IL&FS Transportation Networks Ltd (ITNL), one of the largest roads developers in the country, on Wednesday said Australia’s Macquarie Group Ltd had bought a 15% stake in its Gujarat project. ITNL said Macquarie’s investment vehicle MAIF Investments India Pte. Ltd bought the additional stake in its roads subsidiary Gujarat Roads and Infrastructure Co Ltd. for about Rs.109.8 crore. In January 2015, Macquarie had acquired about a 42% stake in Gujarat Roads and Infrastructure for Rs.650 crore, according to a presentation by Macquarie dated 30 September 2015. After the latest transaction, Macquarie will hold a 56.8% stake in Gujarat Roads and Infrastructure, while ITNL will cease to have management control. ITNL said in a BSE filing that it will, however, continue to hold 26.8% in the company. ITNL has 31 road projects in its portfolio, of which 22 are operational. The company has been looking to monetize its portfolio of operational build, operate and transfer (BOT) road assets for several months and has evaluated options ranging from listing these projects under the newly approved infrastructure investment trust to an outright sale, in order to cut debt and fund projects under construction. The company is one of India’s largest BOT road operators with exposure to national and state highways, urban roads, tunnels, flyovers and bridges. It had consolidated debt of Rs.26,213 crore as of 30 September.
L&FS Transportation Networks Ltd’s (ITNL) robust performance in the March quarter is the result of a better-than-expected-income from all its business segments. One, construction income was the sweet spot that drove net revenue higher by about 72% from a year earlier, catapulting it higher than the street’s forecast. Two, the pace of project completion was faster, and, three, tolling revenue came in higher than expected. So, a huge revenue beat pushed up the quarter’s operating profit by about 80% from a year earlier. Further, ITNL’s decent order book provides growth assurance over the next 12-18 months. But then, the high proportion of income from the construction segment turns out to be a double-edged sword. While it fuels revenue growth, it does not augur well for profit margins. Operating margin at 30.5%, although wider than the year-ago period, fell short of that pencilled in by brokerages. ITNL’s margin was also impacted adversely by a Rs.44 crore provisioning made during the quarter towards loans that the firm is doubtful of receiving. The concerns on profitability are likely to continue as most of the orders are in the low-margin construction segment. This is not all. ITNL’s balance sheet is already highly stressed with a debt-to-equity ratio in excess of 4. This weighs down investor sentiment, which makes the ITNL stock wobbly. Besides, in spite of turning in a better than expected revenue and order book growth, the stock has underperformed the benchmark indices in the last one year. The silver lining in the cloud of debt is that the recently raised money, through a rights issue, should lower leverage. But according to the post-results review by Emkay Global Financial Services Ltd, “Leverage continues to surge higher and ITNL earnings highly leveraged to new orders, equity funding gap would still put pressure on balance sheet What would work in favour of the company is strong revenue traction as new projects are due to get commissioned, easing cash flows from business operations over the next 12 months. ITNL’s trump card would be its ability to monetize some of its existing and operational assets. Also, funds could be raised through the new route of Infrastructure Investment Trust, for which approval is awaited from the regulatory authority.
Naveen Verma, Secretary, Development of North Eastern Region (DoNER) Ministry visited the IL&FS institute of Skill at Bodhjunnagar industrial area and interacted with the students and faculty at the centre and took note of their problems.
IL&FS Transportation Networks on Thursday said it has raised Rs 300 crore through allotment of non-convertible debentures to JP Morgan Securities Asia and JP Morgan Securities India. Gujarat Road and Infrastructure Company Ltd (GRICL), an associate of the company, had allotted 3,000, 9 per cent Rated, Listed, Secured, Redeemable, NCDs of face value Rs 10,00,000, each aggregating to Rs 300 crore on a private placement basis to JP Morgan Securities Asia and JP Morgan Securities India, it said in a regulatory filing. Rating agencies ICRA and CARE have given Provisional Rating for the NCDs as ‘AAA(SO)’, it added. “The funds raised from the issue of the aforesaid NCDs will be utilised by GRICL for repayment/prepayment of the existing Deep Discount Bonds and NCDs carrying interest rate of 15.5 per cent per annum,” the filing said. Formed in 2000 as a subsidiary of IL&FS, the firm is a player in infrastructure development and financing. Transportation infrastructure development was initially taken up in IL&FS, and thereafter the transportation vertical IL&FS Transportation was formed. IL&FS Transportation is the largest BOT (build, operate, transfer) road asset owner in India with about 13,100 km lanes in its portfolio. It has presence in Metro rail, bus services and border check-posts, besides having a footprint in Spain, Portugal and Latin America.
Australia’s Education Ambassador to India and Australian cricket legend Adam Gilchrist, today visited IL&FS Institute of Skills (IIS) to witness sports vocational training courses run by Sports Education Development Australia (SEDA-India) in collaboration with IL&FS Skills.
