Noida Toll Bridge Company Ltd


BSE: 532481 | NSE: NOIDATOLL | ISIN: INE781B01015 
Market Cap: [Rs.Cr.] 601 | Face Value: [Rs.] 10
Industry: Construction

 Discuss this stock

Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Noida Toll Bridge Company Limited was promoted by Infrastructure Leasing &Financial Services Limited (IL&FS), as a Special Purpose Vehicle for theimplementation of the Delhi Noida Bridge project on a Build, Own, Operate and Transfer(BOOT) basis. The Concession Agreement (Concession) executed between the Company,IL&FS and New Okhla Industrial Development Authority (NOIDA) in November 1997,provides the Company the right to levy a user fee. The Governments of Uttar Pradesh andthe National Capital Territory of Delhi have, in January 1998, executed a SupportAgreement in favour of the Project/Concessionaire.

The Delhi Noida bridge (commonly known as and hereinafter referred to as the DND Flywayor DND) was opened to traffic in February 2001 and is an eight lane tolled facility acrossthe Yamuna River, connecting Noida to South Delhi with a four lane link to Mayur Viharadded in June 2007 (Phase I)/January 2008 (Phase II).

Noida Toll Bridge Company Ltd. is a publicly listed company with Equity Shares listedon the National Stock Exchange and the Bombay Stock Exchange in India and GDRs listed onthe AIM segment of the London Stock Exchange.

Industry Structure and Development / Competition and Threats

The Noida Toll Bridge Company Ltd. is an infrastructure company in the Roads sector.Although the facility caters specifically to traffic between Noida/Mayur Vihar and SouthDelhi, it continues to compete with two free bridges which cross the Yamuna River namelyNizamuddin Bridge and Okhla Barrage/Kalindi Bridge. Currently both are running at maximumcapacity during peak hours. NOIDA has, however, begun the ground work on expansion of theOkhla Barrage.

The Government of Delhi has been considering extending the Barapullah Nullah ElevatedRoad (BPNER) across the Yamuna. The Company has informed the Government of Delhi ofclauses in the Support Agreement, which prevent them from building another un-tolledbridge in the area between Okhla Barrage and Nizamuddin Bridge until the DND achieves acertain level of capacity utilisation. The Company also continues to follow up with theGovernment of Delhi regarding its proposal for integration of the BPNER with the DND as acost saving option and more efficient utilisation of existing road infrastructure. In themeanwhile, in Phase II of the BPNER project, additional entry and exit ramps are proposedto be built on the Ring Road, which will facilitate direct access between BPNER and DNDand is expected to have a positive impact on DND traffic. Work on Phase II has beenstarted and is likely to be completed by 2014.

The Delhi Metro Rail Corporation commenced its metro services in Noida from November2009. The current line caters mainly to commuters travelling between Noida and CentralDelhi. A new Metro line from Hauz Khas (South Delhi) via Kalkaji Temple Station andKalindi Kunj to Botanical Gardens in Noida is under construction and is expected to becompleted by March 2016. This could have a negative impact on two wheeler traffic on theDND, once completed.

Risks and Concerns

The traffic congestion at Ashram crossing, at the Delhi end of the facility, continuesto be an area of concern for commuters, especially during peak hours. The traffic slowdown at Ashram during peak hours is a daily hindrance to smooth flow of traffic on theDND. The additional links planned by the Delhi Metro as well as the additional ramps beingbuilt in Phase II of the BPNER project are likely to ease the congestion at Ashramcrossing.

The Company's toll technology is now over 12 years old making hardware replacementsdifficult. The process of up gradation of toll technology has been taken up and isexpected to be completed within this Financial Year. The new technology shouldsubstantially improve processing, resulting in reduced waiting time at the toll plaza.

The Company is entitled as per the Concession Agreement, to an annual CPIlinked/formula driven increases in toll which have not been regular, resulting in a lossof around Rs. 474 million upto March 31, 2013. Demonstrations by the Federation of NoidaResident Welfare Associations (FONRWA) and the PIL filed by them in the Allahabad HighCourt as well as agitations by the Bhartiya Kisan Union (BKU) against toll revision, havealso been an area of concern.

