Expect Rs 46-47 cr revenue from WB toll proj: MEP Infra

MEP Infrastructure has received letter of acceptance for two projects from NHAI. It has got the rights to collect toll fee at NH-31 in West Bengal and Dasna toll plaza, a section of NH24 in Uttar Pradesh for a period of one-year. The fee collection will start after 15 days once the contractual formalities are completed, said Vice Chairman and Managing Jayant Mhaiskar in an interview to CNBC-TV18.The total remittance to authorities would be around Rs 42 crore for West Bengal project and Rs 28 crore for UP on annual basis payable weekly. It is a fixed remittance to the government. Mhaiskar expects revenues of Rs 46-47 crore on annual basis from the West Bengal Project and around Rs 36-37 crore from UP.Below is the verbatim transcript of Jayant Mhaiskar's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Reema: Could you tell us what is the daily collection of toll that you anticipate and foresee on these two projects NH24 and NH31 and what is the revenue share with the government?A: These two projects -- we have received the Letter of Acceptance (LOA) from National Highways Authority of India (NHAI), which entitles us to collect the toll fee from these two projects for a period of one year beginning from 15 days from now once we complete the contractual formalities. The total remittance to authority would be on annual basis so it would be Rs 42.03 crore for the West Bengal project and for Dasna that is in Uttar Pradesh (UP), we would be paying Rs 28.08 crore on an annualised basis payable weekly.Reema: It is a fixed amount that you pay to the government. It is not a percentage of the kind of revenues which you will get from the toll?A: No, it would be a fixed annual remittance, which would be paid to the authority. That is what the contract mentions. Typically the way the company operates is into the pure toll and OMT play where we assure a fix revenue to the government irrespective of the revenues or collections we make.Nigel: Could you also tell us what kind of revenues are you projecting from both these two projects, give us a breakup, how much you are foreseeing that you are getting from West Bengal, how much do you see coming in from UP, also traffic growth, what are you expecting over there?A: West Bengal should be roughly in the estimates of Rs 46-47 crore on an annualised basis. The Dasna project should be around Rs 46-47 crore.Reema: That would mean you won't be making too much money. For instance in UP if you only get Rs 36 crore, out of that you will be paying Rs 28 crore, so that is just a benefit of about Rs 8 crore and even for West Bengal, out of Rs 46 crore you could be paying Rs 42 crore to the government? So the net intake would hardly be Rs 4-5 crore?A: If you see the way the projects work is in terms of equity returns to the shareholders and the company, we work on a zero equity infinite IRR kind of a model. So it is a little unbelievable kind of situation where we pay a security deposit equivalent to one month of the toll collection and a bank guarantee equivalent to that amount so the equity infusion per se is zero against which you have ab absolute number of around Rs 8-10 crore on an annualised basis out of two projects. So we have a bouquet of projects, which we have already been doing and it also adds to the topline also on the profitability of the company.Nigel: Traditionally you were only involved in Maharashtra projects, both these two projects are outside Maharashtra, could you give us some kind of sense about what is your break up, currently how much of your revenue comes from Maharashtra and how much from outside Maharashtra?A: If you see the numbers historically, last five years we have been actively pursuing a lot of projects outside Maharashtra. So at a peak we will be working on different projects in 12 states at the point of time. Now we are working at almost 11-12 states again. So for the last five-six years, the focus has shifted from Maharashtra and also we have now been a Pan India toll operator. Just to give a quick break up of revenues from toll in Maharashtra is close to around 18-19 percent vis-a-vis the balance of the revenue comes from the projects outside Maharashtra.