Date:31/03/2004 URL: http://www.thehindu.com/2004/03/31/stories/2004033103771800.htm

Business

Thiruvananthapuram Road Development Company achieves financial closure

By K. T. Jagannathan

CHENNAI, MARCH 30. Thiruvananthapuram Road Development Company Limited, a special purpose vehicle (SPV) set up for the development of road network in the Thiruvananthapuram Capital Region under the Thiruvananthapuram City Roads Improvement Project, has achieved financial closure. Claimed to be first full-blown private initiative in the country on the urban road front, the project is estimated to involve an outlay of about Rs. 220 crores. This is the first time that an urban road project is being implemented from the construction to the upkeep stage.

The project will have a debt-equity ratio of 3 to 1. The financial closure for this project has been achieved within 15 days of signing the Concession Agreement, it is claimed.

The SPV is promoted by Consolidated Toll Network Ltd. and Punj Lloyd Ltd. The two hold equal shares in Tiruvananthapuram Road Development Company Ltd. Infrastructure Leasing and Finance Services Ltd. (IL&FS) played the facilitator role in the financial closure.

The total project cost has three segments — equity, sub-ordinate debt and senior debt. The equity component of Rs. 40 crores will include a sub-ordinate debt worth Rs. 20 crores. The senior debt is Rs. 180 crores. The debt is provided by Punjab National Bank-led consortium comprising J&K Bank, Bank of India, Indian Overseas Bank and Oriental Bank of Commerce. K. Ramchand, President and Chief Executive Officer of CTNL, told this correspondent that the tenure of senior debt is 12 years with an initial three-year payment moratorium on principal. The debt will bear an interest of 9.75 per cent during the construction stage and 8.75 per cent there after once the project goes operational. To a question, he said the SPV went in for local sourcing of funds as it wanted to avoid exchange risks associated with a foreign debt.

Though the road project — involving around 45 km with four lanes — was envisaged to be constructed in three years, Mr. Ramchand said the SPV would aim at finishing it in 28 months. The concession period for the project is seventeen-and-a-half years. Mr. Ramchand said. While Punj Lloyd would undertake the construction, the upkeep would be done by CTNL.