Abhijeet Toll Road Karnataka Limited

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On June 2011, the Karnataka Road Development Corporation Limited (KRDCL) awarded a 30-year concession (including construction period of 48 months) to Abhijeet Group for the strengthening, improvement, 2-laning, operation and maintenance, and tolling of 70kms of Chikkanayakanahalli-Tiptur-Hassan section - from Chikkanayakanahalli to Tiptur (23 kms) and from Tiptur to Hassan (47 kms), in the State of Karnataka. Under the contract, Abhijeet was responsible for design, construction, finance, operation and maintenance and widening of the existing carriageway to a 2-lane highway with paved shoulders. The existing road has single and intermediate two lane configuration without paved shoulders along the project highway. The scope would include construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, road intersections, interchanges, drains, etc. The expansion project, was part of Karnataka State Highway Improvement Project -KSHIP. The road mainly caters to traffic pertaining to iron/manganese ore to Mangalore port. In addition, this road serves as link for the traffic destined/originated between Tumkur and Hassan districts. The existing road condition is deficient and hence the improvement in road would enhance the traffic to Mangalore and Karwar port. Abhijeet Group (through its subsidiaries - Abhijeet Infrastructure Limited, Abhijeet Roads Limited, and Corporate Ispat Alloy Limited), established Abhijeet Toll Road Karnataka Limited, a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by KRDCL, by quoting the lowest viability gap funding (upfront subsidy) of US$ 18.6mn (INR 929.9mn). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. Abhijeet Projects Limited would execute the EPC for the project. The concession agreement was signed on 3rd June, 2011 but the Appointed Date (for start of the concession) was 5th January 2012. The project attained financial closure on January 2012. The grant/debt/equity ratio of the project was 29/42/29. The estimated capital cost of the project at the time of financial closure was US$ 63.8mn (INR 3189.7mn @ 50 INR/USD). Aside from INR 929.9mn (US$ 18.6mn grant from Government of India and INR 453.1mn from Government of Karnataka), financing comprised a 14-year 6 month term loan of US$ 26.6mn (INR 1330mn), and sponsor equity of US$ 18.6mn (INR 929.9mn). The INR 1330mn term loan had a grace period of 3months and repayment schedule of 49 quarterly installments. The Pricing was linked to SBI base rate with a positive spread of 275 basis points. The debt was arranged by State Bank of India and the other participating bank was India Infrastructure Finance Company Limited. Construction on the project began in January 2012 (Appointed Date) and was expected to be completed by January 2014. The company was already in possession of 83.33% of the land. At the time of collection of this information, the work on development of Chikkanayakanahalli-Tiptur-Hassan road had come to a halt as promoters of the company had come under the scanner of the Central Bureau of Investigation (CBI) in connection with the coal block allocation scam, which resulted in fund flow being stopped for this project, thus hitting road development project in the State of Karnataka.