“Secular growth in traffic witnessed in the past few years has been affected due to the economic slowdown,” said K P Maheshwari, chief executive officer, Adani Transport.
According to ICRA Research, there may be mid-single-digit growth in toll collection in FY20.
This would be a modest one compared to an implied 12.10 per cent toll collection growth rate in the second half of FY18, but it fell to 3.8 per cent in the second half of FY19.
ICRA sees a decline in traffic volumes for the sample of 34 build-operate-transfer (BOT) toll road projects in India for the last three quarters.
India Ratings Research stated traffic growth may slow by 200 basis points in FY20 from 4-4.5 per cent in FY19.
Industry experts say passenger vehicles are holding up the growth trend for toll and traffic.
“If one were to consider only the commercial vehicles segment, it would show negative growth. Passenger vehicles in some segments are still showing a double-digit growth rate,” said a top official from a fund that invests in road projects.
For India’s national highways, commercial vehicles like trucks contribute more than 70 per cent of the toll collected.
ICRA attributed the slowdown in traffic to changes in axle load norms for such trucks.
“The revision in axle load norms in July 2018 allowed medium and heavy commercial vehicles to carry higher freight by 15-20 per cent with the same fleet size,” the report last week said.
However, industry officials suggest reasons beyond the changes in norms. “The decision had some impact but that has stabilised now,” said Maheshwari. He added, “We expect the impact due to economic slowdown to be a temporary phenomenon and also expect traffic to pick up after a couple of quarters.”
Not everyone is sure how long the slump will continue. “Traffic has been slow since the elections, when we typically see fewer vehicles moving for commercial purposes. The slump continued with a longer monsoon setting in. We did see some uptick in the last one and a half months but not much,” the fund official quoted earlier stated.
Vishal Kotecha, associate director, India Ratings and Research, expects the trend will mirror the economic situation in the country.
In addition to the National Highways
Authority of India (NHAI), companies like IRB Infrastructure Developers, Sadbhav Infraprojects, MEP Infrastructure Developers, L&T Infrastructure Development Projects, and Ashoka Buildcon have direct exposure to toll collection.
Under the build-operate-toll (BOT) model, the developer collects toll to make up for the investment made in building the road. “Agreements signed after 2010 have a clause to cover up for lower-than-estimated traffic to some extent,” the fund official added.
These companies will also have to brace for slow growth in toll rates in FY21. “The increase in toll charges will be lower than in FY19 due to a moderating wholesale price index (WPI),” said Kotecha. The WPI is a component used to set toll rates each year. In some agreements signed before 2010, toll rates are linked to the WPI.
India Ratings expects the slowdown in toll collection to have a minimal impact on the NHAI.
“Toll income for the NHAI is more than Rs 10,000 crore. However, most of their toll revenue projection is based on starting toll on new stretches,” said Kotecha.