IVRCL to sell assets including Chennai Desalination Plant and Jalandhar-Amritsar Highway project

October 10, 2013

By PTI |


IVRCL is also working on some more BOT road projects which will reach their final stages in six months. (File image of IVRCL office in Hyderabad)

IVRCL is also working on some more BOT road projects which will reach their final stages in six months. (File image of IVRCL office in Hyderabad)
HYDERABAD: Infrastructure major IVRCL plans to sell some more assets as part of its second round of debt-reduction exercise, a senior company official said here on Thursday.”We will put up projects like Jalandhar-Amritsar National Highway project in Punjab and Chennai Desalination Plant for sale,” IVRCL Chairman E Sudhir Reddy said, adding that some development is expected on this front in next nine months.

“Three parties have been showing interest in the desalination plant, but numbers are yet to come from them. No agreement has been signed yet, but the process has begun,” Reddy said, answering a shareholder’s query at the company’s annual general meeting yesterday.

The Chennai desalination plant, with a capacity to purify 100 million litres of sea water everyday, was set up at an investment of Rs 600 crore in 2010.

Recently, IVRCL sold three highway projects it developed on NH-47 in Tamil Nadu to Tata Group company TRIL Roads Pvt Ltd (TRPL) in a bid to reduce debt in its books which were denting profits.

Reddy said the company’s debt would be reduced by Rs 1,100 crore, besides getting back around Rs 450 crore of its equity invested in road projects.

IVRCL has a consolidated debt of around Rs 6,100 crore as on March 31, a senior company official said.

The company suffered a Rs 102-crore loss during FY 2013 on gross turnover of Rs 3,579 crore due to high interest and finance costs pegged at Rs 348 crore during the fiscal.

“In nine months, we are hopeful of selling assets. We will not bid for any BOT projects till the interest regime is stable,” he said, about the time frame for the second round of sales.

Three road projects already sold by IVRCL include Salem toll way, Kumarapalayam toll way and IVRCL Chengapally toll way, which is being built on a build-operate-transfer (BOT) basis at a cost of Rs 2,200 crore, IVRCL said earlier.

IVRCL is also working on some more BOT road projects which will reach their final stages in six months, Reddy said.

The 155-km Indore-Jhabua road project will be ready in next six months and become operational, he said.

The company also plans to commence commercial operations of its Baramati-Phaltan road project in Maharashtra, Reddy said.


IVRCL to exit from all BOT projects

August 16, 2013

Prashanth Chintala  |   Chennai/ Hyderabad

The company has 11 BOT projects of which, one is water and 10 are road projects

Hyderabad-based infrastructure company IVRCL Limited has decided to exit from all its build, operate and transfer (BOT) projects and focus on engineering, procurement and construction (EPC) activities.

At present, the company has 11 BOT projects of which, one is water and 10 are road projects. Of the 10 road projects, three projects are under operation and three more are expected to come under operation in the next five months, while the remaining four are still in a virgin stage.

“We have invested over Rs 2,000 crore in the six road assets and this amount will come into our kitty if I exit from them. Consequently, my profitability will go up,” IVRCL chairman and managing director, E Sudhir Reddy, said.

He said the amount realised from the sale of the six assets could be utilised for the companies EPC segment which has an order book of Rs 26,000 crore at present.

The road projects of the company, which are currently under operation, are Salem Tollways (53.53 km), Kumarapalayam Tollways (48.51 km) and Jalandar Amritsar Tollways (49 km).

“We will sell these three toll projects first while the other three projects which are under construction will be offered for sale after they are completed,” Reddy said.

Though the three toll projects have been put on the block for nearly a year, he said no deal had been finalised so far. Three firms, including Tata Realty and Infrastructure, have evinced interest in the projects but “nothing had been finalised till now.”

According to Reddy, infrastructure companies that have taken up road projects on a BOT basis have failed in their traffic assumptions and anticipation of interest rate hikes and dollar fluctuations. The execution of many projects has been delayed on account of various aspects including lack of environmental and forest clearances. Consequently, “95 per cent of the contractors who had jumped into these projects have lost money.”

