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Paving the Roads to Socio Economic Growth 20th July 2012, New Delhi

May 31, 2012

Paving the Roads to Socio Economic growth

20th July 2012, New Delhi

 Roads & Highways scenario

Roads and highways is more than an identifiable thoroughfare, route, way or path to connect between places; it is a corridor with the ability to bring about social, political and economic change. Achieving sustainability and capitalising on the vast investment, social and commercial opportunities by examining conceptual and technological advancements for future development to encompass today’s changing world, its growing diversity and complexity.

 Theme:

Roads for inclusive development

Objectives of the conference

EPC World Media group is organising the one day conference with the objectives to guide, promote, share and highlight the strategies and opportunities in planning, construction, financing and managing the road network to maintain the much needed connectivity to growth. The conference will have presentations by the industry leaders, policy makers and decision makers on the following topics:

Key topics during the conference

Session – 1   Policy & land acquisition

  • National Highways Development programme – NHDP
  • Ambitious road development vision (Target v/s achieved)
  • Trends in road development
  • Expenditure in terms of Road revenue for Roads & Highways
  • Capacity augmentation and skill development for trained and skilled manpower
  • Contractual conditions & Model Concession Agreements (MCA)
  • Synergy of efforts for land acquisitions between state government and NHAI
  • Delay in project award and implementation due to existing environmental policy

Session – 2   Intelligent transportation system, sustainable design & construction technology

  • Roads & Highways designing (design & load planning)
  • Traffic modeling (routing, operation & Road Safety)
  • Safety management techniques & speed management
  • Traffic engineering innovations, road design and behavioral issues
  • Integrated toll management system
  • Construction products & raw material (Bitumen, Modified bitumen, Geosynthetic etc.)
  • Road construction equipment
  • Specification & best construction practices
  • Smart & green road technology
  • Utilization of alternate & sustainable materials in road construction
  • Sustainable & high performance roads

Session – 3   Public Private Partnerships & financing initiatives

  • Making cost estimation more realistic
  • Funding options & constraints (state funding, debt, equity, PPP)
  • Road asset management (ownership & maintenance)
  • Planning, financing and economics of low-volume roads
  • Impact of foreign direct investment in road development sector
  • Legal issues & challenges in road projects

Who should attend the conference

Participants of Paving the Roads to Socio Economic growth conference consists of all the stakeholders representing the:

  • Government agencies
  • Policy makers
  • Technology developers
  • Service providers
  • Companies in Infrastructure & Construction sector
  • Raw material supplier
  • Logistics companies
  • Road machinery & equipment providers
  • Professionals & consultants
  • Academic and research community

Benefit of attending the conference

The technical sessions, networking opportunities serve as perfect platform for decision makers, Suppliers, user community, technology developers, service providers, contractors, researchers to:

  • Discuss successful case studies
  • Share knowledge and experiences
  • Financing options for the projects
  • Know about the emerging business opportunities
  • Gain first-hand information on strategic decision-making process
  • International norms, standard, executions and challenges etc.

Organiser

The EPC World Media group is a one stop knowledge information hub for Infrastructure, Construction and Realty sector. It strives to promote, propagate and assist the decision and policy makers from government and private organisations along with the technology developers and service providers to enhance and develop their capabilities, policies.

The EPC World Media group facilitates knowledge transfer to grassroots and strengthens their productivity and management capabilities for the benefit of society at large through its key platforms:

Print media

  • EPC World (monthly magazine focusing on Infrastructure & Construction sector development)
  • Projects World

Online media

Events

  • Industry recognition awards – EPC World Awards, Architects’ Choice Awards

(Recognising the Infrastructure & Construction Industry for their contribution to this sector)

  • B2B conference (H2O World, Metrorail World, Rail Vision 2020, Realty India 2012)

For more details on the conference please log on to the:

http://www.epcworld.in/roads

 

Written by ITW Editor · Filed Under Expo & Events 

Project Flow 2012

May 31, 2012

Project Flow 2012

– A CEO’s Conclave for Executing Projects Faster November 23, 2012 – JW Marriott Mumbai – India

ABOUT THE CONFERENCE

Project Flow 2012 is industry leading Global Conference on Project Execution. After 8 Successful Annual Conferences in USA, this is the first time Project Flow Annual Conference will take place in India. Realization Technologies Inc. in association with Cerebral Business Research is pleased to announce Project Flow 2012 – A CEO’s Conclave for Executing Projects Faster to be held on 23rd November 2012 in Mumbai.

