Noida Toll sees 15% rise in traffic, 20% in revenues

May have more than doubled net profit in fiscal 2008

NEW DELHI: The Noida Toll Bridge Company Ltd expects the traffic on its DND Flyway to increase by about 15% year on year to 120,000 vehicles per day by the end of the current fiscal year that began Tuesday, the company’s president and chief executive officer Pradeep Puri said on Monday.

 “The revenue is likely to increase by about 19%-20% on-year with the increase in vehicle traffic,” Puri told DNA Money.

“The current traffic is about 105,000 vehicles per day,” he said.

DND Flyway is a 7.5 km-long tolled road and bridge connecting New Delhi to Noida.

The Noida Toll Bridge Company Ltd, promoted by the Infrastructure Leasing & Financial Services Ltd, owns the project on a build-own-operate-transfer basis.

It has to operate the road and transfer it to the government after it earns the project cost plus 20% per annum for 30 years.

It also includes a link from southern Delhi to Mayur Vihar area in the New Delhi, which was opened for the public in the last fiscal quarter only.

“We have about 10,000 vehicles per day plying on the Mayur Vihar link currently. We expect this to go up to 15,000 in the next 12 months,” Puri said, adding that the link will witness a “further spurt in traffic with the Reliance’s mall when it is operational”.

Reliance Industries Ltd is developing a 42,000 square feet hypermarket in New Delhi’s Mayur Vihar area, where the Mayur Vihar link of the DND Flyway lands. The mall is in the final stages and is expected to open in the first week of June.

Noida Toll Bridge expects to more than double its net profit for the fiscal year 2007-08 from Rs 11.1 crore in the previous fiscal year, on the account of the increased traffic.

The company had already reported a net profit of Rs 21.33 crore in the nine months that ended December 2007.

“Our costs are primarily the interest on the debt that we have and the operation and maintenance, which is done by our joint venture company, and hence are largely fixed. Therefore, most of our revenue growth contributes to increasing the operating margins,” Puri said.

NTBCL has about 250 acres of surplus land and has sought government’s permission to develop it for commercial and residential purposes. “We are in talks with the authorities concerned. As and when we get the approval, we will start developing the land,” Puri said.

Analysts say land development is very important for the company to recover its project cost, as so far there has been a huge shortfall in its earnings since 2001, when the project was commissioned.

“In the initial years, the traffic was very low. We got only 14,000 vehicles per day in the first year against an estimate of 67,000 vehicles per day,” Puri said.

The shortfall in the earnings each year got added to the project cost every following year, raising the revenue target.

“As a result, the cost to be recovered had ballooned to Rs 1,100 crore at the end of the FY07,” Puri said. The current cost to be recovered may be about Rs 1,250 crore, he added.

“If the company gets some land development rights, then they may be able to recover the project cost, but not just by earning toll revenue,” said Charulata Gaidhani, an analyst with the Almondz Research.

“It may, however be difficult to get the land development rights considering the environmental issues,” says an analyst with a local research and brokerage firm, requesting anonymity.

The company is also looking to issue bonds worth Rs 175 crore to get a long-term debt, as its current Rs 150 crore debt has to be retired between 2008 and 2004.

“We currently have the debt at 10.02% interest rate. We will issue the bonds for refinancing of the project once we get the appropriate interest rates,” Puri said, adding the company can issue the bonds when interest rates come down to 10.25%-10.5% against the current about 11.5%.

Noida Toll currently has a debt-to-equity ratio of 0.9:1 versus 2:1 or 3:1 acceptable for such projects.

“We are also looking for the new projects, as those can entirely be funded through the new debt, hence we have the room to raise that money, bringing down the entire project cost by about one-third,” Puri said. He did not give details of the new projects.

The company is also considering paying dividend to the shareholders. “We have cash and we would like to reward our shareholders. We are working towards it,” he said, but declined to say when will the dividend be announced.

a_shaleen@dnaindia.net