Case- Yamuna Expressway
Yamuna Expressway Project Finance...
Cases in Project Finance
Case prepared with inputs from Ashley Thomas Mathew, V Gayatri, Sanketa Pawar, Shweta Shankar and Sonia Karmali, students of Goa Institute of Management, class of 2010. Their contribution to the case is acknowledged with gratitude. This case has been developed solely as the basis for class discussion from published sources. Names/ details have been disguised, and hypothetical characters have been introduced to facilitate case analysis. Cases are not intended to illustrate effective or ineffective management or decision making
Copyright Padmalatha Suresh 2013
It was mid June 2009, and Sirish Kumar2, CEO, Jaypee Infratech Ltd [JIL], waited in the Board room of the company’s corporate office while his team assembled and took their seats. The meeting had been called on a Sunday since the bankers had scheduled a discussion the following week to finalize the debt requirement of the Yamuna Expressway project. Shirish and the team knew that there were barely five weeks left for the Yamuna Expressway project to achieve financial closure. JIL, the SPV formed by Jaypee Associates Limited to execute the Rs 9740 crore Yamuna Expressway project, had to arrange Rs.6000 crore non-recourse project financing from banks. Of this, Rs 3000 crore had been tied up with ICICI Bank. Sirish had previously met the three lead arrangers – Axis Bank, SBI Caps and ICICI Bank- a few times for discussing the syndication of the remaining portion of the debt. He knew that the banks were impressed with the project profile considering that this was the largest PPP financing in the Indian roads sector so far, and the first where government support had been in the form of transfer of real estate development rights. If the project was successful, it would herald a new template for future Indian PPP in road development. The challenge was to convince the bankers of the economic viability and financial feasibility of the project and also that all necessary measures had been adopted to mitigate the most critical risks of the project. Sirish knew that if bankers were not convinced about the cash flow assumptions, he would have to go back to the parent company for more equity, which would entail more negotiations and further delay in the project that was awarded in 2003, but could begin construction only in January 2008.
Roads in India India, the world’s largest democracy in terms of population (1.2 billion people), and the second-fastest growing economy in the world, had been investing heavily in infrastructure projects under the publicprivate partnership [PPP] model. Infrastructure expenditure had increased from 5.4% of GDP in 2005 to 7.5% in 2009 and was poised to go up to 8% of GDP in 2010. Over 2012-17, India forecast its infrastructure spend at $1 trillion as compared with $530 million over the previous five-year period.3 As of September 2007, India had the second largest road network in the world, aggregating 3.3 million kilometres. In descending order based on the volume of traffic movement, the road network in India could be divided into the following categories:
Expressways and National highways (NH); State highways (SH); Major district roads; and Rural and other roads.
Road planning and financing was the responsibility of both the Central and State Governments, with the Central Government being responsible for the construction, operation and maintenance of the National Highways (NHs) and the States for all the other type of roads such as State Highways (SHs) and Major District Roads (MDRs).
Name changed Source: India’s Planning commission website
Expressway Development under Public Private Partnership in Uttar Pradesh Uttar Pradesh was the most populous state in India with a population of 166 million according to the 2001 census report. It had the largest network of highways in the country. The Government of Uttar Pradesh [GoUP] showed its eagerness to improve road infrastructure in the state - it had incurred capital expenditures of Rs. 44 billion, Rs. 48 billion and Rs. 54 billion in Fiscal years 2007, 2008 and 2009, respectively, the highest by any state government in the country4. In the past, the GoUP had taken up road projects to facilitate growth in the Noida region such as NH 8, NH 26, the Delhi-NoidaDelhi Flyover and the Noida-Greater Noida Expressway. The GoUP promoted PPPs in various infrastructure sectors and identified expressway projects across the state to bring connectivity to various parts of the state. Many of these projects had been awarded on a build-operate-transfer (BOT) basis with concessions to collect toll revenues for a specified period of time. Exhibit 1 shows the status of some large projects in Uttar Pradesh in 2009 In order to improve the financial viability of the projects, the GoUP proposed to allot land parcels along the expressway to the developer at the GoUP’s acquisition cost which can be used by the developer for real estate development.
