March 25, 2013
Nitin Patel, ED, Sadbhav Engineering , says that recently the company as emerged as a successful bidder for the two lane project in Tamil Nadu. The project is based on annuity basis. The company has also submitted another bid for Rohtak-Hissar project for Rs 1300 crore, the results for which is expected today evening.
Out of the 12 projects, 8 projects are now operational and the company expects the ninth project to be operational by June. Going forward, depending on the equity and investment commitment the company may go for asset securitization.
Below is the edited transcript of his interview to CNBC-TV18.
Q: It is understood that your company has emerged as a successful bidder in NHAI’s two lane Tamil Nadu project. By when do you plan to start construction on the project? What will be the total cost and your profit margins?
A: This is a two lane road project based on annuity. The existing highway has width of seven meter which needs to be extended to 10 meter and the length of the project is 80 kilometers. We estimate the total project cost to be around Rs 400 crore and it will take around two years to complete the job. We have received a concession period of 15 years. So, for the remaining 13 years we will receive annuity amount from NHAI as per the terms of concession.
Q: How much margins do you make upfront?
A: In normal course, we expect to make around 12-13 percent at EBITDA level at EPC value and around 16-18 percent as returns on investment. This is the normal bidding criteria for us.
Q: What has been the activity from NHAI side on both build-operate-transfer (BOT) and EPC. How does the order pipeline looks? Are they looking aggressive in awarding orders?
A: On cash contract front, NHAI invited around 8-9 tenders during last month. The response was quite good and NHAI received bidders at almost 20-22 percent lower then their estimate cost on the cash contract front. On BOT front, only one tender went to IL&FS Transportation Networks (India) Limited (ITNL) which is of Barwa Adda to Panghat.
We have received annuity for the second project. Today, we have submitted a bid for Rohtak-Hissar project for Rs 1300 crore, the results is expected to be out by today evening. Five entities have submitted their bid including us. Another 2-3 bids will be submitted before March 31, the central government and the Planning Commission will give approval for rates for the projects. Later, based on that, NHAI will come for the bidding and particularly in BOT and annuity front.
Q: Do you have any plans to reduce debt, are you securitizing any project, your debt stands at over Rs 3000 crore?
A: Out of the 12 projects that the company has, 8 are now operational and we expect the ninth project to be operational by June. So, in terms of the operational projects the number of projects is high and also the revenue parameter seems reasonable.
So, based on our requirement of the equity and investment commitment we will plan to securitise one or two assets. We have started that process but we require equity investment over the period four years from now so the planning will be done as and when needed.
March 11, 2013
Lalitha Rao ,Monday, March 11, 2013
PBA Infrastructure Ltd has been awarded the EPC contract for four laning the Solapur-Gulbarga, Maharashtra- Karnataka border section of National Highway 9, from Solapur Tollways Pvt Ltd, a joint venture of Coastal-Srei Consortium. The contract worth 780 crore is being executed as BOT (Toll) on DBFOT pattern under National Highways Development Project Phase-III. NHAI had appointed Artefact Projects Ltd as project consultant.
The Cabinet Committee of Infrastructure approved the project in November 2011 at a total estimated cost of992 crore including land acquisition, rehabilitation and pre-construction activities. The concession period including construction period of the project is 25 years. The project starting from km 249.00 to km 348.80 would cover the districts of Pune, Solapur and Osmanabad in Maharashtra.
Speaking to Projectmonitor, S.K. Bothra, President, PBA Infrastructure Ltd, said, “We are mobilsing fund through five banks with Canara Bank as the leading Bank. We are planning to start the work by April 15.”
While talking on the land details he said that about 80 per cent of the land has been possessed and the remaining stretch would be acquired soon. The four laning of the 100-km long stretch is expected to be completed in 36 months, he said.
Srei Infrastructure Pvt Ltd, the first beneficiary of the project, under consortium arrangements with various companies has a diversified portfolio of annuity and toll-based road projects close to 5,500 km with a total capital cost of around 13,000 crore, awarded by the NHAI under NHDP, Ministry of Road Transport and Highways and various other State Governments.
In its 2011-2012 Annual report, the company stated that during the year under review, the Company as co-developer has successfully completed the construction of Thrissur-Angamali Road Project in Kerala on NH-47 under NHAI and Jaora Nayagaon Road Project in Madhya Pradesh on SH-31 under Madhya Pradesh Road Development Corporation. Meanwhile, the company also started the six-laning of Chandikhole Jagatpur Bhubaneswar project in Odisha on NH-5 under NHAI. Other than the Solapur- Maharashtra Karnataka Border project on NH-9 the company also won the Bikaner-Suratgarh project on NH-15 from Public Works Department of Rajasthan on build- operate transfer basis.
