Sustained toll growth makes developers upbeat on H2

TOLL COLLECTIONS by highway developers grew an annual 4.4 per cent in the April-june period, sustaining an uptick that began in June 2015. A good monsoon and a pick-up in the economy, developers say, would see traffic growing further in the second half of 2016-2017.

Varun Mehta, chief financial officer, Sadbhav Infrastructure Project says the outlook for traffic remains robust with the second half of the year expected to bring higher volumes. “We saw a traffic growth of 6.6-7 per cent across our roads in Q1 and it should be good later in the year too thanks to the good monsoon,” Mehta said.

Virendra Mhaiskar, chairman and managing director, IRB Infrastructure Developers attributed the growth to a pick- up in the economy as well as a slight shift of traffic from railways to roads, particularly on the NH8. “For years together, the railways had not increased tariffs which are being revised now for some commodities. This, in turn, has also contributed to the shift of some traffic to the roads. We have reported a 7-8 per cent volume growth across most projects,” Mhaiskar said.

A pick-up in traffic at ports and in industrial areas — especially the automobile belts — has helped too, even as negative wholesale inflation has impacted revenues. Toll rates are revised annually using the WPI as the benchmark and although WPI is now moving into a positive trajectory, the full impact of this will be seen only in 2017-18. The WPI remained negative for 17 months and hit its lowest level of -5.06 per cent in August last year. However, in April it rebounded to a positive 0.34 per cent, and rose 3.55 per cent in July.

Vehicular traffic — both for trucks and cars—has seen an uptrend with toll collections coming in at Rs 893 crore for a clutch of 19 road projects, up 14 per cent year-onyear. These include roads developed by IRB Infrastructure, Ashoka Buildcon and Sadbhav Engineering. The growth was a shade lower than the rise in collections in the Januarymarch period of 16 per cent y-o-y to Rs 864 crore.

IRB’S Mumbai-pune stretch continued its double digit growth in toll and traffic. The growth of 17.5 per cent in toll collections was entirely on account of traffic growth. Similarly, in other projects like Surat-dahisar and Tumkur-chitradurga, the 5-7 per cent growth in toll collections is led primarily by traffic growth. On the Ahmedabad-vadodara section, the toll collections for the developer more than doubled to nearly Rs 88 crore.

Mehta of Sadbhav says the roads around Aurangabad and Pune stretch are seeing higher growth as a result of more activity in the automobile belt. “Our Aurangabad-jalna project has done well as development activities in Shendre and Dhulera have picked up under DMIC Phase I. Dhule-palesner has benefited from the increase in automobile dispatches from factories in Chakan, Pune. Increase in industrial activity around Chennai and Bengaluru has contributed to the growth in traffic volumes on the Bijapur-hungud stretch,” he said.

Although a recovery in the economy has had a positive impact on traffic and toll in central and eastern India — Chattisgarh, Odisha and West Bengal — the upturn in mining is yet to fully reflect on these numbers.

In Ashoka Buildcon’s Sambhalpur project for instance, collections after achieving full commercial operations have improved to Rs 16 lakh per day against Rs 14 lakh per day in Q1FY16. However, Paresh Mehta, chief financial officer, Ashoka Buildcon told analysts the mining recovery will add another Rs 4 lakh per day to the collections. Toll collections for the company’s Dhankuni, Bhandara and Jaora projects grew in the range of 7-16 per cent y-o-y, while Belgaum reported growth of 4.3 per cent y-o-y. FE