IL&FS Transportation Networks (ITNL) is in the process of closing sale of its two annuity road assets, one in Andhra Pradesh and one in Karnataka, sources with knowledge of the developments told FE. It is understood that I Squared Capital is leading the race for acquiring these projects. The total enterprise value of the two assets is expected to be in the range of Rs 1,550-1,600 crore, according to sources. The two assets are understood to be the 328 km Andhra Pradesh Expressway (APEL), worth Rs 863 crore, and the 472 km North Karnataka Expressway (NKEL), pegged at Rs 600 crore. Both projects were bid out by National Highways Authority of India (NHAI) on a build, operate and transfer annuity basis. While NKEL has been operational since July 2004 and has a concession period of 17.5 years, APEL became operational in September 2009 and has a concession period of 20 years. In a response to email queries, ITNL said, “Due to non-disclosure agreements, specific details cannot not be divulged.” A response from I Squared Capital was awaited at the time of going to press. Sources said that while ITNL is talking to a host of investors to sell its entire annuity road assets portfolio, the discussions on sale of these two projects are likely to bear fruit soon. Apart from I Squared, the company is said to be in discussions with Brookfield Asset Management, IDFC Alternatives and few pension and sovereign wealth funds to sell part or full stake in four other operational roads, and one which is still under construction. Top management officials of ITNL in an analysts’ call in February had indicated that the company is willing to sell some of its road assets. K Ramchand, managing director, ITNL, told analysts that the company will be looking at selling part debt and equity in projects that are maturing. “It is not that we are selling the entire 100% but only part of these projects, realising some value in them,” he said. He added that it was part of the company’s strategy to meet its equity requirement as well as pare debt on its standalone entity. “ITNL management has been actively working on divesting part or a majority stake in three to four road assets to monetise the investments. A few investors have evinced interest and offers have been made, but no definitive agreements have been signed as yet,” a source said. ITNL’s standalone debt at the end of December 2015 stood at Rs 8,873 crore, up from Rs 8,430 crore as of September 30, 2015. Its standalone debt for the full year ended March 31, 2015, was Rs 7,439 crore. The company’s consolidated debt, which has also been on the rise, stood at Rs 26,900 crore at the end of December 2015. This was up 2% sequentially. ITNL’s leverage ratio, though improved from 4.5x to 4x in December compared with September 2015, was still on the higher side. Edelweiss Securities in a February 2016 report said that debt reduction is key for ITNL. The company had utilised Rs 740 crore from a rights issue to prune debt during the third quarter of FY16. Over the last one year, brokerages have pointed out that ITNL’s balance sheet has been highly leveraged and would require equity dilution to bring down its net debt to equity ratio. HSBC Global Research observed in a report last year that ITNL’s leverage balance sheet severely hampers its ability to add new projects. The foreign brokerage also pointed out that despite the potential equity dilution, its net debt to equity would remain above 3.0x, which will restrict the company from investing into new assets.
The mounds of debris along roads, which block traffic and eat up parking space, may finally be put to good use with government agencies being asked to use recycled construction and demolition (C&D) waste for their projects. The country’s first C&D waste recycling plant, with a capacity of 2,000 TPD (tonnes per day), was set up in North-West Delhi’s Burari in 2009. Since then it has processed 20 lakh tonnes of debris or malba . But, due to lack of planning and coordination the recycled material — ready-mix concrete, kerb stones, cement bricks — have just been piling up here. Delhi got its second such plant in East Delhi’s Shastri Park last year, which is yet to work at its full capacity of 500 TPD. Two more C&D waste recycling plants are being planned by the Public Works Department.
In what has could come as a big relief for infrastructure financing, the ECB policy of December 2015 is all set to be amended. With minimum maturity likely to be halved to 5 years, what does this mean for the cash-starved infra sector? To discuss more on the same, Sunanda Jayaseelan and Anupriya Nair of Bloomberg TV India are joined by K Ramchand, CEO - Infrastructure, IL&FS.
IL&FS Energy Development Co. (IEDC) has embarked upon a first-of-its-kind feasibility study to examine the possibility of integrating wind and solar power production along with energy storage at a single plant. The results are expected by September. "They can be utilised by anyone who wants to come up with hybrid tenders or demonstration hybrid projects," said Sunil Wadhwa, Managing Director. "We have also talked to the Central Electricity Regulatory Commission to consider fixing a special feed-in tariff for such projects." IEDC, the power and infrastructure arm of IL&FS, currently operates 760 MW of wind farms across seven states and is developing one each at Ramagiri in Andhra Pradesh and Nana Layja in Gujarat. It is setting up solar parks of 5,000 MW capacity in Rajasthan in collaboration with the state government. The company is also into bagasse-based power generation and bio-mass projects.
ORIX Corporation (“ORIX”), a leading integrated financial services group, and INFRASTRUCTURE LEASING & FINANCIAL SERVICE LIMITED (“IL&FS”), an infrastructure development and finance company, today announced that they will expand the wind energy platform with a total capacity of 1,004 MW in India. ORIX has been a significant shareholder in IL&FS since 1993 and the partnership is targeted to also achieve a large-scale solar capacity in the coming years. ORIX has invested in 49% of the equity of the Wind Platform of IL&FS aggregating to 1,004 MW, of which 775 MW is operational, and the balance is under construction. In this project, total 26 wind power plants will be built in seven states where wind conditions are better than other parts of India. The generated power will be mainly sold to state power companies under the feed-in tariff scheme as well as to commercial-scale utility customers.