Portfolio of 19 projects, 8 are commissioned: IL&FS Transp

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IL&FS Transportation initial public offering (IPO) has opened up today with a price band of Rs 242-258. If it lists at or around the higher level of the band, then it will command a market capital of Rs 5,000 crore. 

In an interview with CNBC-TV18, Shri K Ramchand, Managing Director of IL&FS Transportation, spoke about his outlook for the company.

Here is a verbatim transcript of an exclusive interview with Shri K Ramchand on CNBC-TV18. Also watch the accompanying video.

Q: Can you explain the IL&FS transportation model to us. How much of it is toll based and how much of it is annuity projects because it has attracted a lot of comparisons with the listed player IRB?

A: We have a portfolio of 19 projects of which eight projects have been commissioned so far. These eight projects are being commissioned from about 2000 till last year. We have 11 more projects which we have on the anvil. They are in the process of executing. Of the projects that have been commissioned, about 35% comes from tolls and 65% is annuity.

Going forward on 19 projects, this will remain almost the same. We will have about 35% annuity and 65% will come from toll based projects. We started this business in 1992 in IL&FS when we started a small road project in Madhya Pradesh, which went back to government.

When we started this company in 2000 as IL&FS Transportation, a fully owned subsidiary of IL&FS, we had four projects and the rest of them have been bid and won by this company from both the states as well as the central sector.

Q: Can you talk a little bit about what the key toll projects are that IL&FS Transportation is involved with right now and that constitute your order book?

A: The projects which have been commissioned, we have the Delhi-Noida bridge, Ahmedabad-Mehsana road, Vadodara-Halol toll road and Rajkot-Jaipur road. These are the four projects that are on toll.

Then the projects which are not on toll are the North Karnataka Expressway which goes from Belgaum to Maharashtra border. We have recently completed another large programme in Rajasthan which is also on toll based and is a 1,000 kilometer programme. These are the projects which have been commissioned so far. We believe that we would still be at the top end of the market with a positioning which will be higher than many others in the sector.

Q: Of these 11 to be executed projects that you spoke about, how many of these will go live over the next four quarters?

A: Three of them will be going live, two of them in Hyderabad, Andhra Pradesh and one of them in Rajasthan will be going live and the balance will be over the next three years.

Q: Before we come back to the business, give us one word on the financials. I don't have your FY10 debt figure, for FY09 it was as high as 1,800 crore and a huge chunk of the money that you are raising is being used to repay outstanding debt. Where is it that debt levels stand at for FY10 up until now?

A: Half year debt levels in the parent company which is the IL&FS Transportation where we are raising the money was thousand crore. I think you were talking about the consolidated figures which are at Rs 1,800 crore. If you look at the consolidated figures at half year 2010, it is about Rs 3,000 crore because we are financially closed many other projects and drawn down a lot of debt for these projects.

Out of these Rs 1,000 crore which is there in the parent, we will use Rs 500 crore of the issue to repay debt in our books and with a networth of Rs 1,800 crore which we believe will be post issue. Debt equity will be about 1:2.3 which gives us a sufficient gearing to going forward to invest in new projects.