December 29, 2012
According to Arun Bhagat, EVP and group head – corporate communications, GMR Group, “This is a 555 km-long, 4-6 laning of the Kishangarh- Udaipur- Ahmedabad stretch.”
“We were awarded this in September 2011. At the end of about 16 months since the award of contract, certain critical permissions that were applied for were yet to be granted,” he clarified.
“Despite doing whatever was required, the permissions were not granted and this forced us to serve a termination notice under terms of the contract.”Source: moneycontrol.com
December 24, 2012
MUMBAI: The infra growth story at least in the road sector appears to be over as the private sector is now shunning government’s road projects. The government which announced an ambitious target of $1 trillion of infrastructure spending is finding no takers for the 8,000 km of road projects to be awarded under the built, operate & transfer (BOT) mechanism this fiscal.
Interestingly, the National Highways Authority of India (NHAI), the nodal agency for awarding these road projects, witnessed phenomenal success in awarding over 8,000 km of road projects last year as 31 of the 51 road project were bagged at premium. Based on last year’s success, the government increased the target to award 8,800 kms of road projects this year; however, NHAI so far was able to award only 700 kms with less than four months remaining in the current fiscal.
Two projects, worth about Rs 2,450 crore, awarded last year to DSC Ltd and Gannon-Dunkerley Co Ltd were terminated after failure to achieve financial closure. This was the first time that such termination had to be done due to failure of companies to achieve financial closure (tie up debt).
At current pace of less than 5 km of road construction per day, the government is way behind its ambitious target of achieving 20 km of road construction per day for which it needs to award over 7,000 km of road projects each year. The reason: Availability of 50 road projects worth Rs 50,000 crore totaling 5,000 km are on the block in the secondary market as the debt-laden infrastructure firms wants to get rid of these road projects that they bagged by aggressive bidding and are now finding it difficult to execute due to the depressed returns. Prime Minister Manmohan Singh reviewed the performance of the transport sector in a series of meetings recently and a recent PMO statement on targets for awarding road transport and highways project last week said, “The ministry will try its best to award road projects as per the original targets for FY 12-13 and will certainly cross 8,000 kms of awards this year by March, 2013. Road projects of at least 3,000 kms length will be awarded under OMT by March, 2013.”
This means that in the absence of takers for road projects under BOT basis, which requires companies to raise funds from the market, the government is planning to award 3,000 km of road projects on engineering procurement contract (EPC) basis, where government spends the entire money required to build roads. However a government statement on Wednesday said, “As against the target for awarding works for a total length of 8,800 km during 2012-13, it has been possible to award projects for a length of 705 km upto October, 2012. Some projects have not received good response from bidders. Apart from general slowdown of economy, viability of some of the projects, sectoral lending caps of the banks, limitations of the concessionaires like availability of equity and other resources to execute the projects appear to be the main factors for poor response.”
“I have my doubts on the PMO statement. If they awarded just 700 kms in the first nine months, then how can they award 9000 km in the next three months. The constraints like land acquisition, funding from banks and remain the same. The government first needs to address these issues before awarding further road projects,” Bajrang Choudhary, CEO, Infrastructure Project Development at SREI Infra told ToI. Leading infrastructure firms like L&T, GVK, GMR, IVRCL, Gammon Infrastructure, SREI Infrastructure, Gayatri Projects, Madhucon Projects, Ashoka Buildcon amongst others have meanwhile reportedly put their road assets on the block.
Infra firms meanwhile are being chased by their lenders to sell assets any which way they can as the banks have stopped lending to the road sector with stringent lending norms scaring away private developers from investing in the highway projects. Over three dozen highway projects are awaiting financial closure.
October 15, 2012
NEW DELHI: Private highway developers, who are struggling to get finances for projects, are likely to impact government’s target of awarding 9,500 km during this fiscal. With only 600-odd km road stretches awarded during the first half of the financial year, now even senior National Highways Authority of India (NHAI) officials are conceding that they can award not more than 5,000 km till March, 2013.
At least 23 road projects awarded last year have missed their timeline to tie up funds. NHAI gives six months to contractors to get funds from banks and financial institutions for all build, operate and transfer (BOT) projects.
April 20, 2012
Union Minister for Road Transport and Highways C.P. Joshi on Thursday unveiled India’s first Radio Frequency Identification (RFID) technology-based Electronic Toll Collection (ETC) Plaza at Chandimandir here. He also inaugurated the four-lane Zirakpur-Parwanoo section of National Highway 5 passing through Punjab, Haryana and Himachal Pradesh.
Calling for coordinated efforts by the Central and State governments for making India a developed nation, Dr. Joshi said: “A qualitative infrastructure development is the need of the hour.”
Stating that a thrust to infrastructure development had been given in the 11th and coming 12th Five-Year Plans to increase the national Gross Domestic Product, he said the endeavour was to facilitate the common man with new technology and better road transportation facilities.
