Fairval

Notes on Indian equities, sectors and economy

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 90 other followers

  • Top Posts & Pages

Mumbai Sea Link – a white elephant

Posted by fairval on August 6, 2009

Came across this interesting infobyte.

The average daily traffic on Noida Toll Bridge was 98,746 vehicles for Apr-Jun09. As compard to this, Mumbai Sealink is doing around 20,000 vehicles per day, just about 20%.

The capex in Noida bridge was around Rs 420 crore. The Mumbai Sealink cost Rs 1600 crore, or about 4x.

So there is a difference in economics of about 20x (5x vehicles, 1/4 the cost), in favour of the Noida bridge. So, if in Mumbai they charge Rs 75 for a round trip, the equivalent of that is around Rs 4 in Delhi.

Or look at this way. The Noida bridge it appears charges Rs 20 for one way. At Mumbai they charge Rs 50, about 2.5x. This is actually cheap, considering project cost is 4x. Only catch is – they get only 20% of traffic of Noida.

Consider this – if the toll was Rs 20 in Mumbai, then it needs may 400,000 vehicles a day to generate the same economics as the Noida bridge, or about 20x what it gets now. And not that Noida toll bridge is raking in the money. For FY09, after being operational for maybe 7-8 years, it had an ROCE of around 9%.

It appears rather obvious – the Mumbai bridge is unlikely to be profitable. It is a white elephant, perhaps meant to line political pockets. And it not fully finished even now.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: