IL&FS Transport Networks has sold a highway project in Andhra Pradesh for ₹140 crore. In an interview with BTVI, Dilip Bhatia, CFO, ITNL, speaks more on the deal. Excerpts:

Take us through the contours of this deal.

ITNL is one of India’s largest BOT players. We have sold our annuity project called Andhra Pradesh Expressway for a total consideration of ₹140 crore to Cube Highways.

The deal was signed on Thursday and is subject to approval from the authorities — the NHAI and the creditors.

How do you intend to deploy the funds that come in?

From the total consideration of ₹140 crore, we will use some money to increase the equity participation in some of the ongoing projects.

The rest will go into retiring some of the debt of the company.

Will Cube Highways be assuming any debt on its book from you?

As a project SPV, this entity has creditors in the form of NCD holders to the tune of ₹500 crore. When the transaction completes, it will become a 100 per cent Cube Highways company.

At that point, the SPV will have the same debt profile as it does today, it will continue on its books.

Would it be right to say that IL&FS debt would reduce by ₹640 crore as a result of this sale?

Yes, that would be right.

You still have a portfolio of 31 road projects. Are we likely to see any more divestments in the future?

This is the second such divestment this year.

Earlier this year, we sold 15 per cent stake in our Gujarat road project to Macquarie for ₹110 crore.

We continue to look at opportunities to monetise some of our mature assets.

We may have some more assets that could be reviewed at a later point this year.

We have also filed with SEBI for an infrastructure investment trust. So we may have some more assets that become a part of that during the year.

On a consolidated basis, your debt stands at ₹27,643 crore.

Where do you see that number by the end of the year, and what level do you want to bring it down to?

The consolidated debt is at the level you’ve said.

The cycle has peaked plus-minus ₹500 crore.

So, for the end of the year we should be at the same level.

What does your order book look like for the next 12-18 months?

The current order book stands at ₹14,600 crore, which is good for us to execute over at a three-year period. We continue to bid for projects on a selective basis.

You’ve been able to complete projects faster than expected, and tolling revenues were higher as well in the previous quarter.

How do you see that going for the rest of the year, and will profitability remain intact because some of the projects you have bagged are at the lower end of the margin range?

A lot of our projects went live late last year and in Q1, as a result the tolling revenues were higher.

We expect a 4-5 per cent traffic growth to continue for FY17.

When do you see revenue recognition coming for projects that are being commissioned now?

We are looking at three large projects being commissioned this year.

The first is a tunnel project in Jammu & Kashmir, the other two are toll projects.

So, by the end of FY17 we expect a total capex of ₹10,000 crore being commissioned.

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