The financial viability of the Yamuna
Expressway
Monica Singhania and Kamal Kumar
Monica Singhania is an
Associate Professor,
Kamal Kumar is an
Executive MBA Student
and are both based at
Faculty of Management
Studies, University of
Delhi, New Delhi, India.
The authors would like to
thank Sujoy Das and
Ram Prasad Gurung
(Executive MBA Class of
2013-2015, Faculty of
Management Studies (FMS),
University of Delhi).
Disclaimer. This case is written
solely for educational
purposes and is not intended
to represent successful or
unsuccessful managerial
decision making. The author/s
may have disguised names;
financial and other
recognizable information to
protect confidentiality.
DOI 10.1108/EEMCS-11-2013-0216
Prologue
The Yamuna Expressway (in the state of Uttar Pradesh [UP] in India) promises to provide
a fast-moving corridor to minimize travel time and connect the main townships, commercial
centers and industrial centers on the eastern side of the Yamuna. Its other objectives
include the development of the adjoining area; the reduction of the pollution and carbon
footprint of vehicles travelling between New Delhi and Agra; to improve vehicle fuel mileage
efficiency; to reduce wear and tear on vehicles; reduce logistical costs; enable farmers in
western UP to move agricultural, horticultural and dairy products rapidly to major cities; and
accelerate the movement of supplies and help to affected areas during the Yamuna floods
and other emergencies.
An entrepreneurially challenging project, it has seen as many as four state government
changes during the course of completion (1997-2012) and an increase in initial land costs
from INR800 crores to INR2,800 crores for the successful completion of the project. The
project exhibits exemplary courage by a corporate house (Jai Prakash Associates Ltd.
erstwhile Jai Prakash Industries Ltd. generally referred to as Jaypee Group) to work against
the headwinds and to make the project financially viable and successful.
Conceptual framework
The Yamuna Expressway[1], conceived in 1997, was the dream project of Ms Mayawati,
the then Chief Minister (CM) of UP, India, with the idea to connect Agra with Noida[2]
and the National Capital Region (NCR) and to open up avenues for industrial and urban
development in the region through the expressway. The other objective was to reduce the
traffic load on an already congested National Highway Number 2 (NH2) that was the only
method available to reach Agra from Noida and NCR. The Yamuna Expressway (Exhibit 1)
passes along the eastern banks of the Yamuna River from Noida to Agra.
The length of the expressway is 165.5 km with a capital investment of INR13,300 crores (at
completion). The project was awarded to concessionaire Jai Prakash Industries Ltd.
(Exhibit 2) in 2003[3], and later in the form of a separately carved out Special Purpose
Vehicle (SPV)[4] called Jaypee Infratech Ltd. (JIL) on the Built Own Operate and Transfer
(BOOT)[5] project with the development rights of five parcels of land in the form of a ribbon
development to improve the socio-economic profile of the area and to provide an
alternative to connect Agra with Noida and the NCR. The project showcases how public
private partnership (PPP) projects can be made financially viable in an infrastructure area
which requires huge capital investment and a long gestation period to become profitable.
The whole project primarily involves construction of an access controlled expressway 165.5
km with six lanes that are extendable to eight lanes and consist of toll collections (Exhibit
3) for 36 years[6]; ribbon development of five parcels of land on lease based model during
VOL. 4 NO. 2014, pp. 1-20, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 the concession period to sell to the general public, each measuring 1,235 acres with a
salable area of about 530-million square feet[7]. The project also entails innovative
financing and concessions obtained by the company under section 80-IA of the Income
Tax Act, 1961[8].