Real Estate Sector in India The real estate sector, along with the construction sector, played a very important role in the overall development of core infrastructure in India. The sector comprised residential housing, commercial buildings, hotels & restaurants, cinemas & retail outlets and the purchase & sale of land & development rights. Historically, the real estate sector in India was unorganized and characterized by factors such as the absence of a centralized title registry providing title guarantees, a lack of uniformity in local laws and their application, limited availability of bank financing, high interest rates and transfer taxes and the lack of transparency in transaction values. The recent improved efficiency and transparency in this sector was primarily due to the enactment and implementation of laws and regulatory reforms. Investments by domestic and international financial institutions increased, allowing real estate developers greater access to capital and financing. The Government of India [GoI] in March 2005 amended existing legislation to allow FDI in the construction and real estate businesses subject to certain conditions5. The nature of demand was also changing with heightened consumer expectations influenced by greater disposable incomes, increased globalization and the introduction of new real estate products and services. The rising investment trends in the real estate sector were reinforced by substantial growth in the Indian economy. Additionally, certain tax and other benefits applicable to special economic zones were expected to result, over time, in increased demand in the real estate sector. Exhibit 2 shows an estimate of the likely growth of the realty sector in India. Exhibit 3 summarizes some features of real estate sector reforms in India.
Source: CRISIL Research - Roads and Highways Annual Review, August 2009 According to the Department of Industrial Policy and Promotion of the GoI, FDI inflow into India from April 2000 through July 2009 was Rs. 306,750 million in the housing and real estate sector and Rs. 259,580 million in the construction sector (which includes roads and highways). 5
Sponsors Overview Jaiprakash Associates Limited (JAL), the flagship company of Jaypee group, held 98.86% shareholding in JIL. The Jaypee Group had a diversified portfolio with operations in civil engineering and construction, cement, expressway and real estate, power, hospitality and education. JAL was an operating entity for some of the group businesses and holding company for some group subsidiaries. In March 2009, JAL had projects valuing Rs. 30,046.77 crore under development [excluding Yamuna Expressway] and projects valuing Rs 34,023.44 crore for future execution [including Yamuna Expressway]. To take advantage of the growing opportunity in India’s infrastructure and power sectors, JAL undertook projects on a Build-Own-Operate (BOO) model or Build-Operate-Transfer (BOT) model in highways, expressway and real estate sectors. JAL was also present in the power sector with development of thermal power projects, hydro power projects and oil and gas exploration. The company’s strengths in engineering, technology, and construction expertise and project management in addition to well trained workforce, highly specialised machinery, plant and equipment were its competitive advantage. Exhibit 4 shows the corporate structure of JAL, with subsidiaries and step down subsidiaries created for different operations. Exhibit 5 contains the summarized financial statements of JAL
Of the other two Expressway projects being executed by the group, Himalayan Expressway Ltd, executed by a wholly owned subsidiary of JAL, had achieved financial closure in June 2008. The concession agreement had been signed in 2008 by Jaypee Ganga Infrastructure Corporation Ltd, a wholly owned subsidiary set up to execute the 1047 km long Ganga Expressway project, along with development of 30000 acres of land.
The Yamuna Expressway Industrial Development Authority [YEA] YEA was established by the GoUP for anchoring the development of the Yamuna Expressway project. The primary responsibility of YEA was to ensure proper execution of the project. Apart from acquisition of land for the expressway construction and area development, the YEA was made responsible for preparation of master plans for development along the expressway, and development of drainage, feeder roads, electrification and other facilities in the area. More than 330 villages in the surrounding areas were brought under YEA to hasten their development.
Project Overview The project involved the Design, Engineering, Finance, Construction, Operation and Maintenance of a new access controlled Six Lane Expressway (extendable to 8-lane) between Noida and Agra with Service Roads and Associated Facilities on BOT (Toll) basis and the acquisition and development of 6175 acres [2500 hectares] of land, along the Expressway as an integral part of the project. The length of the Expressway would total 165.537km6. The GoUP intended to build this expressway as a strategic, high-density road corridor to connect Delhi with Agra that would relieve the congestion on the existing arterial roads on either side of the Expressway – NH2 and Old Grand Trunk Road (NH 6
In the Concession Agreement of the project, the length of the Expressway is envisaged to be 160 km. However, as per the DPR accepted by the YEA, the length of the expressway is envisaged to be 165.537 Km based upon the actual alignment.
