Toll collections across the country are starting to look up, not merely thanks to inflation...
Toll collections across the country are starting to look up, not merely thanks to inflation-linked escalations but also on account of higher traffic. Road developers say there’s been more movement of trucks in the April-September quarter than there has been in the past couple of years. That’s encouraging since commercial vehicles account for close to 70% of the traffic.
Larsen and Toubro, which has built the Jadcherla-Kothakota (Andhra Pradesh) and Halol-Godhra-Shamlaji (Gujarat) highways, is among the concessionaires that is benefitting. R Shankar Raman, the firm’s CFO, told FE, toll revenues are growing at 10-12%, and that the pace could pick up to ahead of 15% by March next year. “Commercial vehicle traffic is improving by the month especially after the new government has taken charge though passenger car traffic remains at the same levels,” Shankar Raman observed.
Data across 17 road projects promoted by IRB Infrastructure Developers, Ashoka Buildcon and Sadbhav Engineering shows an uptick in collections of a sharp 16% year-on-year to nearly R618 crore for the three months to September. After a sluggish FY14, this is a welcome trend especially since it is broad-based; every project except Ashoka Buildcon’s Jaora-Nayagaon has reported an increase.
CARE Ratings has attributed the uptrend in collections to the partial withdrawal of the ban on mining in states like Karnataka. To be sure, IRB Infrastructure’s Tumkur-Chitradurg, has been faring better and reported a 13% y-o-y growth in toll collections in the three months to September, though some of this was due to a price escalation. The firm’s CFO Anil Yadav, said the rise in traffic last quarter had surpassed expectations of 5%.
Ashoka Buildcon’s CFO Paresh Mehta told FE traffic had started picking up over the last two quarters.
“We are seeing a growth in the range of 2-4% which is possibly the result of an improvement in the general economic outlook,” Mehta observed.
Analysts say the management of Sadbhav Engineering, the Ahmedabad-based road developer, too saw a reasonably good toll collections in the June-September quarter driven by better traffic flows, which were up anywhere between 8 and 12%. In the last three years, traffic on some of its roads had actually dropped by about 7-8%. Traffic on the Hyderabad-Yadgiri stretch is now doing much better—up about 16%—after the resolution to the political crisis in erstwhile Andhra Pradesh.
Having lost out on collections in the past couple of years owing to a sluggish economy, concessionaires are hoping to be able to make up for the deficit. They are building in an average increase of 7-10% over the long term. L&T’s Raman said, “We project growth anywhere between 7% and 10% on a long-term basis. There is some recovery in base traffic but given the negative levels in the last two years, the gap will take some more time to get covered”.