Airport metro saviour faces Rs 1,600-cr burden - Business Standard

Airport metro saviour faces Rs 1,600-cr burden

The financial assistance could only be given to DMRC after a nod from the Empowered Group of Ministers

Anusha Soni  |  New Delhi  

July 27, 2013 Last Updated at 23:09 IST

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Delhi Metro Rail Corporation (DMRC) has sought the government’s help to bear the Rs 1,600-crore debt burden it might have to face after taking over the operations of the airport metro line.

The corporation, which took over the airport metro after Reliance Infrastructure’s special purpose vehicle, Delhi Airport Metro Express Pvt Ltd (DAME), withdrew from managing the service, has written to the ministry of urban development seeking assistance “in case they end up paying 80 per cent of the debt, if the lenders refuse to find another concessionaire”.

A director on the DMRC board told Business Standard the current debt of the airport metro link was about Rs 2,000 crore, of which 80 per cent, or Rs 1,600 crore, was what DMRC could end up paying.

The only way out for DMRC would be if the lenders, a consortium of 10 banks, find another concessionaire for the project, which seems unlikely in the current situation. The financial assistance would be given to DMRC only after a nod from the empowered group of ministers (EGoM) headed by the finance minister. The matter is expected to go to the EGoM after the lenders take a call on the project, likely in eight to 10 days.

According to the concession agreement between DAME and DMRC, the corporation would have to pay 80 per cent of the debt, even if DAME defaults. The clause was put in to ensure greater protection to the lenders.

Another sticky issue is the subordinate debt DAME had raised by diluting the debt-equity ratio of 70:30, which it claimed to have the right to do under the agreement. DAME’s equity in Delhi Airport Express is Rs 1 lakh.

A questionnaire sent to Reliance Infrastructure was unanswered.

DMRC officials said R-Infra had reduced equity because it wanted to exit the project.  “The dilution of equity was done to bring this sum under the definition of debt. If a higher sum is brought under the definition of debt, it helps the company, as equity cannot be recovered in case the concessionaire is found to be in breach of the contract,” said a DMRC official.

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COLLATERAL DAMAGE
Project cost: Rs 5,800 cr; 50:50 partnership of DMRC and DAME
Debt:equity ratio decided for DAME 70:30
Current debt: About Rs 2,000 cr
Subordinate debt: Rs 800 cr
Current equity: Rs 1 lakh
If DAME is found liable of breach: DMRC pays Rs 1,600 cr to lenders as debt due and operates the airport metro express service; no equity refund
If DMRC is found to be liable of breach: DMRC pays Rs 2,000 cr debt and 150% of equity
Other disputed claims: Rs 800 cr of subordinate debt to be a matter of legal interpretation of debt; DMRC calls R-Infra’s other claims of about Rs 795 cr exaggerated

http://www.business-standard.com/article/economy-policy/airport-metro-saviour-faces-rs-1-600-cr-burden-113072700683_1.html

Japan sanctions $ 700 million loan for Mumbai Metro - IB Live

Japan sanctions $ 700 million loan for Mumbai Metro

IANS
May 29, 2013 at 05:59pm IST

Tokyo: Japan has given a loan of 71 billion yen (around $700 million) for the Mumbai Metro Line-III project. The exchange of notes was signed in this regard here on Wednesday in the presence of Prime Minister Manmohan Singh and his Japanese counterpart Shinzo Abe.

"The two Prime Ministers welcomed the signing of the Exchange of Notes for yen loan totalling 71 billion yen for the Mumbai Metro Line-III project, as well as the yen loan of the fiscal year 2012 totalling 353.106 billion yen for eight projects," a joint statement by the Prime Ministers said.

"Prime Minister Singh appreciated the pledge by Prime Minister Abe for the Campus Development Project of Indian Institute of Technology, Hyderabad (Phase 2) for 17.7 billion yen and the Tamil Nadu Investment Promotion Programme for 13 billion yen," it said.

Japan has also offered to upgrade the speed of passenger trains on the existing Delhi-Mumbai route to 160-200 km per hour (semi-high speed railway system).

The statement said Japan has offered to upgrade the speed of passenger trains on the existing Delhi-Mumbai route to 160-200 km per hour (semi-high speed railway system).

Manmohan Singh noted Japan's interest in supporting the introduction of high speed railway system in India. Both sides decided to co-finance a joint feasibility study of high speed railway system on the Mumbai-Ahmedabad route.