91). To enhance use of the new road, the government had also decided to develop a Special Economic Zone (SEZ) [Taj Economic Zone (TEZ)] and Taj International Hub airport in this region. Exhibit 6 is a pictorial depiction of the project site To summarise, the objectives of the Yamuna Expressway were as follows:
To provide a fast travel corridor to minimize the travel time from Delhi to Agra. To connect the main existing and proposed townships/commercial centers on the eastern side of Yamuna River. To relieve traffic congestion on NH-2 which runs through cities of Faridabad, Ballabgarh and Palwal
Based on the bid of 36 years concession period from COD, Jayprakash Industries Ltd [JIIL], a Jaypee Group company, emerged as the preferred bidder and Yamuna Expressway Authority [YEA] issued the LOA on 23rd January 2003. Thereafter, the Concession Agreement [CA] was executed between JIIL and YEA on 7th February 2003. In terms of the requirement of the bidding process, JIIL submitted Detailed Project Report (DPR) to YEA, in terms of the provisions of the CA, on 11 th June 2003. The total construction period envisaged for the Project was 7 years from the date of execution of the CA, with provisions for extension. Subsequently the project was transferred to Jaypee Infratech Limited [JIL] on 22nd October 2007. The concessionaire could not commence the construction of the Expressway immediately because of the delay in land acquisition. YEA subsequently started transferring land to the company in 2006 and the company commenced the construction of the Expressway from January 2008. The Board of directors of JIL was mostly drawn from the parent company, JAL. Jaiprakash Gaur, Founder Chairman of the Jaypee Group, was part of the Board of JIL. Apart from family members and senior managers of other group companies, the project company inducted a retired highly ranked official from National Highways Authority of India [NHAI]7, and an experienced project clearances and implementation expert well versed with government procedures. The Concession Agreement The Concession Agreement proposed that the expressway be developed in three phases. Land would be released by YEA in stages corresponding with milestones for the three phases of development. The land will be leased to JIL, free of all encumbrances, for a period beginning from the date of transfer till the end of the concession period. The Concession Agreement between the GoUP and JIL [ Concessionaire] contained the following key features: 1. Concession period of 36 years from Commencement date [COD] 2. Construction period of 7 years from date of execution of Concession Agreement or the date permitted by YEA. In this case, as the land acquisition was delayed extension was given up to April 2013 3. The sale premium to be paid by JIL for the land transferred for the project would be equal to the YEA’s acquisition cost plus an annual lease rental of Rs 100 per hectare of land. The acquisition cost would be the actual compensation paid to land owners
NHAI is the apex body for highway /road development in India
4. Two separate lease agreements were drawn up. The first was the expressway lease agreement for total land of 5106 acres, which YEA would lease to JIL from the date of possession till the end of the concession period. The second was the agreement for land of 6175 acres to be developed, the lease for which between YEA [lessor] and JIL [lessee] would be from the date of transfer of leased land for a term of 90 years. For both agreements, the lease rental was fixed at Rs 100 per hectare of land leased per year. 5. The land would be released in every phase only after satisfactory financing arrangements were made by JIL 6. It was YEA’s responsibility to provide right of way to JIL, free from all encumbrances. 7. There was a provision to create mortgage of land for expressway, interchanges and real estate development with banks and other financing institutions 8. Termination payments under different events of default and force majeure situations were specified in the agreement. Where JIL was responsible for termination of the contract, damages would be paid by JIL. However, where political or other force majeure events halted the project, YEA would compensate JIL 9. The agreement granted special permission to JIL to use 23.8 kms of existing expressway between Noida and Greater Noida, that had already been constructed by the GoUP and being used by the public. However, the capital cost for the construction would be treated as an interest free loan and had to be paid by JIL in 15 equal installments, commencing from the 11th year of the concession period. 10. A ‘non compete agreement’ between JIL and YEA provided that a competing road would not be built by the government. However, if such a road is built and it adversely affects JIL’s revenues, the concession agreement would be extended suitably to place JIL in the same position as it would be had the competing road not been built. The business model of the company was based on revenue streams from traffic on the expressway and development of land as an integral part of the Concession Agreement. To assess the potential of each revenue stream, JIL had contracted with independent consultants – Design Aid [in association with TPA Engineering consultancy India P Ltd] as traffic consultant, and Cushman and Wakefield as real estate consultant. Jaypee Ventures P Ltd, a group company, was the Design consultant. Exhibit 7 shows the project contractual structure Design and Construction The entire stretch of land meant for the expressway was flat, with minimum cutting and filing required to begin construction. The project road runs almost parallel to the Yamuna river and its alignment was in the catchment area of the river, with some portions prone to inundation due to floods. A large network of canals existed in the project influence area. The status of land acquired for the Expressway and interchanges is given in Table 1 Table 1: Status of land acquisition for expressway [31st March 2009] Required [acres] Acquired by JIL Amount required Amount already [acres] to be paid paid to YEA Expressway 3991 3991 Rs 900 crore Rs 831 crore Interchanges 753 41 Total 4744 4032 Source: Project Information Memorandum, 2009 6
