Supreme Infra Q1 Net up 64 pc to Rs 25.57 crore

August 23, 2011

MUMBAI: Supreme Infrastructure today posted a 64 per cent increase in its net profit for the quarter ended June 30 to Rs 25.57 crore as against Rs 15.59 crore in the year-ago period.

The total sales of the company jumped 78.82 per cent to Rs 330.02 crore during the quarter as against Rs 184.53 crore in the corresponding period last year.

“We have started the year with good execution levels across projects. We have added projects in our BOT portfolio and are confident of ramping up operations to achieve greater results for our stake holders,” the company’s director Vikas Sharma said in a statement issued here

Source: articles.economictimes.indiatimes.com

Written by ITW Editor · Filed Under BOT, Supreme Infrastructure India Ltd.

Cape Town threatens lawsuit over tolls

August 23, 2011

Outrage over proposed R10bn winelands toll road project in the Western Cape

THE City of Cape Town is threatening legal action if the state goes ahead with plans to develop the R10bn winelands toll road project in the Western Cape.

The South African National Roads Agency (Sanral), which struggled this year to apply tolls to the Gauteng Freeway Improvement Project amid a public outcry about the high costs, has not yet begun construction on the winelands route.

Cape Town mayoral committee member Brett Herron said yesterday he had written to Transport Minister Sbu Ndebele to inform him about the city’s declaration of a dispute under the Intergovernmental Relations Act.

The project encompasses 105km of the N1 highway between Cape Town and Worcester and a 70km stretch of the N2 between Bot River and Cape Town. In 2003 the project received environmental authorisation and it was gazetted as a toll road in 2008.

Mr Ndebele had not received the letter yet, Department of Transport spokesman Logan Maistry said yesterday. “But I am sure that once it has been received there will be further engagement and consultation on this matter, including by the newly announced government commission on infrastructure,” he said.

Mr Herron said the letter was sent two weeks ago.

The city wants to meet Sanral next week to select an independent arbitrator for its dispute. The city alleges that Sanral’s processes, including its environmental impact assessment and its published intent to toll, were “flawed”.

Sanral did not address the city’s concerns during the public participation process, Mr Herron said. These included the socioeconomic effects of tolling . Motorists avoiding the tolls would use alternative routes belonging to the city, which “will impact on maintenance required”. “Sanral refused to discuss the City’s concerns…. Our letter to the minister is our last attempt at resolving this dispute before legal action,” Mr Herron said.

Toll roads “are always an emotional issue,” Sanral manager Alex van Niekerk said. “The bottom line is if you cannot come up with the money through taxes then you are either going to have (tolls) or not have the project.”

Source: businessday.co.za

Written by ITW Editor · Filed Under Road, South Africa, Tolling

Union minister”s assurance about putting TAH on fast track

August 23, 2011

Itanagar Aug 19 (PTI) Union Minister of Road Transport and Highways C P Joshi has given an assurance to put the Trans Arunachal Highway (TAH) on the fast track by removing all bottlenecks, particularly the environmental and forest clearance. Joshi�s assurance came after two high-level review meetings on the progress of the ambitious project on August 12 and 17 last at New Delhi, Lok Sabha member from Arunachal Takam Sanjoy said in a press release here today. The review meetings were held against the backdrop of letters written to Joshi recently by Chief Minister Jarbom Gamlin and Sanjoy, seeking the granting of environment clearance for the construction and renovation of the 2,319 km road by the ministry under the Arunachal package of roads and highways. The state PWD has been entrusted the 750 km pre-construction activities of BoT (annuity) projects of the Nechiphu-Hoj and Potin- Pangin roads and bridges across Dibang and Lohit river systems for executing the project. Sanjoy who attended the review meetings said that completion of the project was a top priority agenda for the Centre as it was a part of the PM�s package announced for the state in his maiden visit to the state during 2008. �The road project is very important for national security as the double-lane highway will link 11 of the 16 district headquarters of Arunachal, including Tawang along the Sino-India border,� Sanjoy said.

