The rating on Rs 775.16 crore of fund and non-fund based bank facilities of GMR Infrastructure Ltd’s Chennai Outer Ring Road project (GCOPL) have been revised downwards by CARE Ratings to CARE BBB minus from CARE BBB.
In a note, the ratings agency said the revision in rating of GCOPL follows revision in rating of GMR Infrastructure Limited (GIL) from CARE BBB/A3+ to CARE BBB-/A3. CARE said that the ratings were based on the credit enhancement in the form of unconditional and irrevocable additional sponsor support agreement extended by GMR Infrastructure Limited and GMR Highways Ltd to fund GCOPL’s obligation towards debt servicing for the fund based bank facilities. It was also in the form of unconditional and irrevocable corporate guarantee from GIL to meet obligations towards debt servicing for the non-fund based bank facilities.
In September, CARE had revised GIL’s ratings factoring in the continuing challenging operating environment for the group’s energy assets in which major share of the group’s capital is employed affecting the cash generation and ultimately the group’s financial risk profile.
Incorporated on July 21, 2009, GCOPL is a special purpose vehicle promoted by GIL & associates, with GIL holding 80% stake. The balance equity is held equally by GMR Energy Limited and NAPC Limited. GCOPL was formed for the purpose of 6-laning dual carriage way of Vandalur to Nemilichery section of 29.65 km of Outer Ring Road in Chennai city on Design, Build, Finance, Operate and Transfer (DBFOT) on annuity basis, awarded by Government of Tamil Nadu.
On September 23, CARE had also downgraded long-term and short-term bank facilities of a road project of the company— GMR Hyderabad Vijayawada Expressways Pvt. Ltd. (GHVEPL) to CARE D or default rating. The rating revision, CARE said was assigned taking into the account on-going delays in servicing of debt obligations and persistent cash losses on account of lower than anticipated toll revenue from the project.