Dr. Joshi said all the highways in the country would be enabled with RFID technique that “helps users to pay the toll tax without stopping at toll plazas and reduces traffic congestion and commuting time.”
“Toll statements can also be made available online to the road users and they need not stop for the receipt,” he added.
He said his Ministry would consider giving exemptions and concessions to a certain category of users as per the request of Haryana Chief Minister Bhupinder Singh Hooda and his Punjab counterpart, Parkash Singh Badal, besides that of Union Culture Minister Kumari Selja and Haryana PWD Minister Randeep Singh Surjewala.
Dr. Joshi, however, asserted that the need of the hour was to rise above populism as the companies which had created huge infrastructure had to recover their costs through toll collection.
Referring to the “bottlenecks” faced by residents of Panchkula, he said these would be technically examined.
He disclosed that the National Highways Authority of India (NHAI) has completed projects worth Rs. 1,913 crore in Haryana, Rs. 1,419 crore in Punjab and Rs. 50 crore in Himachal Pradesh. He added that the NHAI would take up major road projects measuring 1,167 km in Haryana, Punjab and Himachal Pradesh during the current financial year.
Mr. Hooda said this project would benefit the people of Haryana, Punjab and Himachal Pradeshas they would not have to face traffic jams on the highway. He urged the Union Minister to formally approve various roads in Haryana as National Highways which had been approved in-principle.
Local MP Kumari Selja demanded the conversion of the Saha-Ambala stretch into a national highway.
Mr. Badal stated that the payment of toll, though unpalatable to the public, had become a necessity and there was no way out.
Meanwhile, ICICI Bank officials said the bank was working with the toll operators for issuing RFID tags to road users to be read at the toll plazas. Users, who need to register themselves, could use the tags across multiple toll plazas; they could be updated and would act as a record for settlement of financial transactions of the toll operators.
April 19, 2012
HYDERABAD: Hyderabad-based construction firmKNR Constructions has completed the Bijapur-Hungund toll road of National Highways Authority of India (NHAI) nearly 11 months ahead of schedule and claimed it a record in the history of Indian highways.
The four lining of 97.22 kilometres of road project, valued at Rs 905.5 crore, was completed in 582 days as against the scheduled duration of 910 days.
NHAI had awarded the project on design, build, finance, operate and transfer (DBFOT) basis to a special purpose vehicle of Sadbhav Engineering, which in turn awarded the project to KNR Constructions, an EPC (engineering, procurement and construction) contracting firm.
“The primary motivation to complete the project much ahead of schedule was the attraction of earning a bonus of Rs 16 lakh per every single day of early completion. In the process, we ended up with earning a bonus of around Rs 50 crore for early completion,” Executive Director K. Jalandhar Reddy told ET.
As a part of achieving the target, he said, the company has paid additional compensation to the land owners towards expeditious land acquisition, apart from deploying modern imported construction equipment and adopting best sourcing and keeping a strong supply chain of raw material.
“Most of the concessionaries are bagging the road projects these days at very thin margins owing to aggressive bidding and early execution of projects by EPC contractors will significantly help them improve their financials,” said Reddy.
Further, he said in the backdrop of not securing BOT road projects from NHAI owing to not so aggressive bidding strategy, KNR will now focus largely on EPC road contracts and help the BOT players with its strong execution skills.
KNR, with Rs 1,051 crore revenue last fiscal, now has an order book of Rs 3,396 crore comprising of Rs 3,253 crore of road EPC contracts, said Reddy.
April 2, 2012
NHAI hastens award of projects covering 5,400 km this financial year, road construction increases to 7 km a day
The pace of road construction in the first three years of the United Progressive Alliance (UPA) government’s second term has increased to seven km a day, compared with 4.1 km a day in the previous three years. However, this is still below the ambitious 20-km a day target set by the government.
Officials said so far, the National Highways Authority of India (NHAI) has awarded projects covering about 5,400 km in this financial year, against a target of awarding 59 projects covering 7,300 km, with a total cost of about Rs 60,000 crore. The authority is expected to hasten the award of projects in the next few days to come as close to the target as possible
In the last three years of UPA’s first term — 2006-07, 2007-08 and 2008-09 — NHAI constructed 4,522 km of highways. This increased to 7,758 km in the first three years of the current term.
At about 2,100 km, 2011-12 would see the lowest national highway construction in the last four financial years. A senior NHAI official said, “We will be able to construct 2,100 km of roads this year. This year’s construction is low because of less number of awards in 2008-09. Our award plans went haywire in 2008-09 because of the recession in the global market.” He added the completion of projects by the authority was below the target of 2,500 km of highways in the current financial year.
