Page 21 - TrafficInfraTech Magazine | Linking People Places & Progress

INFRASTRUCTURE
NEWS PLUS

Project Awarded (KM) Project Constructed (KM)

capital. We have seen a lot of interest It is suggested that the Rules may
from Sovereign Wealth funds, Institutional appropriately be amended to prescribe DCF
investors, pension and Insurance funds method of computing Fair Market Value in
towards this model as the corresponding case of transfer of infrastructure assets where
risks towards operating and maintaining a carve out can be made under the provisions
a road project is significantly lower than discussed above for transfer of assets effected
constructing a brownfield or a greenfield under the InvIT framework as approved by
road project. SEBI, and schemes to resolve stressed assets
The budget speech NHAI could also use Infrastructure administered by RBI and NCLT.
The finance minister’s suggestions
mentions that we investment trusts (InvITs) to raise capital regarding corporate bonds and investment
to fund its projects. InvITs offer multiple
need massive benefits to NHAI as well as infrastructure grades are steps in the right directions. “It
investments developers. Basically it supports in is now time to move from ‘AA’ to ‘A’ grade
estimated to unlocking the invested capital from the ratings. The government and concerned
regulators will take necessary action”.
be in excess of completed projects to deleverage the This will definitely help the development
holding company and even bid for new
Rs.50 lakhCr in projects and complete the cost overruns. of corporate bond market and the
infrastructure to For an investor, the key factor in arriving infrastructure developers, especially when
infrastructure financing is suffering the twin
increase the growth at the fair market value of these assets balance sheet problems. The corporates
would be the underlying ability of the
of GDP, connect and asset to generate cash flows and not the could tap funds for infrastructure
integrate the nation value at which the existing owner has development through capital markets and
gain access to institutional investors.
with a network acquired or built it and carried forward Union Finance Minister Arun Jaitley had
of roads, airports, in books of accounts. Considering the maintained a steady focus on PPP in his
foregoing, Discounted Cash Flow (DCF)
railways, ports and methodology is therefore an appropriate maiden Budget for 2014-15, announcing a
inland waterways valuation approach for investors in number of steps to fast-track such projects
in several areas. However, this year, we
and to provide good infrastructure assets. haven’t observed any guidance towards
The Central Board of Direct Taxes (CBDT)
quality services to has published rules for Sections 50CA and PPP model. Kelkar Committee has clearly
our people. 56(2)(x) of the Income Tax Act, to substitute mentioned that PPPs in infrastructure
represent a valuable instrument to speed
existing rules as set out in Rule 11UA of the up infrastructure development in India. We
Income Tax Rules, 1962 for computing Fair have many success stories in the PPP model
Market value of unquoted equity shares. on the Highway development. A clear
Application of Book Value as the Fair and positive signal is a pre- requisite to
Market Value (except in case of certain encourage the private sector participation
assets) leads to severe tax consequences and tap into the large pool of pension and
if the Fair Market Value based on DCF institutional funds from the international
approach is lower. markets towards the road sector.

www.trafficinfratech-com-500653.hostingersite.com December ’17 - January ’18 / TrafficInfraTech 21