Activity Profile
Our key business activity is the development, implementation, operation and maintenance of surface transport infrastructure projects.
Project Development and Implementation
ITNL performs a range of project development activities from the conceptualization of projects to commissioning and commencement of commercial operations. These activities include the following:
* business development and finding opportunities to participate in competitive bidding for new projects,
* evaluation and preparation of bids,
* assessment of estimated project costs,
* applications for pre-qualifications and tenders,
* preparation of structural and other designs,
* SPV formation and arranging financing for the project,
* management of logistical and development issues (such as liaising with state and local regulatory authorities for obtaining land and environment related approvals for the project) during concession period, and
* management and supervision of projects during project life cycle.
Business Development and Internal Co-ordination
ITNL has an internally well-regulated management policy governing our strategy on bidding for projects. Our management sets our overall strategy with respect to the procurement, development and operation of our projects. Our business development team identifies potential projects and prepares the bids generally by monitoring the published tenders of local, State and Central governments. ITNL also subscribes to news wires to stay informed on the bids published and local and international government initiatives.
Our design and development team complements the bidding initiatives by undertaking relevant studies and preparing preliminary designs in accordance with the requirements of the bid documents to conclude the viability of the project and to arrive at an estimate of cost of the project.
Competitive Bidding
Most of our projects are awarded through a transparent competitive bidding process. The bidding process typically consists of two parts: the pre-qualification stage and the bidding stage.
ITNL submit a final bid after our pre-qualification for the project. In most cases the relevant local, State or Central Government authority follows the Model Concession Agreement formulated by the Planning Commission of India in the bid format. Most of the terms governing a concession are finalized as part of the Model Concession Agreement, and concession operators like us generally have limited ability to change these terms during the construction or operation phases of the concession. However, ITNL has to determine the amount of the premium it will pay to the government for the project or the amount of financial grant or annuity we proposes to receive under the concession agreement. As a result, forecasting both revenues and expenses accurately during the bidding phase, identifying potential risks, incorporating assessed and appropriate provisions prior to submission of bid, are critical.
Bilateral Negotiations
In addition to participating in competitive tenders, ITNL has been awarded projects through bilateral negotiations with State Governments. ITNL, along with IL&FS, often assists the concessioning authorities in the early stages of their processes by customizing scope of work and the concession terms to suit the specific project requirements. In such instances, ITNL is often awarded the project following its submission of competitive bid. Additionally, ITNL is also occasionally awarded concessions by the concessioning authorities for the development of additional roads without going through a competitive bidding process in instances where ITNL has previously developed a road for the relevant concessioning authority.
SPV Formation and Financing
On award of a surface transport infrastructure project, ITNL incorporates a special purpose vehicle (SPV) which holds the project and develops, maintains and operates the concession. While the SPV is the legal entity with rights and obligations under the concession agreement, in practice ITNL provides all necessary support to the SPV and take the lead in project management on behalf of the SPV in accordance with the terms of the concession agreement and also operate and maintain the toll/annuity roads, road on behalf of the SPV once it is completed.
Construction
The construction phase of a toll or annuity road project begins after financial closure is achieved. Our concession agreements often contain incentives for early completion of a project. The construction phase of a project often takes between 15 months and three years to be completed. Our concessions typically range from a period of 11 to 32 years, after which they are transferred to the concessioning authority.
A team from the project implementation department and design unit is deployed, to finalize the detailed design of the project, liaise with the concessioning authority and respective government agencies in connection with the land acquisition process, utility shifting, procurement of necessary approvals/permits and supervise and manage construction work. Throughout this phase, ITNL monitors and controls the various work processes closely with the objective of controlling costs, maintaining quality and other logistical issues such as land acquisition, environmental rehabilitation or social resettlement.
The Project SPVs typically sub-contract construction activities for the projects. Contractors procure all resources for the works and are typically paid based on the completion of construction milestones..
As the project nears completion, an independent engineer is asked to certify that the road has been completed in accordance with the technical specifications set forth in the concession agreement. Upon receipt of the independent engineer's report, the concessioning authority issues a completion certificate, which allows us to begin collecting toll receipts or receive annuity payments as per the provisions of the concession agreement.
