Toll Barriers on National Highways

August 30, 2011

There are 268 toll barriers on National Highways in the country and the revenue collection on these toll barriers during the last three years is Rs.2699.83 crore (2008-2009); Rs. 4151.31 crore (2009-2010) and Rs. 5516.05 crore (2010-2011) respectively.

Traffic flow across toll barriers is regulated by way of clear demarcation of lanes approaching the toll plaza, provision of traffic marshals, provision of tag lanes for rapid clearance of vehicles, reduction of processing time by toll collectors etc.

Complaints of general nature are received from time to time in various offices of NHAI across the country. As and when complaints are received, prompt action is taken to investigate the same and take corrective action, if required.

As per National Highways (Fees for the use of National Highways Section and Permanent Bridge – Public Funded Project) Rules 1997 applicable for Public Funded Projects “ Toll collection shall be done only at one place within a distance of 80 Kms. from a point at the beginning of first National Highways Section or approach of entry of the first permanent bridge to be crossed under the jurisdiction of the same executing agency, regardless of number of projects falling within the length in order to facilitate free and unhindered movement of traffic. Where it is not feasible to do so, the number of collection point shall be kept minimum and shall be decided with the approval of Central Government.

As per National Highways ( collection of fees by any person for the use of section of National Highways / Permanent Bridge/ Temporary Bridge on National Highways) Rules 1997, applicable for BOT projects, there is no such condition regarding distance between two fee plazas .

As per National Highways Fee (Determination of Rates and Collection) Rules 2008 any other toll plaza on the same section of National Highway and in the same direction shall not be established within a distance of sixty Kms.

Provided that where the executing authority deems necessary, it may, for reasons to be recorded in writing, establish or allow the concessionaire to establish another toll plaza within a distance of sixty Kms.

Provided further that a toll plaza may be established within a distance of sixty Kms. from another toll plaza if such toll plaza is for collection of fee for a permanent bridge, bypass or tunnel”.

This information was given by the Minister of State of Road Transport and Highways, Shri Jitin Prasada, in a written reply in Lok Sabha today.

Source: http://pib.nic.in

Written by ITW Editor · Filed Under BOT, Tolling

Parliament Approves $3bn Loan From China

August 29, 2011

After weeks of heated debate both in and outside Parliament, which was characterized with acrimony and name-calling, Parliament Friday approved the $3billion Chinese loan to finance infrastructure development under the Ghana Shared Growth and Development Project (GSGDA).

The House was specifically recalled from recess to give its approval to the report of the Joint Committee on Finance and Poverty Reduction which dealt with the document after it had been referred to it by the Speaker on Thursday, August 25, 2011 before the House went on recess.

By far the facility is the largest single loan that had been contracted by any government since the country attained independence in 1957 and the government had not hidden the fact that the facility would contribute to provide a comprehensive and accelerated infrastructural development across the country.

During the debate, contributors from both the Majority and the Minority sides of the House acknowledge the fact that the country would need between $1.5 to $2 billion annually to fill the gaps in the country’s infrastructural deficit.

And while both sides were of the opinion that the project was a good one, the Minority express reservation about the contents of the Master Facility Agreement (MFA) and the fact that the subsidiary agreements were not made available to the House for consideration alongside the MFA.

With these disagreements and reservations, it was therefore not surprising that when the First Deputy Speaker, Mr Edward Doe Adjaho put the question after a heated, which lasted for nearly four hours, the Minority side sat quietly while the Majority side approved the agreement with a loud “hear, hear”.

The road to the passage was not all rosy as the Minister of Finance and Economic Planning, Dr Kwabena Duffour had to withdraw the original document Thursday and replace with a new one which catered for some of the concerns that were raised by the Minority.

In the new agreement, the concern of the Minority that there was gaps in the agreement such as “to be agreed” or “to be inserted” in certain clauses were filled paving the way for the debate on the motion today.

Contributing to the debate, the Minority Spokesperson on Finance, Dr Anthony Akoto Osei intimated that in principle his side supported the initiative by the government since it was a fact that Ghana needed between $1.5 billion and $2 billion annually to fill its infrastructural gap.

