Noida Toll Bridge Co. Ltd. - Limited Downside and Annuity Potential

(Aksh) #61

It would be quite interesting to read and understand the observations in the Court Order in this case and any other previous similar comparable cases. If anybody already has access to the same, kindly share.

Prima facie, from what I read in the media, It’s quite baffling as to how NTBCL can be stopped from collecting toll just because it has made enough money? What about the contract (i.e. Concession Agreement)?

Disc: No investment but tracking the developments as a case study

(amit anam) #62

Good article above…


This case was already restrained by Supreme court in past. Here’s a news shot from June’16:

SC refuses to restrain DND operator from collecting toll -

Chances are more that the company will win.

(Aksh) #64

The SC refused to restrain the NTBCL from collecting toll as the matter was already before the AHC so it asked AHC to expedite the matter and deliver verdict in 3 months. It in noway means that NTBCL won and the order was in its favour. It just means that the SC refused to interfere in the matter as the matter was already before the AHC.

The AHC also refused to pass an interim order earlier to restrain the NTBCL from collecting toll but now have come out with the verdict of restraining NTBCL from collecting toll from now onwards. AHC is no small institution and chances are that there must be huge merits for it to pass such order esp. when it took so long to consider all the facts at hand. Having said that, there are many examples when SC reversed the HC’s order but if that happens I would be unpleasantly surprised not because I’m against the toll or the company etc. but because It would just validate my skepticism of even highest of our institutions.

(rajput.delhi) #65

There is a good editorial in ET today basically stating that it is a good decision due to the flawed nature of the contract (no competition and high returns) and is a good lesson for companies signing PPPs in future.

Also as we know, in today’s world verdicts are decided more by media than courts esp when public and its welfare is deeply involved. Will be interesting to see how Supreme Court decides given these two points which are hugely negative for NTBCL.


Disc - Invested :slight_smile:

(manjushree) #66

The following link decodes the decision of Hon’ble AHC.

Please look at the following points mentioned therein:
There is a “total cost” of the project including some risk premium, which has ballooned to over Rs. 2,000 cr. so far. This is only for the purpose of ensuring the company is paid if NOIDA arbitrarity cancels the company’s contract.
If NOIDA Authority should terminate the Noida Toll Bridge company’s contract prematurely for any reason, then it is entitled to recover that cost (2,000 cr.) minus any tolls etc. recovered already. This part still remains valid. So regardless of anything, if NOIDA says we’ll forcibly take over the project, the company will get compensated for the loss.

So what do we make of it. Does it mean that in worst case, if the Hon’ble SC confirms the decision of the High Court, the co. still get Rs. 2000 cr minus tolls recovered?

(Aksh) #67

This is by any stretch of imagination a landmark judgement and hopefully will have wider repercussions in the way PPP projects are awarded and operated in the country. The fact that PIL was filed way back in 2012, had many hearings and Order is speaking and quite detailed only indicates that the presiding bench has deliberated well on the matter sensing its wider repercussions.

To summarize, AHC though not in its entirety but at least effectively nullified the CA by holding clause 13 bad and inoperative and clause 14 arbitrary and against the public policy and thus by severing the same. Clause 13 of the CA gives NTBCL rights to levy and collect user fee from commuters and Clause 14 talks about method of calculating total project cost.

This may well open Pandora’s box and we may see many such PILs against similar PPP projects in future. Also it leaves many questions open ended as to who’s the culprit and who’s to be blamed for the losses of many innocent investors?


Goes on to prove that investments in infrastructure related stocks are always poor option.

It will not be easy for NTBC to win this battle. Nature of this contract was always in question since inception.


(Muser) #70
  • The concession contract will now possibly be renegotiated.

  • The company may have to agree to a much less than 20% return, which was guaranteed originally. It may be provided land development rights to sweeten the deal.

  • Infrastructure deals (telecom, road, power etc.) in PPP space have been renegotiated before, in India and abroad.

  • To save face & its business friendly image, the central government will have to broker a deal between the company and the public. Not sure if SC will support.

  • A prolonged legal battle + uncertain outcome implies its time to exit

(bkasal) #71

It’s challenging… Not sure what is value of a contract to do biz…

(Govindarajan) #72

I feel either company would-be liquidated or I remember ILFS Transportation increasing stake so NTBC might be merged with ITNL. ITNL need cash and NTBC has reserves.So that could be the right way in ILFS group gaining investors trust.

All these can considered if SC confirms the verdict after auditing of company’s book by CAG. If company decides to remain independent company with zero toll revenues, it could start depleting it reserves and might report losses.i am not sure if ad revenues are sufficient to keep this company running. All in all, investors should also be protected. Let us what happens. All these are my guesses.

Disc: Invested

(bmathew) #73

Booked loss and got rid of it completely … a very important lesson learned !!

(atulgupta80) #74

this statement doesn’t look like living up to ethos of this forum. correct me if i am wrong.

(bmathew) #75

apology . updated the note

(rajput.delhi) #76

An interesting article…

May be there is light at the end of the tunnel :grinning:

Well…may be!!


(Aksh) #77

DND flyway toll free, SC refuses to stay Allahabad HC order


An article written by an ex-IAS officer and former President & CEO of NTBCL

(Aksh) #79

An informed one can only expect such nonsense from an ex bureaucrat…I suspect if he has even cared to go through the full judgment. To quote him in article…

“If a contract is bad in law it can and should be set aside by the courts. But to the best of anybody’s knowledge there has been no determination that the Concession Agreement, the basic contract between state authorities and NTBCL, is bad in law”

Where in the world you guarantee 20% ROI?

IMO AHC should have gone even further may be suo moto and book those bureaucrats who designed and approved such CA. In so called Indian democracy judiciary is the only pillar that’s standing still as yet.

(Emh) #80

Kindly consider

  1. Prevailing risk free rate at the time of signing contract as also risk premium given that this was the first contract of its kind.

  2. In the middle of the last decade, the company flagged off ballooning cost of project and asked noida to grant development rights to bring down project cost. Noida people did not act quickly enough ( perhaps company did not incentivise the fine people at noida) and the poor commuters paid for this through increasing tolls.