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NHAI to be flag-bearer of Centre’s asset monetisation plan

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highways

The National Highways Authority of India (NHAI) will be the flag-bearer of the government’s asset monetisation programme with a plan to raise about Rs 30-40,000 crore through monetisation of its operational stretches over the next two years.

The company officials indicated that the disruptions in wake of pandemic delayed some of its asset monetisation plan, but with traffic fast returning to near normal levels now, about Rs 10,000 crore of road assets would be monetised by NHAI in the current year (FY 22) and the exercise would kick up pace next year with doubling or tripling of the numbers in the next few years.

With the country in firm grip of the second wave of Covid pandemic in the months of April and May, and subsequent restrictions on mobility and partial lockdown, tolling at national highways nose-dived. In a report released earlier, rating agency ICRA had estimated that sequentially tolling had fallen by about 10 per cent in April and close to 30 per cent in May. Thereafter, there has been marked improvement in traffic on highways reaching 90 per cent of pre-Covid levels and has crossed that level too now.

An NHAI official said that the entity is in touch with a clutch of investors and soon bids would be invited for taking the operational NHAI project under the toll-operate-transfer (TOT) model.

Under the TOT model, highway projects which have been operational for at least two years, and which have been generating a steady stream of revenue, are to be leased out to large-cap investors for carrying out O&M (operation and maintenance) operations in consideration of the highest bid upfront concession fee. The investor recovers investment through tolls collected for a stretch over a period of concession spreading over 20-30 years. Once the cost with agreed return is achieved, the road returns back to NHAI.

“The national monetisation pipeline announced by the government has identified the road sector having the maximum potential for such exercise at Rs 1,60,000 crore over the next four financial years. This would be achievable given the tested model already available in the sector. Besides, InvIT model would also be used to pool resources and monetise projects,” said a road sector expert asking not to be named.

NHAI has planned an InvIT, the second one promoted by a public sector entity after power transmission utility PGCIL, but it has seen multiple deferments over the Covid disruptions. But a Rs 5,100 crore InvIT is now likely next month.

The InvIT trust will acquire 100 per cent of the equity shares of the project SPV from the sponsor NHAI. It is expected that NHAI may raise further funds, around Rs 5,000 crore, by transferring more assets to the InvIT later in the year.

But TOT may remain the most active model for monetisation. So far NHAI has raised around Rs 17,000 crore through the TOT model by granting on long-term lease three road bundles out of the five attempted so far. The sixth bundle will be out soon.

Another exercise for asset monetisation by NHAI will be through toll securitisation where the authority gets paid for investment in road construction and private investor gets to collect toll.

Proceeds from the asset monetisation programme are used to repay debt and develop highways. As on March, 2021, NHAI had around Rs 3 lakh crore debt. It is permitted to borrow Rs 65,000 crore in 2021-22, same as in 2020-21.

The expectation of asset monetisation (by NHAI and other developers including EPC developers) is also supported by the past performance of road EPC companies. Between fiscals 2016 and 2021, sale of assets to InvITs or to private equity funds helped unlock Rs 80,000 crore of enterprise value for the sector (Rs 50,000 crore for the road EPC companies analysed), according to a Crisil report. Around 60% of this was through four InvITs. The funds released strengthened their balance sheets.

The leverage (calculated as total outside liabilities to tangible net worth) of these companies is estimated to have improved to 1.25 times as on March 31, 2021, from 1.87 times as on March 31, 2016, largely supported by asset monetisation.

The Union Budget 2021-22, laid a lot of emphasis on asset monetisation as a means to raise innovative and alternative financing for infrastructure. In her Budget speech, Finance Minister Nirmala Sitharaman had said that monetising operating public infrastructure assets was a very important financing option for new infrastructure construction. Now a Rs 6 lakh crore monetisation pipeline has been announced for bringing in private investment in brownfield Central government projects in various sectors where assets are idling.

Business

Indian stock market closes higher; Adani Group shares surge

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Mumbai, May 5: The Indian equity markets opened the week with strong gains on Monday, supported by a rally in Adani Group stocks and strength in select auto and banking shares.

Sensex started the day around 160 points higher at 80,662 and climbed to an intra-day high of 81,049.

Although it gave up some of the gains later in the session, the index still ended 295 points up at 80,797.

The Nifty touched a high of 24,526 during the day and eventually closed with a gain of 114 points, or 0.5 per cent, at 24,461.

“Markets started the week on a firm footing, lifted by steady foreign inflows and optimism around an impending India-US trade deal,” said Vikram Kasat of PL Capital.

Strength in Asian currencies and easing global trade tensions added to the positive sentiment, even as activity remained muted in some global markets due to holidays, Kasat added.

The Adani Group was at the centre of investor attention, with shares jumping up to 11 per cent following reports of the company’s top executives holding discussions with officials from the US President Donald Trump administration.

