CARE Ratings - PDF document

1 1 CARE Ratings Limited Pres
1 CARE Ratings Limited Press Release Raxa Security Services Limited June 22, 2021 Ratings Facilities Amount (Rs. crore) Rating 1 Rating Action Long term Bank Facilities@ - - Rating continues to remain under ISSUER NOT COOPERATING category; Reaffirmed at CARE BB (CE); ISSUER NOT COOPERATING* [Double B (Credit Enhancement)] (ISSUER NOT COOPERATING*) and removed from Under Credit watch with Positive Implications and Withdrawn Long - term/Short - term Bank Facilities@ - - Rating continues to remain under ISSUER NOT COOPERATING category; Reaffirmed at CARE BB (CE) / CARE A4 (CE); ISSUER NOT COOPERATING* [Double B (Credit Enhancement) / A Four (Credit Enhancement)] (ISSUER NOT COOPERATING*) and removed from Under Credit watch with Positive Implications and Withdrawn Total - Details of instruments/facilities in Annexure - 1 @backed by unconditional and irrevocable corporate guarantee provided by GMR Infrastructure Ltd. (GIL) Detailed Rationale & Key Rating Drivers CARE has reviewed and has removed the ratings from credit watch with positive implications on account successful deal completion with France’s Group ADP for 49% shareholding in the group’s airport business. CARE has also reaffirmed the ratings assigned to the bank facilities of Raxa Security Services Limited (RSSL) at CARE BB (CE)/ CARE A4 (CE); Issuer Not Cooperating and simultaneously withdrawn, with immediate effect. CARE has reviewed the ratings on the basis of best available information which however, in CARE’s opinion is not sufficient to arrive at a fair rating. The rating withdrawal is at the request of RSSL and ‘No Objection Certificate’ received from the banks that have extended the facilities rated by CARE. Detailed description of the key rating drivers At the time of last rating on April 06, 2020 the following were the rating strengths and weaknesses (updated for the information available from Registrar of Companies and stock exchange): Key Rating We aknesses of corporate guarantor - GIL Below av erage financial risk profile GIL continues to have below average financial risk profile on a consolidated basis. The total operating income of GIL increased from Rs. 7,931 crore in FY19 to Rs. 8,665 crore in FY20 . The company continues to make losses at the net level , though reduced to Rs. 2,198 crore as against Rs. 3,466 crore as on March 31, 2019 . The capital structure of the company continues to be highly leveraged with increase in debt levels of the company on account of incremental borrowing for meet ing debt servicing requirements and e rosion of net w o rth due to increased losses at the net level. Challenging environ ment for group’s energy assets The group’s energy assets continued to face challenging operating environment with low PLF levels resulti ng in lower than expected profitability and cash accruals. During FY20, one of the coal - based energy assets GMR Warora Energy Limited (GWEL) reported a PLF of 7 9 %. Also, the gas - based energy assets continued to operate at low PLF levels due to uncertainty over gas supply. Continued subdued performance of group’s energy assets has a bearing on the total cash generation, leading to weak liquidity position. Key Rating Strengths of corporate guar

2 antor - GIL Experienced promoters with
antor - GIL Experienced promoters with long track record GIL is the holding company for infrastructure business of GMR Group promoted by Mr G M Rao in 1978 having experience of more than three decades. The group has established track record in project execution with diversified portfolio of assets in energy, air ports, roads and urban infrastructure business. 1 Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 2 CARE Ratings Limited Press Release Dem onstrated ability to raise funds Over the years GIL has demonstrated the ability to raise funds to support the projects under its subsidiaries as well as meet debt obligations including divesting stake u nder its various highway projects, Maru and Aravali transmission projects , entering into strategic partnership with Tenaga Nasional Berhad in GEL and raising additional debt among other s to support the liquidity position of the company. Further, GIL ha d a nnounced the strategic partnership with France’s Groupe ADP for its airports business. The proposed partnership has been executed and as per the share purchase agreement, Group ADP hold s 49% stake in G MR Airports Limited (G A L). The earlier deal with consor tium of TATA - GIC - SSG has been called off . GAL has received both first and second tranche amounting to Rs. 9,813 crore for the acquisition of GAL. Analytical approach: The rating of Raxa is based on the assessment of the corporate guarantor i.e. GIL as the rated facility is backed by credit enhancement in form of unconditional and irrevocable corporate guarantee from GIL. Applicable Criteria Policy in respect of Non - cooperation by issuer Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition CARE Methodology on Credit enhanced debt Rating Methodology - Short term rating Rating Methodology - Infrastructure Financial ratios - Non - financial sector Policy for Withdrawal of Ratings About the Company - Raxa Security Services Limited Raxa, a GMR group company was originally incorporated in 2005, under the name of ‘Raxa Security Services Private Limited’, and subsequently changed to Raxa Security Services Limited after the company changed its legal stru cture and was converted into a public limited company. Besides its core business of manned security guarding services, Raxa offers a range of service s including consultancy services for integrated security solutions, technical security to Industrial and Bu siness establishments, planning and execution of security systems for major events including sports, international conference, etc. Raxa also has an institute in the name of Raxa academy to train marshals for high level security. Raxa is manned by technica l professionals with long years of experience drawn from police and defence forces. Brief Financials (Rs. crore) FY19 (A) FY 20 (A) Total operating income 186.44 204.45 PBILDT 34.91 40.99 PAT 7.26 6.54 Overall gearing (times) 4.00 3.77 Interest coverage (times) 1.12 1.31 A: Audited About the Corporate Guarantor - GMR Infrastructure Limited GIL is the holding company for the infrastructure business of the GMR

