HomeIndian Economyindia: Repayment worries: Lenders' debt recast plan for MEP Infra hinges on...

india: Repayment worries: Lenders’ debt recast plan for MEP Infra hinges on a green light at the toll booth


Mumbai: A restructuring plan by lenders to the debt-laden toll collector MEP Infrastructure (MIPL) has been delayed for over six months as the Maharashtra government is yet to approve the proposal for extension of its rights even as banks are anxious about their dues from the account which has been classified as a non-performing asset (NPA) for almost two years.

MIPL, a part of the Jayant Mhaiskar-promoted MEP Infrastructure Developers (MIDL), owes lenders led by IDFC First Bank more than ₹2,600 crore. Its agreement with the Maharashtra State Road Development Corporation (MSRDC) allows the company to collect tolls at all five entry points into Mumbai. However, the sharp fall in traffic due to the Covid-19 pandemic and previous issues due to delays in some projects meant the company has been tagged as an NPA in lenders’ books. MIDL did not reply to an email seeking comment.

“The proposal by lenders hinges on MSRDC extending MIPL’s agreement by one year to November 2027 from November 2026. It also requires the promoter to infuse at least ₹100 crore to make the plan viable. Currently, loans to the company are due in July 2025, the timeframe for which is expected to be extended to July 2026,” said a person familiar with the plan.

RENEWAL OF RIGHTS STUCK
However, MSRDC the nodal body for roads in the state has not approved the proposal because the state finance department has raised queries on the issue. Documents accessed by ET show that MIPL has claimed losses due to the reduction in traffic during Covid, seeking an increase of 187 days for extra toll collection beyond 2026 when the agreement period ends.

A senior state government official said that besides MIP, other toll collectors in the state had also sought an extension of the toll period.

“The policy for extension has to be cleared by the cabinet because the losses suffered by the toll company have to be calculated. The government will not only have to calculate the number of days needed to recoup the losses suffered, it will also have to account for the increase in the traffic post-Covid and beyond for which a policy will have to be formed,” the government official said.

MSRDC vice-chairman Radheshyam Mopalwar did not respond to calls and messages.

Responding to ET’s queries, lead lender IDFC First Bank said the account was classified as NPA during Covid in 2021. “Our exposure has been coming down because we continue to receive repayments even while the account is in NPA as traffic has resumed on the toll roads post-Covid. Our exposure is down from ₹1,026 crore in 2019 to ₹716 crore in March 2023. We believe restructuring the account to align the contractual dues with cash flows will be a positive outcome for everybody.”

STUCK

CASH FLOW WOES
The holding company MIDL has 38 subsidiaries and joint ventures for different projects. Not all lenders are receiving payments.

“Lenders to the SPV that collected tolls on the Bandra-Worli Sea Link, for example, have been left high and dry with outstanding debt of ₹80 crore as MIPL was replaced as the toll collector for the bridge last year. Since there are no cash flows now, the two lenders to this entity have to explore legal means or bargain for a settlement with the promoter to recover any dues,” said a second person familiar with the situation.

Besides IDFC First, other lenders to the group include IIFCL, Bank of India, Bank of Maharashtra and Canara Bank together with some co-operative banks.

Lenders are hoping for a long-term solution to the company’s debt issues or they will have to look at replacing MIPL as the contractor on a project-by-project basis which will be a time-consuming process.



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