponsor APSEZ to realize the interest cost savings at consolidated level, entire
term debt of Rs.18.48 crore as on March 31,2019 has been prepaid through infusion of funds from the sponsor leading to
significant improvement in the financial risk profile of the company while also enabling addition to the cash surplus being
generated. The operations of the company have largely been self-sustainable since the past two years ended March 31,
2019.

Operational status of its agri-warehousing facility along with established track record of receipt of storage charges
from MPWLC
AALL-Harda commenced storage operation with effect from January 14, 2016 when it also received final commercial
operation date (COD). The project has a track record of over three years for receipt of storage charges from MPWLC with
payment mechanism stabilizing during the last year. For FY19, AALL-Harda received fixed and variable charges to the tune
of Rs.3.97 crore.

Healthy mix of fixed and variable charges

AALL-Harda is entitled to receive fixed charges, variable charges, procurement charges and associated service charges
during operational period as per terms of storage agreement (SA). AALL-Harda is entitled to receive fixed storage charges
on monthly basis upon ensuring 98% availability of the storage facility irrespective of its utilization. Further, AALL-Harda is
also entitled to receive variable charges, procurement charges upon notification by the GoMP and associated service
charges on monthly basis. Revenue stream is well diversified with good mix of fixed charges contributing around 70% of
the revenue and remaining through procurement charges, variable charges and other associated charges.
Liquidity: Adequate
The liquidity profile of AAL-Harda is underpinned from the fact that it has self-sustainable operations generating cash
surplus along with the need based access to the funds from its sponsors. With nil term debt outstanding and regular
receipt of charges from MPWLC, the liquidity position remains adequate. Further, AALL-Harda also derives financial
flexibility being a fellow subsidiary of APSEZ.

Key Rating Weaknesses

Counterparty risk
MPWLC being an undertaking of the GoMP and nodal agency for all warehouses in the State of Madhya Pradesh relies on
state finances and government grant to release the storage charges to AALL-Harda. Hence, MPWLC is exposed to state
finances risk. During FY17, the company received fixed and variable charges in 60 days. However, the payment
mechanism stabilized during FY18 post which the charges have been received within 25-30 days from the raising the
invoice. Furthermore, receipt of partial portion of grant is awaited from MPWLC.

Inherent O&M risk

The operational period of AALL-Harda is fraught with risk of higher than anticipated maintenance expenditure on its
storage facilities, and inherent risk in handling of food grains while maintaining stipulated specifications. AALL-Harda is
required to undertake major overhaul of silos but in no case more than once in every five years in accordance with a
schedule to be notified by it to the MPWLC at least one year in advance provided the overhaul shall not be scheduled
during the harvest season or during a period of six months following the harvest season. However, comfort can be
derived from the strong parentage, absence of term debt and financial flexibility of APSEZ.

Analytical approach: Standalone while taking into consideration strong parentage of APSEZ

Applicable criteria:
Criteria on assigning Outlook to Credit Ratings
CARE’s Policy on Default Recognition
Criteria for Short Term Instruments
Policy for Withdrawal of ratings
Rating Methodology – Factoring Linkages in Ratings
Financial Ratios – Non-Financial Sector

About the company

AALL-Harda is a special purpose vehicle (SPV) which was earlier floated by AEL during for the purpose of storage and
handling. Thereafter, during March, 2017, AEL formed an entity to hold the stakes in all the agri-logistics SPVs of AEL by
the name Adani Agri Logistics Ltd (AALL) which acquired the stake of AEL in the AALL- Harda.
During February 2019, APSEZ through its subsidiary Adani Logistics Ltd acquired 100% stake in AALL from AEL thus making
AALL-Harda its 100% fellow subsidiary of APSEZ.

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 Press Release

AALL-Harda had entered into a 30 year storage agreement (SA) on June 6, 2014 with MPWLC for the development of four
steel silos with capacity of 50,000 MT (12,500 MT each) for the storage of wheat and other agro commodities in Harda,
Madhya Pradesh on design-build-finance-operate and transfer (DBFOT) basis. The cost of the project was Rs.24.76 crore
which was funded with term loan of Rs.19.41 crore, and remaining through promoter contribution. AALL-Harda
commenced storage operations on January 14, 2016. AALHL commenced storage operations on January 21, 2016.
Brief Financials (Rs. Crore) FY18(A) FY19 (A)
Total operating income 3.14 2.79
PBILDT 1.75 1.51
PAT (0.57) (0.88)
Overall Gearing (times) 18.57 NM
Interest coverage (times) 0.80 0.67
A: Audited; NM- Not Meaningful
Note: AALL-Harda’s financials for FY19, FY18, are as per Ind-AS. The company has recognized financial assets as the
present value of fixed charges receivable under its concession (discounted based on effective interest rate method) and
interest income on these assets as it accrues during the period. Variable charges are recognized as revenue on actual
billing basis. Hence, interest coverage is less meaningful.

Status of non-cooperation with previous CRA: Not applicable

Any other information: Not Applicable

Rating History for last three years: Please refer Annexure-2

Annexure-1: Details of Facilities

Size of the
Name of the Date of Coupon Maturity Rating assigned along
Issue
Instrument Issuance Rate Date with Rating Outlook
(Rs. crore)
Term Loan-Long Term - - - 0.00 Withdrawn
Non-fund-based - LT/ ST- CARE A-; Stable / CARE
- - - 2.15
Bank Guarantees A2+

Annexure-2: Rating History of last three years

Current Ratings Rating history

Name of the Type Rating Date(s) & Date(s) & Date(s) & Date(s) &
Sr. Amount
Instrument/Bank Rating(s) Rating(s) Rating(s) Rating(s)
No. Outstanding
Facilities assigned in assigned in assigned in assigned in
(Rs. crore)
2019-2020 2018-2019 2017-2018 2016-2017
1)CARE BBB+; 1)CARE BBB; 1)CARE BBB /
1. Term Loan-Long Term LT - - - Stable Stable CARE A3+
(25-Sep-18) (05-Oct-17) (22-Sep-16)
1)CARE BBB+; 1)CARE BBB;
CARE A-; 1)CARE BBB /
Non-fund-based - LT/ Stable / CARE Stable / CARE
2. LT/ST 2.15 Stable / - CARE A3+
ST-Bank Guarantees A3+ A3+
CARE A2+ (22-Sep-16)
(25-Sep-18) (05-Oct-17)

Note on complexity levels of the rated instrument: 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
care@careratings.com for any clarifications.

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 Press Release

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Contact no.: +91-22-6837 4424
Email ID: mradul.mishra@careratings.com

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Email ID: maulesh.desai@careratings.com

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Contact no. : 079- 4026 5656
Email ID: deepak.prajapati@careratings.com

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recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE’s ratings
do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated entity. CARE has based its
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the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo
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