The award and construction of road projects had slowed during the first term of the UPA government. While the economic slowdown and the ensuing liquidity crunch had hit performance and kept companies away, T R Baalu’s record as the road transport minister was also not satisfactory.
In mid-2009, UPA came to power for the second time and Kamal Nath was appointed surface transport minister. He had set a target of 20 km a day, increasing it from the target six km a day in 2008-09. During his tenure, Nath had come up with project plans for two financial years and had set a target of awarding a little over 200 projects, worth Rs 200,000 crore. The pace of awarding road projects and construction of roads improved under the new minister, C P Joshi.
The highways authority has also awarded over 21 projects on premium that is expected to fetch around Rs 3,000 crore a year. A company offering a premium shows it is committing to an annual payment to the government over a period of time, instead of seeking a grant for building roads. Companies bid a premium if these are confident the accruing toll revenue would more-than-offset their costs.
The premium income is also set to bring down NHAI’s borrowing. It would now have to borrow only Rs 83,000 crore till 2030-31. The B K Chaturvedi committee, appointed in 2009 to examine the National Highways Development Programme and related aspects (it gave its second report last year), had said NHAI would need to raise Rs 191,000 crore by 2030-31.
December 12, 2011
NEW DELHI: The Planning Commission has kicked off a fresh debate, questioning how National Highways Authority of India ( NHAI) has gone ahead with four-laning of national highways even when the daily traffic volume on these stretches did not qualify them to be widened beyond two lanes.
In a recent letter to highways minister C P Joshi, deputy chairman of Planning Commission Montek Singh Ahluwalia raised questions on five projects, including the 70-km Lucknow-Rai Bareli section. Ahluwalia said there were standards – daily traffic volume – set by the Indian Road Congress (IRC) for considering widening of roads to two lanes, four lanes and six lanes. The letter said these standards were bypassed to push certain projects for four-laning under the build-operate-transfer (BOT) model.
Moreover, Ahluwalia mentioned that such a move could have adverse bearing on the finances available for the highway development programme in the country since the allocated budget could get exhausted in less number of projects.
The letter came despite the recent experience of how government had to start six-laning of the Golden Quadrilateral project only 6-7 years after its construction because of the high increase in traffic. “We will always compare our infrastructure development with China to push the need to go on overdrive, but we are caught in issues like this. We have seen how four-lane roads built in the past 10 years are becoming inadequate to handle huge traffic. Are we building roads for the next five years or for decades,” asked a senior ministry official.
Engineers working with IRC said it was not mandatory for the government to follow the recommendations set by the professional body. “But we can see how the Planning Commission uses our recommendation as per its convenience. It has downplayed the views of IRC so far as making safe roads are concerned,” said a senior retired engineer from the ministry who is associated with IRC.
In fact, Ahluwalia reiterated the views of his colleagues in the plan panel on such issues. In his letter to Joshi, he wrote that all highways should be at grid (surface) level without any flyover. Besides, he said there was no need to construct service roads all along the highways in rural areas, though accidents are on the rise in these areas. His juniors have been raising these issues, which have been termed impractical and compromises safety aspects.
A source in IRC said they had told the government that it could “downsize” the plan if it did no have “enough funds” rather than build unsafe roads and those which don’t meet operational needs. “Here, the Planning Commission does not find the merit of IRC’s recommendations,” a senior IRC member said.
September 12, 2011
NEW DELHI: The ministry of road transport and highways (MoRTH) has asked the National Highways Authority of India (NHAI) to award 3,000 km of roads on a cash contract basis during the current fiscal year to step up road construction.This would mean that projects worth Rs 7,500 crore-Rs 8,000 crore would be up for grabs for private road developers in the next few months. So far, NHAI has been awarding projects either through the BOT (toll) or BOT (annuity) mode, but this is the first time the authority has been asked to award large stretches under the cash contract scheme.While toll road projects have been mostly bagged by big players in the sector, cash contract projects may help small and medium-level players. “The focus of cash contract works will be more in the hinterland areas, which have remained untouched. These stretches have less traffic, and hence are not viable to collect toll,” said an NHAI official.The cost of construction is estimated to be in the range of Rs 2.5 crore and Rs 3 crore per km. The ministry is also considering whether these projects can be rolled out without acquiring additional land by using space available along the existing roads. Under this scheme, only extended two-lane roads would be built.Officials said this method would help expedite project execution. They said Uttar Pradesh, which is going for election early next year, is likely to get a bulk of such projects. Since the projects would be funded by the NHAI or the ministry, the Union government will have greater control over these projects that could help complete the work on time.In the first phase of this scheme, the highways ministry has started floating tenders for 540 km of highways in UP. Some officials in the ministry say the timeframe of one year for the maintenance of these roads by private contractors may lead to poor quality, and they want this to be extended to three to five years.