Essel has bought out the 26% stake of Roads Infrastructure India, a wholly owned subsidiary of London-based Infrastructure India plc.
In a sign of renewed vigour in the road sector, Essel Infraprojects, an enterprise of Dr Subash Chandra-led Essel Group, has acquired full control of Western MP Infrastructure & Toll Roads (WMP), that runs a 125 kilometre toll road.
Essel has bought out the 26% stake of Roads Infrastructure India, a wholly owned subsidiary of London-based Infrastructure India plc.
The Rs 203 crore deal augurs well for Essel Infraprojects, the promoter of the project, as its minority partner has sold its 26% stake at a discount of about 13% to the £25 million value ascribed to the stake in its books as on September, Infrastructure India plc has disclosed to the London Stock Exchange on Friday.
WMP operates a 125 km toll road in Madhya Pradesh since 2008 on build-own-transfer basis under a 25-year concession with the Madhya Pradesh Road Development Corp.
The four lane expressway connecting the towns of Lebad and Jaora provides crucial links to National Highway 8 from eastern Rajasthan to the industrial city of Indore as well as a link to National Highway 3, which connects Mumbai to Agra.
The first phase of 67 km of toll road was made operational in 2009 while the second phase starting operations in June 2011.
While traffic was initially ahead of expectations, growth slackened with the slowing economy forcing Essel to revise its traffic growth forecast downwards.
But after a not-so-great FY15, traffic improved in FY16.
"In FY15, overall toll revenue increased by 3.6% to Rs 116.7 crore. When considering the 7% annual escalation in tolling rates, this data indicates negative overall traffic growth of around 3% for the fiscal year," Infrastructure India plc had revealed in its FY15 annual report.
But in April 2015, toll revenue increased by 13.5% year on year.
And for the six months ended September, collection grew by a steep 22.5% over the previous period.
Besides being helped by better economic activity, the operator improved collection efficiency by installing eight weighbridges at both toll plazas in an effort to ensure that appropriate toll charges are levied on overloaded commercial vehicles.
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