The 165-km long Yamuna Expressway connecting Greater Noida with Agra was inaugurated today by Uttar Pradesh Chief Minister Akhilesh Yadav in Lucknow. NDTV's Ashutosh Sharma caught up with Manoj Gaur, vice-chairman, Jaypee Group to talk on about the expressway and its journey.
Below are the edited excerpts of the interview. Watch the accompanying video here.
- Q: Now that the project is completed and is open to the public, how do you plan to make it financially viable? You would agree with me that the kind of cost you have incurred, you have to make the project financially viable. What kind of traffic growth are you expecting once the project grows? Give us a plan.
A: I won’t make a generic statement. I will make a specific point. It is not something that I’m inventing. But long ago, a famous US president had said that America didn't make roads, roads made America. This project has been conceived not because of the toll collection. JP Infratech, a company dedicated for this project, has two revenue streams. One is real estate development and another is expressway. So, the toll collection for first 6-7 years is very low.
Maybe we know it can’t even take care of the interest which it had to service for the loan. So, the barter was, which I mentioned earlier also, for every acre of land the company has paid for. So, there is a real estate land and we are building a full-fledged city in Noida called Wish Town Noida. So how real estate has to support servicing of loan and how this company is going to be viable? The project is viable because as you know JP Infratech is a listed company and is now recording a turnover of Rs 2800 crore annually, making profit. It is paying tax as applicable, it is paying dividend before the road got commissioned. Hence, now the second revenue stream starts. The investors should be happy about it; there are five land parcels.
The first land parcel is Noida and the fifth one is Agra, and three parcels are in between. So, the entire concept was that you make the road and land value goes up and then real estate comes up. Why realty? It is directly proportional to the growth and economy. We require towns. We feel very ashamed if some child dies in NCR or in Delhi, playing in a lane and falling into gutter. Cities are already staying over the limit. We have to make new cities, as far as these 5 cities are concerned, everyone was apprehensive—most of the people were—that what happens if the road doesn't complete. In real estate, opportunity is limited. Now the road has been completed and is open to public. Now as Indian economy grows, real estate requirement will grow and hence, there are a lot of opportunities for the company to grow.
- Q: That brings me to the next logical question, the development plans that you have across the expressway. The five land parcels you have talked about, some of the parcels among Noida and Greater Noida, we are witnessing development there. But give us the kind of timeline that you are looking at as far as commissioning of these projects is concerned. By when do plan to commission and monetise them?
- We have real estate opportunity of about 450 million sq ft and each parcel is doing about 80 million sq ft. We are doing about 20 million sq ft every year but now the point is that we need to detail our requirement vis-a-vis how we have to meet our schedule of repayment and interest, and how the entire thing works. It’s very clear that 450 mn sq ft opportunities is there and even if we do 20 million sq ft every year there is good work for more than 22 years and toll collection is there for 36 years. So, the investor should be very happy. With the business model where those risk are mitigated. To a larger extent, the risk is about how the economy grows and how the real estate potential grows.