The Concession Agreement provides for traffic risk mitigation measures by allowingNOIDA to grant land development rights. The Company has in its possession, land around theDND Flyway, which may be developed, subject to grant of Development Rights byNOIDA/Government of UP/ Government of Delhi and other relevant statutory bodies. Aproposal was filed with NOIDA and an in-principle approval was received on May 16, 2001.Discussions continue with NOIDA/Government of UP, for grant of these development rights.The denial of Development Rights or conditional grant of the same will delay therealization of Project Returns as contemplated in the Concession Agreement.

Segment-wise and Product-wise Performance

The traffic mix on the DND has changed during the year as depicted below:

Financial Year Commercial Traffic Percentage to total traffic Two Wheeler Traffic Percentage to total traffic Cars Percentage to total traffic Total Traffic
2011-12 3,349 3% 23,635 22% 80,896 75% 107,870
2012-13 4,291 4% 23,646 20% 86,784 76% 114,721

The traffic comprised of cars (76%), two wheelers (20%) and commercial vehicles (4%).The composition of traffic has shown a marginal change compared to the previous year;there has been a decrease in share by 2% (approximately) in two wheelers and increase by1% each in commercial vehicles and cars. The increase in commercial vehicles was mainlydue to the closure of the Noida to Delhi direction carriageway on the Kalindi Kunj bridgeduring the period January-February 2013.

The increase in Average Annual Daily Commercial Traffic was 28% during the year underreview, followed by increase of 7% and 0.05% in cars and two wheelers, respectively, on ayear on year basis. The Average Annual Daily Traffic (AADT) has increased by 6,851vehicles (6.39%) between FY 2011-12 and FY 2012- 13. The composition of this additionaltraffic is shown below:

Outlook

The average daily traffic on the DND has grown from 107,870 vehicles per day in FY2010-11 to 114,721 vehicles per day in FY 2012-13, registering a 6% growth. There has alsobeen a 15% revenue growth, attributable to both the increase in traffic as well as a 10%increase in tolls in November 2011.

In the long run, the traffic on the Delhi Noida Toll Bridge is expected to increasegiven the trend in car sales in Delhi/Noida. The plans for improvement of the road networkin and around the NOIDA/Greater Noida region is likely to result in highly intensifiedreal estate development and will also have a positive impact on traffic on the DND. Inaddition, the completion of phase II of the BPNER, which includes additions of entry andexit ramps on the Ring Road at Sarai Kale Khan, will give commuters on the BPNER (fromCentral and South Delhi) direct access to and from DND. Commuters from the DND will thenbe able to travel, signal free from Noida/Mayur Vihar to Moolchand, Defence Colony, LajpatNagar, and Jawahar Lal Nehru Stadium/INA Market.

Based on current and projected traffic trends, the expected support for uninterruptedoperations of the toll bridge, escalation of tolls as per the Concession Agreement and theaccordance of final approvals of development rights for which NOIDA had already providedin-principle approval, it is expected that the project could achieve commercial viability.

Internal Control Systems and their Adequacy

The toll collection and management systems have inbuilt self audit capabilities.

The Company has adequate internal control systems to monitor business and operationalperformance, which are aimed at ensuring business integrity and promoting operationalefficiency. The Company has appointed an independent firm, of Chartered Accountants asInternal Auditors to ensure that the Company's systems and practices are designed withadequate internal controls to match the size and nature of operations of the Company.

The Internal Auditors conduct a periodic audit and review, covering all areas ofoperations, based on an audit programme approved by the Audit Committee of Directors. TheReports of the Auditors along with the management's responses are placed before the AuditCommittee for discussion and necessary action.

In addition to the foregoing, the Company has appointed an Independent Auditor in termsof the Concession Agreement. to ensure compliance of the Concession terms and conditions.The Report of the Independent Auditor is also placed before the Board.

Financial and Operational Performance

The Noida Toll Bridge was the first green-field toll bridge and road network projectimplemented in the country on an SPV format without recourse to sponsors or financialguarantees from the Government/NOIDA. With initial traffic being far below projections,the Company has had to go through a series of restructuring measures with the support ofits Promoters but was able to pay its maiden dividend to its Equity Shareholders onlyafter 9 years of operations, Financial Year in 2010-11.