He, therefore calmed the nerves of the chiefs of the Western Region explaining that the Minority was not against the development of the area as MPs from the region had portrayed.

Dr Akoto Osei said notwithstanding that it was important for the country to be vigilant to avert a situation whereby the benefit of the oil revenue “appears to go to our benefactor as far as this loan agreement is concerned”.

He referred to the STX Housing agreement adding that what had charaterised it of late was a clear indication that the House should had listen to the advice of the Minority during the debate to approve the deal.

“Mr Speaker, we should learn a lesson from that experience”, he said and cautioned the Speaker to be mindful of that fact he was presiding over the approval of a loan that would have a far-reaching implication on the country.

He stated that the gap that were filled in the new document were not the concerns of the Minority explaining that the approval of the MFA would mean the payment of $37.5million.

Dr Akoto Osei said it was unfortunate that the committee did not discuss the terms of the agreement and pointed out that the terms in the MFA document were different from what was contained in the report of the committee.

Other contributors from the Minority side included Mr Dominic Nitiwul (Bimbilla), Mr Simon Osei-Mensah (Bosomtwe) and Mr Ignatius Baffuor-Awuah (Sunyani West).

Referring to a Daily Graphic publication, Mr Nitiwul expressed concern that while the Dr Duffuor had told the President that funds had already been sought for the Achimota-Ofankor Road, the same project had been catered for in the MFA.

He pointed out that even though some facilities with the agreement were to be implemented on the Build, Operate and Transfer (BOT) basis, some allocations had been made for them.

For his part, Mr Baffour-Awuah argued that said the agreement would commit the country to use the chunk of the oil revenue to repay the facility, it was important for the country to hasten slowly since the oil revenue could be used to finance the projects gradually.

Contributors from the Majority side included Mr Moses Asaga (Nabdam), Mr Haruna Iddrisu, Minister of Communications and MP for Tamale South, Mr Emmanuel Armah-Kofi Buah, Deputy Minister of Energy and MP for Ellembelle and the Deputy Minister of Finance and Economic Planning, Mr Seth Terkper When he took his turn, Mr Buah told the House that the use of part of the loan for the development of the gas infrastructure was a welcome news.

He explained that since gas was cheaper, it was the commodity that would be the driving force of the country’s industrialization.

“Mr Speaker, we should rather commend the President for the urgency that he is attaching to the development of the gas sector”, he said adding that now was the time and that the country could not wait any longer for the development of the its gas infrastructure.

For Mr Asaga, he urged MPs from the Minority side to support the approval of the agreement arguing that the numerous project that would be embarked on in the region would provide employment for the people.

For his part, the Terkper explained that the MFA was rather favourable now that the country was considered as middle-income earner and urged the MPs to support its approval.

When he took the floor, the Minority Leader, Mr Osei Kyei-Mensah-Bonsu questioned whether the Minority was asking for too much by demanding for a better due diligence to be done before the approval of the agreement.

“Even though the proposal is good some aspect of the agreement stinks. We cannot join hands with the Majority to approve this facility in its present state”, he said and called on the Minister of Finance to take back the document and do a better feasibility before the agreement could be approved.

When he caught the eye of the Speaker, the Majority Leader, Mr Cletus Avoka stated that “we need to congratulate the President for his courage to go for such a facility”.

He stated that “if we look at some of the critical developmental challenges facing the country, we should be bold to bite the bullet”, he said.

Mr Avoka added that it was because of country’s credibility rating that had enabled it to be considered for such a facility and called on Mps from both side of the House support its approval.

Winding up the debate, Dr Duffuor thanked the MPs for their inputs and promised that such suggestions would help to enrich the implementation of the project.

“The facility is the cheapest loan on could get in the world. We have taken into account all the concerns expressed by the Minority and have no doubts that all of you will support the motion on the floor”.

He assured the House that the STX project was not in danger”.

Source: modernghana.com

Written by ITW Editor · Filed Under BOT, china

Mumbai transport infra upgrade to cost Rs 2,70,000 cr: CM

August 29, 2011

Maharashtra Chief Minister Prithviraj Chavan on Thursday said the state government would have to spend Rs 2,70,000 crore to beef up Mumbai’s transport infrastructure over the next 20 years to keep pace with rising demand.

