JSR Mulbagal Tollways Private Limited

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In March 2012, the National Highway Authority of India (NHAI) awarded a 15-year concession (including construction period of 1-year) to JSR Constructions Private Limited for the strengthening,improvement, four-laning, operation and maintenance, and tolling of 22.18 kms (from KM216.912 to KM239.100) of Mulbagal to Andhra Pradesh/ Karnataka Border section of National Highway-4 (NH-4) in the state of Karnataka. Under the contract, JSR Constructions 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 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-III would ease traffic congestion and give significant stimulus to trade and commerce in the entire region. JSR Constructions Private Limited established JSR Mulbagal Tollways Private Limited (JSRMTPL),a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI, by quoting the highest annual premium to NHAI. The SPV would pay NHAI a sum of US$0.96mn (INR 56.7mn @58.6 INR/USD) in the first year of operations, with 5% increase in each subsequent year through the life of concession period (this amounted to an NPV payout of about US$ 10mn over the concession period at a discount rate of 10%). Under the contract, the SPV was to recover the capital costs and operating costs including returns through tolling during the term of concession. The fixed price EPC contract for the project had been awarded to JSR Constructions. The project attained financial closure on 12th September 2013. The debt/equity ratio for the project was 71/29. The estimated capital cost of the project at the time of financial closure was US$ 26.3mn (INR 1540.1mn @ 58.6 INR/USD) million. Financing comprised a 13-year 6-months term loan of US$ 18.7mn (INR 1097mn) and sponsor equity of US$ 7.6mn (INR 443.1mn). The participating banks were Corporation Bank,Bank of Baroda,and Canara Bank. Construction on the project was expected to begin in May 2013 and was expected to be completed by May 2014.