The performance of the Company is given below:

Year ended 31.03.2013 Year ended 31.03.2012
Toll Income (Rs./Mn) 888.35 773.98
Advertisement & Other Income (Rs./Mn) 242.02 217.59
PBT (Rs. in Mn) 659.12 534.84
PAT(Rs. in Mn) 421.13 453.21
Average Daily Traffic (Vehicles/day) 114721 107,870
Average Toll realisation per vehicle (Rs.) 21.02 19.60

The increase in revenue is attributable partly to a full years increased toll tariff ascompared to the effect of only five months increased tariff in the last financial year andpartly due to increase in traffic during the partial closure of Kalindi Kunj for repairand restoration work in the months of January and February 2013.

The Company has, upto March 31, 2013, incurred a revenue loss of Rs. 474 million, dueto non-notification of revised toll tariffs by NOIDA and consequent inability to implementregular toll increases.

Human Resources

The Company has a lean organisation with a strength of 9 employees.

Cautionary Statement

Certain statements in the Management Discussion and Analysis Report describing theCompany's objectives, estimates and expectations or predictions may be forward lookingstatements within the meaning of applicable securities laws and regulations. Actualresults could differ from those expressed or implied. Important factors which could make adifference to the Company's operations include traffic, government concessions, networkimprovements, changes in government regulations and other incidental factors over whichthe Company does not have any direct control.

   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
DLF 35,347.40 38.83 2.12 21.72 2.9 7.2 1.09
JP Associates 14,217.71 34.38 0.95 10.49 4.0 7.7 1.80
Prestige Estates 8,769.25 25.80 2.95 13.45 11.4 12.5 0.56
IRB Infra.Devl. 8,556.61 29.36 4.96 11.41 12.1 10.5 1.13
Oberoi Realty 8,502.80 32.10 3.11 16.07 13.8 18.4 0.00
Unitech 6,658.48 84.83 0.67 17.64 1.8 4.1 0.38
NBCC 5,567.40 21.18 4.94 0.00 23.8 26.7 0.00
Phoenix Mills 5,092.93 33.39 2.72 17.54 7.8 10.0 0.17
Jaypee Infratec. 4,562.64 17.29 0.75 8.92 11.6 10.8 1.27
Godrej Propert. 4,555.08 52.65 2.54 23.96 6.2 7.7 0.78
Sobha Developer. 4,427.90 22.74 1.97 9.16 9.5 13.6 0.52
H D I L 3,886.23 14.18 0.37 6.60 5.6 8.7 0.34
Indbull.RealEst. 3,339.50 34.93 0.58 6.95 4.7 7.0 0.19
Sadbhav Engg. 3,067.61 21.22 3.20 11.19 4.1 9.0 0.76
Puravankar.Proj. 2,608.54 27.92 1.44 8.33 7.3 13.0 0.95

Futures & Options Quote

 
Expiry Date
NA
Instrument: NA
Expiry Date: NA
Strike Price: NA
Open Price: NA
Average Price: NA
No. of Contracts Traded: NA
Open Interest: NA
Underlying: NA
Option Type: NA
Market Lot: NA
Previous Close: NA
Day’s High | Low: NA | NA
Turnover (Cr.): NA
Open Int. Change: NA | NA
View detailed F& O quotes >>

Key Information

Key Executives:

R K Bhargava , Chairman  

Piyush Mankad , Director  

Sanat Kaul , Director  

Deepak Premnarayan , Director  


Company Head Office / Quarters:
Toll Plaza DND Flyway,
Opposite Sector 15 A,
Noida,
Uttar Pradesh-201301
Phone : 91-0120-2516438/56/93/95
Fax : 91-0120-2516440
E-mail : ntbcl@ntbcl.com
Web : http://www.ntbcl.com
Registrars:
Karvy Computershare Pvt Ltd
Plot No 17-24
Vittal Rao Nagar
Madhapur
Hyderabad-500081

Fund Holding


Calendar

Aug-2014
M T W T F S S
28 29 30 31 01 02 03
IPO
listIssue Open : Vishal Fabrics
Economic Events
list Construction Spending (MoM)
list ISM Manufacturing
Results
list Berger Paints | Berger Paints | Cummins India | Cummins India