Navayuga Bengalooru Tollways Private Limited - ICRA

Navayuga Bengalooru Tollways Private Limited
RATING HISTORY
Amount
Outstanding
Maturity date
Rating
Outstanding
Previous Ratings
March 2010
Rs. 5.39 billion Term Loans LBBB (stable) LBBB
ICRA has reaffirmed the rating of
LBBB (pronounced as L triple B) to
Rs. 5.39 billion term loan of
Navayuga Bengalooru Tollways
Private Limited (NBTPL) . The rating
carries stable outlook.
ICRA’s rating reaffirmation takes into
account the significant progress
made on the project and infusion of
significant amount of budgeted
capital. Further, the rating also
factors in the attractiveness of the
project on account of the high traffic
density on the route and low threat
from alternate/competing routes. The
rating is however constrained by the
delay in project execution thereby
shifting the commercial operation
date (COD) by around six months;
adverse impact of the increase in
Minimum Alternate Tax (MAT) rates
from 10% at the time of award of
project to 18% now. The rating
continues to factor in the sensitivity of
the project to traffic levels, adverse
movements in interest rates and
wholesale price index (WPI).
Navayuga Bengalooru Tollways
Private Limited (NBTL) is a SPV
promoted by Navayuga Engineering
Company Ltd. (NECL) to widen the
19.5 km stretch on NH4 connecting
Bangalore to Nelamangala. This
includes a 4-lane elevated stretch of
4.5 km and 6-laning of the remaining
For complete rating scale and
definitions please refer to ICRA’s website
www.icra.in or other ICRA rating
publications
15 kms. The project was awarded by
National Highways Authority of India
(NHAI) on Design, Engineering,
Finance, Construction, Operation and
Maintenance basis for a concession
period of 20 years including
construction period of 2 years. The
project stretch is part of the 700 km
NH 4 which connects Pune -
Belgaum - Hubli - Bangalore - Kolar
and Chennai, thereby traversing
through the states of Maharashtra,
Karnataka and Tamil Nadu. The
proposed access controlled highway
project from Bangalore to
Nelamangala is one of the high
density traffic corridors in Karnataka.
The traffic on NH 4 is contributed by
the high density traffic corridors like
NH 48 (Bangalore – Mangalore Port),
NH 206 (Tumkur - Honnavar Port),
NH 13 (Mangalore Port – Chitradurga
– Sholapur in Maharashtra), NH 209
(Mysore road) and NH 7. The project
road passes through predominantly
industrial area which includes
factories, transport companies,
schools, and petrol pumps. The
project highway connects Bangalore
to regions in Maharashtra and Tamil
Nadu, in addition to intersecting
highways connecting Mysore and
Hyderabad. There is no alternate
route for vehicles commuting along
this stretch. However, the project
viability remains exposed to the
actual traffic levels following the
economic downturn over the last few
years.
The COD of the project was
scheduled for November 2009 (as
per the terms of the concession
agreement which stipulated the
construction period of two years).
However, owing to the nonavailability
of land for part of the
project stretch, the construction
schedule has been revised and the
COD has been shifted to May 2010.
A small land portion still remains to
be provided by NHAI. Further, the
time extension and corresponding
extension of the concession period is
yet to be sanctioned by NHAI. The
EPC (Engineering, Procurement and
Construction) contract has been
awarded to the parent company,
Navayuga Engineering Company
Limited (NECL) on a fixed price
basis. Till date more than 95% of the
physical work has been done and the
outstanding work is mainly towards
small part of the elevated portion and
construction of toll plaza.
The total project cost has been
estimated at Rs. 7.19 billion. This
includes a negative grant of Rs. 200
million paid to NHAI. The project is
being funded by a debt of Rs. 5.39
billion and Rs. 1.79 billion of
promoters’ equity. Till date, entire
amount of budgeted equity of Rs.
1.79 billion has been infused by the
promoters and close to 99% of term
loan has been disbursed. The
repayment for the project debt has
been structured over 46 structured
quarterly instalments commencing
from 30th June 2010. While the
execution is satisfactory, any time
overrun beyond the proposed COD of
May 2010 can impact the debt
servicing. Further, the interest rate on
the term loan would be reset post
COD, thus exposing the company’s
profitability to any upward revision in

