L&T Halol Shamlaji Tollway defaults on Rs 1,014 crore loan

MUMBAI: L&T Halol Shamlaji Tollway, a 100% special purpose vehicle promoted by L&T Infrastructure Development Project, has defaulted on Rs 1014 crore payment to lenders which was due in August due to cash shortage due to low toll collections. The total project cost was pegged at Rs 1305.0 crore included equity of Rs 261 crore and debt of Rs. 1044 crore indicating a debt equity ratio of 4:1.

This is the second SPV promoted by L&T Infrastructure Development Projects that has defaulted in recent weeks. L&T Chennai Tada Tollway with Rs 475 crore loan defaulted due to difference on land acquisition with National Highway Authority of India.

Following the delay in repayment of loan, Icra has downgraded the loan of L&T Halol Shamlaji Tollway from (ICRA) BB+ which indicates investment grade to (ICRA) D indicating junk category. The SPV has mandated to carry out four laning of 173 km from Halol to Shamlaji in Gujarat. The project road is a part of State Highway-5 which starts at Vapi and runs through the eastern part of Gujarat.

A statement issued by Icra said that since the beginning of tolling operations, the traffic volume in this stretch has been significantly lower than the initial estimated, due to presence of an alternate route, resulting in lower than anticipated cash accruals. After awarding the SPV the Gujarat government improved the competing road that led to diversion of traffic from the project stretch. The company was actively pursuing various avenues to increase toll revenues and to minimize the cash shortfall. “In addition to deferment of revenue share payments, the company had also requested for a revenue shortfall loan from the Gujarat State Road Development Corporation (which is under active consideration). Further, the company was looking at refinancing the existing borrowings, which would have resulted in reduction of repayment commitments in the near to medium term,” said a statement issued by Icra.