The status of land acquisition for real estate development project is shown in Table 2 Table 2: Status of land acquisition for real estate development [31st March 2009]
Source: Project Information Memorandum, 2009 Of the payments of RS 1719 crore to be made by JIL for land acquisition for real estate development to YEA, Rs 539 crore had been paid at the end of March 2009. Removal of encroachments, clearing the site and obtaining all necessary clearances, including environmental clearances were the responsibility of JIL. YEA would provide the necessary support to JIL in carrying out these actions. JIL entered into a ‘works contract’ with JAL in November 2007 for construction of the expressway on a ‘cost plus’8 basis. The scope of work included construction of the road and allied structures [such as culverts, underpasses, bridges and interchanges], toll management system, highway traffic management system, and other miscellaneous work including utilities and road safety arrangements. The entire construction had to be completed within 36 months from the date of execution of the contract, with a provision for extension. The contractor [JAL] would be responsible for all material and equipment required for construction. If the construction is not completed within the specified [or extended ] period, JAL would pay JIL liquidated damages for every week of delay at the rate of Rs 2 crore per week of delay, subject to a maximum of Rs 100 crore. After construction, JAL had to correct, at its cost, any defects in construction noticed over the succeeding 12 months. JIL had already paid Rs 900 crore as advance to JAL. Thereafter, payments for work executed would be made on a monthly basis. The entire construction activity had been divided into packages, and JAL had entrusted some of the packages to experienced sub contractors for execution, the material and equipment being supplied by JAL. A project team from JAL would monitor the project execution
‘Costs’ included all the actual cost of all direct expenditure on material, labor, plant, machinery, equipment, vehicles, subcontracted work, safety gear, additional scope of work due to change in design etc; and indirect expenditure such as salaries, temporary/ancillary work, welfare activities, taxes, duties, statutory charges, insurance and other incidental charges
An environment management plan was prepared to study the impact and suggest mitigation measures during the construction and operation phases. JIL had carried out an environment impact assessment and obtained the necessary clearance from the Ministry of Environment and Forests, Government of India. Major risks that could arise during the construction and operation of the project were to be covered by insurance. During the construction period, JAL/JIL would maintain insurance coverage for risks such as contractor’s all risk, advance loss of revenue, third party liability and workmen’s compensation. The operation period insurance would cover third party liability, burglary, property all risks insurance including loss of revenue, special contingency policy for removal of encroachments, and workmen’s compensation. JIL was willing to take on additional insurance cover if the project or contracts required such insurance. Operations and Maintenance JIL would enter into an O&M contract with an experienced and reputed contractor before commencement of operations. The O&M contractor would be responsible for toll collection and other commitments on behalf of the project company, as laid out in the concession agreement – such as traffic monitoring, routing and periodic maintenance of the expressway, preventing leakages in toll collection, recording of defects, etc. Traffic study and projections The likely traffic on the project road was estimated by Design Aid 9 in association with TPA Engineering consultancy (I) P Ltd. The projections were made for 40 years, assuming 2007 as the base year. The traffic on the Greenfield expressway was estimated to be a sum of ‘diverted traffic’ from other routes in the corridor, and ‘induced/ development / new generation traffic’. The base projections were arrived at after primary surveys were conducted to estimate traffic volume counts, origin-destination analysis, speed and delay analysis, and road network inventory. The traffic volume data were collected at all survey locations over 24 hours on an average working day to determine the ‘average day traffic’. Based on the elasticity based econometric model [IRC-108, 1996], the traffic growth rates were arrived at as in Table 3. For assessing the financial viability, the normal growth rates were assumed. Using the ‘Saturn’ software [that employs the stochastic state of user equilibrium technique for traffic analysis], the consultants arrived at the projected traffic on the expressway, assuming no seasonality in traffic flow. The toll revenue thus estimated is shown in Exhibit 8 Cushman & Wakefield prepared the Market Assessment study report for real estate development along the expressway. The consultants used a combination of macro analysis, micro market study and SWOT analysis to arrive at their assessment of real estate revenues. The popularity of the Jaypee Greens project started in 2006 along the corridor was a pointer to the success of the real estate development plans. The development of the international airport along the expressway would provide more connectivity, while the Formula One track that was expected to be operational by 2011 would put the region on the world map. The consultants made optimistic estimates of cash flows, which are shown in Exhibit 7. 9
Established in 2003 for consultancy services in highway engineering. It has been actively involved in major highway projects in India, Afghanistan and Bangladesh. It has a team of experts for planning, designing and implementing infrastructure projects.
