RATING RATIONALE

17 April 2020

DP Jain Ujjain Package (Annuity) Road Projects Pvt Ltd

Brickwork Ratings revises the long-term ratings for the Bank Loan Facilities of Rs 110.16
crs of DP Jain Ujjain Package (Annuity) Road Projects Pvt Ltd

Particulars:

Amount
(Rs. Crs.) Rating*
Facilities** Tenure
Previous
Previous Present Present
(Mar 2019)
Fund Based BWR A (SO) BWR A-
123.92 110.16 Long Term
Term Loans (Stable) (Stable)
Total 123.92 110.16 One Hundred and Ten Crores Sixteen Lakhs Only
Note​: ​Structured Obligation rating has been assigned earlier based on credit enhancement in the form of an escrow account for the
routing of annuities for servicing term loan installments and build up of DSRA.
In accordance with the latest SEBI Cir. No. SEBI/HO/MIRSD/ DOS3/CIR/P/2019/70 dated 13 June 2019, a standalone rating has been
assigned as no credit enhancement can be derived from the DSRA /escrow mechanism as per these guidelines.
The above change in the rating is not to be construed as a revision in the rating.

RATING ACTION:
In accordance with the circular issued by the Securities and Exchange Board of India (SEBI) on 13 June
2019, titled Guidelines for Enhanced Disclosures by Credit Rating Agencies (CRAs), and subsequent
clarifications received, Brickwork Ratings (BWR) has changed its criteria with respect to Structured
Obligation Ratings and issued fresh criteria for Credit Enhancement Ratings. In light of these changes,
the structured obligation (SO) rating as per the above table has been changed to a standalone rating for the
bank loan facilities amounting to Rs. 110.16 Crs.
The SO rating has been assigned earlier on the basis of the comfort derived from the annuities being
routed through an escrow account for servicing term loan installments and the availability of DSRA. In
accordance with the latest SEBI Cir. No. SEBI/HO/MIRSD/ DOS3/CIR/P/2019/70 dated 13 June 2019, a
standalone rating has to be assigned as no credit enhancement can be derived on the basis of the comfort
of the DSRA and escrow mechanism as per the guidelines.

The rating takes into account the timely receipt of annuities from the Madhya Pradesh Road Development
Corporation Limited (MPRDC) till date, timely debt servicing and the DSRA being maintained equivalent
to 6 months of interest and principal obligation during the tenure of the loan. The rating also continues to
factor in promoters’ experience in the execution and maintenance of infrastructure projects, low revenue
risk on account of the annuity payments being received as per the concession agreement. The rating is,
however, constrained by inherent maintenance risks associated with BOT projects and any unforeseen

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likelihood of a delay in future annuity receipts from MPRDC. The company is also exposed to the risk of
timely implementation of the major maintenance activity without cost overruns.

The Stable outlook has been assigned as BWR believes the business risk profile of ​DP Jain Ujjain
Package (Annuity) Road Projects Pvt Ltd ​will be maintained over the medium term.

KEY RATING DRIVERS

Credit Strengths:
● Experienced promoters/ Sponsor Company - ​D P Jain & Co Infrastructure Pvt Ltd is the parent
company, which is also the EPC contractor for the SPV. The promoters of D P Jain & Co
Infrastructure Pvt Ltd have extensive experience in the infrastructure, EPC and BOT industry.
● Annuity-based revenue model with fixed semi-annual annuities from MPRDC - ​The SPV
receives fixed semi-annual annuities of Rs 14.72 Crs during April and October every year. The
SPV has been receiving annuities from Madhya Pradesh Road Development Corporation Limited
(MPRDC) on time as per schedule. The company has so far received 11 annuity installments.
● Presence of Salient features such as DSRA maintenance - ​DSRA equivalent to 6 months
principal and interest has to be maintained during the tenor of the loan, which further provides
support for meeting the debt obligations in a timely manner.
● Annuity receipts routed through escrow mechanism for servicing term loan obligations​- The
annual annuity receipts of Rs 29.44 Crs per annum are being routed through an escrow account
with a defined waterfall mechanism, ensuring timely servicing of debt

Credit Risks:
● Inherent maintenance risks associated with BOT projects- ​The SPV faces the inherent
maintenance risks associated with BOT projects. As per the terms of the concession agreement
with MPRDC, the concessionaire is responsible for the maintenance of the project road stretch for
the entire concession period so as to be eligible to receive the full annuity without any deduction
by the concessioning authority. The second major maintenance activity is expected to be
undertaken in FY26, towards which the total cost is estimated to be around Rs 7.22 crs.
Therefore, the timely creation of the reserve and implementation of the major maintenance
activity shall remain a key monitorable.
● Timely receipt of annuities in future​- The prompt payment of annuities by MPRDC in future
for servicing loan obligations is another key rating monitorable.

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ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has considered the standalone financials of the SPV and cash
flow from the annuity receipts from the MPRDC.
BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided
at the end of this rationale).

RATING SENSITIVITIES

Going forward, the timely receipt of future annuities, which is crucial for ensuring that adequate
liquidity of the company is available to meet debt repayment and debt servicing through an
escrow mechanism with the timely provision for and execution of maintenance work as
mandated by the concession agreement, will be key rating sensitivities.

