Managerial and financial support from MSRDC
MSRDC was established by Government of Maharashtra (GoM) in 1996. It is established to oversee large road infrastructure projects across State of Maharashtra. MSRDC has successfully completed key projects such as Mumbai Pune Expressway (MPEW), Bandra Worli Sea Link, Airoli Bridge Project and Satara Kagal Road amongst others. MIPL was formed as MSRDC’s subsidiary to undertake the six/eight laning of 23.80 km Vadape –Thane section of NH-3. Completion of this project is critical to MSRDC as it is in proximity to and will act as a feeder road for its flagship project NMSCEW. MIPL is therefore expected to receive managerial and financial support from MSRDC in completion of this project. MIPL is a fully owned subsidiary and is completely managed by MSDRC. Acuité believes the continued managerial and financial support from MSRDC will remain a critical rating factor.

Benefits derived from annuity-based revenue model
The project undertaken by MIPL has a Hybrid annuity-based revenue model. Under this model, post completion of construction NHAI will make thirty semi-annual payments to MIPL. MIPL does not bear any traffic risk as it recovers whole of capital cost through these annuity payments. Further, operational and maintenance (O&M) costs and interest costs are also reimbursed by NHAI. Annuity payments have been indexed to inflation thus protecting from any increase in costs and interest costs are reimbursed to the extent of bank rate+3 per cent. MIPL will also provide for a Major Maintenance Reserve (MMR) through its excess cash flow or promoter infusion to cover maintenance costs in excess of the routine O&M expenses. This will be done post commencement of commercial operations. The risk of MIPL to any delay in receipt of annuity payments from NHAI remains low as NHAI is an arm of Government of India (GoI).

Project execution risk
MIPL is currently undertaking the six/eight laning of 23.80 km Vadape-Thane section of National Highway – 3 (NH – 3) NHAI under HAM. MIPL got the project under harmonious substitution after NHAI decided to terminate their agreement with the original concessionaire – MEP Long Jian VTR Private Limited. The project was expected to be completed in September 2024 as per NHAI’s agreement with MIPL. However, due to delays in getting the approvals from the forest and Mangrove departments, NHAI has agreed to extend the completion by 274 days i.e, June 12, 2025 (MIPL has received the forest department clearance as on date).  However, till March 31, 2025 ~76 per cent of the cost incurred whereas physical progress stood at ~ 90-95 per cent. Hence, the completion of project without significant time and cost overruns remains critical as the commencement of annuity payments is based on timely completion of the project. However, this risk is mitigated to some extent on account of MSRDC’s established track record of completing road infrastructure projects of similar scale within the state, its long experience of working with the current EPC contractor and recipt of required approvals. Acuité believes that the completion of the project without significant time and cost overruns will remain a key monitorable.

Exposure to risks inherent in toll road projects
The project remains exposed to risks Inherent to toll projects. These include political acceptability of toll rate hikes, the latter risk is exacerbated in MIPLs case as the stretch mainly caters to daily commuting passenger vehicles as well as commercial vehicles. The risks also include resistance to pay and likelihood of toll leakages. Further, ability of the company to complete major maintenance within stipulated timelines will remain critical from the credit perspective.