Sadbhav Infrastructure Project, an arm of Sadbhav Engineering, is looking to refinance three more of its operating road projects.
The interest cost post the re-financing of R2,300 crore of debt on Ahmedabad Ring Road Infrastructure Limited (ARRIL), Maharashtra Border Check Post Network Limited (MBCPNL) and Shreenathji-Udaipur Tollway Pvt Limited (SUTPL) will come down to 9.75%, resulting in an additional annual saving of R40 crore on interest payment.
The company over the last one year has re-financed R2,300 crore of debt on five of its operational roads, which included Aurangabad-Jalna (AJTL), Nagpur-Seoni (NSEL), Bijapur-Hungund (BHTPL), Dhule-Palesner (DPTL) and Hyderabad-Yadgiri (HYTPL), that has led to a saving of close to R80 crore on interest payment on an annual basis, a senior company official told FE.
The average cost of debt for the operational road SPVs post the refinancing of these five roads came down to 10.4% as on June 30, 2016— a 90 basis points reduction on a year-on-year basis from around 11.3%, during the three months of April-June 2015.
Varun Mehta, chief financial officer, Sadbhav Infrastructure Project said that the company will keep looking at various structures and new markets to reduce the cost of funds.
“At construction stage the interest rates are much higher, but once the construction risk is over, there is scope for refinancing at a lower interest rate, which is what we are vying for, and will also help in better valuations,” Mehta said.
In an analyst call recently, Mehta said that refinancing of SPVs coupled with the significant increase in traffic witnessed over the last 8-10 months is slated to increase the profits of the operational SPV in the coming quarters.
Mehta has earlier said that while the company’s intention remains to churn its road portfolio, the company is not in a hurry. “We are hopeful that with this financial re-engineering and a pick up in traffic, the assets will fetch better valuations in few quarters from now. Also, we would like to undertake first major maintenance, which typically happens in the 5th-6th year of operations, which will further improve the credit profile of the projects,” he added.
Ahmedabad Ring Road became operational in May 2008 and Shreenathji-Udaipur in October 2015.
Sadbhav Infrastructure Project posted a consolidated net loss of R92.3 crore for the quarter ended June 30, 2016. The total income from operations stood at nearly R362 crore. For the full year ended March 31, 2016, Sadbhav had narrowed its net loss to around R274 crore from R301.56 crore in FY15. Sadbhav Infrastructure’s consolidated debt stands at around R8,000 crore.