As per CRISIL, asset reconstruction companies (ARCs) are projected to see recovery rates for stressed road projects improve by 700-1000 basis points (bps) in 2024-25, following a doubling to 50-55 per cent in 2023-24. This improvement can be attributed to faster project completion, descoping of pending right of way (RoW), and the start of annuity payments by the National Highways Authority of India (NHAI), which has supported debt restructuring and resolution.
CRISIL’s analysis of security receipts (SRs) linked to approximately 2,500 lane km of stressed road projects valued at Rs 60 billion (representing 60 per cent of ARC-held road assets) highlighted the impact. These include build-operate-transfer (BOT) toll and hybrid annuity model (HAM) projects acquired with an average 40 per cent haircut. Projects stressed between 2017-2019, due to delays in land acquisition or lower-than-expected toll collections, are now stabilising, with completed works ensuring annuities sufficient for debt servicing.