While Projects are essential for any enterprise growth, they pose a huge challenge for the enterprise management. Most projects are late, risking ROI while draining management’s attention and causing everyone to multitask between ongoing operations and project management.

This Conclave bring together leaders from industry sectors like Infrastructure, Energy, Aerospace & Defense Maintenance, Consumer Electronics and IT from across India at one Platform to discuss these challenges and review case studies of companies in India and around the world which solved this problem by implementing Synchronized Project Management.

Synchronized Project Management is an emerging standard in project execution. It helps organizations run projects 20-50% faster than industry norms. It has already been implemented by 200+ organizations worldwide such as Boeing, NASA, Lufthansa, HP and SAP, and by Indian companies like Dr. Reddy’s, L&T, Trident, TATA Steel, Vardhman and now across all infrastructure Projects in the state of Bihar, and generated $ 3.5 Billion in cash and profits.

This will be the first of its kind international initiative in India wherein role of top management in Project Management will be discussed in detail. It will also be an opportunity to setup 1-1 meetings with executives who already implemented Synchronized Project Management and achieved dramatic improvement in their projects performance.

CONFERENCE FORMAT

-          Key Note Session

-          Introduction to Synchronized Project Management

-          International and Indian Companies case studies

-          Project Management Scenario – Thoughts of Indian Industry Leaders

-          One to One Meetings

-          Media Briefing and Interviews

-          Networking Dinner

Industry sectors include

Critical Chain
Infrastructure
Manufacturing
Pharmaceuticals
Project Execution
Project Management
Faster Projects
Refinery Expansion
Defense and Aerospace Maintenance

Please visit www.cerebralbusiness.com/projectflow  for details on the event.

FOR SPEAKING OPPORTUNITIES

Please get in touch with
Chander Kant Verma
Email: [email protected]
Call: +91 95409 91011

FOR REGISTRATION / PARTICIPATION

Please get in touch with:

Meghana Vyas
Email: [email protected]
Call: +91 95409 91022

Written by ITW Editor · Filed Under Expo & Events 

Roads And Highways In INDIA, Stratergising Growth And Empowerment

May 31, 2012

Infraline Energy Research & Information Services, an accredited premier service provider of critical business information, industry databases, business intelligence and related services in the energy and infrastructure sector is coming up with second annual edition of conference on the subject Roads and Highways in India: Strategising Growth and Empowerment, on June 28, 2012 at New Delhi.

The conference will provide a platform to discuss the issues on

  • infrastructure quality,
  • quality consultants & contractors, financing,
  • reliability,
  • technology,
  • issues and challenges and
  • way forward for the Roads and Highways industry.

The conference has received support from the National Highway Authority of India and Mr. S K Puri, former Director General & Special Secretary MoRTH will be the Conference Chairperson.

The conference also plans to throw light on issues such as:

  • Current status of Roadways Progress in India
  • Key growth trends in road development
  • Lack of trained and skilled manpower
  • Major acts impacting the sector
  • Bidding process
  • Project scheduling and inherent challenges of execution
  • Risk-return dynamics– Driver for investments
  • Trends in financing road projects
  • Viability Gap Funding
  • Challenges in financing of road projects
  • Effectiveness of EPC vs. PPP mode of awarding projects
  • Upcoming Opportunities in OMT Contracts
  • Mega Highway Projects- Boom or Bust in Indian outlook
  • Emerging concept of equipment rental
  • NHAI’s Plan & Initiative
  • Opportunities in the sector in the 12th Five-Year Plan Period

The conference is targeted at National and State Roads Authorities, Construction Companies, Technology Providers, Regulatory Agencies, Equipment Manufacturers, EPC Contractors, Consultants, Banks and Financial Institutions, Suppliers, Designers, etc.