The state government’s 2031 plan based on a feasibility study by the Mumbai Metropolitan Region Development Authority (MMRDA) includes metrorail, mono rail, sea link and water transport. Chavan was addressing a gathering at a conference on “Infrastructure Development in Mumbai Region” organised by the Indian Merchant’s Chamber here.

“The estimated investment of $50 billion ( Rs 2,70,000 crore) is based on a comprehensive transportation study conducted by MMRDA. The total cost of the infrastructure projects comprising metrorail and monorail, currently undertaken by MMRDA is over Rs 26,000 crore,” said Chavan.

The study focuses on infrastructure in the Mumbai Metropolitan Region (MMR). Out of the total projects planned, 80 per cent will be used for transportation that includes 450 km of road, 250 km of suburban railway and another 1,700 km of roads. Chavan said the Coastal Road Project, one of the most ambitious project in Maharashtra, is also on the anvil.

Chavan said Relief and Rehabilitation (R&R) was the most important challenge for infrastructure projects. He said 40,000 families had been rehabilitated under various projects of MMRDA. Apart from environment issues, Chavan said financial restructuring was a problem, especially with issues like Viability Gap Funding (VGP) involved. “The strength of the city is its human resources. For maintaining their quality of life, a good transportation system is of utmost necessity.”

Throwing light on some of the prominent infrastructure projects, Metropolitan Commissioner of Mumbai Rahul Asthana said the Mumbai Trans Harbour Link (MTHL) flagship project, which was bid unsuccessfully twice, would be put for bid again in May 2012. The contract would be awarded by a estimated cost of Rs 10,000 crore.

“MMRDA plans to compensate the build operate transfer (BOT) operator of the proposed MTHL project in case of low toll collection against the projections. However, in case of higher toll collection, the BOT operator needs to share benefits with MMRDA. Besides, MMRDA proposes to provide long tenure soft loan to BOT operator and also compensate L2 and L3 bidders for the cost of bidding. This is to encourage more players to participate in the bidding process.”

Chavan said the Mumbai Metro Rail project, having nine lines will be implemented in three phases at a cost of Rs 47,000 crore. The first phase of the project in he Versova-Andheri-Ghatkopar corridor, is expected to be completed by the third quarter of 2012, at a cost of Rs 2,356 crore. The Metro Line 2, Charkop-Bandra-Mankhurd, which entails an investment of Rs 7,660 crore, has achieved financial closure on March 14. The civil work is expected to begin from October. Metro III is now extended upto airport from Colaba where the entire stretch will be underground and would cost Rs 18,000 crore.

Source: business-standard.com

Written by ITW Editor · Filed Under Maharashtra, Road

Trans-harbour link: Mah govt says ready to cover revenue gap

August 29, 2011

Mumbai, Aug 28 (PTI) In a bid to attract more bidders for the ambitious Rs 10,000 crore Mumbai Trans-Harbour Link project connecting Sevri in the northeastern part of the city with Nhava Sheva (JNPT Port area), the Maharashtra government has proposed to cover the revenue risk of the BOT operator.
“We cannot take construction risk, but we can definitely cover the revenue risk of the BOT operator. We plan to offer a long, soft loan to the BOT operator and also compensate the second and third lowest bidders (L2 and L3 bidders) for the cost of bidding,” Mumbai Metropolitan Regional Development Authority (MMRDA) Commissioner Rahul Asthana has said.
The government started the bidding process in 2004, but it has not been able to make any progress so far.
“This move will encourage more developers, including from overseas, to bid for the ambitious project. We believe that by the third quarter of 2012, we will be able to award the contract,” Asthana said.
MMRDA, the nodal government agency for infrastructure development in the city, is also ready to compensate the BOT operator in case of lower toll collection vis-a-vis projections, he said.
“However, in the case of higher toll collection, the BOT operator needs to share the benefits with MMRDA,” he added.
Maharashtra State Road Development Corporation Limited (MSRDC) — the state road development body that was earlier handling the project — made several attempts to invite bids in 2004 on a BOT basis and in 2008 on a design-build-contract basis.
In June, 2008, separate bids by the Ambani brothers were found unrealistic. Reliance Industries had bid for a 75-year concession period on the project, while the ADA Group quoted only a 10-year concession period. .

