August 26, 2012 [Reuters] - The following statement was released by the rating agency.Fitch Ratings has assigned India-based Ennore Tank Terminal's senior bank loans of INR2,850m a National Long-Term rating of 'Fitch BBB+(ind)'. The Outlook is Stable.
Ennore Tank Terminal was set up to construct, operate, and maintain a marine liquid terminal at Ennore port consisting of jetty, trestle, pipelines, tank farm and related utilities, under a 30-year license agreement from Ennore Port Ltd on a build, operate and transfer model.
The project is sponsored by IMC group (around 88%) and L&T Infrastructure Development Projects Ltd (around 12%). The project cost of INR4,190m was met by a senior debt of INR2,850m, equity of INR990m and the balance through customer advances.
The rating benefits from a reasonably high degree of revenue visibility for the project given the geographical location advantages, the high demand for petroleum, oil and lubricant (POL) products in the port’s hinterland, and the contracts concluded with financially strong counterparties for various facilities offered by the terminal.
A 24-year contract with Indian Oil Petronas Ltd. (IOPL), a group company of Indian Oil Corporation Ltd., for transporting LPG from the jetty to the IOCL terminal located within a 5km distance from Ennore Port is expected to account for a significant portion of revenue.
Revenue from storage, handling and delivery services from tankage facilities should contribute to around 40% of revenue.
However, the company’s ability to conclude satisfactory off-take arrangements for a capacity of around 130,000kl will be key in realising expected levels of cash flows.
The rating also reflects IMC’s strong operational track record in handling third-party marine liquid terminals and tankage facilities at India’s major and minor seaports. The sponsor also carries out operation and maintenance under a fixed-price contract which is renewed every five years.
