37 road infrastructure projects to be completed during current year: Dr Arbab

December 26, 2011

ISLAMABAD(SANA): The National Assembly was informed on Thursday that thirty-seven road infrastructure projects will be completed by National Highway Authority during the current fiscal year.

Minister for Communication Dr. Arbab Alamgir Khan told the House during question hour that 2305 million rupees have been spent on repair of Highways and Motorways damaged by the floods.

He said a PC-1 of 23.56 billion rupees has been forwarded to Executive Committee of the National Economic Council (ECNEC) for approval to carry out reconstruction of the remaining flood damaged road infrastructure. A loan agreement has also been signed with the Asian Development Bank for the flood emergency reconstruction project.

To a question, the Minister said the Kallar Kahar portion of Motorway will be realigned to avert serious accidents there. He said the National Highway Authority has planned to undertake dualization of Muzaffargarh to Dera Ghazi Khan through public-private partnership from October next.

He said toll connection on motorways is being upgraded and replaced with electronic toll traffic management system. The Minister said that the National Highway and Motorway police has taken a number of measures to ensure safety of passengers road users. Four permanent trauma centres are being constructed on different Motorways.

Minister for Religious Affairs Syed Khurshid Ahmad Shah told the House that five point eight million families living below the poverty line are being given cash grant on regular basis under the Benazir Income Support Programme. He said these beneficiaries are also being given health insurance and a proposal is under consideration to exempt them from the payment of sales and other taxes. He said those living below the poverty line will also be given concessions in electricity bills.

He said a poverty survey has been completed in most parts of the country except FATA and some districts of Southern Punjab. He said the survey in the remaining areas will be completed by March next which will help determine the exact ratio poverty in the country.

Parliamentary Secretary for Information Technology Nawab Liaquat Ali Khan told the House that new technology is being introduced to bolster the agriculture produce and ensure food security. He said nine PSDP projects are being executive to popularize the already developed technologies. He said a number of agreements have been signed with different national and international organization to transfer technologies to the farmers as well as to the public department.

Responding to a supplementary question, Minister for Communication Dr. Arbab Alamgir Khan told the House that work on 133 kilometer Karachi-Hyderabad (M-9) will be started next year. He said negotiations for undertaking this project on Build Operate Transfer (BOT) basis with a Malaysian Company is in final stages and will be signed next month.

Minister for Religious Affairs Syed Khurshid Ahmad Shah informed the House that the government has no plans to privatize Water and Power Development Authority (WAPDA). He said the present government has always pursued pro-workers’ policies and abolished all black laws introduced by the dictators. He said we have a given a new concept of privatization by giving twelve percent shares to the employees of public sector under the Benazir Stock Option Scheme.

Parliamentary Secretary for Information Technology Nawab Liaquat Ali Khan told the House that sufficient urea is available in the country to meet the requirements of the growers. Responding to a call attention notice moved by Murtaza Javed Abbasi Minister for Religious Affairs Syed Khurshid Ahmad Shah told the House that eighty percent work in the earthquake affected areas of Azad Kashmir and Khyber-Pakhtunkhwa have been completed. He said twenty-four billion rupees are required to complete the remaining work in the affected areas. Ten billion rupees have been allocated for this purpose during the current financial year while the remaining fourteen billion rupees will be allocated in the next financial year.

He said the government is committed to the complete reconstruction and rehabilitation of quake affected areas and ERRA has been directed to expedite work on the remaining projects.

Responding to another call attention notice Minister for Petroleum and Natural Resources Dr. Asim Hussain informed the House that three point five million vehicles are running on CNG in the country.

These are moving bombs and pose threat to the lives of the people. He said during the last few days explosions in the CNG fitted vehicles have claimed the lives of many people. The Minister said the powers of checking the quality of CNG cylinders be delegated to the OGRA and Institute of Hydrocarbon to ensure the quality of the cylinders.