Source: http://news.in.msn.com

Written by ITW Editor · Filed Under BOT, Default

Smooth rides in store: Jaya promises better roads in 3 yrs

August 29, 2011

CHENNAI: The government is planning to spend Rs 2,400 crore on upgrading roads over the next three years.

Chief minister J Jayalalithaa told the assembly on Friday that the state would convert 963km of state highways into double-lane roads and 3,700km of major district roads to intermediate-lane roads. “Give us time and see the changes in three years,” she said to thunderous applause from the treasury benches.

The government will take up major road projects under a Build Operate and Transfer (BOT) basis with private participation. In the second phase of the Tamil Nadu Road Sector project, 2,500km of roads under the highways department will be improved at a cost of Rs 5,000 crore, Jayalalithaa said. Financial support will come from the World Bank, she said.

Source: timesofindia.indiatimes.com

Written by ITW Editor · Filed Under BOT, Road

Nagarjuna Construction 1QFY2012 performance highlights and results update

August 23, 2011

NCC posted moderate set of numbers for 1QFY2012. The company is facing headwinds like 1) increasing debt levels; 2) overall slowdown in order booking; and 3) delays in financial closure for its power plant. However, owing to its attractive valuations and diversified order book with exposure to most growth sectors, we maintain our Buy view on NCC.
Disappointing numbers, as expected: The company reported top-line growth of 5.1% yoy to Rs.1,141.5cr (Rs.1,086.5cr), which was in-line with our expectation of Rs.1,169.5cr. On the operating front, the company’s margin was marginally ahead of our estimate at 10.2% (9.7%). The company continues to reel under pressure on the earnings front on account of subdued top-line growth and burgeoning interest costs. The bottom line came in at Rs.23.3cr (Rs.41.4cr), which was again pretty much in-line with our estimate of Rs.25.3cr.
Outlook and valuation: The current o/s order book of NCC stands at Rs.16,189cr, flat qoq, with order inflow of Rs.1,349cr for 1QFY2012. Going ahead, we believe the order inflow would be driven by EPC work of its own power plant. However, earnings would continue to reel under pressure due to higher interest cost on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects. We have downgraded the P/E multiple for the stock (from 10x earlier to 8x currently) in light of increased debt levels, gloomy macro environment and pressure on earnings growth in the near to medium term. However, at the current price, the stock is trading at attractive valuations (3.9x FY2013E earnings adjusted for its investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone). Hence, we maintain our Buy view on the stock with a revised target price of Rs.82.

Execution slows down once again
For 1QFY2012, NCC’s numbers were in-line with our estimates but were lower than street expectations. The company posted yoy growth of 5.1% on the top-line front at Rs.1,141.5cr (Rs.1,086.5cr), which was in-line with our expectation of Rs.1,169.5cr and street expectation of Rs.1,193.5cr. Muted revenue performance was due to lower order booking during the year and delayed payments from clients.
On the order booking front, the company faced a slowdown. The company bagged orders of mere Rs.1,349cr during the quarter. Going ahead, we believe the order inflow would be driven by EPC work of its own power plant.\

Net margin under severe pressure due to higher interest cost and subdued top-line growth
On the operating front, the company’s margin was marginally ahead of our estimates at 10.2% (9.7%). The company continues to reel under pressure on the earnings front on account of subdued top-line growth and burgeoning interest costs. The bottom line came in at Rs.23.3cr (Rs.41.4cr), which was again pretty much in-line with our estimate of Rs.25.3cr but was lower than street’s expectation of Rs.28.4cr.

Order book analysis
NCC’s order book, which stands at Rs.16,189cr (3.2x FY2011 revenue) as of 1QFY2012, is spread across nine verticals and the major contributors include the building, water and power segments. Going ahead, management expects the road, building and captive power segments to gather momentum and add significantly to the order book.

Change in estimates
Going ahead, we expect NCC’s interest cost to increase on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects. Therefore, this will significantly impact the company’s bottom-line growth, given the limited cushion from top-line growth.