To register contact:
Kumar Saurabh
Mobile: +91 98998 66251
Email: [email protected]

Written by ITW Editor · Filed Under Expo & Events 

KOREAN FOOD !!

May 29, 2012

Do you live to eat or Eat to live !


Well I am certainly the former kind and not the latter. Life in the highway business takes us from different Dhaba on different highways in India to ones in trying different cuisines in different countries .
During one my recent travels to Korea I had the pleasure of enjoying the mouth watering Korean cuisine .

 

The Free Starters : With Every Korean meal you get some really healthy and yummy starters , and they replenish them as they finish . For the vegetarian friends , all the starters are veg!

 

 

 

 

 

 

 

 

 

 

Bulgogi : This is one the most delicious Korean dishes , it serves with a burner fitted on the table and eaten together with Korean Letuse leaves

 

 

 

 

 

 

 

 

A Typical Korea Spread : The milky stuff in the soup bowl is actually a local alcohol

 

 

 

 

 

 

 

 

Vegetarian Delights: A Special fermented Leave

 

 

 

 

 

 

 

 

A type of Kimchi

 

 

 

 

 

 

 

 

Another fermented Leave preparation

 

 

 

 

 

 

 

 

 

ALL IN ALL KOREAN FOOD TASTES GREAT.IT HAS A LOT OF LEAF DISHES….. YOU PROBABLY WONT FIND THIS ANYWHERE ELSE….

 

Written by ITW Editor · Filed Under Food, Leisure 

NHAI sees drastic drop in bids for road projects

May 28, 2012

The NHAI, responsible for managing a network of highways in India, is expecting the number of pre-qualified bidders for road projects to drop drastically this fiscal as the sector heads for a consolidation phase.

Last year, 99 firms had qualified for the annual pre-qualification process which ensures that companies can submit financial bids instead of going through the two-stage bidding process.

“The market is somewhat indifferent. A couple of companies have defaulted on their financial closures recently. The number of companies may come down but fewer players will emerge stronger,” said a senior official of NHAI, who thinks the time is ripe for a shake-up.

Abhaya Agarwal, executive director and leader PPP, at Ernst and Young, says the current year may see a limited number of projects being put up for award than in the past because fewer detailed project reports (DPRs) got completed.

The official also said a lot of projects might find it extremely difficult to achieve financial closure. “Newer players are coming in and bidding without measuring risks. Some banks are of the view that total project cost calculated is not being subjected to the scrutiny that should be done. We may see bigger companies buying out projects from smaller companies at lower valuation,” said the NHAI official.

Agarwal also said tightening of the liquidity situation has made financing of future projects difficult as banks have exhausted their infrastructure fund and are close to reaching their exposure limit for road funding.

“In addition, financial closure for more than 70% of the NHAI projects is yet to be achieved, the concession agreements for which were signed last year and would require huge funding. Hence, in terms of loan disbursement to the infrastructure sector, we may not see the same rate of expansion in the next two years as we have seen in the past two,” added Agarwal.

Companies like Reliance Infrastructure and IRB Infrastructure, which have a chunk of their order book in the road sector, view this phase as a challenging one.

“Consolidation is due in the sector as roads industry today is fragmented with around 90 players. There are players who have entered with a view to increase order book and are finding it difficult to manage construction challenge. Traffic revenue in projects, which have been bid aggressively, will find it difficult to honour commitments to NHAI premium and debt servicing,” said a Reliance Infrastructure spokesperson.

“The bids have been very aggressive and banks have found it difficult to fund these projects. Financial closures have been made based on over-optimistic revenue models. Yes, the proverbial bubble is ready to burst,” said Virendra Mhaiskar, managing director of IRB Infrasructure Developers Ltd, one of the largest road developers in the country.