Source:ibnlive.in.com

Written by ITW Editor · Filed Under BOT, Default

MBL Infrastructures bags Rs 212cr road project in MP

August 23, 2011

Construction firm MBL Infrastructures today said it has bagged a road development project worth an estimated Rs 212 crore from Madhya Pradesh Development Corporation.

The road project, to be executed through a wholly-owned subsidiary, is in the Seoni and Balaghat districts of Madhya Pradesh and passes through the towns of Seoni, Ari, Tighra, Kehaji, Paraswada and Kantangi.

“MBL Infrastructures Ltd has been awarded the project for developing the Seoni-Katangi to Maharashtra Border Section of State Highway-54 of Madhya Pradesh on a BOT (toll) basis by Madhya Pradesh Road Development Corporation,” the company said in a filing to the Bombay Stock Exchange.

While the concession period for the project is 30 years, the stipulated construction period is 730 days, it said.

Source: moneycontrol.com

Written by ITW Editor · Filed Under MBL, Projects

World Bank asks NHAI to look for new models

August 23, 2011

Upset with delays in the implementation of highway projects, the World Bank has asked the National Highways Authority of India (NHAI) to look for alternative ways of awarding highway contracts to private companies.

Till now, funding from the World Bank for the National Highway Development Project has been confined to EPC (engineering, procurement and construction) projects costing over Rs 4,000 crore. In an EPC project, the government gives a contract for road construction on an outright payment to whoever quotes least cost.

NHAI is currently awaiting a response after it invited expression of interest. “As part of transaction assistance,” points out a senior NHAI official, “the World Bank has asked us to invite EoIs from consultants to select new mode for implementing highway projects.”

EPC projects have witnessed a lot of delays — some even stretching beyond seven years, when completing a road project normally takes three years. The World Bank customarily withdraws fund for a project that has not been built in seven years, leaving the project funding to NHAI.

Analysts feel that availability-based model would be suitable for India, as it is a large country and no one-size fit solution can be implemented for all. “Globally,” says Arvind Mahajan, executive director of consultancy firm KPMG, “the models are availability-based, depending on the conditions prevalent. And all these models are derived out of the basic model prevalent. NHAI has also experimented various models and a availability-based approach would be the best.”

Others feel that delays in the past is what makes the World Bank find issues with the EPC model. Notes National Highways Builders Federation Director General M Murali.“A hybrid model, with features for BOT (build operate transfer) annuity and BOT (toll) will be the best model for such projects.”

BOT (annuity) mode envisages a private company building the road and the government paying to the company in instalments every six months.

The maintenance of the road is also not the job of the road developer. In BOT (toll), a road developer builds the road and recovers the money through toll collection. The company is allowed to collect toll to recover the investments made during a period called concession period and can range up to 25 years.

The World Bank, apart from funding for developing highways, also fund the VGF (viability gap funding) payments and annuity projects. VGF is done in a BOT (toll) project to make it financially viable.

Source: business-standard.com

Written by ITW Editor · Filed Under Highway, NHAI, Projects

Quit Toll Day on August 9

August 18, 2011

KOCHI: After a short interval, the days of agitation are back at Kumbalam Toll Plaza. With the National Highway Authority of India (NHAI) resuming toll collection, various organisations under the aegis of National Highway Protection Council have commenced an indefinite strike to protest against toll collection along the Aroor-Edappally stretch of NH 47.

On August 9, Quit India Day, the agitators will observe the day as Quit Toll Day. “We have decided to organise an indefinite strike. Today we erected the pole for constructing a tent for the strike near the toll plaza in Kumbalam,” said C R Neelakantan, activist and leader of National Highway Protection Council (NHPC). “People who pay heavy road taxes are being forced to bear the additional burden of toll which is unfair. Our demand is that the Government should construct 30-metre wide NHs. There is no need to construct the 45-metre-wide road,” he said.

“Construction of private NHs or BOT-based NHs are not feasible in the state. Unlike other states where NHs are used by long-distance travellers, here short-distance travellers constitute the major chunk NH users and it is difficult for them to pay toll every day,” Neelakantan said.