Outlook and valuation
The current o/s order book of NCC stands at Rs.16,189cr, flat qoq, with order inflow of Rs.1,349cr for 1QFY2012. Going ahead, we believe order inflow would be driven by EPC work of its own power plant. However, earnings would continue to reel under pressure due to higher interest cost on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects.
We have downgraded the P/E multiple for the stock (from 10x earlier to 8x currently) in light of increased debt levels, gloomy macro environment and pressure on earnings growth in the near to medium term. However, at the current price, the stock is trading at attractive valuations (3.9x FY2013E earnings adjusted for its investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone). Hence, we maintain our Buy view on the stock with a revised target price of Rs.82.
We have valued NCC on an SOTP basis with a target price of Rs.82/share by assigning 8x FY2013E earnings (standalone). The company’s real estate venture has been valued on P/B basis and its BOT assets have been valued on DCF basis. Our target price implies an upside of ~50.8% from current levels. Hence, we maintain our Buy view on the stock with a revised target price of Rs.82.

Source: stockmarketsreview.com

Written by ITW Editor · Filed Under Default, NCC

The ACN speed rail project

August 23, 2011

one of the most significant presentations at the last Action Congress of Nigeria (ACN) Governors Retreat held in Benin City is the proposal for the building of a bullet train to link the South West with Edo State. This according to the prime movers, will reduce the journey between Lagos to Benin City to 48 minutes, writes, Jacobson Nasamu

It was a scheduled item for presentation but by the time it was tabled, it elicited a near gloomy embrace. Not one of the five ACN governors and one deputy governor present showed beyond a passing interest in the high speed rail project, designed to revolutionalise transportation link between the Western and Midwestern states of Nigeria.

The occasion was the retreat organised for Action Congress of Nigeria (ACN) governors in Benin City recently. Present were the host, Comrade Adams Oshiomhole, Governors Babatunde Fashola of Lagos, Senator Abiola Ajimobi of Oyo, Dr. Kayode Fayemi of Ekiti, Ibikunle Amosun of Ogun and Mrs. Grace Laoye-Tomori, deputy governor of Osun State.

Chaired by former Governor of Ekiti State, Otunba Niyi Adebayo, the retreat also had in attendance National Chairman of ACN, Chief Bisi Akande, Vice Chairman, South South, Pastor Ize Iyamu, National Publicity Secretary, Alhaji Lai Mohammed and other chieftains of the party.

However, the noticeable lack of the anticipated enthusiastic response may have been due in part to the unimpressive manner the presentation was conducted. Done by representatives of proposers of the project, Hammcobtb Engineering, trading in Nigeria as Hammco Engineering Works Limited, it was largely marred by projector failure and microphone malfunction. Some of those who responded to the idea even mistook it for the planned Coastal Highway from Lagos to Calabar, which is also expected to have a railway line.

But “THE GREAT WESTERN” high speed rail project is one project that demands deep reflection not only by the governors of the old Western Nigeria but by the federal government.

The Western and Southern parts of Nigeria constitute a major movement area in Nigeria as a hub of sea, air and land transportation. Major agricultural and commercial activities originate and flow through this region and as the economic nerve centre of the nation, efficient and free flow of people and produce is a prerequisite for both economic and political development.

Interestingly, past governments, both in the Western part and the nation generally have paid lip-service to transforming the various sectors of the economy. Empty promises from the governments; negligence and neglect of infrastructure; corruption and decadence have characterised our national life. The result has been loss of hope, backwardness of the region and hunger and poverty in the midst of plenty.

This is compounded by the fact that existing transport system within this region has been inadequate. The poor infrastructure has also proven to be unable to support rapid socio-economic expansion, thus limiting the movement of people and farm produce to market locations within the region.

With an under-achieving transportation network, characterised by bad stretches, insufficient road networks, a poorly developed water ways, an inefficient air transport system coupled with moribund rail lines, there is the utmost need for a modern and efficient high speed rail transportation system to enhance long-term growth of other developmental processes like power generation and distribution.

