New road projects less profitable: CRISIL

June 4, 2012

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The average return on equity on road projects awarded in 2010-11 is likely to be 6%-8% lower than those contracted before 2009, according to a study by ratings and research agency CRISIL.

The study estimates that toll road projects awarded on build-operate-transfer basis before 2009 could earn developers an average equity return of 22%. In comparison, projects awarded in 2010-11 may see a drop in returns to about 14% due to high premiums offered by developers to the government. Generally, road developers target a return of 16%-18%.

SOURCE: http://articles.economictimes.indiatimes.com