Industry (http://en.wikipedia.org/wiki/Indian_road_network)
India had a road network of over 4,236,000 km[9] (2,632,000 miles) in 2011, the third
largest road network in the world. However, qualitatively India’s roads are a mix of modern
highways and narrow unpaved roads requiring massive improvement. Road transport is
vital to India’s economy but road transport has not gained in importance over the years,
despite significant barriers and inefficiencies in inter-state freight and passenger
movement compared to railways and air travel. Indian road network is administered by
various government authorities such as the National Highway Authority of India (www.nhai.
org) (NHAI) (national highways); State Government (state highways); Local Governments
(major and other district roads); and panchayats (rural roads). Most of the existing
expressways in India are toll roads and these high-speed roads are four or six lanes and
predominantly access controlled.
On August 9, 2012, the 165.5-km Yamuna Expressway opened and was India’s longest
six-laned controlled-access and reduced the travel time between Agra and Greater Noida
from six to eight hours to just two hours. India expects another 3,530 kilometers of
expressways to come up by 2014 from the projects under construction. The Government
has drawn up an ambitious target[10] to lay a 18,637-km network of brand new
expressways by 2022:
The Government also plans to earmark USA$1 trillion for the development of infrastructure in
India over 2013-2018. To attract investments in the sector, it has modified its policies so that
developers no longer have to wait for clearance from various authorities to commence
construction. Another supportive policy came from the Central Bank wherein it reclassified loans
to road developers/builders as secured loans rather than unsecured loans, which would give
more comfort to banks to lend to projects (www.ibef.org/industry/infrastructure/
roads-india.aspx).

Competitor analysis
The Yamuna Expressway enjoys a quasi-monopolistic status in terms of competition. The
only competition it faces is from the existing NH2 which is maintained by the NHAI and
starts from the Delhi Badarpur border and passes through congested Faridabad,
Ballabhgarh, Palwal, Mathura and to Agra. Though the toll rate on this route is
comparatively less compared to Yamuna Expressway, considerable time is lost to cover
this stretch which is going to become the main factor in favor of the Yamuna Expressway.

Company profile
JIL is an Indian infrastructure development company engaged in the development of the
Yamuna Expressway and related real estate projects. JIL, a subsidiary of the Jaypee
Group, was incorporated on April 5, 2007 as an SPV to develop, operate and maintain the
Yamuna Expressway in the state of UP, connecting Noida and Agra. The Yamuna
Expressway is a 165.5-kilometre access-controlled six-lane concrete pavement
expressway along the Yamuna River, with the potential to be widened to an
eight-lane expressway. The company also has the right to develop 530 million square feet
of land (out of which 52.70 million square feet is already sold and it is assumed that 477.30
million square feet will be sold in the financial year 2013-2014, see Exhibit 6) along the
Yamuna Expressway at five locations for residential, commercial, amusement, industrial
and institutional purposes. Refer Figure 1 for historical time line of project.

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2014

 Figure 1 Time line of the Yamuna Expressway project

2012
2011
2010

2007 Toll
collection
2006
Expressway started
Special
I.P.O completed on16-8-
Purpose 2012
completed
2003 Vehicle
Rebidding JaypeeInfratech
Project
of project Limited
awarded to
Incorporated 5-
1997 Project JaiPrakash 4-2007
conceived Industries
Limited

1997 2003 2006 2007 2010 2011 2012

Source: Created by authors

Total land required for project[11]

1. Construction of expressway and allied structures ⫽ 5,060.29 acres.
2. Real estate development five parcels of 1,235 acres each ⫽ 6,175.00 acres.
Total land required 11,235.29 acres.

Financing model (www.jaypeeinfratech.com/investors/stuatory communications/

presentation accessed 18 April 2013)
One of the unique aspects about this project is its financing model. The promoters and
management have applied best practice principles be investing a minimum contribution
and generating sufficient revenues as its internal accruals from the sale of real estate
developments and by project finance from scheduled commercial banks in India. Primarily
ICICI bank as lead banker for this project and by making the company listed on the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) by Initial Public
Offer[12] (IPO) process (refer Table I). The project also enjoys 100 per cent tax benefit
under section 80-IA of Indian Income Tax Act, 1961 for 10 years out of the block of the first
15 years and qualifies to be an infrastructure project[13]. However the Minimum Alternative

Table I Funding pattern (in INR crore)

