Aim to award 5000 km projs, raise Rs 19-20K cr FY16: NHAI

Raghav Chandra, Chairman, NHAI is confident of awarding a total of 5000 Kilometers (km) by the end of fiscal, adding that the company is still receiving bids for projects. So far they have awarded 43 projects for 2600 km but several others have received bids and are in final stages of evaluation, he said. As of now the company has spent around Rs 30,000 crore and would end up spending about Rs 55,000 crore by end of fiscal due to lot of commitments in terms of land acquisitions and civil projects, said Talking about raising Rs 10000 crore via tax-free bond issue that opens tomorrow, he said it is the second tranche of raising this fiscal, adding that they have already raised around Rs 3900 crore but this is the first time an retail investor can participate at an attractive offer of 7.39 percent.  The National Highways Authority of India will start the sale of tax-free bonds on Thursday, December 17 with a plan to raise Rs 10,000 crore. The issue closes on December 31.The company had an approval to raise a total of Rs 24000 crore and could go in for more borrowing in the next 3-6 months. So, in all could raise around Rs 19000-20000 crore in FY16.Below is the transcript of Raghav Chandra’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Is this the only tranche of bonds that you will issue? Or is this the first tranche for the fiscal? A: This is our second tranche for this fiscal and we have already issued bonds worth Rs 3,900 crore, but this is the first time we are coming out for the retail investor and there is significantly interesting offer for the retail investor which offers tax free bonds at 7.39 percent with an effective yield of about 10.7 percent. So, this is a very exciting offer for retail investors and of course, there is an amount for the corporate and the institutional investors as well. Sonia: There has been a lot of interest in these tax free bonds especially after Indian Railway Finance Corporation (IRFC), but apart from the Rs 10,000 crore which is the second tranche that you mentioned, any more that you plan to do in the next 3-6 months? A: Yes, we might have to go in for more borrowing and we have actually I would say that we were allowed tax free bonds worth Rs 24,000 crore, so, we should overall raise about, I would say, Rs 19,000-20,000 crore. Latha: Actually, more doubt in terms of someone raising money. You are saying that the effective cost for the government is 10.7 percent... A: No, I did not. I said effective yield. Latha: I agree. But, that is what the government is losing. It would have got taxed to that extent, so effectively is paying 7.39 and foregoing taxes a little over 2 percent. If you were to raise loans from a bank directly, how much would it cost? Would you not get loans at less than 10.7 percent? A: I doubt it very much. The state of things, as they are, I would suspect that the banking industry would be far more circumspect. Latha: The base rates are running at 9.3 percent for State Bank of India. You would not get at 1 percent over base? You would not get at 10.3-10.5 percent? A: I doubt it very much. Certainly, it is worth trying and I will, now that you have mentioned it, I will try and talk to the SBI to see if they are ready to give it to us at that kind of rate. Yes, it is interesting. Sonia: How many projects have been awarded up until now, this year? If you could give us details on that. And how many projects do you plan to award by the end of the fiscal? A: We have already awarded projects about 43 projects so far. And that is for overall about 2,600 km. But there are several other projects which have already received bids and the bids are in the final stages of evaluation. So, I would suspect that in the fiscal, we should be able to award projects for overall of more than 5,000 km and we are happy to say that we are receiving bids for all the projects that we are going ahead with. Latha: Including viability gap funding for this year and for previous year projects, how much have you already spent this year? A: We spent, in terms of our spending alone, we have actually spent more than Rs 30,000 crore this year. And we have lots of commitments to make. Latha: You mean Rs 30,000 crore  so far, this year? A: Yes. And we would end up spending about Rs 55,000 crore by the end of the fiscal, because there are lots of commitments pertaining to land acquisition, pertaining to civil projects that we need to take care of. So, that is significantly more than it was last year. I would say it is about 30 percent more than last year. Sonia: You did mention that by FY16 end, you will award 5,000 km of projects right? That is if I am not wrong, lower than what you had estimated the last time. The last figure that we have is 5,600 km. So, have you lowered your target? A: No, we have not, we are just being circumspect when we are mentioning that. And, we had set for ourselves, this year a target of 5,000 and we are sure that we will go much beyond that. Latha: You said Rs 55,000 crore that you will spend this year in total would be 30 percent higher. Last year, you did Rs 40,000 crore? A: That is right. Latha: Can you give us an idea of project completion rate? There have been a lot of initiatives, you have compensated people on the build, operate, transfer (BOT) projects for delay when it is on account of the contractor. You have allowed back-payment, deferred payment of contractors, equity commitments, ensure a lot of environment and forest clearances as well – given all these initiatives, can you give us an idea of completed road km this year vis-à-vis last year? A: It may not be possible for me to give you the exact because this is all work in progress, but we do have overall, if you are looking at the overall picture, then we have done certainly more than last year and we have already completed in terms of actual completion more than 1,000 km this year and we hope to do about 2,000 km by the end of the fiscal. Latha: I have a number picked up from the net, so I do not know its sacredness. It says the completion has improved to 16 km from 12 km a day from last year. I just wanted to check the veracity of that number. A: That is correct, because the highway programme is so large and extensive that it is also being undertaken through the various state governments and through various other bodies of the Ministry of Road Transport and Highways. So, all those figures add up to what you have mentioned.