Gayatri Projects seeks strategic partner for Andhra road deal

Infrastructure developer Gayatri Projects is planning to rope in a strategic partner to handle a 207-km road project that was awarded to it by the Andhra Pradesh government.

The road project between Hyderabad and Ramagundam is expected to cost about Rs 2,200 crore and includes four laning of an existing two-lane road.

To be taken up on build, operate and transfer basis, the toll road project would be ready for commercial operations within 30 months from the date of achieving financial closure. Gayatri had submitted bids through a consortium with a DLF group company.

“We have a viability gap funding of Rs 454 crore for the project. The equity would be about Rs 246 crore. The balance Rs 1,500 crore would be raised through debt. Gayatri and DLF together would hold 52% of the equity and the balance 48% would be offered to a strategic partner. We are currently evaluating some proposals for roping in a partner,” K G Naidu, Gayatri’s CFO, told DNA Money.

Though a toll project that is expected to break even within the concession period of 25 years, the traffic projections are said to be inconsistent.

According to officials privy to the traffic projects, the transport traffic primarily comprising lorries has dropped by about 50% on this road due to the slump in the real estate market in Hyderabad.

Additionally, the separate Telangana movement too has an impact on the traffic density on the road.

“We have different sets of numbers for assessing the traffic density. But, we are confident that the project will achieve break even within the concession period,” Naidu said.

Gayatri is now working on floating a special purpose vehicle to accommodate the strategic partner in the project and achieve financial closure by November this year.

Meanwhile, shares of Gayatri Projects ended at Rs 416 on the National Stock Exchange on Wednesday, down 1.4% from its Tuesday close.