Source: sananews.net

Written by ITW Editor · Filed Under International, pakistan, Projects, Road

Have completed BOT project in MP before time: Valecha Engg

December 26, 2011

Valecha Engineering has been in the red. The company’s recently commissioned build-operate-transfer (BOT) project is facing execution pressure. However, managing director Jagdish K Valecha indicated that the company has been able to commission its first BOT road project in Madhya Pradesh and Indore 11 months ahead of time.

The company also plans to complete the second BOT project before time instead of 24 months. “This will get us the extra revenue stream by way of toll and tax free revenue stream in the SPV,” he added.

Q: How much are you bidding for in terms of future orders? What will be the breakup of the geographical division?

A: We have got projects in North Delhi, Madhya Pradesh, Gujarat and Arunachal. These are the four-five larger areas where we are concentrating. We have got projects down south in Bangalore and Chennai as well.

Q: Is there any reason to concentrate more on the north or has it always been like that? Where is execution the easiest?

A: In the North, before the Commonwealth Games, we were one of the few companies who delivered most of our flyovers before the Commonwealth Games. We have built up a brand equity towards the North for the infra projects and a lot of projects are happening.

The company has also qualified itself and made bid for the underground metro, which is a high tech fish area in Delhi for Delhi Metro Corporation, along with international joint venture partner.

Q: Could you give us an update on the debt on the books? Will you all be pairing down anything in FY12?

A: The debt on the book is comfortable. It’s around 1:1 ratio. We are not over feared as yet. We are taking selective projects, where most of the projects are going at prices that are like premiums.

We have bagged projects with good IRRs. We are keeping an eye on the EBITDA and then bagging the projects, instead of just going behind the project.

Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.

Q: Could you take us through a couple of these exactions concerns that lots of infrastructure companies are facing at this point in time? How is the situation on the ground looking for you all?

A: There are execution challenges with the other infrastructure companies, who have over bagged the orders and this is the reason they are not able to execute.

The good news in the case of Valecha Engineering is that we have been able to commission our first BOT road project in Madhya Pradesh and Indore 11 months ahead of time. This is a record in the road building exercise that the country has embarked upon.

Q: Coming to the other two BOT projects that you bagged about six to seven months back; you were looking to get financial closure, particularly for the third one. Are there any kinds of delays or stress on that account?

A: All the BOT projects have got the financial closure. The recent one in Gujarat (Bhuj to Bhachau) of nearly Rs 500 crore has also received its financial closure last week. This project will also now kick-start in a faster anvil as such.

Q: Concentrate a bit on your Q2 numbers, your net sales were down 19% for the quarter on a year-on-year basis, but you improved in the margins to 11% versus 7% on a year-on-year basis. What sort of operational efficiencies are you undergoing or implementing at this point in time? What is the outlook for the remaining part of the fiscal in terms of margins?

A: We developed a strategy a year back to have 25% sales out of BOT projects and 25% sales out of budgeted projects. In the budgeted projects, we have a mixed client base and mixed geographical base so that the risk is divided.

The current stress of the management with the team at the project side is to implement the projects ahead of time for the recent projects and concentrate on improving the efficiency by quick delivery and turnaround.

Q: Even for BOT project two and three, will you execute it at a faster clip? When are they likely to get commissioned?

A: The project’s shelf life is 24 months. We are targeting the second BOT project instead of 24 months again like the first BOT project, which will obviously get us the extra revenue stream by way of toll and tax free revenue stream in the SPV. The concentration will be to complete the project ahead of time.

Q: How much are you bidding for in terms of future orders? What will be the breakup of the geographical division?

Q: Is there any reason to concentrate more on the north or has it always been like that? Where is execution the easiest?

The company has also qualified itself and made bid for the underground metro, which is a high tech fish area in Delhi for Delhi Metro Corporation, along with international joint venture partner.

Q: Could you give us an update on the debt on the books? Will you all be pairing down anything in FY12?

We have bagged projects with good IRRs. We are keeping an eye on the EBITDA and then bagging the projects, instead of just going behind the project.