“If the BOT projects have to be viable, the government should increase the concession period by at least 3-10 years,” he said. At present, the concession period, depending upon the project location, ranged from 20 to 30 years.

Reddy denied reports that there was a delay in the execution of works pertaining to four/six laning of NH- 47 from Chengapalli, near Coimbatore, to Walayar on the Tamil Nadu-Kerala border due to funds shortage. “Work was slowed down because we are awaiting the state support agreement, which is part of the conditions of the contract. In the absence of such an agreement, bankers are not releasing any loans,” he said.



Better than peers

September 6, 2012

While the construction sector is going through a rough phase for the last two financial years, Simplex Infrastructure Ltd has done relatively better than its peers like IVRCL Infrastr-uctures and Projects Ltd, NCC and Hindustan Construction Co. Not only has the company exhibited consistently strong execution with topline growth of over 20 per cent, but it has also witnessed lesser pressure on the bottomline despite high interest costs. However, with increasing exposure to BOT (build-operate-transfer) projects, the company’s debt levels are on the rise, which is seen as the biggest risk.

Nevertheless, analysts remain positive on Simplex despite the challenges continuing for the construction sector. Says Parvez Akhtar Qazi, analyst at Edelweiss Securities: “Simplex is one of the few pure contracting plays available in the construction industry.” Adds Deepak Purswani, analyst at ICICI Direct: “Its strong well-diversified order book, relatively lower equity commitment towards subsidiary and execution capabilities make it a strong candidate for re-rating in multiples when the macro environment improves.” The stock, which has done better than its peers (except for IVRCL, which had gained on news of possible takeover Essel group) in the last one year, is likely to sustain its lead going ahead.

Consistently better performance
Simplex exceeded analysts’ expectations in the June quarter, wherein its performance was even better compared to FY12. The June quarter was the fourth consecutive quarter of revenues growing in excess of 25 per cent. The company has been able to report better performance (compared to its peers) partly due to its well-diversified and balanced order book in terms of sectors, clients and geographies.

In Rs crore FY13E FY14E
Net sales 6669.3 7459.7
% change y-o-y  13.1 11.9
Operating profit 591.7 663.0
% change y-o-y  29.0 12.1
Net profit 103.8 118.0
% change y-o-y  16.4 13.6
EPS (Rs) 21.0 23.8
P/E (x) 9.1 8.0
E: Estimates                    

The top three sectors contribute 70 per cent of total order book with building and housing (25 per cent) having the biggest contribution followed by roads and power (each 23 per cent). Also, the company has lower presence in capital intensive and high gestation BOT projects. Says Nitin Arora, analyst at Angel Broking: “Simplex is a well-diversified player in terms of sectors, geographies and client mix and, unlike its peers, has limited exposure to road BOT assets.”

In Rs crore Simplex IVRCL NCC* HCC
FY12 Q1′ FY13 FY12 Q1′ FY13 FY12 Q1′ FY13 FY12* Q1′ FY13
Net sales 5,897.6 1,585.3 4,971.0 NA 6,665.0 1,793.0 8,158.0 969.4
% change y-o-y  23.8 25.7 -12.0 NA 7.0 11.9 14.1 -8.4
Operating profit 458.6 126.9 377.0 NA 897.5 204.5 423.5 68.9
% change y-o-y  -2.5 5.7 -26.6 NA 25.5 -40.7 -26.0 -50.1
Net profit 89.2 20.1 36.0 NA 54.9 20.3 -364.0 -40.5
% change y-o-y  -27.6 -16.5 -77.2 NA -75.0 -35.0 NA PTL
* Consolidated; NA is not available; PTL is Profit to Loss                                                                             Source: Companies


But, some concerns emerging
Though the company’s order book of Rs 15,500 crore gives revenue visibility of 2.3 times (based on FY13 estimated sales), the same has grown only 5.5 per cent since FY11-end. Also, 55 per cent of total order inflow (Rs 1,870 crore) in the June quarter was from in-house road BOT project. With slowing economic growth, order inflows remain a concern across the sector, including for Simplex. The management expects order inflow and order book to remain flattish if the environment continues to remain challenging. Acco-rdingly, it has given a top line growth guidance of 10-15 per cent in FY13 despite good show on the topline front in the June quarter.