Designed as a loop within the western part of the country, the high speed rail project will cover a distance of 800 kilometres through major industrial and commercial centres. It would also accommodate growth potentials with expansion into new arteries as well as extension into other regions of the country. Expectedly, it will facilitate major industrialisation of the area. It will also improve transportation of agricultural produce and create immediate political awareness for further emancipation of the people.

So why really did the governors not show much interest in the presentation? Could it be that they were scared by the cost?

According to Hammcobtb Engineering, it had put together a team of consultants to oversee the design, construction specification and implement the fast rail route. An initial evaluation, they said, had been made, potential technical partners identified and necessary contacts made on the project. The average cost of the high speed rail system covering a distance of 800 kilometres in a loop within the terrain of the South West is put at about $57 billion with a completion time of 156 weeks.

This cost, as high as it may appear, is not expected to be borne by the respective governments alone or even at all. The encouragement of public-private partnership in various forms and scales seem to be a key policy in financing all types of transport infrastructure. This will ease the burden of maintaining and expanding transportation facilities which has simply grown too great to be borne solely by tax-payers and government.

The rail project, therefore, will be funded through a public-private initiative, which presupposes that the project when completed will be run on a commercially viable basis through private sector investors. This should guarantee timely completion, efficient management of the rail system, and uninterrupted pay-back of project cost.

The involvement of the various governments may be limited to expressing interest in writing which should enable Hammcobtb Engineering bring in foreign investors; assistance in obtaining necessary permits from the federal government; release of right of way and the execution of a Board of Trustees (BOT) agreement for the project.

In view of the great prospect of the project, the governments of the South West should give the proposal its due consideration and lend their weight as a measure of commitment via a letter of expression of interest which should facilitate Hammcobtb‘s further negotiations with “international parties already identified for the project”.

According to the engineering company, it has “relationship with fund providers from South Africa and Canada who have indicated firm interest in funding this project”.

Hammcobtb‘s proposal should be revisited by a technical committee set up by the governors concerned to study and properly advise them on the viability and its overall benefit not only to the states of the West but to the nation as a whole.

The high speed rail service with a speed of about 250 kilometres an hour is expected to open up the rural areas for easy access for development as well as aid and sustain all other developmental reforms in the region by the present visionary leaders of the western part of the country.

The creation of a safe, efficient and affordable transport system will increase the quality of life of the people. Such a project is bound to decongest the cities as most of those who work in Lagos, Ibadan and other cities and towns within the region would prefer to live in their villages or other towns far away and commute to the cities to work.

Our highways would, therefore, be decongested of the heavy vehicular movement presently being experienced particularly in Lagos. These are generally the needs of the people and any government which can identify and meet the most pressing needs of its populace is guaranteed continuous support. Meeting the needs of the people is an insurance policy for any government to stay in power.

There is no doubt, the governors of the South West are visionary and have a burning passion to take their states to a higher level and make the region a pacesetter once again. This is one project which should help them achieve a higher quality of life for the people and return the region to the glorious days of yore

Source: thenationonlineng.net

Written by ITW Editor · Filed Under Africa, Default

Supreme Infrastructure: Concrete structure

August 23, 2011

The company, which is present in railways, bridges, buildings, power, sewerage, irrigation and roads, is looking to expand its capabilities in marine projects and deepen vertical strength in various states
Supreme Infrastructure India (SIIL) is one of the few listed infrastructure companies that is doing extremely well. SIIL is present in seven verticals—railways, bridges, buildings, power, sewerage, irrigation and roads—across Maharashtra, Haryana, Punjab, Rajasthan, Uttar Pradesh and West Bengal. Each vertical functions as a business unit, thus increasing focus on execution as well as order book growth. SIIL started with executing orders of Mumbai’s municipal corporation and the public works department of Maharashtra and, when the infrastructure boom started in India in the mid-1990s, it expanded its activities by procuring contracts of urban development and municipal authorities in various cities.

SIIL’s construction business has an integrated business model with in-house asphalt, ready-mix concrete, crusher and wet-mix plants, ensuring timely supply of construction material and saving of tariffs & taxes due to captive material transfers. This also ensures lower costs.

