Hyderabad-based infrastructure player IVRCL Limited will receive Rs 400 crore from the sale of three road projects in Tamil Nadu after the delayed monetisation resulted in a loss in value of the projects.
The company last week said the sale consideration for divestment in the three road projects — Salem Tollways Limited, Kumarapalayam Tollways and Chengapalli Tollways — was lower than the stated value of investments and outstanding advances, and will result into an aggregate loss of Rs 327.6 crore.
“The three projects have a debt of Rs 1,500 crore. The interest costs, about Rs 200 crore a year, had accrued on the debt due to delay in execution of the deal. This apart, the buyers want an IRR of 16 per cent on the projects ,” a senior official of the company said, as way of explanation for the loss-making sale.
Though IVRCL and Tata Realty and Infrastructure Limited (TRIL) had entered into a stake sale deal in the year 2013, it is being executed only now as ‘all conditions’ precedent to the revised definitive agreement were fulfilled only during the second quarter of the current financial year.
The estimated deal of Rs 2,200 crore now comes with the interest costs on debt for the seller.
The company will get a net amount of Rs 400 crore from the sale. Of this it will receive Rs 315 crore in the next couple of months and the balance in September 2017, according to the company executive.
The Salem Tollways Limited, the special purpose vehicle (SPV) of the road project, operates a 53-km stretch of NH-47 from Salem to Kumarapalayam under a concession agreement signed with the National Highways Authority of India (NHAI). It started operations in June 2010.
Similarly, Kumarapalayam Tollways operates a 47-km stretch of NH-47 from Kumarapalayam to Chengapalli. The project achieved CoD in August 2009. And for the third BOT road project in the deal involving a 54.83 km stretch of Chengapalli-Coimbatore-Walayar highway, Chengapalli Tollways has received the provisional certificate for commercial operation only from October 14, 2015, on account of project execution delays.
The sale of road projects has been proved a tough task for many infrastructure companies as the valuations based on the earlier traffic projections were strongly contested by buyers.
Last year IVRCL had gone for a Corporate Debt Restructuring (CDR) after the BOT road projects, which account for half of the consolidated debt of over Rs 8,000 crore of the company, added to its debt woes.
The company is currently facing a tough financial situation as lenders are reluctant to give new loans even though it was sanctioned a fresh non-fund credit of Rs 1,800 crore in bank guarantees and letter of credit in addition to a cash credit limit of Rs 200 crore as part of the CDR deal.
The revenue position has not improved as there was no money to execute the orders in hand, the company says. The company has an order book of Rs 18,000 crore.
Apart from monetising the assets, there are six more in line, it has decided to focus on realizing the claims amounting to over Rs 6,000 crore from various government projects. The company wants to utilise the new arbitration law that brings down the time limit for the settlement of a commercial dispute, for this purpose.