Further, the company’s debt at Rs 2,400 crore as on June 30 was higher than Rs 2,130 crore at FY12- end. Its debt to equity ratio at 1.8 times is also expected to rise due to its increasing BOT presence and growing working capital requirements. While it has added two road BOT projects to its existing three totalling to five road assets worth Rs 4,000-odd crore in the June quarter, its working capital cycle also worsened to 132 days as compared to 113 days in March 2012 quarter.

Says Abhinav Bhandari, analyst at Elara Securities: “The present net debt to equity ratio threatens to reach 2.5 times over next four-six quarters considering no major easing in the operating and financing environment, coupled with pending equity infusion across existing assets over the next 24-30 months.” Analysts feel rising leverage could negate the impact of strong topline growth and good operational performance.

SOURCE: http://www.business-standard.com


IVRCL bags orders worth Rs 1430-crore

February 20, 2012

HYDERABAD: IVRCL Group, a city-based infra major today said it bagged orders worth Rs 1430 crore.

IVRCL Assets and Holdings Ltd, a subsidiary of IVRCL Limited bagged a road project of 151 km long connecting Rajasthan border and Haryana, worth Rs 1201.7 crore, a statement from IVRCL said.


Source: www.articles.economictimes.indiatimes.com

KJMC downgrades IVRCL to `Hold`

February 20, 2012


KJMC Institutional Research has downgraded IVRCL to `Hold` with a pricetarget of Rs 63 as against the currentmarket price (CMP) of Rs 60 in its report dated Feb. 16, 2012. The broking house gave the following rationale:

IVRCL Q3FY12 standalone result was below our expectation on low execution. The revenue for Q3FY12 fell by 15.2% yoy, worst in past 5 quarters. Execution took a hit on various hurdles like state elections, legal &environmental issues, slower decisions, etc related to the contracts under executions. EBITDA margin took a hit with 194 bps yoy decline at 7.3% on a lower revenue base. The PAT for the quarter declined by 83.9% yoy to Rs 67.9 million. IVRCL has an order backlog of Rs 250 billion (including Rs 30 billion of L1 order) at the end ofthe quarter.

Key Highlights

Execution remained subdued in Q3FY12:

The execution continued to remain subdued in Q3FY12 with net revenue declined sharply by 15.2% on yoy basis to Rs 11.9 billion. Execution took a hit on various hurdles like state elections, legal & environmental issues, slower decisions, etc related to the contracts under executions. We believe that the execution may remain weak in next few quarters also. But looking at the strong order book and a low revenue base in FY12E, we expect strong revenue growth in FY13E.

Order book grew to Rs 250 billion:

IVRCL has reported a robust Rs 250 bn of order backlog at the end of the quarter which also includes Rs 30 billion of L1 orders. The order inflow for Q3FY12 was Rs 30 billion and for 9MFY12 was at Rs 107 billion. The order inflows in the quarterincludes Rs 12 billion of EPC work for the new BOT road project Raipur-Bilaspur bagged by IVRCL Assets. The orderbook composition included 37% from water & irrigation, 29% from transportation, 22% building, 7% power T&D and 5% from oil & gas. The company is positive on the future outlook in terms of new inflows as the current bids outstanding are to the tune of over Rs 500 billion. It has witnessed a bid strike rate of 20-22% in the past few years, and going by the track record there is strong visibility of new orders.

Update BOT Business:

IVRCL will be selling one of its road assets however the company has not disclosed the name of the project. It has also sold its land parcel in Noida. The company expects Rs 4 bn of proceeds from the sale of land and BOT assets. The proceeds would be utilized to meet equity requirement in BOT projects. In FY13 it would need Rs 3 billion of equity commitment in the BOT projects. The process of merging BOT subsidiary, IVRCL Assets is on track. It has received court order and shareholders approval is expected in this month. IVRCL’s board had earlier approved the merger. As per the swap ratio the shareholders of IVRCL Assets will receive 5 fully paid up equity shares of Rs 2 each in IVRCL for every 6 shares of Rs.10 each held in IVRCL. The merger would result in the issuance of additional 39.8 million shares of IVRCL (15% dilution), hence the equity capital of IVRCL would increase from 267 million shares to 306.88 million.

