Puzzolana bets on annuity road projects

November 26, 2012

Construction equipment major Puzzolana is expecting the government’s proposal to allot highway projects to contractors on an annuity basis instead of build, operate, transfer (BOT) basis to turn around the road sector.

Puzzolana, which has about 45% share in the Rs1,200 crore construction equipment market, depends on the highways builders for bulk of its equipment sales.

“Till 2008, we were recording about 100% growth. However, for the last 2-3 years, the growth has been 10-15%. The activity in the road sector particularly the highways has been sluggish due to a variety of problems related to the project execution. The construction companies have also been facing problems in financial closures,” Abhijeet Pai, managing director of Puzzolana group, said.

According to him, there are indications that the government would now look at allotting 70-75% of the proposed 15,000 km roads on annuity and operation & maintenance basis. “The share of BOT projects would significantly come down, thereby decongesting the sector. Currently, there are more BOT projects than the annuity. Once this shift takes place,all contracts would be on EPC basis and the sector would get relief from financial troubles,” he said.

To address the changing market conditions, Puzzolana will unveil a new sander equipment at the Bauma Conexpo Show – BC India 2013 at Mumbai in February.

Source: http://www.dnaindia.com