K M Toll Road Private Limited

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In January 2010, the National Highway Authority of India (NHAI) awarded a 25 year concession (including construction period of 30 months) to Reliance Infrastructure Limited for the strengthening, improvement, four-laning, operation and maintenance of 71kms of Kandla Port-Mundra Port Section of National Highway-8A (NH-8A) in the state of Gujarat. Under the contract, Reliance Infra was responsible for the design, construction,finance, operation and maintenance and strengthening of the existing two-lane highway to a four-lane highway with paved shoulders. The scope includes initial construction of 4 lanes and subsequently widening the same to six lanes after 8 years 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 - III, connects two major ports of India to other parts of India, thus attracting lot of truck traffic to the corridor and will give significant stimulus to trade and commerce in the entire region. The sponsor Reliance Infrastructure Limited established K M Toll Road Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding, conducted by NHAI during Feb 2009, by quoting the highest premium of US$ 9.3 million (INR 420 million @ 45 INR/USD) to be paid to NHAI. Of the 20 bidders qualified for the financial bidding stage, 6 bidders participated in the bidding. Of this, 4 companies offered a premium to the NHAI, while the rest demanded grants from the authority.The GVK-led consortium, coming second, had quoted a premium of INR 306mn.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 in March 2010. The project attained financial closure on 25th January 2011. The debt equity ratio of the project was 70:30. The estimated capital cost of the project at the time of financial closure was US$ 250.7mn (INR 11280 mn @ 45 INR/USD) million. Financing comprised INR 7890mn 15year tenure term loan, and INR 3390mn equity. The INR 7890mn term loan had a payment grace period of 4 years and repaymnet was in 44 quarterly instalments.The debt was arranged by Yes Bank Limited. There were a total of 7 lenders: Karnataka Bank Ltd(500m), Corporation Bank (1,650m),Punjab & Sind Bank(850m), State Bank of Bikaner & Jaipur (850m),Bank of Maharashtra(850m), State Bank of Hyderabad(850m), Andhra Bank(1,250m). Construction on the project began in September 2010 and was expected to be completed by March 2013.