Press Release

AVR Infra Private Limited

March 08, 2021
Ratings
Amount
Facilities Rating1 Rating Action
(Rs. crore)
16.50 CARE BBB-; Stable
Long-term Bank Facilities Reaffirmed
(Reduced from 18.50) (Triple B Minus; Outlook: Stable)
16.50
Total Facilities (Rs. Sixteen crore and fifty lakh
only)
Details of instruments/facilities in Annexure-1

Detailed Rationale & Key Rating Drivers

The rating assigned to the bank facilities of AVR Infra Private Limited (AVR) continues to derive strength from strong
promoter, IMC Limited (rated ‘CARE A; Stable/ CARE A1’) with established track record & experience in the bulk liquid
handling business and demonstrated support from the parent. However, the rating continues to be constrained by lower-
than-expected throughput in the terminal, the regulated nature of the business with tariff being fixed by the Tariff Authority
for Major Ports (TAMP), shorter length of the berth restricting the service to larger ships and competition from nearby ports
on the east coast.

Rating Sensitivities
Positive Factors - Factors that could lead to positive rating action/upgrade:
 Significant improvement in the scale of operations and achieve higher than the envisaged traffic on sustained basis

Negative Factors- Factors that could lead to negative rating action/downgrade:

 Any significant deterioration in the credit profile of the parent, IMC ltd

Detailed description of the key rating drivers

Key Rating Strengths
Strong promoter with experience in port-based business and continued support from the promoter
AVR is a part of the IMC group based out of Chennai. AVR is a joint venture between Chennai-based IMC Ltd and ITD
Cementation India Limited. The IMC group has total storage capacity of over one million kilolitres (KL) across 14 ports in the
country and is capable of handling all kinds of bulk liquid including crude oil, petroleum products, liquefied gases, chemicals,
vegetable oils and biofuels. IMC has been in business since 1935 and the promoters have more than five decades of
experience in liquid storage business. The IMC group has also gained expertise in developing and operating liquid cargo berth
by establishing the Marine Liquid Terminal at Ennore Port through its SPV, Ennore Tank Terminals Private Limited. ITD
Cementation is an infrastructure construction company with experience in building ports and terminals.

Continued support from promoter

The parent, IMC, is providing support to AVR in the form of loans & advances. The company has received sum of Rs.7.3 crore
from the parent, IMC Ltd, in FY20 (PY: Rs.9.5 crore [refers to the period April 1 to March 31]) and Rs.2.2 crore in H1FY21 in
the form of loan and advances. The total support provided by parent as on March 31, 2020 is Rs.90.5 crore (PY: Rs.83.1
crore). CARE expects the need-based support to AVR from IMC Ltd to continue in the future as well.

Key Rating Weaknesses

Off-take risk with low cargo throughput
IMC has presence in the port prior to setting up AVR terminal. IMC ltd also has storage tank terminals in Visakhapatnam port.
Majority of this tank capacity is connected AVR’s EQ-10 berth and the throughput/unloading of cargo for the same will be
routed through EQ-10 berth. The storage tanks with 18,000 kl capacity developed by AVR is also connected to EQ-10 berth.
The hinterland served by Visakhapatnam port includes aluminum, fertilizers, chemicals, pharmaceuticals and biodiesel
manufacturing companies.
However, the revenues of AVR remained marginal due to lower cargo throughput on lower demand as many of the projects
which were envisaged to come up in the hinterland has been delayed. For FY20, AVR reported TOI of Rs.3.9 crore and net loss
of Rs.14.9 crore. The total throughput of the company for FY20 was 3.93 lakh MT against capacity of around 1.5 MTPA.

1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.
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 Press Release

For H1FY21, AVR has reported TOI of Rs.1.3 crore and net loss of Rs.2.4 crore on account of lower cargo throughput due to
lower demand and slowdown due to Covid related lockdown especially in Q1FY21.The total throughput for H1FY21 stood at
1.37 lakh MT.

Competition from nearby ports

Visakhapatnam port faces competition from the nearby ports in the eastern coast which serves the same hinterland.
However, the nearby ports like Gangavaram port primarily concentrate on dry bulk cargo. Also in Visakhapatnam port,
currently there is no dedicated third party liquid cargo berth except for two captive liquid cargo berths for handling
petroleum oil lubricant (POL) products and exclusive jetty to discharge LPG . However, the risk of nearby ports establishing a
marine liquid berth still persists. Nevertheless, strong storage capacity of IMC group, augurs well for AVR which will place the
company in competitive position as against other ports. The shorter length restricts the ability of the berth to handle ships of
higher overall length (LOA). This limits the type/size of vessels which can be berthed.