Source: moneycontrol.com

Written by ITW Editor · Filed Under BOT, Valecha Engineering

Supreme wins new BOT road project

December 26, 2011

Supreme Infrastructure India has completed EPC for its first marine project, Kasheli Bridge and commenced tolling operations. The company added orders worth Rs212.30 crore along with a bridge project for Rs124 crore where it is declared L1.
Kasheli Bridge in Thane Vikas Sharma, whole-time director, Supreme Infrastructure, said “We are proud to report completion of our first Marine project Kasheli bridge at Thane. This project has added significant capabilities to our engineering team, which can now undertake complex and larger marine projects. Also, our efforts of expanding our reach in the northern territory is starting to show positive signs. We have also won orders from our existing customers and it is a mark of the good quality work we continue to deliver for our clients and a testimony to our work ethos.”
It has also added a road BOT project in Maharashtra. Further, the company is in advance dialogue with the strategic investors to explore possible investments in its BOT portfolio. The EPC work in the Marine Segment involves building a six lane flyover on old Thane-Nashik highway for a length of 1.2 Km on the Thane Creek for Rs301 core.
This project was awarded to Supreme in 2009 by the Sangam group and has been completed in 36 months. The project involved complex engineering skills to cast pilling with depths ranging from 15–25 meters. This project is an engineering marvel and a reflection of our in house capabilities.
Supreme holds 10 per cent equity stake in the Kasheli Bridge SPV through Kalyan Sangam Infratech. This SPV was involved in the construction of the Kasheli Bridge on a BOT basis. The construction of Kasheli Bridge is completed and tolling operations have commenced.
Construction of Villas and premium apartments have been awarded by BPTP Group, Gurgaon. This is a state-of-the-art project being developed in Gurgaon. Order size is Rs71 crore and is expected to be executed by March 2014.
The group also has project awarded by Ramprastha Group for construction and development of Multi storied tower ‘SKYZ’, at Gurgaon. The scope of work order involves construction of nine towers of 19 stories each. Order size is Rs141.30 crore, which is expected to be competed by March 2014.
The company has been declared L1 by MMRDA for the design and construction of flyovers at Rajnoli Junction and at Mankoli Junction on NH-3 at Thane Nashik road. Order size is Rs124 crore.

Source: constructionweekonline.in

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

CRISIL assigns valuation grade 5/5 to MBL Infra

December 19, 2011

CRISIL assigns valuation grade 5/5 to MBL Infra

CRISIL Research has come out with its report onMBL Infra . The research firm has maintained the valuation grade 5/5 to the company in its December 12, 2011 report.

MBL Infrastructure Ltd’s (MBL’s) Q2FY12 revenues and earnings were above CRISIL Research’s expectations. Given the timely execution of projects, revenues registered robust growth of 25.3% y-o-y. Although high raw material cost pulled down EBITDA margin by 156 bps y-o-y to 15.2%, it was above our expectation of 13.7%. PAT registered muted growth of 1.8% as lower EBITDA margin and increased interest and depreciation costs offset revenue growth. Order inflows remained subdued during the quarter – MBL’s current order book is valued at ~Rs 12.5 bn (1.1x TTM revenue), which provides visibility only for the next 12 months. We maintain our earnings estimate and fundamental grade of 3/5.

Q2FY12 result analysis:

Revenues grew by 25.3% y-o-y to Rs 1,540 mn due to the timely execution of projects. H1FY12 revenues grew by 34.1% to Rs 4,671 mn.
EBITDA margin declined by 156 bps y-o-y to 15.2% due to increased raw material cost. H1FY12 EBITDA margin declined by 98 bps y-o-y.
PAT increased 1.8% y-o-y to Rs 80 mn due to lower EBITDA margin and higher interest and depreciation costs. However, it was better than our expectations. H1FY12 PAT increased by 20.2% y-o-y to Rs 283 mn.