Table 3: Projected traffic growth rates [%] Period Bus Car LCV 2A Normal growth scenario Upto 2012 5.5 7.5 6.5 6 2013-17 5 7 6 5.5 2018-22 4.5 6.5 5.5 5 After 2022 3 6 5 4.5 Low growth scenario Upto 2012 4.7 6.4 5.5 5.1 2013-17 4.3 6 5.1 4.7 2018-22 3.8 5.5 4.7 4.3 After 2022 3.4 5.1 4.3 3.8 High growth scenario Upto 2012 5.9 8.1 7 6.5 2013-17 5.4 7.5 6.5 5.9 2018-22 4.8 7 5.9 5.4 After 2022 4.3 6.5 5.4 4.8
7 6.5 6 5.5
8 7.5 7 6.5
6 5.5 5.1 4.7
6.8 6.4 6 5.5
7.5 7 6.5 5.9
9.6 8.1 7.5 7
Project cost and financing Cost of the Project The total cost of completion of the project was estimated at Rs. 9739.29 crore.The break up of the costs is as given in Table 4 (Project Information Memorandum, 2009): Table 4: Project cost breakup Description Cost of land for Expressway Cost of land for Development Cost of construction of Expressway Preliminary & Preoperative Expenses Contingencies Interest During Construction Total Project Cost
Amount (Rs. in crs.) 900.00 1719.00 5300.00 240.00 230.00 1350.29 9739.29
Financing Mix 1. Equity: The total equity contribution for the project was proposed at Rs. 3739.29 crore, including internal accruals of Rs. 1489.29 crore from real estate development during construction period. The proposed equity mix is given below (Project Information Memorandum, 2009):
Rs. 1500.00 crore
IPO/ Sponsor Support
Rs. 750.00 crore
Internal Accruals(from Real Estate Development)
Rs. 1489.29 crore
At the end of March 2009, JIL had received Rs 555.23 crore from real estate proceeds. JAL provided an undertaking to cover any shortfall in equity from IPO proceeds and internal accruals. 2. Debt The total debt requirement for the project was of Rs. 6000 crore. JIL had tied up Rs. 3000 crore from ICICI Bank and the balance senior debt requirement of Rs3000Cr had to be obtained from a syndicate of banks led by ICICI Bank, Axis Bank and SBI Caps. The lenders and lead arrangers were reputed and well experienced in project financing deal making. At JIL…. From the papers before him, Sirish observed that Rs 3412 crore had been spent on the project at the end of March 2009. Of this Rs 1482 crore had been incurred for civil work on the expressway. The expenditure had been funded by Rs 990 crore of equity, Rs 1867 crore of term loan from ICICI Bank and Rs 555 crore of real estate sale proceeds. He was reasonably sure that the bankers should be satisfied with the risk mitigation measures and the progress so far, and agree for financial closure during the impending meeting. However, he was not certain how the bankers would view the projections made, especially in view of the economic slowdown. If they viewed the pessimistic scenarios as the most likely, there would be a funding gap that would have to be bridged with more equity from the promoter company. Sirish knew that he would have a tough time convincing JAL’s Board about the need for more equity. Sirish concluded the meeting, asking his team to revisit the major risks in the project, and the mitigation measures put in place. He knew that he had a difficult task the following week, convincing the bankers about the need to part with Rs 3000 crore of additional debt. Even if they were convinced, what would be the covenants and other terms and conditions they would stipulate? At SBI Senior managers of ICICI Bank, Axis Bank and SBI met at SBI’s main branch boardroom to discuss the JIL proposal for non recourse funding of Rs 3000 crore. They agreed that the proposal looked attractive with the base case projections presented to them. The positive changes transpiring in the infrastructure sector, the support that this project drew from the Government of UP and the reputation of the sponsors involved in the project were all encouraging signs. All the same, the bankers were concerned about factors that could significantly impact the ability of JIL to service the debt, the major ones being the variations in traffic volumes and fall in the real estate prices. They also decided to take a deeper look at all the risks associated with the project and the adequacy of the mitigation measures adopted, and propose suitable covenants for the loan if they were in favour of financing the project.