For the financial year ended 31 March 2011, SIIL’s total income jumped 72% to Rs918.70 crore from Rs534.10 crore, while net profit surged by 91% to Rs74.80 crore from Rs39.20 crore in FY09-10. Its net profit for the March 2011 quarter zoomed 148% to Rs27.40 crore from Rs11 crore in the corresponding period last year on an 88% rise in total income to Rs328 crore from Rs174.30 crore.

At present, SIIL has five BOT (build, operate, transfer) projects in Maharashtra. These include Kasheli Bridge which is expected to be complete by Q2FY11-12, while the Panvel-Indapur and Manor-Wada-Bhiwandi projects are expected to be completed by July 2013 and the Ahmednagar-Karnala-Tembhurni project is expected to finish by March 2014. The Haji Malang project is a ropeway project having a construction period of two years. The Manor-Wada-Bhiwandi project—an industrial belt connecting Gujarat and Maharashtra—is the company’s first BOT road project.

The company has also won contracts in the irrigation, railways, building and power sectors. Its Osmanabad (Andhra Pradesh) irrigation project is scheduled to be completed by June 2012. SIIL, in a joint venture with Patwari Electricals, is executing turnkey power projects for Maharashtra State Electricity Distribution Co Ltd. In the railways segment, SIIL has won many orders from Mumbai Railway Vikas Corporation. Also, in the building segment, the company has won several orders from government agencies as well as private companies. Some of the major projects include construction of Edge Towers worth Rs255 crore at Ramprastha City, Gurgaon, construction of Hexcity worth Rs138 crore for Armstrong group at Navi Mumbai.

The company is looking to expand its capabilities in the marine projects segment and deepening vertical strength in each state. In Kolkata, it has joined hands with Bengal Tools to undertake orders in the industrial infrastructure space.

However, currently, most of the company’s orders are from Maharashtra (around 76%). Any slowdown in the order book from this state may affect the cash flows of the company. SIIL has a track record of timely completion of projects. But, being a new player in the BOT segment, there could be a potential execution risk. Land acquisition is also another problem—any delay in project execution would affect the revenues of the company, going forward.

Over the past five quarters, SIIL has reported an average growth in revenues and operating profit of 59% and 56%, respectively. Its average operating margin is 17% and return on net worth is 29%. Its market-cap to revenues is 0.33, while its market-cap to operating profit is 2.16 times. The stock is an attractive buy at the current market price.

Source: moneylife.in

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

Ramky Infrastructure sees Rs6,000 cr orders till March

August 23, 2011

Ramky Infrastructure Ltd, a South-based construction and infrastructure development company, is expecting an additional order inflow of about Rs6,000 crore in the rest of the current fiscal.

At present, the company’s order book has been pegged at about Rs12,000 crore in the engineering, procurement and construction arm, in addition to about 16 build-own-transfer (BOT) projects under execution.

In the first quarter ended June 2011, the company recorded fresh order inflows worth about Rs1,600 crore. “There is a strong pipeline of another Rs1,200-1,300 crore. Bids worth about Rs11,000-12,000 crore are yet to be opened. So, we are confident of getting another Rs6,000 crore worth orders during the year,” M Gautham Reddy, executive director of Ramky Group, said.

However, he said, the company was not aggressively looking at piling up the orders. “We are not aggressively pursuing orders. We have a philosophy of making optimum use of men, material and capital. We will follow that. We have not set any target for order-book expansion,” he said.

The current order book is dominated by three sectors with roads & bridges contributing about 35% followed by water and waste water management (22%) and buildings (16%). While the company expects the average earnings before interest, tax, depreciation and amortisation (Ebitda) margins to hover between 11% and 11.5%, what is likely to impact is the interest rate burden.

Currently, the company’s debt carries an interest of about 12%.

“There is a possibility of these rates going further up by 0.50%. But, that’s where the rates are expected to peak out,” he said.
In the BOT segment, Ramky currently has five road projects including four annuity projects and one toll project. “Our exposure to NHAI projects is not much. One of the four annuity projects is a Hyderabad outer ring road project offered by the state government. We have already achieved

COD for the project. The other is a Gwalior bypass of the NHAI. This is yet to achieve the COD. The other two projects in Jammu and Kashmir and Assam have achieved financial closure,” he said.

