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The sudden and severe onset of the second wave of the Covid pandemic, has adversely impacted the toll collections again, and the same are on the downward trajectory.

As per an ICRA note, despite the lack of a nationwide stringent lockdown or toll suspensions, the regional restrictions imposed in several states, along with the increase in wariness, has negatively affected the people movement in the past few weeks.

Road traffic had witnessed a marked improvement in H2 FY21 after subdued traffic witnessed in the initial months of the last fiscal, post resumption of tolling from April 20, 2020.

Shedding more light on the impact on toll collections, Rajeshwar Burla, Co-Group Head & Vice President, Corporate Ratings, ICRA, said, "With continued rise in number of Covid cases in May 2021 and stringent lockdowns imposed by states to contain the infection, the de-growth in the toll collections has been much sharper in May 2021.

The toll collections reduced by around 10 per cent in April 2021 over March 2021 and estimated to decline by 25-30 per cent in May 2021 over April 2021.

With fall in number of Covid cases from third week of May 2021, the States are expected to relax the lockdown restrictions in a gradual manner.

"We expect the toll collections to ramp-up from June onwards. Despite hitting a speed breaker in the form of second wave of Covid; toll road projects are expected to witness low teen revenue growth in FY22 on the back of low base and inflation linked increase in toll rates."

ICRA has done a study on toll collections data for 29 projects which are spread across 11 states over a period of 60-70 days (Mar 1, 2021 to May 10, 2021).

As per the study, Maharashtra is the worst hit state in India, with the lockdown restrictions having started earlier than other states due to which de-growth has been higher in April 2021. For Rajasthan, most of the projects in sample have higher proportion of passenger vehicle as they cater to tourist destinations, therefore, the impact on toll collections has been much sharper due to the restrictions imposed on people movement.

For the states of Andhra Pradesh and Karnataka, the de-growth remained comparatively moderate as these stretches are largely used by commercial traffic.

The month-on-month, de-growth has increased over the month of April and May 2021 with sharper dip on weekends as some of the states have started restrictions by imposing weekend lockdowns.

Although the degrowth in toll collections has been across vehicle categories, the impact has been severe on the passenger vehicles and bus categories due to strict restrictions imposed on people movement by various states. Unlike the earlier wave where there was a nationwide lockdown and toll suspension; this time the nature of lockdowns is more regional with relaxations to both manufacturing and construction activities and movement of goods. As a result, the impact on the overall toll collections is expected to be less severe when compared to last year.

"Unlike the first wave, no compensation against toll revenue loss is announced by the authorities so far and is unlikely to be covered under concession agreement. However, the rebound in traffic now is expected to be much faster as compared to first wave which took almost 5-6 months to reach pre-covid levels. Majority of the road projects rated by ICRA in investment grade categories have 3 to 6 months of DSRA and are adequately placed to withstand the current impact," Burla added.

As for the impact on the ratings for ICRA rated BOT (Toll) road portfolio, in FY2021, ICRA has upgraded one issuer which had achieved significant ramp up in toll collections post commercial operational date (COD). There were four rating downgrades; the rating action in two of these four issuers was because of breach of rating triggers due to expected deterioration in coverage metrics on account of reduced toll collections. In the case of third issuer, the rating action was on account of adverse regulatory developments viz. adverse arbitration outcome and in fourth, termination notice served by NHAI. In April 2021, there were no upgrades/downgrades.