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Last Updated : Oct 26, 2015 04:36 PM IST | Source: CNBC-TV18

Loan rejig to pare finance cost by Rs 110cr: Sadbhav Infra

Nitin Patel, Director, Sadbhav Infrastructure says the company is already working to convert loans for its Ahmedabad Ring Road project and he expects FY16 finance costs to come down by Rs 100-110 crore.

The recently listed Sadbhav Infrastrucutre Projects will undertake restructuring of three of its road assets to reduce interest costs. The road major is in talks with banks like HDFC Bank, Kotak Mahindra, Axis and ICICI to refinance two of its three projects.

Speaking to CNBC-TV18, Nitin Patel, Director, Sadbhav Infrastructure says this loan refinancing process will be completed this quarter. Sadbhav’s current consolidated debt stands at Rs 6,300 crore.

Furthermore, he says the company is already working to convert loans for its Ahmedabad Ring Road project and he expects FY16 finance costs to come down by Rs 100-110 crore.

Meanwhile, he expects the Udaipur project to become operational this quarter.

Below is the edited transcript of Nitin Patel’s interview with Nigel D’souza and Reema Tendulkar on CNBC-TV18.

Nigel: Could you confirm that this news is in fact bang-on in terms of you looking to refinance two out of these three projects and could you tell us which ones, because we have heard that you are looking to refinance the Ahmedabad project, Maharashtra project as well as the Nagpur project, so could you confirm these details?

A: I would like to put it in a different way because out of these operational special purpose vehicles (SPV), we have already moved to convert the debt into the bond structure for Ahmedabad Ring Road post the RBI gave approval to banks to give the credit enhancement for the infrastructure projects.

So, currently Ahmedabad Ring Road already is having the A+ credit rating. So, we are expecting that it will move to AA+ rating. So, obviously this will give further leverage for reduction in the cost of funds.

Apart from that Maharashtra border check-post from April 1, the toll rate has increased by another 22 percent and we have seen the phenomenal traffic growth almost around 15-16 percent in entire commercial segment.

So, this has resulted into the first cut reduction by the existing set of lenders by almost around 130 basis points has been reduced by the banks. With effect from July 1, we are paying lesser interest.

We are further expecting another 125 basis point cut because of the refinance activity, for which some of the banks have already.

Apart from that, the four projects-- the Dhule-Palasner, Bijapur-Hungund, Aurangabad-Jalna and Hyderabad-Yadgiri-- we have already got a sanctions basically for refinancing the whole debt of all these four projects and we got almost around 130-135 basis point cut over the cost that we paid just two quarters back.

So, we this is a significant move actually for Sadbhav Infrastructure Project Limited’s (SIPL) entire portfolio. So, we are totally focusing on these aspects this quarter, we are trying to complete refinancing activity of entire SIPL portfolio.

Reema: So, just to clarify, for the Ahmedabad Ring Road project as well as for the Maharashtra border check-post project, refinancing has already begun. It is on four additional projects like Dhule, Bijapur, Hyderabad that you are looking to refinance or you have got an in-principle approval for restructuring which will lower your interest cost by 135-140 basis points?

A: We have got a final sanction from the banks for the four projects. Now we have to just complete the formalities to complete the documentation and the replacement of the new set of lenders with the existing lenders.

Nigel: Let us talk about the refinancing of this Ahmedabad Ring Road project. You told us for the Maharashtra border, it has already come down by around 130 basis points, so what is the total debt that both these two projects have and what will the total cost of lending come down particularly for these two projects?

A: The total outstanding debt is Rs 1,040 crore and as of now, we are paying 11.30 percent. So, earlier we were paying actually 12.70 percent. So, that has come down to 11.30 and post this refinance we are expecting it should come down to 10.15 or 10.1 percent for the Maharashtra border check-post.

In Ahmedabad Ring Road, the outstanding debt is Rs 340 crore. Of this, we are paying at 10.95 percent because with this because we are going into the bond structure; we are planning to reach a AA+ number. And post this we are expecting this should come down to almost close to around 9.7 or 9.8.

Reema: So, your total finance cost, say as of FY15, was at Rs 526 crore. Post all these developments and the initiatives that the company has undertaken, how much has your finance cost come down by and to what level?

A: The finance cost and the interest rate have reduced by the banks. But both put together, we are expecting that post this refinance, we may get on an annualised basis over FY15, minimum around Rs 100-110 crore of interest cost saving actually. That is obviously straight away at the bottomline.

And the second most important thing post the listing of this initial public offering (IPO) has been utilised to pass some of the debt. So, Rs 180 crore facility of ICICI bank has been repaid by SIPL.

Around Rs 130 crore has been paid back to Sadbhav Engineering.

So, all put together, we have seen cost reduction of Rs 35-40 crore because of the repayment of the debt.

Nigel: One final question in terms of your operational performance, we have your toll revenue. It was at around Rs 165 crore for the past quarter where there are few more projects will come on stream. What will your quarterly revenue look like for the next couple of quarters?

A: Obviously, we are expecting that the Shreenathji-Udaipur will be functional in this quarter itself. We have already applied for final commercial operations date (COD) to National Highways Authority of India (NHAI).

We are expecting to get the approval from NHAI within a couple of weeks. So, this will generate seven more check-posts. We are expecting to start generating revenue before March actually. So, this will also further add up the revenue. So, obviously, quarter-on-quarter revenue continues to grow up.

And apart from that in Q4 of the current fiscal, Bhilwara-Rajsamand may also become operational. In all, 10 projects will be operational so far as SIPL is concerned. But we may see continuous growth over seven to eight quarters because various stages projects are also becoming operational. Apart from that, the traffic is also growing significantly almost in all the corridors of the projects that the company has.

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First Published on Oct 26, 2015 01:51 pm
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