The Hindu Business Line : MSRDC hopeful of clinching securitisation deal

DESPITE doubts expressed in certain quarters, including banking circles, the Maharashtra Government-owned Maharashtra State Road Development Corporation Ltd (MSRDC), which constructed and operated India's first expressway, the Mumbai-Pune expressway, is optimistic about clinching what could be India's biggest securitisation deal.

MSRDC, which has invited bids from private companies for securitising the future cash inflows from the 94-km Mumbai-Pune expressway and the 111 km stretch of the NH 4 that runs parallel to the expressway for a period of 15 years against a minimum upfront payment of Rs 900 crore, uncorked its first road show in Mumbai on Monday.

"Seven companies, including Indian companies like L & T, Punj Lloyd and IL & FS and foreign companies like Malayasia-based IGM, have shown interest in the project. We expect at least 15 to 20 companies to participate in the tender," Mr A.K. Lakhina, MSRDC's Vice-Chairman and Managing Director, told press persons.

MSRDC has invited the bids for tolling, operation and maintenance of the Mumbai-Pune expressway and widening, tolling, operation and maintenance of the existing two-lane NH4 section of Mumbai to Pune against a minimum upfront payment of Rs 900 crore. The company expects to wrap up the bidding process and ink securitisation deal by February-end or early March this year. The project would include widening of the NH 4 section into a four-lane road at a cost of Rs 200 crore and improvements on the Mumbai-Pune expressway at a cost of Rs 21 crore.

The objective of MSRDC's securitisation programme is to use the upfront payment to repay its debt for the Mumbai-Pune expressway, which was constructed at a cost of Rs 2,136 crore. It has also proposed to securitise both these projects for a period of another seven years and use this upfront fee to completely repay its outstanding debt obligation, thus making the project debt free for the remaining concession period of eight years (the total concession period offered to the company is 30 years).

Mr Lakhina said the securitisation programme was aimed at making the company a "project incubator", involving conceptualising, developing, constructing and initially operating road projects. "Once the major risks in the project are addressed, MSRDC will attract private sector efficiencies in operation and maintenance of its projects at very attractive rates to free up its investments for subsequent projects. We felt that we should not be saddled with the management of such large projects. At the moment, we have proposed road projects in 12 districts in the State," he pointed out.

According to him, the securitisation deal would be attractive for the private companies. The current estimated annual toll revenue from Mumbai-Pune expressway is to the tune of Rs 75 crore and the expected toll revenue from the expanded NH 4 section would be about Rs 45 crore in the first year of operation, he said, adding that in 2006-07, when the NH4 section is fully operational, the total annual toll revenue would be about Rs 145 crore. "Further, as the revision of toll rates for both the roads will be in line with the toll notifications of the State Government and NHAI, that is an increase of 5 per cent per annum effective every three years, the private sector player can expect a robust growth in revenue," he said.

In response to a question, he said the company would not negotiate on the minimum upfront fee of Rs 900 crore. "Any bid above this is acceptable to us, provided the private company satisfies the eligibility norms," he said.

More Stories on : Roadways | Karnataka | Securitisation

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