Incurred till financial
Description Total year 2012-2013

Project cost (INR crore) 13,330 13,152

Source of funds
Equity from promoters and Others 1,250 1,250
IPO proceeds 1,500 1,500
Accruals from real estate development 3,550 3,596
including advances and sales of land
Debt 7,000 6,657
Total 13,330 13,152
Source: Created by authors from www.jaypeeinfratech.com/investors/stuatory communications/
presentation to investors dated 18 April 2013 hyperlink www.jaypeeinfratech.com/
jp%20infratech/JIL-Investor-Presentation-May%202013.pdf

VOL. 4 NO. 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 Table II Assumptions for financial analysis
1. Assume salable rate as INR 3,000 per square feet. Land area already sold 52.70 million
square feet (refer Exhibit 6). Balance land to develop 477.30 million square feet and to be sold
in financial year 2013-2014 (refer Exhibit 6)
2. Assume an earnings before interest taxes depreciation and amortization (EBITDA) of 50% for
real estate
3. Assume an EBITDA of 30% for toll revenues (2013-2014: INR150 crore; 2014-2015–INR200
crore; 2015-16–INR353 crore, and constant thereafter that is no growth rate in traffic
projections)
4. JIL wants to be debt free on March 31, 2014. Debt to be repaid entirely by 2014 (both
secured loan and non-secured loan). Secured loan is INR 7712.63 crore and non-secured loan
is INR511.79 crore as per balance sheet of financial year 2012-2013. Assume interest rate as
12% per annum
5. Equity capital INR1388.93 crore (refer Exhibit 4)
6. Section 80-IA is applicable only up to financial year 2017-2018. MAT is applicable up to 2018
at 20%. After 2018, assume tax rate as 33.99%. Assume no depreciation is allowable
Source: Created by authors

Tax[14] (MAT) is applicable to book profit. In addition, the Reserve Bank of India (the
Central Bank of India) has classified loans to road developers and contractors as secured
loans because infrastructure has been granted a special status[15] and the capital raised
will be used for construction of roads, now considered a national investment under nation
building. For financial statements, refer Appendix Exhibit 4 and 5.
The company is interested in determining its keys financial ratios for the period 2009-2013
along with earnings during the entire lifecycle of the project (2014-2048). The earnings
projections are to be based on assumptions stated in Table II.

Notes
1. It was erstwhile referred to as the Taj Expressway.
2. New Okhla Industrial Development Authority (NOIDA) is adjoining NCR of New Delhi, capital city
of India. Agra is the place where the Taj Mahal is located. This highway experiences massive traffic
due to international and local tourists.
3. Jai Prakash Associates Annual Report 2004-2005, page 10.
4. SPV is a legal entity created to fulfill narrow, specific or temporary objectives.
5. Build– own– operate (BOO); build– develop– operate (BDO); design– construct–manage–finance
(DCMF); buy– build– operate (BBO); lease– develop– operate (LDO); wrap-around addition (WAA),
build– own– operate–transfer (BOOT); build–rent– own–transfer (BROT); build–
lease– operate–transfer (BLOT); build–transfer– operate (BTO) and managed service provider
(MSP) – PPP in Indian Infrastructure Development: Issues and Options available on www.rbi.org.
in/scripts/BS_VIEWContent.aspx?ID⫽1912
6. Jai Prakash Associates Annual Report 2004-2005, page 10.
7. Jai Prakash Associates Annual Report 2004-2005, page 10.
8. Final Prospectus of IPO filed with Registrar of Companies dated May 6, 2010, pages 55-65.
9. Annual Report 2010-2011 (pdf), Ministry of Road Transport and Highways, Government of India,
page 1 retrieved September 3, 2013.
10. The Times of India, November 23, 2009.
11. Final Prospectus of IPO filed with Registrar of Companies dated May 6, 2010, page xiii.
12. IPO’ is the first sale of stocks by a private company to the public.
13. Final Prospectus of IPO filed with Registrar of Companies dated May 6, 2010, pages 55-65.
14. MAT was introduced under Income Tax Act 1961 to tax companies making higher profits and
declaring dividends to shareholders but having no significant taxable income due to exemptions,
deductions and incentives.

