Strength of the escrow mechanism

The escrow and bond payment mechanism provides adequate strength to the proposed bond issuance. For the green municipal bonds, own-revenue escrowed at collection, trustee-managed escrow mechanism and payment structure with recourse to the originator ensure sufficient safety for timely debt servicing. Creation of the DSRA in case of the green municipal bonds before pay-in and maintenance of the same throughout the tenure of the bonds enhance the strength of the structure. The DSCR is expected to be high throughout the tenure of the bonds.

Strong financial performance, as reflected in healthy operating surplus

Revenue includes income from collection of property tax, user charges for water and sewerage service, income from other taxes such as professional tax, octroi compensation, other revenue grants and other non-tax income. The revenue surplus is healthy, backed by strong property tax collection and steady grants from the state government in lieu of octroi and non-tax income, comprising town development income. Revenue surplus in fiscal 2024 stood at Rs 832 crore (vs Rs 393 crore in fiscal 2023) primarily on the back of revision in tax rate coupled with increased user charges. The corporation is expected to sustain the same in the near term. Further, operating surplus of Rs 734 crore was reported in the first 11 months of fiscal 2025.

Comfortable financial risk profile

A healthy operating surplus along with support from the state government in the form of grant has helped the corporation to fund the growing capex through internal cash accrual, leading to no reliance on debt. As on December 31, 2024, the corporation had nil outstanding debt. Robust cash flow provides ample liquidity to the corporation.