Fitch rates Madurai loans BB(ind)

Fitch Ratings said it assigned Madurai Municipal Waste Processing Co. Pvt. Ltd.'s project bank loans of Rs. 232.6 million a national long-term rating of BB(ind).

The outlook is stable.

The company is a special purpose vehicle fully-owned by the Subhash Projects group that has secured a 20-year concession from Madurai Municipal Corp. to dispose municipal solid waste.

The rating is constrained by the project's residual completion risk, from a lack of firm off-take arrangements for almost half the forecasted revenue, an absence of definitive contractual arrangements governing receipt of governmental grants for construction, weak financial covenants and structural features in the project debt, Fitch said.

However, fixed-price EPC contracts, an infusion of sponsor equity and 'availability' payments contractually assured by the municipal counterparty support its credit profile, the agency said.

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