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2014

 15. http://articles.economictimes.indiatimes.com/2010-04-21/news/27573964_1_unsecured-loans-
flow-of-bank-funds-road-sectorMediaReportinEconomicTimes Newspaper Dated 21.4.2010
20. Refer Exhibit 3, 6 and Table 2 of Case Study: Toll projections by management of JIL Real Estate
EBITDA assumed as 50 per cent and toll revenue EBITDA as 30 per cent.
21. Interest charges at 12 per cent per annum on INR 8224.41 crores.
22. Tax at 20 per cent MAT.
23. Principal repayment of INR 8224.41 crores long- and short-term debt.
24. Net profit up to financial year 2012-2013, refer P&L Account for financial year 2008-2009 to
2012-2013 [242.88 ⫹ 469.856 ⫹ 1451.704 ⫹ 1277.912 ⫹ 694.528 ⫽ INR 4136.88 crores say INR
4,137crores].
25. Net profit from financial year 2013-2014 to 2047-2048 [48,263 ⫹ 36 ⫹ 48 ⫹ 85 ⫹ 85 ⫹ 85 ⫹ 2098
⫽ INR 50,700 crores].
26. Net profit from financial year 2008-2009 to financial year 2047-2048 [ 4137 ⫹ 50700 ⫽ INR
54,837crores].
27. Profitability on equity capital ⫽ 54,837/1388.93 ⫽ 39.48 times.
Keywords: 28. Long-term earnings on equity of INR1388.93 crores is INR 54,837crores [1388.93*1.1075^36 ⫽
Financial model, INR 54,837crores compounded @ 10.75 per cent per year for 36 years].
Infrastructure, 29. Short-term earnings on equity up to March 2014 [(4,137 ⫹ 48,263 ⫹ 36 ⫽ 52,436
Social welfare, crore)1,388.93*1.83156 ^6 ⫽ INR 52, 436 crores compounded @ 83.156 per cent per year for six
Public private partnership years].

Exhibit 1

Figure E1 The Yamuna Expressway schematic diagram

165 KM Yamuna Expressway

Noida NCR JaganPur NCR Mirzapur NCR Tappal Agra

Six-lane access controlled expressway extended upto eight lanes

Land parcel 4
Land parcel 2 Land parcel 3 Land parcel 5
Land parcel 1 1,235 acres
1,235 acres land 1,235 acres land 1,235 acres land
1,235 acres land land for real
for real estate for real estate for real estate
for real estate estate
development development development
development development
Source: Created by authors, interpretation drawn from original source: www.jaypeeinfratech.
com/investors/stuatory communications/presentation<zurlx> to investors dated April 18 2013,
www.jaypeeinfratech.com/jp%20infratech/JIL-Investor-Presentation-May%202013.pdf

VOL. 4 NO. 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

 Exhibit 2

Figure E2 Real estate under development JIL concessionaire arrangement

JaiPrakash Associates Limited (Parent Company)

Hold 83.1% Shares in Special Purpose Vehicle JaypeeInfratech Limited

Special Purpose Vehicle JaypeeInfratech Limited (Concessionaire Company)

Yamuna Expressway 165 kilometers and

development of five land parcels each of 1,235 acres

Source: Created by authors, interpretation drawn from Original Source: www.jaypeeinfratech.

com/investors/stuatory communications/presentation to investors dated 18 April 2013, www.
jaypeeinfratech.com/jp%20infratech/JIL-Investor-Presentation-May%202013.pdf

Exhibit 3

Table EI Toll rate and toll projections of Yamuna Expressway

Toll rates Average annual traffic
Average daily
traffic
Type of Serial (Passenger Toll Revenue in
Serial number Type Rate in INR journey no. Financial year car unit) INR crore