Mhaiskar feels that consolidation has already begun with IRB taking over a BOT asset in Tamil Nadu and Essel making an attempt to take over a major player like IVRCL. According to Fitch’s report, the actual first year traffic is usually lower by around 45% in many toll projects.

SOURCE:http://economictimes.indiatimes.com/

Written by ITW Editor · Filed Under NHAI 

Reliance Infra eyes stressed road assets; profit flat

May 28, 2012

Reliance Infrastructure Ltd (R-Infra), an arm of the Anil Ambani-led Reliance Group, is scouting to buy some road projects from developers who have not been able to complete the works due to a lack of money, said chief executive Lalit Jalan.

R-Infra is eyeing around 20 such assets and hopes to conclude some deals this fiscal year, said Jalan while announcing the firm’s March-quarter earnings on Friday.

“There are assets that are two-thirds complete but the developers now have no money,” Jalan said. “Many of them have put their assets on the block.”

On 9 May, for instance, infrastructure company IRB Infrastructure Developers Ltd announced it had acquired MVR Infrastructure and Tollways, a firm that operated a 66-km road between Salem and Karur in Tamil Nadu on the so-called build, operate and transfer (BOT) model.

Jalan said any acquisition will be in-line with the internal rate of return, or IRR, of 20% that R-Infra’s enjoys on its existing road projects portfolio.

R-Infra’s net profit growth was muted due to higher expenses and finance costs. Net profit inched up to Rs.411.46 crore in the quarter ended 31 March from Rs.410.88 crore a year ago and from Rs.408.32 crore in the preceding October-December quarter.

Revenue almost doubled from a year ago to Rs.7,135.31 crore. But finance costs also doubled year-on-year to Rs.419.30 crore. The company’s total expenditure rose 84% from the year-earlier period to Rs.6,740 crore.

Share prices of R-Infra rose 1.86% on BSE on Friday to close at Rs.463.05 apiece. The benchmark Sensex ended the day nearly unchanged at 16,217.82 points.

“R-Infra’s March-quarter results got substantial support from the EPC (engineering, procurement and construction) division, but higher interest costs and other expenses ate into profits,” said Manish Kumar, infrastructure sector analyst at SBICap Securities Ltd.

The rise in interest outgo, according to Jalan, was a result of more of its infrastructure projects coming onstream. R-Infra has long-term debts to the tune of Rs.11,000 crore and a short-term debt of Rs.6,000 crore, he said.

The company’s net profit was marginally below market expectations.

A consensus of R-Infra’s earnings estimates put out by various analysts and compiled by Bloomberg had pegged its net profit at Rs.457 crore. Its revenue, however, surpassed the consensus estimate of Rs.6,130 crore.

For fiscal 2012, R-Infra’s net profit rose marginally to Rs.1,587 crore fromRs.1,552 crore in the previous year. Revenue jumped 59.50% to Rs.24,272 crore.

R-Infra’s EPC and contracts business was the major contributor to its topline and profitability in the January-March quarter.

Revenue from the segment grew around five-fold to Rs.4,141 crore.

Operating profit from the division jumped almost 12-fold to Rs.231crore.

Most of R-Infra’s EPC contracts pertain to power projects being built by Reliance Power Ltd (R-Power), another group firm in which it holds an equity stake. With more of R-Power’s projects progressing on the ground, R-Infra’s EPC business did well.

R-Infra’s EPC order book stood at Rs.17,280 crore as on 31 March.

Kumar of SBICap said that with a large portion of the regulatory overhang on the company’s electricity distribution business being out of the way, its earnings from that business should improve going forward. Regulatory uncertainty largely pertained to certain key approvals that were awaited from the electricity regulatory commissions of Maharashtra and Delhi, including tariff hikes.

Some of the approvals are in place and others are expected shortly, the company said in a statement.

“At current valuations, R-Infra is a more favourable pick than other infrastructure companies,” Kumar said.

On a sequential basis, however, R-Infra’s electricity and the EPC and contracts businesses saw operating profits decline, and losses from the infrastructure business widened.

Net sales from the electricity business fell 7.4% quarter-on-quarter to Rs.2,902 crore.

