In a setback for MEP Infrastructure, the Maharashtra government has decided to exempt light motor vehicles and MSRTC buses from paying toll fee at three toll plazas.
In an interview with CNBC-TV18’s Sumaira Abidi and Reema Tendulkar, Jayant Mhaiskar, Vice Chairman and Managing Director, MEP Infrastructure, discussed the impact it would have on the company.
Below is the transcript of the interview on CNBC-TV18.
Sumaira: Could you give us a sense on what could be the potential impact on revenues as well as profitability because of this move?
A: As we are all aware, Government of Maharashtra has come out with a notification exempting light motor vehicles and Maharashtra State transport buses for specific tolls identified which does not include Mumbai entry project and the sea link.
Having said that, there are three projects which are operated currently by the company and its special purpose vehicle -- mainly Kalyan, Bhiwandi which is operated by the company -- Integrated Rural Development Programme (IRDP) Solapur and Baramati toll project.
The impact of revenue in terms of cars or ST buses being exempted under this notification is very minimum or I would say insignificant in terms of the total overall revenue for FY15 and going ahead.
Reema: The company right now has 18 toll collection booths out of which three of them are exempt from any toll. Is that correct?
A: As far as MEP is concerned, there are few projects which are run by a company under National Highways Authority of India (NHAI) which are also in Maharashtra which has no bearing as per this notification.
Also, Mumbai entry point which has five toll plazas and sea link which has one toll point are not in the list of tolls where cars would be exempted.
Reema: You are saying that the impact on the revenues will be negligible but whatever be the limited impact, will there be any compensation from the government generally as a policy?
A: We had issued an amendment to our earlier red herring prospectus (RHP) which we had filed with the exchange and the regulator. We had specifically mentioned that as on 14 October, the total impact on revenue by these three projects is below 5 percent and also the cars’ impact would be very insignificant.
Sumaira: Also some of the other toll plazas in Maharashtra have been shut down by the government. There were some reports that 12 toll booths will be shut effective the end of May. You have a heavy dependency on Maharashtra tolls; you have five entry points into Mumbai alone. Would these moves not pose a serious risk to your overall business model itself?
A: Frankly no because if you even take Mumbai entry point project as one of the projects, the total impact on revenue on the overall portfolio what we have is less than 20 percent.
Reema: There will be no compensation from the government even though for you the impact you are saying is sub-five percent on account of the three toll booths but I am sure for other companies there will be some impact. So, generally as a policy, is there going to be compensation from the government for the revenue loss?A: Just to correct you, the impact on the total revenue which includes car is less than 5 percent. If you take the cars alone, it will be less than one percent. Having said that as far as we are concerned or even the others are concerned, we understand there will be a mechanism which will be derived by the government.
As of now we are expecting some information from the government of Maharashtra on the way the compensation would be paid either as per the media reports what we have read would be in way of extension in concession period or adding the toll on the heavy vehicles or by way of a cash compensation.
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