Ranchi Expressway Limited

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In March 2011, the National Highway Authority of India (NHAI) awarded a 15-year concession (including construction period of 912 days) to Madhucon Projects Limited (MPL) for the strengthening, improvement,4-laning,operation and maintenance of 163.5 kms (from km 114.000 to km 277.500) of Ranchi-Rargaon-Jamshedpur section of National Highway-33 (NH-33) in the state of Jharkhand. Under the contract,GR Infraprojects was responsible for the design, construction, finance, operation and maintenance and strengthening and widening of the existing passageway to a 4-lane highway with paved shoulders. The scope would include construction of new pavement, rehabilitation of existing pavement, construction and/or rehabilitation of major and minor bridges, tunnels, viaducts, culverts, road intersections, interchanges, drains, etc.The complexity of the project is higher than average as it involves construction of three RoBs, three major bridge rehabilitations, seven major grade intersections and multiple bridge structures.The expansion project, part of National Highway Development Project Phase -IIIB was was expected to give significant stimulus to trade and commerce in this difficult terrain. Madhucon Projects Limited established Ranchi Expressway Limited (REL), a special purpose vehicle, to implement the project. The SPV won the tender through international competitive bidding,conducted by NHAI, by requesting the lowest fixed annuity of US$ 56.7 million (INR 2664 million @ 47 INR/USD). Under the contract, the SPV was to recover the capital costs and operating costs including returns through fixed semi-annual payment of INR 1332mn from NHAI during the term of concession.REL had entered into a fixed time, fixed price EPC contract for INR 14310mn with MPL for implementation of the project. Thw concession agreement was signed on 20th April 2011. The project attained financial closure on 31st October 2011.The debt equity ratio of the project was estimated at 72:28.The estimated capital cost of the project at the time of financial closure was US$ 352.1 (INR 16550mn @ 47 INR/USD) million. Financing comprised of INR 11916mn 14-year term loan,and INR 4634mn sponsor equity. The INR 11916mn term loan had a garce period of 6months and a repayment schedule of 22 semi-annual instalments. The loan was priced at 150bp above the prime lending rate of Canara Bank. Debt was arranged by SBI Capital Market,Canara Bank and IDBI.The particpating banks were Canara Bank(1900mn), Allahabad Bank(700mn),Dena Bank(500mn), Federal Bank(600mn),ICICI Bank (1000mn),IDBI Bank (1250mn),IIFCL (1400mn), Oriental Bank of Commerce (1116mn),Punjab & Sind Bank (400mn), South Indian Bank(650mn), State Bank of Bikaner & Jaipur(200mn), State Bank of Patiala (400mn),State Bank of Travancore(400mn), Corporation Bank(700mn),Vijaya Bank(700mn)- amounts in INR. The sponsor equity contribution of INR 4634mn was in the form of INR 1820.5mn equity and INR 2813.5mn interest free unsecured loans. Construction on the project began in January 2012 and was scheduled to be completed by July 2014.As on April 2012, out of total area of the site required for the construction of project highway, NHAI had handed over 80% of the site.