Many organisations have already come forward to conduct the strike every day till August 15. “August 15 will be observed as the Right to Travel day. We plan to picket the toll plaza.

We are yet to give shape to the programme,” Neelakantan said. In other states, few roads cut the across NH and that too after 40-50 km interval. But in Kerala, on an average of more than five roads will enter the NH on a one-km stretch. So, it will be very difficult for the locals to pay the toll,” he said. The NHPC argues that elevated roads can be constructed using the subsidy given for BOT roads and the amount used for acquiring land for the widening the road.

Source: http://expressbuzz.com

Written by ITW Editor · Filed Under BOT, NHPC, Toll Plaza

NHAI awards Rs 2,815 cr project to GVK

August 18, 2011

With private companies growing interest in the road sector, the National Highways Authority of India (NHAI) today awarded a Rs 2,815 crore contract in Madhya Pradesh to infrastructure player GVK that will fetch it an annual premium of about Rs 190 crore for 30 years, more than the total project cost.

With this award, the income to NHAI would be over Rs 870 crore per annum from four projects which it bid out within last few days.

“We have successfully awarded Rs 2,815 crore project in Madhya Pradesh for four-laning of Shivpur-Dewas section to GVK Transportation. NHAI will get a premium of Rs 189.9 crore per annum on this for 30 years, with a provision of an increase of five per cent every year,” a senior Road Ministry official told PTI.

The 330 km-project will be built under phase IV of the National Highways Development Project (NHDP) on BOT (build, operate and transfer) basis on DBFOT (design, build, finance, operate and transfer) pattern.

GVK was selected out of 14 major bidders that included players like GMR, Gammon, Essar and Punj Lloyd, the official said, adding that the “contract was proposed to be bid out on 15 per cent viability gap funding (VGF).”

The development comes close on the heels of NHAI bidding out its first mega project — Kishangarh-Udaipur-Ahmedabad at Rs 636 crore annual premium for 26 years to Bangalore-based GMR Infrastructure on July 29.

Further, the highway authority, which awarded projects worth over Rs 12,000 crore in the last four days, got about Rs 50 crore premium on Hospet-Bellary stretch in Karnataka and Orissa border-Aurang section.

Highways developers bid premium if they find the project lucrative; the private companies are confident that the toll revenue accruing to them would be more than their total cost.

Earlier, NHAI virtually used to provide grants on schemes to road developers to make the projects viable.

NHAI has announced to award 59 projects– involving 7,994 km, with a total cost of about Rs 60,000 crore– this fiscal.

India has a network of 3.3 million km roads out of which national highways constitute only 70,548 km. To augment it, the government plans to build 35,000 km of roads by 2014.

Source: business-standard.com

Written by ITW Editor · Filed Under BOT, GVK, NHAI, NHDP

Private bidders see profits in govt rejected road projects

August 18, 2011

Here’s a surprise: Corporate India wants to pay the government – and not be paid – to build roads.

In six recently awarded build-operate-transfer (BOT) contracts, the National Highways Authority of India (NHAI) had budgeted for a subsidy grant of Rs 270 crore. But the bidders promised it an income of Rs 6,350 crore over the life of the projects.

Experts are not sure if this is the result of aggressive competition or an underestimation of potential revenues on the part of government bodies. What the government thought was unviable seems to have been assessed as very profitable by private sector bidders, who opted for negative grants.

A negative grant is a premium a bidder offers to the NHAI to bag a contract it finds to be potentially lucrative. A grant is generally offered for projects which will not be able to recover their investments in a reasonable timeframe.

For example, rural roads are needed to connect villages to nearby towns. This offers economic benefits to villagers who are integrated to the mainstream, but revenues for the bidder may be low due to lack of traffic and the inability to pay. Tolls thus cannot be charged or have to be kept too low. In such cases, the government comes in to fund the viability gap with a grant. This is known as viability gap funding (VGF).

But when bidders offer to pay a premium for projects which the government considers unviable, it’s time to ask why. There is little doubt that roads are the only infrastructure projects to have gained some traction after a long time. The results of NHAI’s annual pre-qualification exercise show that competition has intensified. There were 98 unique bidders for 55 projects ranging from Rs 82 crore to Rs 11,350 crore. Five of the top 10 bidders were foreign players. With interest rates going up, international players have an edge over Indian companies who pay more for their money.