Key developments:

Order intake during the quarter was subdued. The company received orders worth Rs 1 bn from Haryana PWD and National Building Construction Corporation and ~Rs 2 bn from Madhya Pradesh Road Development Corporation. The current order book is valued at ~Rs 12.5 bn (1.1x TTM revenue), which provides visibility for just 12 months.
Recently, it received road projects worth Rs 415 mn in Madhya Pradesh on BOT basis (toll + annuity). With this, the company now has four road BOT projects in its portfolio, of which one is operational and three are under construction.
Construction work on the Orissa road project is on schedule; till date, the company has completed work worth Rs 40 crore.

Valuations: Current market price has strong upside We continue to value MBL based on the sum-of-the-parts method. The contracting business has been valued on the P/E method (with a P/E multiple of 6x), while BOT projects have been valued on the DCF method. We maintain our fair value estimate of Rs 249 per share. At the current market price, the stock merits a valuation grade of 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL’s opinions as on the date of this Report. The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

Source: http://www.moneycontrol.com

Written by ITW Editor · Filed Under MBL, PWD

‘Road sector bags maximum PPP projects in northern region’

December 19, 2011

The road sector has bagged the maximum number of PPP projects in the northern region with 94 projects (66.7 per cent), followed by urban development with 28 projects (19.9 per cent), energy sector with seven projects (five per cent), tourism and education four projects each, healthcare three projects and one airport project, according to the CII report on “Public Private Partnership in northern region: An Analysis”. The report is based on data from PPP India as on June 2011 and the Planning Commission.

Northern states comprising Chandigarh, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Rajasthan, Uttar Pradesh, Uttarakhand, and Delhi have 141 PPP projects in various stages of implementation with an estimated value of Rs 80,544 crore. The report also highlights the intra state variations in terms of PPP projects.Within the region,

Rajasthan leads with 41.2 per cent of the total projects in the region; followed by Punjab, 23.0 per cent; Uttar Pradesh, 12.2 per cent; Haryana, 9.5 per cent and Delhi, 8.1 per cent. In terms of value, the top five states are Uttar Pradesh 33.5 per cent of the total; followed by Rajasthan, 18.4 per cent; Haryana, 17.1 per cent; Delhi, 13.7 per cent and Punjab, 7.9 per cent.

As on June 2011, out of the total 748 PPP projects under implementation across the country, northern region accounts for only 18.8 per cent as against 31.0 per cent for western region and 36.2 per cent for southern region. In terms of value of the projects, the share of northern region is 21.3 per cent, whereas, southern and western regions account 40.2 per cent and 27.2 per cent respectively.

The report also highlights that PPPs in social infrastructure sectors like education and healthcare is quite good with region’s share at 40.8 per cent and 24.1 per cent respectively.

The region has attracted Rs 755 crore in the education sector and Rs 442 crore in healthcare sector respectively. In northern region, the report highlights, that BOT (Built-Operate-Transfer)-Toll model is the most popular PPP model (75 are BOT-Toll type out of 141 projects in the region) adopted by Central and state in 94 road sector projects, followed by BOT-Annuity in 11 and BOT in five projects.

In social sector projects, BOT (3) and DBFOT (Design-Build-Finance-Operate-Transfer) (2) model are preferred. In the urban development sphere, BOOT (Build- Own-Operate-Transfer) and BOT are the preferred models with six projects each. In the state sector, BOT — Toll is the preferred model with 47 projects followed by BOT in 16 projects followed by BOT-Annuity (11.3 per cent).

In terms of state agencies implementing PPP projects, Rajasthan has the largest number of projects at 50, followed by Punjab, 27 projects; Delhi, 9 projects.

Also, 57 projects worth Rs 6,289 crore have moved from construction or implementation phase to operational phase in the region.

Source: business-standard.com

Written by ITW Editor · Filed Under Projects, Road

Plan panel questions four-laning of some national highway sections

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.

