SBU Asia

We at ROADIS Asia focus on the management of existing assets in India and work towards acquiring other profitable long-term projects in the Asia-Pacific region. India is a fundamental market for our growth with a total network of 710 km already under management. Here, we are one of the leading highway developers and operators, having demonstrated our capacity to deliver on the ground. We have a solid reputation in the country because of our long-term strategy, strong network of partners and dedicated operations capabilities.

All existing assets in India operate under a tolling model and have achieved significant milestones in terms of project completion. We are committed to a long-term engagement in the country as is apparent from our investment interests over the past year. In 2017, we reached an agreement with a fund managed by Morgan Stanley through which we increased our stakes in three of our assets in India from 25% to 50%. Furthermore, we have been working on several potential transactions, including the privatization of the first bundle under the TOT program, an NHAI initiative to monetize toll road operations across the country.

We are committed to being part of the country’s focus on significant highway development. The government seems dedicated to solving the challenges regarding infrastructure to boost investments in the nation. We are optimistic about the future growth as the economy is recovering to become stronger—the impact of the introduction of GST and demonetization is fast receding, and Moody’s has upgraded the credit rating for India.

Overall, the outlook for growth in the country is positive and thus we remain strongly committed to growth in India and hope to increase our shareholders’ returns through investments in the country.

The Indian economy is gradually recovering from the transitory adverse impact of rolling out the Goods and Services Tax (GST) and measures to choke off the black economy, including demonetization, and is on-track for being the fastest growing economy in 2019.

India’s move towards clearer and more open foreign direct investment (FDI) regulations is helping to drive greater inflows of funds into the country. This economic momentum is aided by the growth in the industrial and services sectors and increased central government spending.

This economic thrust and support from the authorities are promising for sustainable growth for ROADIS in India.

Spanning a total of 5.6 million kilometers, India has one of the largest road networks in the world. According to the India Brand Equity Foundation (IBEF), the road network transports over 60% of all goods and 85% of total passenger traffic. Development of the road infrastructure is a vital factor in the economic growth of the nation. Moreover, due to an increase in vehicle ownership and rising freight transport coupled with growing initiatives by the government to improve transportation infrastructure in the country, the road sector is projected to exhibit a CAGR of 36.16% during 2016-2025. Furthermore, the NHAI is confident of meeting the fiscal target of completion of 3500 km of highways in the 2018 financial year.

In 2017 alone, cumulative FDI in the roads sector amounted to 24 billion US dollars in the wake of the government permitting 100% FDI in the sector. An outlay of INR 1.21 lakh Cr (USD 18.7 billion) was allocated to the road sector for the 2019 financial year, with INR 71,000 Cr (USD 11 billion) allocated specifically for the development of national highways in the country.

Furthermore, over the next five years, investment through the PPP model is expected to be USD 31 billion. Recently, the NHAI has been working on an equity financing model for its upcoming expressway and economic corridor projects to further promote private investments in the sector. With initiatives like this and the Toll-Operate-Transfer (TOT) model being pursued by the government, it is evident that the government is actively making efforts to solve the various challenges faced by the sector and make it more lucrative and stable for further investments.

Given this focus on the sector and the excellent forecast for the upcoming years, ROADIS reaffirms its commitment to a significant presence in the country, with a sustainable, transparent and solid operating scheme.