3 group which is a leading business house
group which is a leading business house having significant interest in Infrastructure Sector viz. Airport, Power, Road etc. 6 2.61 % stake in GIL is held by the promoters and promoter group companies which in turn are closely held by Mr G M Rao & family as on March 31, 20 21 . U nder the airports segment GMR had three operating airports with ann ual capacity of close to 83 million passengers per annum. Under the energy segment, the company has operational power generation capacity of 4,636 MW under various coal, gas and solar projects. Under the highways segment, the company has 6 operational proj ects with 4 projects aggregating 285 Kms on annuity basis while the remaining 2 projects aggregating 216 Kms are toll projects. GIL also has an Engineering, Procurement and Construction (EPC) business which it commenced in FY10 as a separate operating div ision mainly to cater to the requirements for implementing the projects undertaken by the subsidiaries. Brief Financials (Rs. crore) FY1 9 (A) FY 20 (A) Total operating income 7,931 8,655 PBILDT 2,067 2,740 PAT - 3, 466 - 2,198 Interest coverage (times) 0.77 0.77 A: Audited Status of non - cooperation with previous CRA: Not Applicable Any other information: Not Applicable 3 CARE Ratings Limited Press Release Rating History for last three years: Please refer Annexure - 2 Annexure - 1: Details of Instruments/Facilities Name of the Instrument Date of Issuance Coupon Rate Maturity Date Size of the Issue (Rs. crore) Rating assigned along with Rating Outlook Non - fund - based - LT/ ST - Bank Guarantees - - - 0.00 Withdrawn Term Loan - Long Term - - - 0.00 Withdrawn *Issuer did not cooperate; Based on best available information Annexure - 2: Rating History of last three years Sr. No. Name of the Instrument/Bank Facilities Current Ratings Rating history Type Amount Outstanding (Rs. crore) Rating Date(s) & Rating(s) assigned in 2021 - 2022 Date(s) & Rating(s) assigned in 2020 - 2021 Date(s) & Rating(s) assigned in 2019 - 2020 Date(s) & Rating(s) assigned in 2018 - 2019 1. Non - fund - based - LT/ ST - Bank Guarantees LT/ST - - - 1)CARE BB (CE) / CARE A4 (CE) (CWP); ISSUER NOT COOPERATING* (06 - Apr - 20) 1)CARE BB (SO) / CARE A4 (SO) (CWP) (05 - Apr - 19) - 2. Term Loan - Long Term LT - - - 1)CARE BB (CE) (CWP); ISSUER NOT COOPERATING* (06 - Apr - 20) 1)CARE BB (SO) (CWP) (05 - Apr - 19) - *Issuer did not cooperate; Based on best available information Annexure 3 : Complexity level of various instruments rated for this Company Sr. No. Name of the Instrument Complexity Level 1. Non - fund - based - LT/ ST - Bank Guarantees Simple 2. Term Loan - Long Term Simple *Issuer did not cooperate; Based on best available information N ote on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to care@careratings.com for an

4 y clarifications. 4 CARE Ratin
y clarifications. 4 CARE Ratings Limited Press Release Contact us Media Contact Name: Mradul Mishra Contact no. – + 91 - 22 - 6837 4424 Email ID – mradul.mishra@careratings.com Analyst Contact Name – Puneet Kansal Contact no. - 011 - 45333225 Email ID - punee t.kansal@careratings.com Relationship Contact Name: Swati Agrawal Contact no. : 011 - 45333200 Email ID : swati.agrawal@careratings.com About CARE Ratings: CARE Ratings commenced operations in April 19 93 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by t he Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their vario us requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk - return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodolo gies congruent with the international best practices. Disclaimer CARE’s ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE’s rati ngs do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated entity. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, howe ver, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. CARE or its subsidiaries/associates may also have other commercial transactions with the entity. In case of partnership/proprietary concerns, the rating /outlook assign ed by CARE is, inter - alia, based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/ proprietor in addition to the financial performance and other relevant factors. CARE is not responsible for any errors and states that it has no financial liability whatsoever to the users of CARE’s rating. Our ratings do not factor in any rating related trigger clauses as per the terms of the facility/instrument, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and if triggered, the ratings may see volatility and sharp downgrades. **Fo r detailed Rationale Report and subscription information, please contact us at www.careratings.com