Source: http://articles.timesofindia.indiatimes.com

Written by ITW Editor · Filed Under BOT, NHAI

Madhucon Projects rallies on large order win

December 12, 2011

Madhucon Projects rose 2.03% to Rs. 52.65 at 13:20 IST on BSE, extending Monday’s 3.8% rally triggered by a large order win.

Meanwhile, the BSE Sensex was down 60.15 points, or 0.37% to 16,106.98.

On BSE, 2,472 shares were traded in the counter as against average daily volume of 4,935 shares over the past one quarter.

The stock hit a high of Rs. 53.50 and a low of Rs. 50.50 so far during the day. The stock had hit a 52-week low of Rs. 47 on 22 November 2011. The stock had hit a 52-week high of Rs.132.90 on 2 December 2010.

The stock has risen 5.9% in two trading sessions from Rs. 49.70 on Friday, 25 November 2011, boosted by a large order win. The company announced the order win after market hours on Friday, 25 November 2011.

The small-cap stock had underperformed the market over the past one month till 28 November 2011, falling 26.34% compared with the Sensex’s 9.2% fall. The scrip had also underperformed the market in past one quarter, declining 31.66% as against 2.01% rise in the Sensex.

The company has an equity capital of Rs. 7.38 crore. Face value per share is Re 1.

Madhucon Projects on Friday, 25 November 2011, said it has bagged an EPC contract worth Rs. 422.06 crore from Bharat Coking Coal, Dhanbad. The project is to be completed in 84 months from the date of acceptance, Madhucon Projects said in a statement.

Madhucon Projects has order book position of around Rs. 6500 crore, inclusive of road, irrigation, power and mining sectors. Madhucon has also been prequalified in EPC works of over Rs. 20000 crore in various sectors, the company said in a statement.

Madhucon Infra, a subsidiary of Madhucon projects, is having road vertical, power vertical and coalmine vertical. There are total 8 road projects under road portfolio costing around Rs. 7000 crore in which 4 toll road projects are commissioned and toll revenues are being collected, Madhucon Projects said in a statement. With regard to 3 more newly secured Build-Operate-Transfer (BOT) projects, financial closure has been completed and the project construction activities have just started, Madhucon added. LOA for one more BOT toll road project between Vijayawada and Machilipatnam, costing around Rs. 760 crore. is received from National Highway Authority of India (NHAI), Madhucon Projects said in a statement.

Madhucon Projects further added Madhucon Infra is also coming up with a 1920 megawatts (MW) coal based power project near Nellore. The first phase of 300 MW power plant is expected to be commissioned by end of this year. The second phase of 300 MW power plant is expected to be commissioned by August 2012. Madhucon Projects has also been declared as preferential bidder in a 300 MW mine mouth power project in Indonesia, which is on BOT basis, the company said in a statement.

With regard to the coal subsidiary i.e. PT Madhucon Indonesia, in principle clearance for jetty construction has been received and the company is hopeful of commencing the coal production by January/February 2012, Madhucon said in a statement.

Madhucon Projects’ net profit fell 10.1% to Rs. 6.05 crore on 18.3% growth in net sales to Rs.416.05 crore in Q2 September 2011 over Q2 September 2010.

Madhucon Projects is an engineering construction company. The company is involved in projects that include highway construction, infrastructure projects, and construction of hydel and thermal power projects.

Source: indiainfoline.com

Written by ITW Editor · Filed Under BOT, Madhucon

R-Infra may buy troubled road projects

December 12, 2011

The ride is getting bumpy for many roads developers. But Reliance Infra is making hay out of the current tough environment. Months after it announced that it was looking at distressed road assets in the market, NDTV has learnt that it is in talks with several players including IVRCL, Madhucon Projects and SREI Infrastructure all of who are looking to sell stake in some of their existing projects.

While Reliance Infrastructure hasn’t pinned down on any particular asset as yet, a buyout could happen in the next 1-2 months.

This will be in Tamil Nadu and will have synergies with the company’s existing projects in the state.

