NHAI News: NHAI pays Rs 891-crore termination compensation to IL&FS for Khed-Sinnar Expressway

The National Highways Authority of India (NHAI) has paid over Rs 891 crore to crisis-hit non-banking finance company Infrastructure Leasing & Financial Services (IL&FS) as compensation for termination of a road project Khed-Sinnar Expressway that forms part of the Delhi-Mumbai industrial corridor, said people with direct knowledge of the development.

“This termination compensation is in addition to the Rs 90 crore collected by the company as toll from the 80% completed project over the last two years,” said one of the persons mentioned above.

Cumulatively, IL&FS will now have Rs 980 crore to meet its various liabilities due in this project. The total debt of Khed-Sinnar Expressway that gets addressed with this compensation stands at Rs 1,400 crore and the project gets handed over to NHAI.

The project was awarded to IL&FS (ITNL), an IL&FS subsidiary, in 2013 with a 20-year concession ending in 2033 and key lenders to the project include , IFCL and .

Khed-Sinnar section of National Highway-50 is a 138-km long part of Delhi-Mumbai Industrial corridor and is considered an important highway project passing through major towns. These towns include Rajguru Nagar of Khed, Manchar, Kalamb and Narayangaon in Pune district, Bote, Ghargaon and Sangamner of Ahmednagar district, Nandur Shingote in Nashik district and the end point is at Sinnar.

IL&FS has claims of around Rs 3,200 crore from NHAI and Ministry of Road Transport & Highways (MORTH) of which around Rs 2,700 crore have been received and additional Rs 500 crore are in final stages of settlement. This entire Rs 3,200 crore is part of the Rs 55,000 crore resolved by IL&FS as per last update.

The projects where the total compensation of around Rs 2,700 crore has been paid by NHAI and MORTH includes Rs 707 crore for Fagne Songadh Expressway, Rs 672 crore for Kiratpur Ner Chowk Expressway, Rs 891 crore for Khed Sinnar Expressway, Rs 250 crore and Rs 20 crore claim towards Jorbat Shillong Expressway and Chnani Nashri Tunnelway, respectively and Rs 140 crore towards ITNL Road Infrastructure Development Company (IRIDCL).

The two projects where final settlement is in advance stages include Rs 300 crore for Srinagar Sonmarg Tunnelway and Rs 170 crore for Amravati Chikli Expressway.

“We are awaiting confirmation from our Bank with respect to receipt of the amount from NHAI,” IL&FS spokesperson said in response to ET’s email query. A separate query to NHAI remained unanswered until the time of going to press.

The settlement of this claim is expected to add to the NBFC’s ongoing efforts to achieve resolution of debt. IL&FS has been monetising its assets to manage its debt obligations since its failure to meet repayment obligations in September 2018 had triggered a liquidity squeeze that gripped India’s non-banking finance sector.

As part of a clean-up, the government then replaced the IL&FS board, which has since been engaged in trying to resolve the debt situation.

As part of this asset monetisation plan, after selling its iconic headquarters in Mumbai’s business district, the NBFC has put more commercial properties including two standalone prime properties Business Arcade and IL&FS House in Mumbai on the block. These towers and some more properties for which bids have been invited, according to property consultants, are expected to fetch over Rs 700 crore.

While the term of Uday Kotak, chairman of this government-appointed board, ended on April 2, IL&FS shared that it has addressed debt of Rs 55,000 crore, up from Rs 52,200 crore as of November 2021. The group has retained its overall resolution estimate at Rs 61,000 crore.

Late March, global alternative investment major Brookfield Asset Management emerged as the successful bidder and acquired IL&FS’ headquarters, a 10-storey iconic property in Mumbai’s business district Bandra-Kurla Complex (BKC) for over Rs 1,080 crore.

The debt worth Rs 55,000 crore addressed till date represents over 90% of the overall estimated resolution value. Resolution of remaining Rs 6,000 crore debt has moved into the ongoing financial year 2022-23.

IL&FS’ overall resolution estimate of 62% is double the average recovery of 31% under Insolvency & Bankruptcy Code (IBC). Of the 347 entities under IL&FS Group as of October 2018, a total of 246 entities stand resolved leaving 101 entities to be resolved in the current financial year.