1 Two-wheeler 150 Single 1 2013 9,711 58.77

2 Car/Jeep 320 Single 2 2014 expected 25,000 150
3 LCV 500 Single 3 2015 expected 35,000 200
4 Bus/Truck 1050 Single 4 2016 expected 60,000 353
5 MAV 1600 Single
Source: Created by authors, interpretation drawn from original source: www.jaypeeinfratech.com/investors/stuatorycommunications/
presentation to investors dated 18 April 2013 hyperlink www.jaypeeinfratech.com/jp%20infratech/JIL-Investor-
Presentation-May%202013.pdf

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2014

 Exhibit 4

Table EII Balance sheet

Jaypee Infratech Ltd.
INR in crore March 2013 March 2012 March 2011 March 2010 March 2009

Sources of funds
Share capital (a) 1,388.93 1,388.93 1,388.93 1,226.00 966
Reserves and surplus (b) 4,791.23 4,388.71 3,374.00 766.85 279.36
Total shareholders’ funds (c) ⫽ (a) ⫹ (b) 6,180.16 5,777.64 4,762.93 1,992.85 1,245.36
Secured loans (d) 7,712.63 6,959.85 6,209.85 5,721.00 1,867.54
Unsecured loans (e) 511.79 250.15 149.55 0 0
Total debt (f) ⫽ (d) ⫹ (e) 8,224.42 7,210.00 6,359.40 5,721.00 1,867.54
Total liabilities (g) ⫽ (c) ⫹ (f) 14,404.58 12,987.64 11,122.33 7,713.85 3,112.90
Application of funds:
Gross block (h) 9,711.67 76.94 64.51 62.78 58.82
Less: accumulated depreciation (i) 64.5 49.66 48.12 39.62 23.5
Net block (j) ⫽ (h) ⫺ (i) 9,647.17 27.28 16.39 23.16 35.32
Capital work in progress (k) 330.76 9,202.61 6,830.57 5,188.33 2,536.29
Investments (l) 205.43 0 0 0 0
Fixed assets (m) ⫽ (j) ⫹ (k) ⫹ (l) 10,183.36 9,229.89 6,846.96 5,211.49 2,571.61
Current assets, loans and advances
Inventories (n) 5,707.85 4,528.35 3,337.74 1,909.99 550.14
Sundry debtors (o) 363.42 409.55 537.89 102.63 0
Cash and bank balance (p) 254.44 541.6 1,850.85 1,782.97 190.92
Loans and advances (q) 2,865.66 2,065.12 1,652.00 719.09 299.14
Total current assets (r) ⫽ (n) ⫹ (o) ⫹ (p) ⫹ (r) 9191.37 7544.62 7378.48 4514.68 1040.2
Less: current liability and provisions
Current liabilities (s) 3,930.73 2,874.94 2,505.95 1,874.61 461.65
Provisions (t) 1,039.42 911.93 597.16 137.71 37.26
Total current liabilities (u) ⫽ (s/) ⫹ (t) 4970.15 3786.87 3103.11 2012.32 498.91
Net current assets (v) ⫽ (r) - (u) 4,221.22 3,757.75 4,275.37 2,502.36 541.29
Total assets (w) ⫽ (m) ⫹ (v) 14,404.58 12,987.64 11,122.33 7,713.85 3,112.90
Note: Equity capital may be assumed as INR1,388.93 crores 2011 onwards over the life of the project
Source: Created by authors; www.hdfcsec.com/jaypeeinfratech/company annual report 2009-2013

VOL. 4 NO. 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

 Exhibit 5

Table EIII Profit and loss statement16

Jaypee Infratech Ltd.
INR in crore March 2013 March 2012 March 2011 March 2010 March 2009

