The prospect of National Highways Authority of India (NHAI) achieving its budgeted borrowings target of Rs 3,600 crore during the current fiscal could prove elusive, with its privately placed tax-free issue having managed to raise only Rs 200 crore during the first half of 2001-02.
"We have raised about Rs 200 crore from the issue till end-September," a senior NHAI official said. He claimed that in spite of the bleak market conditions, the issue would be able to mop up the budgeted sum, as a recovery in the bond market is already underway.
According to market analysts, despite the issue coming armed with a long-term capital gains tax exemption under section 54 EC of the Income-Tax Act, the performance has been disappointing.
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They said that with the capital markets being depressed, the presence of a lock-in period of three years is not very appealing to investors, though the issue has a 'AAA' rating from Crisil.
The current issue would be open 'on-tap basis' till March 2002, with allotments being made at the end of every month. The proceeds will go towards part financing of the Rs 54,000 crore National Highway Development Project (NHDP).
The issue, which opened on July 20, 2001, has only six more months to mop up the remaining Rs 2,800 crore borrowings target, even after discounting the Rs 656 crore that NHAI has raised last year.
NHAI had raised the sum in two tranches last fiscal, which would be reflected in the borrowings target for the current financial year since there was no internal and extra budgetary resources (IEBR) target for 2000-01.
"The effective target for 2001-02 is therefore Rs 3,000 crore only" an official said.
The Authority raised Rs 500 crore from its maiden bonds issue in September-October 2000 and garnered Rs 156 crore from its second issue during February-March 2000-01.
NHAI is scheduled to raise a total of Rs 13,800 crore from the markets by 2003-04. It has targeted a sum of Rs 6,200 crore in 2002-03 and the balance Rs 4,000 crore is expected to be raised in 2004-05.
Lead arrangers for the current issue are SBI Caps, DSP Merril Lynch, Kotak Mahindra, ICICI Securities, J P Morgan and RR financials while MCS Ltd is the registrar to the issue.