It may be eyeing 400 KM of road projects, including IVRCL’s Salem to Kumarapalayam highway and Madhucon’s Madurai to Tuticorin highway.

While the existing developers, many of whom bid for these projects very aggressively aren’t able to keep them viable, R-Infra hopes it can cut interest costs and bring in other efficiencies.

Meanwhile the company is also looking to go global.

It plans to bid for a BOT project in Vietnam and has expressed its interest in a project in Turkey as well but going international could be a challenge as its efforts to make inroads in Sri Lanka & Nepal have still not take taken off.

Source: http://profit.ndtv.com

Written by ITW Editor · Filed Under Projects, Reliance, Road

IDFC Project Equity, Ashok Piramal Group, SNC-Lavalin In $250M Tie-up

December 12, 2011

Ashok Piramal Group (APG), India Infrastructure Fund (a fund managed by IDFC Project Equity) and Canada’s SNC-Lavalin have entered into a tripartite arrangement to develop, own, construct and operate public-private partnership (PPP) road projects in India through a joint venture, the companies said in a statement today.

“The total deal value is in the range of $250 million-$300 million,” M.K. Sinha, president & CEO, IDFC Project Equity, told VCCircle.

In terms of shareholding pattern, APG-controlled Piramal Roads Infra Private Limited (PRIL) will hold 51 per cent equity stake, IIF will hold 39 per cent while SNC-Lavalin will own the balance 10 per cent.

PRIL, formed by APG as part of the group’s initiative to pursue opportunities in the infrastructure sector, is currently developing a road project in Madhya Pradesh.

Commenting on the JV, Ashok Piramal Group’s vice-chairman Rajeev Piramal said, “The group has been focused on growth and has been looking to diversify from its existing business. Our goal is to be among the leading infrastructure players in India by 2015.”

IIF, a fund floated by IDFC Project Equity, is a private sector infrastructure equity financer with an existing portfolio of seven road assets, along with its other investments in the energy, ports and urban infrastructure sectors. SNC-Lavalin is among the world’s largest engineering and construction groups and has been active in the infrastructure sector in India for more than 50 years.

According to MK Sinha, president & CEO of IDFC Project Equity, each of the three partners brings together complementary skills and capabilities. “The objectives and expectations of all three partners from this JV are such that they align our interests perfectly well. Also, this initiative is in line with our fund’s long-stated strategy of having a firm, long-term partnership arrangement to build a diversified portfolio of operating and under construction road assets.”

“The idea is to build a portfolio of road projects in excess of $1 billion over the next 3-4 years,” added Sinha. The asset management firm has already committed about $130 million into roads as part of its portfolio.

“It’s an annuity stream once the first dividend cheque comes in. We could package it and sell our fund as a listed fund. Our investment horizon is typically much longer (7-8 years), unlike private equity (3-5 years),” he said, while specifying the terms of providing liquidity to its investors.

In 2008, IDFC Project Equity, an IDFC subsidiary, raised the $930 million India Infrastructure Fund to invest in ‘core’ infrastructure assets.

There have been a slew of big private investment deals in the Indian roads and highways space as investors look to tap the infra opportunities. India may require $1.7 trillion during 2010-20, to meet the country’s overall infrastructure demand and keep pace with the economic growth and urbanisation, a report by Goldman Sachs has stated. Of this, power and roads alone may require upwards of $700 billion.

In another equity partnership for investment in roads, Morgan Stanley Infrastructure Partners and Isolux Corsán Concesiones announced an investment of $200 million each for developing highways in India under long-term concession agreements, awarded through the build-operate-transfer (BOT) programme of NHAI.

Most recently, HCC Concessions Ltd (which has six NHAI concessions) diluted 14.5 per cent stake to US-based investment firm Xander Group for Rs 240 crore.

Private equity major 3i Group has also invested $111.51 million in KMC Infratech Ltd, a subsidiary of KMC Constructions involved in BOT projects in the roads and highways sector. Other major investments in this space have been in Nandi Infrastructure Corridor Enterprises Ltd (JPMorgan) and Tata Realty & Infrastructure (Actis).

