Soubhagya Hata Darguwan Projects Private Limited

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In July 2011, the Madhya Pradesh Road Development Corporation (MPRDC) got the cabinet approval to award a 15-year concession (including construction period of 24 months) with Soubhagya Infrastructure Private Limited, a MPOT Group Company for the strengthening, improvement, four-laning, operation and maintenance of 64.42 kms of Hata-Fatehpur-Derguwan road Section of State Highway-48 (SH48) in the state of Madhya Pradesh. Under the contract, Soubhagya was responsible for the design, construction, finance, operation and maintenance,strengthening and widening the existing 2-lane road.The scope will 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, part of MPRDC Highway Development Project, was expected to ease traffic congestion and give significant stimulus to trade and commerce in the entire region. Soubhagya Projects Private Limited established Soubhagya Hata Darguwan Projects Private Limited, a special purpose vehicle, to implement the project. The SPV won the tender through domestic competitive bidding, conducted by MPRDC, by quoting the lowest annuity of US$ 0.93million (INR 43.816mn @47 INR/USD) per year to be paid by MPRDC (This amounts to an NPV of US$ 7.78mn 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. So in summary, based on the toll rates fixed by MPRDC, revenue would accrue both from toll as well as fixed annuity payment from MPRDC. The project attained financial closure on 24th November 2011. The debt/equity ratio of the project was about 67/33. The estimated capital cost of the project at the time of financial closure was US$ 23.8mn (INR 1120mn @ 47/INR/USD). Financing comprised INR 750mn 14year term loan and INR 370mn sponsor equity. The debt was arranged by Union Bank of India. Construction on the project began in November 2011 and was expected to be completed by October 2013.