Close on the heels of losing the prestigious Hyderabad Metro project, there is more bad news in store for Maytas Infra. Credit rating agency ICRA has assigned an inadequate credit quality rating of LBB to Rs 202 crore long-term loan of Pondicherry Tindivanam Tollway Ltd (PTTL), a highway project being constructed by a special purpose vehicle of Maytas Infra Ltd and Nagarjuna Construction Co Ltd. The rating could translate into difficulty for the SPV in raising funds for the project.
?The rating is constrained by uncertainty over the funding of balance equity and debt given the fact that one of the project sponsors is facing liquidity problems, pending land acquisition in some areas and risk from alternative route namely East Coast Road,? as per a statement by ICRA.
The total project cost of constructing the Pondicherry Tindivanam Tollway is estimated at Rs 3.15 billion, to be funded by equity of Rs 0.67 billion and debt of Rs 2.02 billion. The National Highways Authority of India Ltd would also provide a grant of Rs 0.45 billion.
?An LBB rating to a bank line indicates that there’s a financial risk attached to the project. As a financial rating agency, we realise that one of the project partners – Maytas Infra ? is facing liquidity trouble. This can result in reluctance from banks and financial intermediaries in disbursing the balance amount, Vikas Aggarwal, senior vice president, ICRA, told FE.
ICRA, however, said, ?The rating takes into account the importance of the project stretch (part of National Highway-66 connecting Chennai with Pondicherry) as reflected in its established traffic density.? It also gave some consolation and said, ?Nevertheless, ICRA draws comfort from the fact that the project is proceeding as per schedule and PTTL has entered into a fixed price engineering, procurement and construction contract which reduces the cost over run risks to an extent.?
The project involves strengthening and four-laning of a 37.92-kilometre stretch on the Pondicherry-Tindivanam section of National Highway 66, in Tamil Nadu. It was awarded to the SOV in July 2007 by NHAI on a build-operate-transfer (toll) basis with a concession period of 30 years, from July 2007. The tollway is scheduled to begin functioning from July 2010.
Before it lost out on the Rs 12,200 crore Hyderabad Metro project, other Maytas Infra projects too have been facing trouble because of the company’s links with the scam tainted Satyam Computers Ltd. In April this year, ICRA had given a similar rating to another project being carried out by an SPV which included Maytas Infra and Himachal Sorang Power Pvt Ltd (HSPPL), in January.