On Friday, Sadbhav Infrastructure Project also stated that toll revenues received from 10 operational road special purpose vehicles remained flat at Rs 267.88 crore in the second quarter of FY20, compared with Rs 268.55 crore in the corresponding period last year.
By Anwesha Ganguly
Two highway projects of the Sadbhav Group — the Rudrapur Highway project and the Bhavnagar Highway project — are likely to get further delayed due to land acquisition issues, sources said. Earlier this week, ratings agency Crisil downgraded the long-term facilities of both the projects on account of construction delays.
On October 23, Crisil downgraded the long-term bank facilities of Rs 354.24 crore of Sadbhav Rudrapur Highway to ‘BBB/Stable’ from ‘A-/Negative’. The long-term loan facilities worth Rs 434.49 crore of Sadbhav Bhavnagar Highway were also downgraded to ‘BBB+/Stable’ from ‘A/Negative’.
However, the National Highways Authority of India (NHAI) has extended the timeline for completion of both projects, sources said.
“A proper extension of timeline (EOT) has recently been given to both the projects, since there has been delay of land acquisition from the highway authority’s end,” a senior official told FE.
Following the downgrade, shares of Sadbhav Infrastructure Projects, the build-operate-transfer (BOT) arm of the group, fell 9.54% on October 24, closing at Rs 42.65. On Friday, shares of the company fell 1.06%, closing at Rs 42.20.
Crisil said that the long-term loans of Sadbhav Bhavnagar Highway was downgraded “because the project has not achieved provisional commercial operation date (PCOD) as per the scheduled timeline of August 2019 as heavy rains in the region further delayed project execution.”
A provisional COD is given by the NHAI when a project is substantially complete and commercially operable. In case of road projects, companies have to begin servicing of debt within a specified duration of receiving provisional COD.
The NHAI had earlier recommended that PCOD be given to the Bhavnagar project on completion of 33.98 km of the project. The Bhavnagar project stretches across 48 km. Ability of the company “to apply for PCOD by October 30, 2019, remains a key monitorable,”Crisil said.
Following land acquisition delays, Sadbhav had also applied for the de-linking of a 14.1 km stretch of the Bhavnagar project. This approval has also been given by the NHAI, the official quoted above said. Nitin Patel, executive director and CFO, Sadbhav Engineering, said the downgrades were “of no concern at all.”
Crisil downgraded the Rudrapur project, which stretches 44 km, due to the company’s inability to achieve PCOD by September. The debt disbursement to the project had slowed down and did not normalise till September, the ratings agency said. Construction has resumed, 30 km of the project has now been completed. “PCOD is now expected by October 2019. As per the current debt schedule, repayment is expected to start from October 2019, while the first annuity is expected only six months from PCOD, thereby project would have face a shortfall in meeting debt service obligations in the near term. Sadbhav Infrastructure Project is expected to support the project for its debt servicing,” Crisil said.
On Friday, Sadbhav Infrastructure Project also stated that toll revenues received from 10 operational road special purpose vehicles remained flat at Rs 267.88 crore in the second quarter of FY20, compared with Rs 268.55 crore in the corresponding period last year. The group, which is focused on infrastructure projects, had on October 19 announced the merger of Sadbhav Engineering with its subsidiary Sadbhav Infrastructure Project, subject to requisite approvals.