Jalan said sequentially lower sales from the electricity business was a function of seasonality, and lower segment profits from the business, along with the EPC division, was due to higher allocation of costs on account of these businesses in the final quarter of the fiscal year.

SOURCE:http://www.livemint.com

Written by ITW Editor · Filed Under Reliance 

Ramky Infra Bags Rs.1,248.95 Orders

May 14, 2012

(RTTNews) – Ramky Infrastructure Ltd. said it had bagged new orders aggregating to Rs.1,248.95 crore across the nation covering the State of Arunachal Pradesh, Bihar, Chandigarh, Gujarat, Karnataka, Madhya Pradesh, Odisha, Tamil Nadu, Tripura and West Bengal and across industrial, irrigation, road and power verticals.

Some of the major projects secured by the company are furnished below.

In Arunachal Pradesh, it has secured orders for Rs.192.01 crore – one for Rs.99.42 crore from HSCC (India) Ltd. for strengthening and up-gradation of General Hospital at Naharlagun and another one for Rs.92.59 crore from the Government of Arunachal Pradesh for 2 laning from Yingkiong to Gobuk in Arunachal Pradesh under Arunachal Pradesh package of SARDP-NE.

In Bihar, it has been awarded a project valued Rs.109.38 crore by NTP Ltd. for SG Area Balance Civil Works Package for Barh STPP State-1 (3×660 MW).

In Gujarat it has secured a project for Rs.98.60 crore from Gujarat Water Supply and Sewerage Board for design, build, operate and construct of Kadana Dam based bulk pipe line scheme for Dahod City.

In Madhya Pradesh, the company has been awarded projects totaling Rs.425.46 crore – one for Rs.131.43 crore from Narmada Valley Development Authority for execution of the Nagod (Satna) Br. Canal and its completed distribution system up to 40 hect. Chak of Bargi Diversion project on turnkey basis, and the second one was for Rs.123.08 crore from Narmada Valley Development Authority for execution of the Rewa Branch Canal and Sanaura Sub Branch Canal, including its complete distribution system up to 40 hect. Chak of Bargi Diversion Project on turnkey basis.

The third one was for Rs.87.18 crore from Madhya Pradesh Road Development Corporation Ltd. for regarding, strengthening, widening, maintaining and operating of Jabalpur-Patna-Shahpura Road on BOT (Toll plus Annuity) basis. The concession period for the project is 15 years including two years construction period.

M.P. Paschim Kshetra Vidyut Vitaran Co. Ltd. placed an order for Rs.83.77 crore for supply of materials, survey, installation, testing and commissioning of 33/11kV substation, augmentation of capacity of power transformer and providing additional power transformer in existing 33/11lkV S/s with extension of 33kV and 11kV Bay along with VCB, laying of single circuit/double circuit 33kV and 11kV lines, augmentation of conductor of existing 33kV and 11kV lines and renovation works of existing 33/11kV S/S, installation of new 63 KVA/100 KVA/200 KVA/315 KVA DTRs at identified location along with associated 11kV line.

(RTTNews) – In West Bengal, it had been awarded a project for Rs.152.69 crore by the Government of West Bengal Irrigation & Waterways Department for reconstruction, remodeling & improvement of embankment in Sundarbans and adjoining areas in the districts of North & South 24-Parganas, West Bengal, damaged by severe cyclone ‘Aila’.

At the BSE, Ramky Infrastructure shares are currently trading at Rs.195..40, up 2.25 percent from the previous close.

 

Source: http://www.rttnews.com

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

IRB Infra acquires MVR Tollways for Rs 130 crore

May 14, 2012

IRB Infrastructure said it acquired 100 percent stake in road BOT firm MVR Infrastructure and Tollways in Tamil Nadu for about Rs 130 crore.

“This is the first time that any company has acquired a road BOT company. Going forward, we will continue to look at such opportunities,” IRB Infrastructure Chief Financial Officer Anil Yadav told PTI here.

