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.



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