Source: vccircle.com

Written by ITW Editor · Filed Under Ashok Piramal Group, IDFC

Choked at home, Reliance Infrastructure looks for projects overseas

December 12, 2011

BANGALORE: Reliance Infrastructure is evaluating projects in Vietnam, Turkey, Oman and Nepal as it seeks to build a portfolio of $1.5 billion in two years and expand its footprint beyond India, where analysts say cut-throat competition and land acquisition problems are thwarting projects.

The company, part of the Anil Dhirubhai Ambani Group (ADAG), sees an internal rate of return of 20% from projects, which it aims to execute quickly, a senior company official who did not want to be identified, said.

“There are issues related to land acquisition and environmental clearances which delays projects in India making it unviable. Also the construction period is over five years here against two years overseas,” said a senior official from Reliance Infrastructure’s Road division.

Reliance has stated it is looking at five government road projects in Vietnam under the build, operate and transfer (BOT) model and is preparing to file expressions of interest (EoI) for it. The company is also evaluating, operate-maintain and toll road projects in Turkey, which will help it earn a revenue ofRs 4,000 crore annually.

With orders, especially from the central government, diminishing in the infrastructure sector, the company — which is also executing Mumbai’s Worli-Haji Ali sea link project — is looking at state roads and highways projects in the range of Rs 500-1,000 crore across the country.

“The bidding has been very aggressive with as many as 30-40 infrastructure companies bidding for the same projects. We do not want to dilute our return and portfolio value and RInfra will only choose projects which are high-density traffic corridors and offer 18-20% return,” said the official.

Recently, companies such as GMR Infrastructure, L&T Infrastructure Development Projects and IRB Infrastructure had quoted a premium of over Rs 300 crore for national highway projects. Currently, bids from as many as 30-40 infrastructure companies, most of whom have bid for multiple projects, are awaiting progress. As many as 60 road projects by the NHAI, worth around Rs 40,000 crore, are stuck in clearances with the Planning Commission. In FY12, NHAI has awarded 3,300 km of projects and will award 4,200 km by December 2011.

“Land hassles, high interest rates, adverse currency movement, low ordering environment and intense competition for the few projects that are available are several problems that companies in the India construction and infrastructure space are facing. The private sector’s confidence to invest in capacity creation remains low and that both public and private capex are likely to take longer to recover this time,” Morgan Stanley said in a report.

Separately, Reliance is also in talks to acquire national highway road projects in Tamil Nadu, Gujarat and Karnataka worthRs 2,000 crore. “We are looking at building our portfolio through secondary market and are evaluating some assets. The project should be viable and make healthy return for us,” said the Reliance official.

Reliance Infrastructure has emerged as the largest concessionaire of NHAI and currently has 11 road projects totalling 1,000 km valued at aroundRs 12,000 crore under various stages of execution. Six projects would become revenue operational by March, 2012, while four have already started generating revenues.

These projects include sixlaning of the NH 4 between Pune and Satara of length 140 km in Maharashtra, six-laning of NH 7 between Hosur and Krishnagiri of length 60 km in Tamil Nadu, six-laning of NH 2 between Delhi and Agra of length 180 km in Haryana and Uttar Pradesh. The 10 road projects are expected to be fully-commissioned by 2014 and will generate a revenue of Rs 1,200-1,400 crore annually.

“The company is also looking to bid for mega highway projects upward of Rs 2,000 crore and expects a 10-12% increase in traffic growth annually,” he said. RInfra has 25 infrastructure projects totallingRs 40,000 crore, including these 10 projects under different stage of execution. The company had posted a net profit of Rs 362 crore in the quarter ended September 30, 2011. On Friday, the firm’s stock closed up 1.78% at Rs 413 on BSE.

Source: http://articles.economictimes.indiatimes.com

Written by ITW Editor · Filed Under BOT, Reliance

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