Outlook & Valuation:

We have downgraded our revenue and earning estimates for FY12E factoring in impact of lower execution. Based on FY12E and FY13E revised EPS of Rs 2.1 and Rs 4.8, the stock is currently trading at a P/E of 38.4x and 12.6x respectively. Considering, the slower execution and recent share price appreciation, we downgrade our rating on the stock to Hold with target price of Rs 63 based on SOTP valuation.

Source: http://www.myiris.com


February 28, 2008

There is no proposal of two-laning of all single-lane NHs across the country on BOT basis, which are not covered under approved phases of NHDP. However, NHDP-Phase-IV, involving upgradation of NHs to two-lane standards with paved shoulders primarily on BOT basis, is yet to be approved by the Government.

The Eleventh Five Year Plan (2007-12) endorsed by the National Development Council (NDC) during its meeting held on 19.12.2007 recommended that the targets for stretches other than NHDP have to be prioritised according to their importance to the national economy so that the available resources are not spread thinly among competing projects. The major targets for non-NHDP components include:

i. Accelerated efforts to bring NHs network to a minimum of two-lane standard within the next ten years and four-laning small segments of non-NHDP stretches.

ii. Removing existing deficiencies, like inadequate capacity, insufficient pavement thickness, etc. in the road network by strengthening the National Highway network/improving riding quality.

The condition of the National Highways (NHs) is monitored on regular basis. Further, the development and maintenance of NHs is a continuous process to keep them in traffic worthy conditions and are taken up as per the availability of funds, traffic intensity and inter-se priority.

This information was given by the Minister of State for Shipping, Road Transport and Highways, Shri K.H. Muniyappa in a written reply in the Rajya Sabha today.

Source: pib.nic.in

IVRCL achieves financial closure for road project

June 25, 2006

IVRCL Infrastructures & Projects Ltd has announced that it has achieved financial closure for its Jalandhar-Amritsar road project awarded by National Highways Authority of India (NHAI).

The company said the project involves improvement, operation and maintenance including strengthening and widening of the existing two-lane road to four-lane duel carriageway from km 407.100 to km 456.100 of NH-1 (Jalandhar-Amritsar section) in Punjab on build, operate and transfer (BOT) basis.

IVRCL is executing this project through special purpose vehicle (SPV) called Jalandhar Amritsar Tollways Ltd, a wholly owned subsidiary of the company.

The estimated project cost is Rs 237.75 crore, of which the loan component is Rs 157 crore. Canara Bank is financing it to the extent of Rs 60 crore, llahabad Bank Rs 50 crore and State Bank of Bikaner and Jaipur Rs 47 crore with Canara Bank as the lead lender of the consortium.

Read more

First edition of e-Magzine – Editorial

January 2, 2006

Dear Reader,

We are glad to bring out the first edition of this e news magazine bringing you the latest news on the developments of BOT projects in India.

As you are all already aware that the future of road construction in India is going the BOT way . Not only the NHAI , but even the state governments such as the Government of Punjab through PIDB and Madhya Pradesh Government through MPSRD has come out with no. of BOT projects .

Apart from Road Projects even Check Post Management has gone the BOT way with state governments such as the NEW DELHI already having implemented and KERELA and RAJASTHAN in the planning stage to go for BOT projects for CHECK POST MANAGEMENT.

With this magazine we hope to bring together companies and professionals in BOT road projects to share news ,views ,problems and solutions through a platform which will bring together best of the industry through a forum for sharing thier knowledge .

Also we hope to use this a medium for recruitment of High skill professionals having experience in managing different aspects of BOT projects by the leading BOT concession companies.

Last but not the least we want to constantly educate the concessionaires about the latest in Tolling and Traffic Management Technologies offered by Metro Road Systems and its global partners –Kapsch Trafficom , Austria.

We would really appreciate constructive and critical feedback on this maiden venture in the Industry.

In the next issues you can look forward to :

1. Articles from renowned people in Industry
2. Web Chat with experts on Hot topics concerning industry
3. Lot of illustrations and pictures

Thanks and Regards,
Sachin Bhatia
Chief Editor ,
[email protected]