The only toll project — a state road between Narketpally and Addanki in AP connecting to a Chennai road — is still being developed.

Meanwhile, the company is gearing up to replicate its prestigious integrated industrial park concept in Africa. The company has developed a pharma city near Visakhapatnam to cater to the needs of the pharmaceutical sector.

“A similar concept is now being adopted for a project in Africa. We have been asked to develop a timber SEZ, an industrial park to cater to the needs of timber processing in Africa. It is a $89 million project and the works are expected to commence during September-October this year,”he said.

Source: dnaindia.com

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

Premium income to ease NHAI annuity burden

August 23, 2011

The National Highways Authority of India (NHAI) says it will be able to take care of its current annuity payment of Rs 1,871 crore following the recent rise in premium income from highway projects.

The highways’ authority recently awarded 10 projects with a premium of Rs 1,628 crore annually that will increase at the rate of five per cent per annum for 25 years. This amount is over and above the Rs 300-crore premium NHAI is already earning.

“Our current annual premium will take care of our annuity payment but whether this trend will continue or not will depend on the kind of response we get for the upcoming projects,” said a senior NHAI official, who did not want to be identified

PREMIUM HIGHWAYS
Project (Rs cr)	Concession period (yrs)	Premium*
Kota-Jhalawar	25	3.51
Ahd-Vadodara	25	309.60
Barwa Adda- Panagarh	20	106.00
Nagpur-Wainganga	18	106.00
Beawar-Pali- Pindwara	23	251.01
Kishangarh-Udaipur -Ahmedabad	26	636.00
Shivpuri-Dewas	30	180.90
Gwalior-Shivpuri	29	66.60
Orissa Border- Aurang	28	29.70
Hospet-Bellary	30	18.00
*Premium increases @5% per annum

Quoting premium amounts to committing an annual payment to the government over a period of time, instead of seeking a grant for building roads. Companies bid premium if they are confident that the toll revenue accruing to them would more than offset their costs.

The official said these new projects would start paying in six to eight months, where the contractor can start collecting toll the moment it starts work on the project.

Some in the construction industry say companies are going overboard in quoting premium to bag projects. “The premium payments in some of the projects are actually unrealistic but, nevertheless, it is a respective company decision. But the NHAI needs to upgrade its mechanism for traffic projections, as their projections are not realistic most of the times,” said an executive of a Mumbai-based infrastructure company.

Analysts also think the bigger problem is a large number of companies chasing a few projects. “A company takes into account a lot of things before bidding for a project and no company will bid to make loss in a project. The bigger problem is that there are no projects in the market and people are bidding for the few available,” said Sanjay Sethi, senior executive director and head of infrastructure group at Kotak Investment Banking. Sethi added it was imperative that the government should release more and more projects.

NHAI has announced to award 59 projects covering 7,994 km with a total cost of around Rs 60,000 crore in the current financial year. It has a huge annuity liability of Rs 24,386 crore so far for 41 projects.

Among the 41 projects awarded on annuity, eight are under the first phase of the National Highways Development Programme (NHDP), 20 under the second phase of NHDP, 11 under the third and one under the fourth phase. The one remaining project is under the Special Accelerated Road Development Project for the North-East. NHAI makes the payment for all annuity projects except for those in Jammu & Kashmir and North-East which are taken care of by the central government directly.

In the case of premium income, the amount first goes into the consolidated fund of India and is accounted for in the internal external budgetary resources of NHAI. “All the money that includes cess income, toll income and premium income that comes to us is kept in a central pool and then spent according to our needs,” said another senior official, who did not want to be identified.

The official added that earlier they used to keep toll income for maintenance of highways and repaying loan tranche to Asian Development Bank but later this practice was stopped.

NHAI awards projects on two Public-Private Partnership (PPP) modes. One is BOT (annuity) and the other is BOT (toll). Unlike the BOT toll model, where the private operator takes on the risk of toll collection, the government mitigates the risk of toll income in the annuity model by guaranteeing six monthly payments over the concession period. This increases its liability but with premium becoming attractive, NHAI officials are hopeful that the annuity burden would be taken care of to a large extent

Source: business-standard.com

Written by ITW Editor · Filed Under NHAI, Projects