Essel Gwalior Shivpuri Toll Roads Private Limited

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In September 2011, the National Highway Authority of India (NHAI) awarded a 29-year concession (including construction period of 30 months) to Essel Infraprojects Limited for the strengthening, improvement, 4-laning, operation and maintenance, and tolling of 125.3kms of Gwalior-Shivpuri section from from KM 15.600 (of NH-75, end of Gwalior bypass) to KM 236.000 (of NH-3),in the state of Madhya Pradesh. Under the contract, Essel Infra was responsible for the design, construction, finance, operation and maintenance and strengthening of the existing 2-lane carriageway to a 4-lane highway with paved shoulders. The scope included construction of 4-lanes, including construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, culverts, service roads, road intersections, interchanges, drains, etc.The expansion project, part of National Highway Development Project Phase-IV would ease traffic congestion and give significant stimulus to trade and commerce in the entire region.Project corridor passes through Mangarh, Mohna, Ghatgaon and Nayagon.The Project road is a part of National Highway 3 (NH 3), commonly referred as the Mumbai-Agra Highway, is a major Indian National Highway that runs through the states of Uttar Pradesh, Rajasthan, Madhya Pradesh and Maharashtra states in India. The stretch between Agra and Gwalior is marked as the North-South corridor by the National Highways Authority of India. Essel Infrasprojects Limited established Essel Gwalior Shivpuri Toll Roads Private Limited (EGSTRPL), a special purpose vehicle, to implement the project. The SPV won the tender through competitive bidding, conducted by NHAI, by quoting the highest annual premium. The SPV would pay NHAI a sum of US$13.3mn (INR 666mn @50 INR/USD) in the first year of operations with 5% increase in each subsequent year (This amounted to an NPV payout of about US$ 207.6mn over the life of concession period at a discount rate of 10%). There were 28 pre-qualified bidders out of which 15 offered their final bids. The L2 bidder, Oriental Structures had quoted a premium of INR 506mn. Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The concession agreement was signed on 9th January 2012. The project attained financial closure on 13th December 2012. The debt/equity ratio for the project was 68/32. The estimated capital cost of the project at the time of financial closure was US$ 320.3mn (INR 16017.7mn @ 50 INR/USD) million. Financing comprised a term loan of US$ 218mn (INR 10900mn) and sponsor equity of US$ 102.3mn (INR 5117.70mn). The term loan would mature on 30th September 2027. The term loan was syndicated by Yes Bank and Axis Bank. Construction on the project was expected to begin in December 2012 and was expected to be completed by June 2015.