Income:
Sales turnovera (i) 3,274.34 3,155.90 2,778.70 640.65 554.54
Other income (ii) 17.86 13.03 19.93 12.2 1.71
Total income (iii) ⫽ (i) ⫹ (ii) 3,292.20 3,168.93 2,798.63 652.85 556.25
Expenditure:
Power and fuel cost (iv) 10.07 1.65 1.03 0.52 0.49
Other manufacturing expenses (v) 1,662.57 1,459.91 921.56 36.78 172.27
Employee cost (vi) 29.33 12.67 8.6 3.28 3.9
Selling and administration expenses (vii) 63.37 22.33 29.96 7.68 61.31
Miscellaneous expenses (viii) 31.7 9.04 3.92 0.24 0.71
Profit before interest depreciation and tax 1,495.16 1,663.33 1,833.56 604.35 317.57
(ix) ⫽ (iii) ⫺ [(iv) ⫹ (v) ⫹ (vi) ⫹ (vii) ⫹ (viii)]
Interest and financial charges (x) 612.08 64.35 10.3 0.84 0
Profit before depreciation and tax (xi) ⫽ 883.08 1,598.98 1,823.26 603.51 317.57
(x) ⫺ (xi)
Depreciation (xii) 14.92 1.59 8.63 16.19 13.97
Profit before tax (xiii) ⫽ (xi) ⫺ (xii) 868.16 1,597.39 1,814.63 587.32 303.6
Tax (xiv) 173.632 319.478 362.926 117.464 60.72
Profit after tax (xv) ⫽ (xiii) ⫺ (xiv) 694.528 1,277.912 1451.704 469.856 242.88
Notes: aIncludes INR 58.77 crore for financial year 2012-2013 from toll revenues (Expressway opened on 9.8.2012, toll collection
started 16.8.2012); rest all revenues are from real estate
Source: Created by authors; www.hdfcsec.com/jaypeeinfratech/company annual report 2009-2013

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 2014

 Exhibit 6

Table EIV Real estate projections17

Real estate projections Jaypee Infratech Ltd.
Salable area in Salable area in million
million square square foot sold up to
Area Parcel Area in acres foot 31st March 2013

Noida 1 1,235 78 50.72

Gautam Budh Nagar 2 1,235 116 0.00
Gautam Budh Nagar 3 1,235 116 0.00
Aligarh 4 1,235 116 1.98
Mathura 5 1,235 103 0.00
530 52.718
Average rate in INR/square 342319 18,039 crore from real
foot and total collection up estate sold
to financial year 2012-2013
Balance left (530-52.7) 477.3
Average realization 3000 477.30 ⫻ 3,000 ⫽ 1,43,190
expected in INR/square foot crore from real estate to be
and total collection for sold
financial year 2013-2014
Explanation notes
1235 * 4048 * 10.76 * 1.45 ⫽ 78 million square foot
1235 * 4048 * 10.76 * 2.15 ⫽ 116 million square foot
1235 * 4048 * 10.76 * 1.91 ⫽ 103 million square foot
Conversion factors
Acres to square meter 4,048.00
Square meter to square foot 10.76
Square foot to salable 1.45 1.45 FAR Depends upon local building bilaws
2.15 2.15 FAR Depends upon local building bilaws
1.91 1.91 FAR Depends upon local building bilaws
Source: Created by authors, drawn from original source: www.jaypeeinfratech.com/investors/stuatorycommunications/presentation to
investors dated 18 April 2013 hyperlink www.jaypeeinfratech.com/jp%20infratech/JIL-Investor-Presentation-May%202013.pdf

About the authors

Monica Singhania is an Associate Professor, FMS, University of Delhi. She is a graduate
from Shri Ram College of Commerce, post-graduate from Delhi School of Economics and
a Fellow Member (FCA) of the Institute of Chartered Accountants of India. She has the
distinction of being placed in the merit list of the examinations conducted by both the
University and the Institute. She has been awarded PhD in the area of corporate finance
and taxation from the University of Delhi. She is the author of seven books on direct tax laws
and several research papers published in leading journals. She teaches management
accounting, management control systems, project management and corporate taxation to
MBA students at FMS. Monica Singhania is the corresponding author and can be
contacted at: monica@fms.edu
Kamal Kumar has a Bachelors of Technology (Civil) from Delhi College of Engineering. He
belongs to Executive MBA Class of 2013-15 at FMS, University of Delhi. His main interest
is in Meeting, Incentives, Exhibitions and Conventions (MICE) Tourism integrated with
aviation Infrastructure and Infrastructure Financing in India.

VOL. 4 NO. 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9