Reference (n.d.). Retrieved September 2010, from Axis bank: http://www.axisbank.com/aboutus/aboutaxisbank/About-Axis-Bank.asp Jaypee, I. (2010, April 22). Jaypee Infratech - Red Herring Prospectus. Prasad, N. (2010, September). (A. Mathew, Interviewer) Project Advisory and Structured Finance. (n.d.). Retrieved September 2010, from SBI Caps: http://www.sbicaps.com/Main/index.aspx Project Finance. (n.d.). Retrieved September 2010, from ICICI Bank: http://www.icicibank.com/campaigns/project-finance.htm (2009). Project Information Memorandum. Times, E. (2010, August 17). India to become world's fastest growing economy by 2013-15: Morgan Stanley. Retrieved September 2010, from Economic Times: http://economictimes.indiatimes.com/news/economy/indicators/India-to-become-worlds-fastestgrowing-economy-by-2013-15-Morgan-Stanley/articleshow/6322333.cms
Exhibit 1: Some large Road Projects in Uttar Pradesh -2009
Exhibit 2: Demand projection for real estate sector
Exhibit 3 Real Estate Sector Reforms in India The real estate sector had been among the most highly regulated sectors in India. In order to explore the potential of this sector and meet the rising demand, the Central as well as the individual state governments initiated progressive reform measures. 1) Land Acquisition Act, 1894 (the “LA Act”) GoI and the state governments were empowered to acquire any property if it appeared to the government that it is needed for any public purpose or for use by a corporate body. However, Indian courts have stipulated that any property acquired by the government must satisfy the due process of law. Under the LA Act, “public purpose” means: • The provision of land for town or rural planning; • The provision of land for its planned development from public funds in pursuance of any scheme or policy of government • The provision of land for any other scheme of development sponsored by government, or, with the prior approval of the appropriate government, by a local authority Any person having an interest in the land being acquired by the Government had the right to object and the right to receive compensation. The value of compensation for the property acquired depended on several factors, which include the market value of the land and damage sustained by the person in terms of loss of profits. The aggrieved person also had the right to approach the courts. 2) Urban Land (Ceiling and Regulation) Act, 1976 (the “ULCA”) The ULCA prescribed the limits to urban areas that can be acquired by a single entity. The ULCA allowed the government to take over a person’s property and fixed ceilings on vacant and urban land. Under the Act, excess vacant land was required to be surrendered to a competent authority for a minimum level of compensation. Alternatively, the competent authority was empowered to allow the land to be developed for permitted purposes. Even though the ULCA was repealed later, it remained in force in states like Haryana, Punjab, Uttar Pradesh, Gujarat, Karnataka, Madhya Pradesh, Rajasthan, Orissa and the Union Territories.
Exhibit 4- Jaypee Group corporate structure
Source: JAL investor presentation
Exhibit 5 – JAL summarised financial statements
Exhibit 6 – Project site map
Source: JIL Project documents
Exhibit 7 – Project contractual structure10
Source: Project Information Memorandum
Exhibit 8: Key Financial projections For the YE March 31, Months of Operation
2,549 3,112 5,966 10,163
2,959 3,549 6,431 10,716 10,037 11,398 11,748 11,235 11,153 12,127 11,921
Road Operating Expenses (c) Real estate Expenses
9,452 10,777 11,010 10,452 10,327 11,150 10,889
1,788 2,183 4,421
1,886 2,282 4,511
1,073 1,266 1,920
(1455) (1350) (899)
Tax (e) PAT Principal Repayments Increase in NWC Increase in major maintenance capex
Real Estate Revenues(b)
Notes: (a) GoUP has not issued toll rate notification. Assumed on the basis of toll levied on Mumbai-Pune Expressway. The rates are assumed to be revised every three years. (b) The cost of construction and selling prices are assumed for each place along the Expressway and the results aggregated. No escalation has been assumed either in cost of construction or selling price (c) Estimated by JIL (d) Interest was estimated at a minimum of 12.5%. However the actual interest would be pegged to each bank’s base rate and would be quoted as a floating rate (e) Corporate tax rate assumed at 33.99% and MAT at 17%. No other taxes or duties assumed