Operation and Maintenance
ITNL has project implementation teams located on all Project sites to monitor the roads for maintenance, upkeep and operations services, as well as user and emergency services. These services are provided through facilities owned by ITNL and also by sub-contracting some services to specialist companies. ITNL considers the relative efficiencies of self-sourcing and outsourcing for each required service when making our sourcing decisions.
In-house Testing Laboratory
ITNL has set up a mterial testing laboratory in Raipur, Chhattisgarh, certified under ISO 9001:2000, for a number of project development, construction, operations, maintenance, and tolling activities and to serve as a testing facility for the materials used in the construction of the projects that ITNL operate or develop. To the extent this laboratory has unutilized capacity, it is also engaged by third parties to test the construction materials used in their projects.
Accident and Emergency Services
ITNL seeks to meet or exceed internationally accepted safety standards for the management and maintenance of its Toll Roads. Our accident prevention strategy prioritizes construction, acquisition and provision of new safety features, such as pedestrian overpasses, concrete barriers, speed limit controls, improved signals and signage, roadway widening, ambulance response capability, traffic inspection and removal of dead animals and other obstructions.
ITNL provides traffic inspection and emergency, rescue and search services. Our traffic inspection teams patrol our toll roads monitoring potential problems and emergencies, placing emergency signs and taking other appropriate measures when necessary. They also look out for toll road users evading the toll fee. Our service team provides emergency aid to vehicles with mechanical problems on our roads, using tow trucks to remove broken down or damaged vehicles. ITNL also operates mobile rescue units that are equipped to provide first aid and evacuation in case of medical emergency. Most of our mobile rescue units have a GPS tracking system installed that permits us to monitor the vehicle's activity, fuel levels and other critical details on a real-time basis by means of a satellite network.
Traffic Information
ITNL maintains several traffic information systems for our road users, including technologically advanced traffic management systems such as variable message panels along certain of our concession toll roads to provide traffic condition information.
Project Management Information System (PMIS)
PMIS is a web-application designed to be user friendly and provides technologically advanced capabilities, including project information, to our project teams. PMIS employs both Geographic Information System (GIS) and Remote Sensing (RS) technology. GIS is licensed by the Company. PMIS monitors activities such as road inspection, maintenance, arboriculture, accident management, traffic management and traffic safety compliance. In addition, PMIS enables project teams to compile the results of such monitoring in a continually updated database.
Tolling
Toll collection systems
ITNL typically uses automated toll collection systems at our toll plazas and the level of automation at the toll plazas are designed based on the type of traffic and volume at the toll plazas. The technology used for automation of our toll plazas is generally scalable and adaptable to the changing requirements. It also help in creating an audit trail for reconciliation of revenue collection and in achieving efficiency in the manpower required at the toll plazas
User Fees
The user fees that ITNL charges the users of our toll roads are set according to the user fee notification provided as part of the concession agreements. The user fee is typically increased at scheduled intervals, sometimes by reference to certain indices. The user fee also varies depending on the type of vehicle.
Auctioning toll receipts
ITNL has auctioned the toll receipts attributable to some of our roads for one-year periods in order to provide greater certainty and stability to our revenues. ITNL advertises the auctions via newspapers and other media, and ITNL typically sells the receipts to the highest bidder. ITNL requires all selected bidders to guarantee a part of the payments that they are required to deposit with us as part of their toll auction. Purchasers of the future toll receipts, which are generally local or national toll operator companies, pay us a fixed weekly fee in exchange for the actual toll receipts, which may be higher or lower than the fixed fee. The purchasers of these toll roads receipts are typically responsible for collection of tolls and expenses such as maintenance of toll plazas and electricity while ITNL continues to remain responsible for the maintenance and repair of the toll roads. Upon expiry of the one-year period, ITNL will generally sell the toll receipts for a fresh term of one year either by re-negotiating the fee terms with the existing toll operator or by conducting a fresh auction to sell receipts to the highest bidder.
Zerodha (Trading Account)
RHP