Expressing satisfaction with the progress in implementation of the Western Dedicated Freight Corridor (DFC), both sides signed the first tranche of the Main Loan Agreement for Phase-II totalling approximately 136 billion yen.

Both sides also welcomed the progress made in the Delhi-Mumbai Industrial Corridor (DMIC) project. "While continuing our development partnership, especially in the infrastructure sector in India, we will also strive to substantially expand the flow of trade and private investment," Manmohan Singh said.

http://ibnlive.in.com/news/japan-sanctions--700-million-loan-for-mumbai-metro/394783-3-237.html

Will Mumbai Metro meet the October 2013 deadline? - Hindustan Times

Will Mumbai Metro meet the October 2013 deadline?

Hindustan Times  Mumbai, April 30, 2013

First Published: 01:27 IST(30/4/2013) | Last Updated: 01:29 IST(30/4/2013)

Although MMRDA officials have claimed that the stretch of the Metro from Versova to Airport Road will be fully functional by October this year, the situation on the ground is very different.

HT gives you a photo tour of the progress of work on the Versova-Andheri-Ghatkopar corridor of the Metro rail project.

1) While tracks have been laid at the Versova car shed, construction work is far from over

2) However, pillars seem to be in place on the stretch near the Western Express Highway at Andheri (East)

3) Workers use a makeshift bridge at the metro station at Sakinaka, where work is on in full swing

4) The situation is no different at the last stop on the corridor, at Ghatkopar

5) The bridge at Andheri station, is one of the two on the Metro corridor that connects Versova, Andheri and Ghatkopar

6) A worker adds finishing touches to the bridge over the railway station at Andheri

http://www.hindustantimes.com/india-news/mumbai/will-mumbai-metro-meet-the-october-2013-deadline/article1-1052465.aspx

Colaba-Seepz metro could race ahead of Charkop line

Published: Monday, Mar 25, 2013, 10:00 IST
 By DNA Correspondent | Place: Mumbai | Agency: DNA


The second metro route –Charkop-Bandra-Mankhurd – seems to be getting less attention with each passing year. On the other hand, the third route – Colaba-Bandra-Seepz – has not only got more funds but the chief minister’s backing as well.

The Mumbai Metropolitan Region Development Authority’s (MMRDA) budget has been constantly shrinking, from Rs6,653 crore for 2009-10 to Rs4,028 crore for 2013-14. And yet, it has earmarked Rs500 crore for the initiation of the 33km-long third corridor, which is five times more than the amount allocated last year.

“Allocation in the budget this year for the metro rail is a good enough indicator of the MMRDA and chief minister wanting to speed up the implementation of the third corridor,” said an official who spoke on the condition of anonymity.

The third corridor will be underground at a total estimated cost of Rs24,500 crore. Clearances from the ministry of environment and forests (MoEF) as well as the viability gap funding for it are still awaited. Even the tendering process is yet to commence.

On the other hand, works for the 32km-long second route, with a price tag of Rs8,250 crore, have already been awarded, but it is yet to take off due to several hurdles, such as Right of Way and MoEF clearances. Allocation for it too has been downsized from Rs138 crore last year to just Rs10 crore in the latest budget.

In the past one year, the MMRDA has been in two minds whether to go ahead twith the second metro corri dor. Although it is seeking legal opinion to scrap the contract with Reliance Infrastructure, it is also sending a fresh proposal to the MoEF to get permission for its proposed car depot at Charkop over mangrove land.

“Such a small amount for a project that has already been awarded means that less importance will be given to it,” added the official.

http://www.dnaindia.com/mumbai/report_colaba-seepz-metro-could-race-ahead-of-charkop-line_1815333

Future metro lines in city may be underground - HT - 13/2/13

Future metro lines in city may be underground

Ketaki Ghoge, Hindustan Times

Mumbai, February 13, 2013

The first corridor of the Mumbai metro is likely to be the only elevated line, with the state planning to build underground lines for the other proposed corridors. Despite the higher cost involved in building 

underground lines, the Mumbai Metropolitan Region Development Authority (MMRDA) does not want to build elevated lines to avoid the problems of land acquisition, encroachment, traffic dispersion, and the resulting delays in time and cost.

"Other than the eastern suburbs, which have less congested areas, the ground realities of other parts of the city are such that an underground metro would be the way forward," said MMRDA chief Rahul Asthana.

