The Rs 2,500 crore Kalyani Group plans to construct at least a dozen by-pass roads along the 710-km NH 4.
To raise funds for the project, which is expected to cost around Rs 500 crore, the promoters plan to use the Hubli-Dharwad by-pass, for which they have bagged the contract, as a collateral. Funds will also be raised through a public issue for the project.
Ashok Kheni, MD of Kalyani Group's Nandi Infrastructure Corridor Enterprises Ltd, said his group would carry out pre-feasibility studies before placing a proposal before the transport ministry.
"Depending on traffic projections, we will identify the by-pass roads we plan to undertake," Kheni said. Some of the by-pass routes already identified include, Belgaum-Nippon, Tumkur and Davangere routes.
In the case of Hubli-Dharwad by-pass, the promoters have roped in ICICI which will invest about Rs 48 crore in the Rs 70 crore project. ICICI will also be taking a mezanine equity of Rs 5 crore in the promoter's equity of Rs 22 crore. A mezanine equity guarantees ICICI a certain percentage of return on equity.
In case the Centre defaults by way of either nationalising the by-pass or constructing a parallel by-pass, the promoters will be paid 20 per cent as return on paid-up equity, apart from paying the balance on the debt portion.
In case the promoters' default, the Centre will take over the by-pass and the promoters will have to forego the entire equity.
The ministry awarded the contract for construction of the by-pass to Bharat Forge Ltd on February 5 on a Build, Own, Transfer (BOT) basis for 26 years. Bharat Forge in turn floated a special purpose vehicle _ Nandi Highway Developers Ltd _ for the project which has a technical tieup with US-based Vanasse Hangen Brustlin Inc.
The project has achieved financial closure and ICICI is one of the major financing partners for the project. The Kalyani group, which owns Nandi Highway Developers Ltd, holds 51 per cent stake in the project.
The promoters have already bagged the Bangalore-Mysore expressway project which is expected to cost over Rs 2,000 crore.
