Analyst Meet / AGM - Analyst Meet
Targets consolidated Debt:Equity ratio of around 3 by FY'17
ILFS Transportation Networks (ITNL) held its conference call on 1st June 2015 and was addressed by K Ramchand Managing Director
Key Highlights
ITNL has total of 12838 lane km under its road assets portfolio comprising of a mix of toll and annuity based projects. It has a Pan India presence with 27 BOT projects across various States in India.
The company has an operational road asset portfolio of 8899 lane kms of highways, and one bus transportation project as on Mar'15.
The company has an order book of about Rs 11900 crore. About Rs 9000 crore of the projects will be executed in next 18 to 24 months. 51% of the order book is from NHAI, 38% from Non NHAI road projects and rest are non road projects.
ITNL's international operations, primarily through Elsamex are in road segment and spread across Spain, Portugal, Latin America, UAE and China.
As on April'15, about 2100 kms of 23 road projects are at RFQ stage post qualification which translates into revenue of around Rs 33000 crore. 14 of these projects are from NHAI, 7 from States and rest from MORTH (Ministry of Road transport & highways).
The company has not won a single road project in FY'15 as the pie was too small and the bids were irrational.
Also there were lots of uncertainties. Government at one point in time, thought to award road contracts only on EPC basis and no BOT projects. Gradually, based on industry interactions, bankers and other lenders issues, Government is coming out with a Hybrid model for BOT projects.
In FY'15, revenue was lower by about 1% on YoY basis on a consolidated level and stood at Rs 6500.90 crore. The company was able to make operational 3 road projects in FY'15.
Construction income was lower by 11% YoY and stood at around Rs 3605 crore. There was a 46% de growth in fee income as no new projects were won by the company in FY'15. Both these drops were offset by a 12% growth in toll/annuity revenue to Rs 1250 crore and a 75% growth in O&M income to Rs 200 crore and a 4% growth in Elsamex revenue to Rs 1110 crore.
EBIDTA income in FY'15 was higher due to higher O&M income, toll/annuity income and other income while lower construction costs and other expenditure also helped in improving the margins.
Gross Average Daily collection from Toll and Annuity in Q4 FY'15 is around Rs 6.8 crore. Company started tolling in Baleshwar Kharagpur, Pune Solapur, NAMEL, Barwa Adda, Moradabad Bareilly and Warora chandrapur projects in FY'15. Total toll revenue in FY'15 stood at Rs 855 crore as compared to Rs 600 crore for FY'14.
Consolidated debt equity ratio stands at 4.1 with total debt at Rs 23513.50 crore as on Mar'15.
The CNTL project which saw an impact in construction activities in FY'15 due to natural calamities in J&K States is back on track and management expects the project to commission as per the time schedule in FY'17.
The problem for the company is while most of the loans have been booked and interest payments are getting capitalized, most of the projects say around 2/3rd on value wise basis, are yet to be operational. These projects will be operational by FY'17.
For FY'15, total of 3091 km of road projects were awarded by NHAI and about 4270 km were awarded by MORTH. Of the total road projects awarded by NHAI only 24% were on BOT basis. NHAI also has amicably terminated some of the past stuck projects.
NHAI's total expenditure in FY'15 was around Rs 21000 crore. In FY'16, the target is placed at Rs 75000 crore. About 9000 km is targeted in FY'16 by NHAI through BOT and EPC route. The increase of Rs 55000 crore is funded by increased budget allocation of Rs 15000 crore and increase in borrowings by Rs 40000 crore.
In the Hybrid model which is proposed by the Government, NHAI, would bear the revenue risk and would fund 40% of total project costs. Balance 60% the concessionaire has to bring in with suitable debt equity mix. The whole idea of such a hybrid model is to bring back the lenders and investors in the road BOT business, which currently they are averse to.
ITNL will continue to focus on BOT projects and O&M projects in India while internationally; O&M space will provide significant opportunity and space.
Going forward the focus area for the management in FY'16 and in FY'17 is:
To complete current order book on time and finish the balance lengths in some of the projects.
Recycle capital through divestment in toll and annuity assets
Equity to be infused to the tune of Rs 655 crore of which 60% is for Rapid Metro Gurgaon Project Phase 2
Recapitalize balance sheet through QIP/CB/PIPE routes
Refinancing of annuity portfolio, release sub-debts
The targets to achieve by FY'17 are:
Consolidated D/E of 3
Consolidated Ebidta margin expansion to 35-40%
Consolidated ROE expansion back to 18-22% range.
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