 

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

Written by ITW Editor · Filed Under BOT, IRB Infra 

ITNL, IRB: Strong project pipeline enhances visibility

May 14, 2012

With ongoing projects getting commissioned and the road ministry setting higher targets, the two companies should be able to deliver robust growth India’s top two road infrastructure companies, IRB Infrastructure Developers Ltd (IRB) and IL&FS Transportation Networks Ltd (ITNL), reported better-than-expected results for the period ending on March 31. Unlike in the other infrastructure segments, companies in the road space have benefited largely from a strong inflow of new orders and improving execution skills. On the flip side, they have seen a drop in profitability due to higher input costs and increase in interest burden.

 

Analysts are hopeful both IRB and ITNL will stand out in the infra space, given that valuations are attractive and the project pipeline strong. For 2011-12, the Ministry of Road Transport and Highways had set a target of awarding contracts to build 7,300 km of roads. Though the ministry awarded projects for only 6,500 km in 2011-12, it was still a commendable job compared with the 5,083 km of projects awarded the year before. For 2012-13, the ministry has set an ambitious target of 8,800 km, which shows that the project pipeline is strong.

INTEREST COST BITES
Rs crore IRB Infra ITNL
Q4′ FY12 FY12 Q4′ FY12 FY12
Net sales 848.0 3130.7 1988.7 5605.6
% change y-o-y 10.6 28.4 19.9 38.5
Ebitda 380.9 1373.5 457.1 1465.6
% change y-o-y 21.0 25.6 10.5 27.0
Ebitda (%) 44.9 43.9 23.0 26.1
Bps change y-o-y 390.0 -100.0 -196.0 -236.0
Interest costs 150.0 550.5 230.8 728.2
% change y-o-y 7.3 54.1 28.9 46.2
Adjusted PAT 120.4 496.0 177.3 497.0
% change y-o-y 17.1 9.6 11.4 14.8
Source: Capitaline

 

IRB Infrastructure
IRB has benefited from its improving execution skills in the construction business and higher revenues from the toll business as a large number of projects went on stream. For 2011-12, revenue from the engineering, procurement and construction (EPC) business grew 36 per cent, followed by 18 per cent growth in revenue from the build-operate-transfer (BOT) segment. However, in the March quarter, the trend shifted with the BOT segment reporting a stronger 21 per cent year-on-year revenue growth, while the EPC sector clocked just eight per cent growth. During the quarter, IRB also announced acquisition of MVR Infrastructure and Tollways for Rs 128 crore, which, it believes, could generate an internal rate of return (IRR) of about 21 per cent (on equity investment). This is far better than the expected IRR in some of the new or upcoming projects. Analysts believe this will directly add to the profitability of the company from 2012-13.

In the current year, analysts expect IRB’s revenue to grow about 20 per cent, led by a strong jump in BOT revenue as about 1,000-1,100 lane km of projects are expected to be operational. Also, the full impact of the 114-km Tumkur project (commissioned in June 2011) will be felt in the current year. In the construction segment, too, growth in revenue could be in the region of 14-18 per cent, backed by a strong order book of Rs 8,500 crore (3.7 times its revenue from the construction business).

In the near term, analysts believe the issue related to a murder investigation, in which chairman and managing director Virendra Mhaiskar has consented to undertake a polygraph test, could keep the share prices under pressure. IRB’s stock, which outperformed the Sensex in the last 12 months (till April 18 when the investigation news broke), has tanked 39 per cent since then to Rs 121.65 currently. Clarity on this issue could be a big boost for the stock as fundamentally the company is well placed to leverage the opportunities in the road segment, say analysts.

“There is a corporate governance issue, given the ongoing investigations. But if one can take that risk, this is a good opportunity to invest given that the company on a fundamental basis is on a strong footing and valuations are attractive,” says Manish Kumar of SBICAP Securities. Its strong balance sheet, strong project profile and leading positioning in the industry make its case strong. Meanwhile, Citi Investment Research in its post-results report has valued IRB’s stock at Rs 238 on a sum of parts basis, including the value of BOT assets at Rs 149 and construction business at Rs 84 a share.