Tariff determination by TAMP

Being a part of a major port, AVR’s tariff setting falls within the jurisdiction of the Tariff Authority for Major Ports (TAMP) and
is subject to regulatory ceiling of the same. As a result of the regulatory purview, AVR does not enjoy the flexibility available
to operators of private/ non-major ports to charge tariffs in line with their operating and capital costs and any delay in
revision of tariff by TAMP/any downward revision of tariff by TAMP would exert pressure on the company’s profitability.
However as per Major Ports Authority Bill, 2020 (which was passed in Rajya Sabha on February 09, 2021 which will supersede
Major Port Trusts Act, 1963) the major ports are expected to determine the tariffs for various port-related services as well as
the terms for private developers who team up with them.

Liquidity: Stretched
The company has reported after tax loss of Rs.14.9 crore and GCA of Rs.0.7 crore in FY20 as against scheduled repayment
obligations of Rs.7.5 crore in FY20. The parent, IMC Ltd, is supporting the company to meet its repayment obligations. The
company has received sum of Rs.7.3 crore from IMC Ltd in FY20. The company has free cash and bank balance of Rs.3.5 crore
as on March 31, 2020 and Rs.3.8 as on September 30, 2020. AVR has availed moratorium for principal and interest
repayment for three months from June- August 2020.

Analytical approach:
Standalone. Being part of IMC group, support received from IMC Limited has been factored in.

Applicable Criteria
Criteria on assigning ‘outlook’ and ‘credit watch’ to Credit Ratings
CARE’s Policy on Default Recognition
Rating Methodology: Factoring Linkages Parent Sub JV Group
Financial ratios – Non-Financial Sector
Rating Methodology - Infrastructure Sector Ratings
CARE’s methodology for Port Projects
Criteria for Liquidity Analysis of Non-Financial Sector Entities

About the Company

AVR was incorporated on March 30, 2010, as a joint venture between Chennai-based IMC Limited (which holds 74%) and ITD
Cementation India Limited (which holds 26%) to Design, Build, Finance, Operate and Transfer a berth for handling liquid
cargo (Class B & C chemicals including caustic soda, phosphoric acid, edible oil, bio-fuel, etc.) at Visakhapatnam port in
Andhra Pradesh. AVR has signed License Agreement (LA) with Visakhapatnam Port Trust (VPT) on August 16, 2010, on DGBOT
basis for a period of 30 years commencing from October 2011 for developing and maintaining the liquid cargo berth No. EQ-
10.
The project includes construction of a liquid cargo berth of 160 m length and 11.80 m deep. The project also includes
construction of tank terminals with a capacity of 18,000 kilolitres (KL) which is connected to this berth. It is be noted that the
IMC group already has storage tank terminal at Visakhapatnam and has been handling liquid cargo in this terminal for more
than three decades. The company started commercial operations from January 2017, onwards. The total project cost
incurred is Rs.91 crore funded by debt of Rs.42 crore and remaining through promoter’s contribution.

2 CARE Ratings Limited

 Press Release

Brief Financials (Rs. crore) FY19 (A) FY20 (A)

Total operating income 2.7 3.9
PBILDT 1.4 2.4
PAT -9.7 -14.9
Overall gearing (times) 3.30 2.71
Interest coverage (times) 0.48 1.66
A: Audited

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

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

Covenants of rated instrument / facility: Detailed explanation of covenants of the rated instruments/facilities is given in
Annexure-3
Complexity level of various instruments rated for this company: Annexure 4

Annexure-1: Details of Instruments/Facilities

Size of the Rating assigned
Name of the Date of Coupon Maturity
Issue along with Rating
Instrument Issuance Rate Date
(Rs. crore) Outlook
Fund-based - LT-Term
- - July 2022 11.50 CARE BBB-; Stable
Loan
Non-fund-based - LT-
- - - 5.00 CARE BBB-; Stable
Bank Guarantees

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)
2020-2021 2019-2020 2018-2019 2017-2018
CARE 1)CARE BBB- 1)CARE BBB- 1)CARE BBB-
Fund-based - LT-Term
1. LT 11.50 BBB-; - ; Stable ; Stable ; Stable
Loan
Stable (20-Mar-20) (22-Jan-19) (16-Feb-18)
CARE 1)CARE BBB- 1)CARE BBB- 1)CARE BBB-
Non-fund-based - LT-
2. LT 5.00 BBB-; - ; Stable ; Stable ; Stable
Bank Guarantees
Stable (20-Mar-20) (22-Jan-19) (16-Feb-18)

Annexure-3: Detailed explanation of covenants of the rated instrument / facilities: Not Applicable

Annexure 4: Complexity level of various instruments rated for this company

Sr.
Name of the Instrument Complexity Level
No.
1. Fund-based - LT-Term Loan Simple
2. Non-fund-based - LT-Bank Guarantees Simple

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity.
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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Email: jaganathan.a@careratings.com

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Email ID : pradeep.kumar@careratings.com

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