The empowered committee on Mumbai Makeover, chaired by chief secretary Jayant Kumar Banthia, was also of the same view in its meeting in January.

While the first metro corridor, Versova-Andheri-Ghatko-par, is expected to be open for public next year, the contract for the second metro corridor, Charkop-Bandra-Mankhurd, is likely to get terminated due to delays. "If the contract is scra-pped, we will consider extending this line to Dahisar. We will also rethink on the decision to go elevated and chose a complete underground route," said a senior government official.

http://www.hindustantimes.com/India-news/Mumbai/Future-metro-lines-in-city-may-be-underground/Article1-1010862.aspx

MMRDA to Scrap Contract for 2nd Metro Line

Dear Friends

 

It appears that finally authorities have reconciled about the flawed CBM Metro Line (2) and decided to scrap the project.

Attached is a report in today's Hindustan Times.

Hope now they seriously reconsider option for the Underground Metro.

Regards,

Nitin Killawala.

Growth concerns to weigh on R-Infra's valuations - Business Standards

Growth concerns to weigh on R-Infra's valuations

Jitendra Kumar Gupta  |  Mumbai  

January 30, 2013 Last Updated at 00:46 IST

Though its electricity business provides steady growth, the construction and engineering (EPC) business, which continues to report declining revenues, is a concern forReliance Infrastructure. The EPC business, which accounted for about half the company’s revenues, saw its share fall to a third at the end of December. During the quarter ended December, EPC revenues fell 38 per cent, resulting in a 14-per cent year-on-year fall in consolidated revenues.

Visibility in the EPC business remains a concern; analysts don’t expect any of the hurdles to be resolved soon, owing to the overall economic slowdown and the weak investment climate. Earlier, the company had estimated Rs 12,000 crore of revenue in the EPC business for FY13. Later, this was scaled down to Rs 9,000-10,000 crore. However, looking at the current growth (for the April-December period, the EPC segment recorded revenue of Rs 5,392 crore), analysts' expectations are low. The company’s order book has fallen from Rs 17,300 crore at the end of March 2012 to Rs 12,145 as of December-end.

Sustaining healthy growth in the EPC business is important, as this would take care of fixed costs incurred on the company’s infrastructure projects. Apart from the metro rail projects in Delhi and Mumbai, Reliance Infrastructure has eight operational road projects. Recently, its Delhi metro project had been restarted, after obtaining the required clearances. Work on the Mumbai metro is progressing, albeit with some delays. Despite a large portfolio of projects, the infrastructure segment, which accounts for 37 per cent of the capital invested in business, contributes just three per cent to overall revenues. During the December quarter, about 38 per cent of operating profits were used to pay interest costs (which rose 27 per cent year-on-year). Given the recently executed projects in infrastructure, interest costs could remain at elevated levels. This would keep a tab on consolidated earnings, as seen in the December quarter (the company reported a 5.6 per cent rise in net profit at Rs 429 crore, excluding gains of about Rs 300 on the sale of shares of Reliance Power).

MUTED BOTTOMLINE
In RS crore	Q3'FY13	FY13E	FY14E
Revenues	5,296	22,216	25,378
% change y-o-y	-14.0	25.7	14.2
Ebitda	775	2,103	2,122
% change y-o-y	-2.6	32.3	5.3
Net profit	429	1,333	1,459
% change y-o-y	5.6	-37.2	9.5
EPS (Rs)	-	49.8	54.5
PE (x)	-	10.4	9.5
Consolidated financials Source: analyst reports

“The results are below UBS estimates, mainly due to a poorer-than-expected performance in the EPC business (primarily execution related issues),” Pankaj Sharma, who tracks the company at UBS Securities, said in a recent note.

Lack of substantial growth and concerns over some of its projects like the Mumbai metro is reflected in the current low valuations. Given the nature of business, analysts prefer to value the stock on the basis of assets. Today, the stock closed at Rs 519.35 on the BSE, 0.5 times its book value of Rs 995 a share. Though the company has a strong balance sheet and a huge asset base, comprising large projects in the power (932 Mw generation project, distribution assets in Mumbai and Delhi) and infrastructure segments and a 36.52 per cent stake in Reliance Power (worth Rs 9,400 crore at current prices), considering the concerns, the stock is unlikely to rise in a hurry.