IL&FS Transportation Networks 
ITNL, too, reported a good set of numbers for 2011-12, with 39 per cent growth in revenue. Improvement in execution of some ongoing projects led to higher revenues in the EPC business, which led to the better-than-expected performance. However, net profit grew just 15 per cent, largely affected by a 200-basis point drop in operating profit margins and higher interest cost, which grew 46 per cent in 2011-12 due to debt drawn for projects under construction.

Meanwhile, in the two months of the current year, ITNL secured projects worth Rs 3,269 crore, taking its total order book to Rs 12,057 crore, which provides strong revenue visibility. Importantly, a large part of these projects is under construction and expected to be commissioned over two years.

With new projects getting commissioned, the company’s operational base will increase from 4,300 km to 5,900 km (an increase of 1,600 km) in 2012-13. This also means that in 2012-13, ITNL will report a good increase in revenues in the EPC business, leading to strong growth in overall revenues. In terms of earnings, analysts estimate it to grow by 23 per cent each in FY13 and FY14. “We believe the company is poised for a significant re-rating, as the number of operational road projects double over the next 24 to 30 months, raising per day toll or annuity income to Rs 4.73 crore a day from the existing Rs 1.38 crore a day,” says Abhinav Bhandari of Elara Capital. Most analysts have a ‘buy’ rating on ITNL, which at Rs 169 is trading at six times its FY13 estimated earnings.

 

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

Written by ITW Editor · Filed Under IRB Infra, ITNL 

3,000 km of 2-lane roads a lifeline for smaller builders

May 14, 2012

The National Highway Authority of India (NHAI), the government-backed autonomous manager of highways, plans to build one-third (or 2,800 km) of this fiscal’s target of 8,800 km long of road network in the form of two-lane roads on cash contracts.

JN Singh, member-finance of the NHAI, said, “As most of the two-lane roads lack heavy traffic, the projects would be awarded on EPC (engineering procurement and construction) or cash contract basis rather than on BOT (build-operate-transfer) or BOOT (build, own, operate and transfer) basis.”

The two-lane projects, therefore, may not attract big BOT developers that covet only mega highways that yield higher margins.

So, smaller road construction firms ravaged by stiff competition, margin pressure, high interest cost and stretched balance sheets may find the cash contracts manna from heaven.

For, the two-lane projects may entail work orders worth up to Rs15,000 crore.

A report by Merrill Lynch said pure road contractors such as IVRCL and NCC could benefit.

Agreed Pankaj Kumar, senior analyst at KJMC Capital Market
Services. This fiscal, he said,
could prove to be a good year for BOT players-cum-road contractors such as IVRCL, HCC, Nagarjuna Construction. But pure BOT developers may find the going tough.

Last fiscal, the NHAI awarded 35 projects. All were for four-lane or six-lane roads, and 23 projects garnered premium status, fetching Rs24,200 crore in net present value (NPV) for the NHAI. (NPV is the difference between the present value of cash inflows and outflows.)

Singh said projects this fiscal would not fetch such huge NPV. Value of orders will also decline due to shift to two-lane orders.

The NHAI will fund the two-lane projects with capital raised from tax-free infrastructure bonds.

Land acquisition and annuity projects should not pose a problem as it had raised Rs10,000 crore last fiscal through bonds.

It has also received approval for an additional bond issue of Rs10,000 crore this fiscal.
Besides, a recent report by Motilal Oswal Securities said the NHAI rakes in Rs9,200 crore in cess, Rs3,000 crore in toll collections and Rs3,000 crore in premium, which would help it in meeting recurring EPC obligations and annuity projects.

The report also stated that intense competition in the road sector is likely to ease due to challenging macroeconomic environment and with established players committing their capital to large infrastructure projects.

The road sector may see consolidation as aggressive bidding, lower-than-expected tariffs, rising funding cost and execution delays have considerably lowered returns on projects, the Motilal report added

Source: www.dnaindia.com

Written by ITW Editor · Filed Under EPC, NHAI