Adani Ports was the top performer among Sensex stocks, soaring 6.3 per cent. Other gainers included Mahindra and Mahindra, ITC, Power Grid Corporation and Tata Motors.

On the other hand, Kotak Mahindra Bank fell 4.5 per cent, making it the biggest loser on the Sensex. SBI and Axis Bank also ended the day in the red.

The broader market outperformed the benchmark indices. The BSE MidCap index jumped 1.5 per cent, while the SmallCap index advanced by 1.2 per cent.

Among sectors, oil and gas stocks saw notable buying, with the BSE Oil and Gas index rising 2 per cent, driven by strength in oil marketing companies.

Consumer durables, energy, and FMCG sectors also posted gains of over 1 per cent each.

However, the BSE Bankex ended lower, down nearly 1 per cent due to pressure on select banking names.

“The upbeat start to the week reflects investor optimism, driven by corporate developments and select sectoral momentum,” market experts noted.

The rupee traded positive, gaining 13 paise to settle at 84.32 as sustained FII inflows continue to support the domestic currency.

“Going ahead, the rupee is expected to trade in a range of 84.00 to 84.75, with continued global risk sentiment and commodity movements guiding intraday volatility,” Jateen Trivedi of LKP Securities noted.

Gold prices surged sharply as expectations of an interest rate cut by the US Federal Reserve this week fuelled strong buying.

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Business

Mumbai Airport Refutes IATA’s Claims On Cargo And Passenger Flight Slot Changes, Defends Operational Adjustments

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Mumbai: Days after airlines trade body IATA expressed disappointment at Mumbai airport operator MIAL’s decision to stop cargo freighter flights and withdrawal of slots for passenger flights, the airport refuted the claim on Thursday.

“Mumbai International Airport Ltd (MIAL) is disappointed by the statement issued by the IATA on April 29 and strongly refutes its assertions,” MIAL said in a statement. “Contrary to the claims made by IATA, the recent adjustments to cargo operations and slot allocations at Chhatrapati Shivaji Maharaj International Airport (CSMIA) have followed a transparent, consultative and regulatordriven process,” it said.

These operational changes are part of a broader infrastructure upgrade initiative governed by the Airports Economic Regulatory Authority of India (AERA) as part of the Fourth Control Period review, MIAL said. In a strongly worded statement on Tuesday, IATA’s Head of Worldwide Airport Slots, John Middleton, called on MIAL to reverse the cuts immediately.

“MIAL continues to respect international best practices, including the guidelines issued by the Worldwide Airport Slot Board and remains committed to maintaining coordination,” the private operator said.

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Together, we sail towards a stronger, bolder India: Gautam Adani

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Thiruvananthapuram, May 2: Gautam Adani, Chairman of the Adani Group, on Friday said he is grateful to Prime Minister Narendra Modi and Kerala Chief Minister Pinarayi Vijayan for their support towards building India’s first deep-sea automated port which is a future global transshipment hub, adding that together, “we sail towards a stronger, bolder India”.

This is a triumph of vision, resilience, and partnership, said Gautam Adani as PM Modi dedicated to the nation the Vizhinjam International Deepwater Multipurpose Seaport worth Rs 8,900 crore.

“Today, at Vizhinjam, history, destiny, and possibility came together as a 30-year-old dream of Kerala became India’s gateway to the world,” said the billionaire industrialist in a post on X.

“We are proud to have built India’s first deep-sea automated port. A future global transshipment hub. This is a triumph of vision, resilience, and partnership,” Gautam Adani added.

The Adani Group Chairman further stated that “together, we sail towards a stronger, bolder India.”

Vizhinjam Port, having strategic importance, has been identified as a key priority project that will contribute to strengthening India’s position in global trade, enhance logistics efficiency, and reduce reliance on foreign ports for cargo transhipment.

Its natural deep draft of nearly 20 metres and location near one of the world’s busiest sea trade routes further strengthen India’s position in global trade.

“A historic day. Grateful to the Central and State Governments, and the administration and people of Kerala, especially Thiruvananthapuram, for their support in making this port stand as a testament to India’s strategic and bold maritime ambitions,” said Karan Adani, Managing Director of Adani Ports and SEZ Ltd (APSEZ), in a post on X.

The port is expected to significantly lower logistics costs for Indian manufacturers by 30-40 per cent, enhancing the country’s export competitiveness.

With plans to increase capacity to 5 million TEUs by 2028 with the latest technology, the port is set to play a crucial role in India’s maritime infrastructure.

Working closely with the state government and the Central government, the Adani Group has already invested over Rs 4,500 crore in the Vizhinjam International Seaport project. The Adani Group is expected to invest another Rs 20,000 crore in the project’s upcoming phases, creating more than 5,000 jobs and boosting the local economy to unprecedented heights.

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