interest rate. Infrastructure projects
are entitled to pay tax at the MAT
rates (which is lower than the
corporate tax rate) and this is an
important contributor to the project
viability. With the increase in MAT
rates from 10% at the time of award
of the project (in May 2007) to 18%
now, the project viability has been
impacted.
Going forward, timely project
completion, prevailing tollable traffic,
interest rate on term loan and the
WPI movement (which determines
Key Facts
Promoter
Project Length
Total Project Cost
Key Dates
the revision in toll charges) would be
the key rating sensitivity factors.
Company Profile
Navayuga Bengalooru Tollways
Private Limited (NBTL) is a SPV
promoted by Navayuga Engineering
Company Ltd. (NECL) to widen the
19.5 km stretch on NH4 connecting
Bangalore to Nelamangala. This
includes a 4-lane elevated stretch of
4.5 km and 6-laning of the remaining
15 kms. The project has been
awarded by NHAI on Design,
Engineering, Finance, Construction,
Operation and Maintenance basis
with a concession period of 20 years
Navayuga Engineering Co. Ltd.
19.50 km
Rs. 7.19 billion
including construction period of 2
years. The commercial operation
date (COD) of the project was
scheduled for November 2009,
entailing a construction period of two
years. However, owing to the nonavailability
of land for part of the
project stretch, the construction
program has been revised and the
COD has been shifted to May, 2010.
There are six toll plazas located on
the project road and the toll rates are
linked to the annual WPI movement.
March 2010
Date of Signing CA 9th May, 2007
Appointed Date 3rd November 2007
Concession Period
Construction Period
20 Years (including Construction Period of 24 months)
24 months
Commercial Operation Date Revised from Nov, 2009 to May, 2010
EPC Contractors
O&M Contractor
Navayuga Engineering Company Limited
To be done in-house
Funding (Rs. billion)
Equity 1.79
Debt 5.39
Debt/Equity Ratio 3:1
Lead Banker
Oriental Bank of Commerce
Debt Repayment Period 46 Quarterly instalments commencing from 30 th June 2010
Negative grant to NHAI
Rs. 200 million
Parties involved
Design Consultants • JMI, a Malaysian Company for Elevated Portion
• Mr. Arvind Salecha, Structural consultant, Infrastructure Technology &
Consultancy Services
• Navayuga Engineering Construction Ltd.
Traffic Consultant
Nag Infrastructure Consulting Engineers P. Ltd.

NHAI’s Independent Consultant
Lender’s Engineer
Aarvee Associates Architects Engineers & Consultants P. Ltd. In JV with Bonfica SPA
Nag Infrastructure Consulting Engineers P. Ltd.
For further details please contact:
Analyst Contacts:
Mr. Vikas Aggarwal (Tel No. +91-124-4545300)
vikas@icraindia.com
Relationship Contacts:
Mr. Jayanta Chatterjee, (Tel. No. +91-80-43326401/ 098 450 22459)
jayantac@icraindia.com
© Copyright, 2010, ICRA Limited. All Rights Reserved.
Contents may be used freely with due acknowledgement to ICRA
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. The ICRA
ratings are subject to a process of surveillance which may lead to a revision in ratings. Please visit our website
(www.icra.in) or contact any ICRA office for the latest information on ICRA ratings outstanding. All information
contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although
reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’
without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or
implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein
must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from
any use of this publication or its contents

You can reach us at any of our offices:
Registered Office
ICRA Limited
1105, Kailash Building, 11th Floor, 26, Kasturba Gandhi Marg, New Delhi 110001
Tel: +91-11-23357940-50, Fax: +91-11-23357014
Corporate Office
Mr. Vivek Mathur
Mobile: 9871221122
Email: vivek@icraindia.com
Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91-124-4545350
Mumbai
Mr. L. Shivakumar
Mobile: 91-22-30470005/9821086490
Email: shivakumar@icraindia.com
3rd Floor, Electric Mansion, Appasaheb Marathe Marg,
Prabhadevi, Mumbai - 400 025
Ph : +91-22-2433 1046/ 1053/ 1062/ 1074/ 1086/ 1087
Fax : +91-22-2433 1390
Chennai
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: jayantac@icraindia.com
Email: Mr. K. Ravichandran
Mobile: 91-44-45964301/ 9940008808
Email: ravichandran@icraindia.com
5th Floor, Karumuttu Centre, 498 Anna Salai, Nandanam,
Chennai-600035.
Tel: +91-44-2433 3293/ 94, 2434 0043/ 9659/ 8080, 2433
0724, Fax:91-44-24343663
Ahmedabad
Mr. L. Shivakumar
Mobile: 9821086490
Email: shivakumar@icraindia.com
907 & 908 Sakar -II, Ellisbridge,
Ahmedabad- 380006
Tel: +91-79-26585494, 26582008,26585049, 26584924
TeleFax:+91-79- 2648 4924
Hyderabad
Mr. M.S.K. Aditya
Mobile: 9963253777
Email: adityamsk@icraindia.com
Kolkata
Ms. Anuradha Ray
Mobile: 91-33-22813158/9831086462
Email: anuradha@icraindia.com
A-10 & 11, 3rd Floor, FMC Fortuna, 234/ 3A, A.J.C. Bose
Road, Kolkata-700020.
Tel: +91-33-2287 6617/ 8839/ 2280 0008
Fax: +91-33-2287 0728
Bangalore
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: jayantac@icraindia.com
'The Millenia',
Tower B, Unit No. 1004, 10th Floor, Level 2, 12-14, 1 & 2,
Murphy Road, Bangalore - 560 008
Tel:91-80-43326400 Fax:91-80-43326409
Pune
Mr. L. Shivakumar
Mobile: 9821086490
Email: shivakumar@icraindia.com
5A, 5th Floor, Symphony, S.No. 210, CTS 3202, Range Hills
Road, Shivajinagar,Pune-411 020
Tel : (91 20) 2552 0194 -96; Fax : (91 20) 2553 9231
301, CONCOURSE, 3rd Floor, No. 7-1-58, Ameerpet,
Hyderabad 500 016.
Tel: +91-40-2373 5061 /7251 Fax: +91-40- 2373 5152