● Positive: ​In case the SPV continues to receive the annuity payment in a timely and
sustained manner, leading to reduced debt equity level and improved coverage indicators,
and the timely implementation of the periodic maintenance as per the schedule

● Negative: ​Delays in the receipt of future annuities, weakening in the credit profile of the
sponsor company or parent company and deterioration in the credit profile of MPRDC
which is the counterparty

LIQUIDITY INDICATORS

Adequate: The liquidity is adequate as the company will receive an annuity income of Rs 29.44
crs, and the debt obligations would be in the range of Rs 24 crs- 27 crs for the next 5 years. The
company has maintained Fixed Deposits of Rs 16.55 crs as on 31 March 2019 to meet the DSRA
stipulation, which further provides liquidity support for any mismatches in the timing of the cash
flows. The company has opted to avail the three-month moratorium period, as allowed by the
banks as per RBI guidelines. However, the next repayment is due on 31 July 2020, due to which,
there will not be any impact on liquidity/finance costs and the next annuity will also be available
by then in the escrow account, which would be adequate to meet the debt obligations.

Company Profile - ​DP Jain Ujjain Package (Annuity) Road Projects Pvt Ltd
D P Jain Ujjain Package (Annuity) Road Projects Pvt Ltd, a Special Purpose Vehicle (SPV) incorporated
and owned by D P Jain & Co Infrastructure Pvt Ltd has entered into a 15-year Concession Agreement
with MPRDC ​for the Build, Operate and Transfer (BOT) (Annuity basis) of three stretches of Major
District Roads (MDR) having a combined length of 94.46 Kms. The Ujjain project of the MPRDC
comprises of strengthening, widening, maintaining and operating of Devgularjod – Arandia (34.96 km),
Pipliya – Manasa (40.19 km) and Salsalai – Gulana – Gulai Railway Station (19.31 km) roads in Madhya
Pradesh. The Concession period of 15 years includes a construction period of 730 days from the
appointed date. The company completed the project on 30th April 2014 against the scheduled commercial
Operation Date (COD) of 6th September 2014. It is entitled to annuity payments from MPRDC to the

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 tune of Rs. 29.44 Cr per year (payable semi-annually) from 2015 to 2027, subject to the company meeting
all the requirements as per the Concession Agreement. The SPV so far has received 11 annuity
installments in a timely manner.

KEY FINANCIAL INDICATORS

Company - DP Jain Ujjain Package (Annuity) Road Projects Pvt Ltd

Key Financial Indicators Units FY18 FY19
Result Type Audited Audited
Annuity Income Rs.Crs. 29.44 29.44
Operating Profit Rs.Crs. 27.25 28.26
PAT Rs.Crs. 0.71 2.44
Tangible Net Worth Rs.Crs. 27.39 29.83
Total Debt/ Tangible Net worth Times 4.98 4.15
Current Ratio Times 1.31 1.58

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED: ​The terms of sanction

normally include standard covenants stipulated for bank loan facilities. The cash flows of the
company are routed through an escrow account, along with a DSRA stipulation equivalent to two
quarters of debt servicing.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY IF ANY : Nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS

Sl.
Facility Current Rating (2020) Rating History
No.
Tenure Amount Rating Mar 2019 Dec 2017 July 2016
(Rs Crs)
1 Fund based Long term 110.16 BWR A- BWR A (SO) BWR A (SO) BWR A-(SO)
Limits (Stable) (Stable) (Stable) (Stable)
Reaffirmed Upgraded Reaffirmed

Total 110.16 One Hundred and Ten Crores Sixteen Lakhs Only
Note​: ​Structured Obligation rating has been assigned earlier based on credit enhancement in the form of escrow account for routing of
annuities for servicing of term loan installments and build up of DSRA.
In accordance with the latest SEBI Cir. No. SEBI/HO/MIRSD/ DOS3/CIR/P/2019/70 dated June 13, 2019, a standalone rating has been
assigned as no credit enhancement can be derived from the DSRA /escrow mechanism as per these guidelines.
The above change in the rating is not to be construed as a revision in the rating.

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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
● Infrastructure Sector
● Credit Enhancement

Analytical Contacts Investor and Media Relations

Nirav A Shah
Analyst
Board: ​022​ - ​28311426​ Ext: ​676
Liena Thakur
nirav.shah@b​rickworkratings.com
Assistant Vice President - Corporate Communications
+91 84339 94686
Vipula Sharma
liena.t@brickworkratings.com
Director​ ​– Ratings
Board: 080 - 40409940 Ext: 330
vipula.s@brickworkratings.com

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 DP Jain Ujjain Package (Annuity) Road Projects Pvt Ltd

ANNEXURE I
Details of Bank Loan Facilities rated by BWR

Type of Total O/s Debt*

Sr No. Bank Name Tenure
Facility (Rs. Crs.)
1. State Bank of India Term Loan Long Term 110.16
Total rated Limits 110.16
*O/s Debt as on 31 March 2020

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About Brickwork Ratings​: Brickwork Ratings Private limited (BWR), a SEBI registered Credit Rating Agency,
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DISCLAIMER: Brickwork Ratings Private Limited (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 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

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