MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Noida Toll Bridge Company Limited was incorporated as a special purpose vehicle forthe Delhi Noida bridge project on a build, own, operate and transfer (BOOT) basis. TheDelhi Noida Bridge (commonly known as and hereinafter referred to as the DND Flyway orDND) is an eight lane tolled facility across the Yamuna River, connecting Noida to SouthDelhi. With the commissioning of the Mayur Vihar Link in June 2007 (Phase I) / January2008 (Phase II), the catchment area of DND Flyway has been extended to cover the EastDelhi colonies of Mayur Vihar, Vasundhra Enclave, Patparganj etc. This link substantiallyreduces distance and time taken by Mayur Vihar residents to various destination points inSouth Delhi.
The Concession Agreement (Concession) executed between the Company, Promoter and NewOkhla Industrial Development Authority (NOIDA) in November 1997, gives the Company theright to levy toll.
Industry Structure and Development / Competition and Threats
The Noida Toll Bridge Company Ltd. is a toll road infrastructure company, publicly heldand listed on the National Stock Exchange and Bombay Stock Exchange in India and the AIMsegment of the London Stock Exchange.
Although the DND Flyway caters specifically to traffic between Noida/Mayur Vihar andSouth Delhi, it continues to compete with two free bridges which cross the Yamuna Rivernamely Nizamuddin Bridge and Okhla Barrage.
The Delhi Metro Rail Corporation commenced its metro services in Noida from November13, 2009. The line caters mainly to commuters travelling between Noida and Central Delhi.The traffic on the DND was not impacted by the Metro for the initial 7 months butthereafter there was a consistent drop in traffic which could be attributed to the Metro,monsoons, as well as the construction activity/holidays during the Commonwealth Games. Theintroduction of the Metro line has essentially seen a shift of DND two wheeler commuters,to the Metro. During the year DND Flyway has seen a dip in the two wheeler category ofusers by around 6%.
Risks and Concerns
Recently there have been several reports that the Governments of Delhi and NOIDA areconsidering extending the Barapullah Elevated Road across the Yamuna and widening theOkhla Barrage. The Company has written to both Governments informing them of clauses inthe Support Agreement executed with the Delhi Government and the UP Government whichprevent them from building another un-tolled bridge in the area between Okhla Barrage andNizamuddin Bridge until the DND achieves a specified capacity utilization. The Company hassubmitted a proposal to Public Works Department, Government of NCT of Delhi, forintegration of the Barapullah Elevated Road with DND, which is under consideration.
The Concession Agreement provides for traffic risk mitigation measures by allowing forNew Okhla Industrial Development Authority (NOIDA) to grant land development rights. TheCompany has in its possession, land around the DND Flyway both in Noida and Delhi, whichmay be developed, subject to grant of Development Rights by NOIDA/Government of UP/Government of Delhi. Discussions are on with NOIDA/Government of UP, for grant ofdevelopment rights. The denial of Development Rights or conditional grant of the same maypose a financial threat to the Company.
In the absence of a toll hike since April 2009, resultant revenue losses continue. TheCompany has incurred a revenue loss of Rs 66.41 Million and Rs 167.56 Million for FY2009-10 and FY 2010-11 respectively, due to non-notification of revised toll tariffs byNOIDA and consequent inability to implement toll hikes.
Segment-wise and Product-wise Performance
The Company had carried out a traffic revalidation study through Halcrow ConsultingIndia Ltd. in May 2009. A comparison of their projections with Average Daily Traffic (ADT)for the period April 1, 2010 to March 31, 2011, is given below:
|Class ||Two Wheelers ||Cars ||Commercial Vehicles ||Total |
|Projected ||29,883 ||88,154 ||2,602 ||120,639 |
|Actual ||23,241 ||76,158 ||2,995 ||102,394 |
|Achievement ||77.77% ||86.39% ||115.10% ||84.88% |
The average daily traffic on the bridge has grown from approximately 17,000 vehiclesper day in 2000- 2001 to 102,394 vehicles per day in 2010- 2011. The trend in trafficgrowth during the year, however, has witnessed a slowdown.
There has been a revival in the development of recreational, commercial and residentialspaces in the primary catchment area of Noida and Greater Noida, which is likely toreceive further impetus due to development of the Yamuna Expressway. The Yamuna Expresswaywill be a 6-lane (extendable to 8 lanes) access-controlled Expressway and will connectDelhi with Agra via Mathura. It is expected to be completed by December 2011.
In the long run, the traffic levels on the Delhi Noida Toll Bridge are expected toincrease due to implementation of planned development in Noida and Greater Noida. Inaddition, the following construction work will have a favorable impact on traffic.
Additional exit/entry ramps onto the Barapulla elevated road on the Ring Road aswell as Lala Lajpat Rai Market. Commuters from the DND will then be able to travel, signalfree from Noida/Mayur Vihar to Moolchand, Lajpat Nagar, and Jawahar Lal Nehru Stadium.
Completion of the underpass at the Rajnigandha crossing, on the Noida side,which currently adds to congestion at one of the exit points of DND. This is expected tobe completed by August 2011.
Internal Control Systems and their Adequacy
The toll collection and management system has 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, M/s. Patel & Deodhar,Chartered Accountants, as Internal Auditors, to ensure that the Company's systems andpractices are designed with adequate internal controls to match the size and nature ofoperations of the Company.
The Internal Auditors conduct a periodic audit and review, covering all areas ofoperations, based on an audit programme. The reports of the Auditors along with themanagement's responses are placed before the Audit Committee for discussion and necessaryaction.
Financial and Operational Performance
The comparison of financial and operational performance with the previous year is givenbelow:
| ||Year ended 31.03.2011 ||Year ended 31. 03. 2010 ||Variation |
|Toll Income (Rs/Mn) ||698.70 ||709.19 ||(1.48%) |
|Advertisement & Other Income (Rs/Mn) ||174.49 ||150.15 ||16.21% |
|Average Daily Traffic (Vehicles/day) ||102,394 ||104,277 ||(1.81%) |
|Average Toll realisation per vehicle (Rs) ||18.63 ||18.56 ||0.41% |
Since January 2010, NOIDA has started the construction of an underpass at one of DND'sexit points in Noida, at Rajnigandha crossing. This has lead to congestion and contributedto a drop in the traffic. This construction is, however, likely to be completed by August2011.
During the year under review, the construction work for the Commonwealth Games towardsthe Mayur Vihar exit and the Ring Road, hindered traffic flow, resulting in a drop involume of traffic. The closure of educational institutions and offices during the Gamesalso contributed to a tremendous dip in traffic during October 2010.
The Company has a lean organisation with staff strength of 10. Qualified personnel,reporting to the CEO, head the key functions of Finance, Operations and Secretarial.
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 makea difference 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.