During the initial days of BOT projects, project bidders worked with internal rates of return (IRR) of nearly 20 percent. IRRs are commonly used metrics to evaluate the desirability of investments or projects. The higher a project’s IRR, the more desirable it is to undertake it.

In the recent round of bidding, some companies bid so aggressively that the IRRs went negative or lower than the cost of capital (cost of raising the funds for the project). For example, the equity IRR for the Khagaria-Purnea annuity project won by Punj Lloyd was 7.8 percent while for the Barasat-Krishnagar project, the IRR was negative.

It does not make economic sense for a company to take a project with a negative IRR, unless it is compensated in some other way, like development rights along the highway. However, in most of the recent BOT cases, such rights have not been awarded.

Industry observers say that since toll is collected in cash, not every rupee collected is reported. Faulty machines, power failures at the toll gates, and theft are various ways of showing lower revenues. Some companies auction a toll booth to outside agencies and are thus assured a minimum return, but the true value of the traffic is far above that recorded. It cannot be ruled out that the toll collection company is also a front company for the developer.

There is a possibility that NHAI may have been too conservative in estimating the commercial potential in some projects. This is all the more important as NHAI has been kept out of the purview of the Land Acquisition Bill, which means that they can acquire land at rates near market value – and not pay a premium for it. Infrastructure companies will increasingly be lining up for road projects, which are relatively hassle-free as far as land acquisition is concerned, rather than other projects.

Source: firstpost.com

Written by ITW Editor · Filed Under BOT, NHAI, Road

Supreme Infrastructure: Infra player with a strong foundation

August 17, 2011

Mid-sized infrastructure EPC contractor Supreme Infrastructure appears substantially undervalued considering its better than industry performance in terms of margins, return on equity and working capital cycle. Its growing order book and entry into BOT road projects give strong visibility about future growth. Long-term investors should add this scrip to their portfolio.

GROWTH DRIVERS

The company currently has orders worth Rs 3,117 crore which is 3.4 times its sales for FY11. Nearly 85% of these unexecuted orders are for buildings and roads, while the rest consist of bridges, irrigation and power etc.

In the roads segment, Supreme Infra is a fully backward integrated company. It produces all the key raw materials such as asphalt and RMC, and has in-house stone quarrying and crushing capacities. This enables it to earn one of the best margins in the industry.

Source: economictimes.indiatimes.com

Written by ITW Editor · Filed Under Default, EPC, Infrastructure

Project News : Road Ministry, NHAI Plan Investment for Road Sector

August 5, 2011

The Union Ministry of Road Transport and Highways has chalked out investment plan for the road
sector.

The ministry is planning to invest over Rs 2.64 lakh crore in the 12th Five‐Year Plan (2012‐17). Of the
total, a sum of Rs 87,000 crore will come from the NHAI and the remaining Rs 1.77 lakh crore will come
from the private sector. The ministry has set a target of awarding 7,300 km of roads in the current fiscal.
The government plans to build 35,000 km of roads by 2014. PT ‐ Exclusive

MAHAGENCO invites bids for solar PV power project

MAHAGENCO plans to set up a solar and wind energy park at Shivajinagar in Sakri taluka in Dhule
district of Maharashtra.

In this regard, the bids have been invited from EPC contractor / developer for crystalline solar PV power
project (25 MW) at Shivajinagar. MAHAGENCO is planning to set up 125 MW (5×25) PV power project in
Shivajinagar.

UJVNL invites EoIs for hydro electric projects in Uttarakhand

UJVNL has invited EoIs from eligible companies for Bowala Nand Prayag and Nand Prayag Langasu hydro
electric projects in Chamoli district of Uttarakhand.

The EoIs have been invited for JV formation with UJVNL for construction, operation and maintenance of
Bowala Nandprayag (300 MW) and Nand Prayag Langasu (100 MW) hydro electric projects

Written by ITW Editor · Filed Under NHDP

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