The company has also executed concession agreement with NHAI for another BOT project
IRB Infrastructure Developers Ltd (“IRB”), one of the largest BOT road developers in India, announced that it has commenced construction on Goa/Karnataka Border to Kundapur BOT Project. The company has also executed concession agreement with NHAI for another BOT project viz. Four Laning of Solapur to Yedeshi section of NH-211.
Goa/Karnataka Border to Kundapur BOT Project is being implemented by the wholly-owned subsidiary of the company viz. IRB Westcoast Tollway Pvt. Ltd. This SPV has now received an Appointed Date in terms of the Concession Agreement executed with NHAI. The project involves four laning of NH17 from Km 93.700 to Km 283.300 in the State of Karnataka. The project cost of the company is approximately Rs. 2,639 crores and the concession period is 28 years. Construction period for the project is 910 days. IRB has sought Rs. 536 crores as viability gap funding from NHAI. The SPV has already achieved financial closure and tied up project finance of Rs. 1,406 crores from a consortium of public sector banks.
IRB has also informed that it’s another wholly-owned subsidiary viz. Solapur Yedeshi Tollway Pvt. Ltd. has executed concession agreement with NHAI for the project of four laning of Solapur to Yedeshi section of NH-211 in Maharashtra. The estimated project cost is approximately Rs. 1,500 crores. IRB has sought Rs. 189 crores as viability gap funding from NHAI for the project. Concession period is 29 years for the project and construction period is 910 days.
IRB Infrastructure Ltd has emerged as the preferred bidder for Rs 1,500 crore highway development contract for four-laning of the 98.7 km stretch between Solapur and Yedeshi in Maharashtra from the National Highways Authority of India (NHAI).
A senior NHAI official said, “With the drying up of appetite for the toll-based projects in the last one year, the government had skewed its contract awards towards normal engineering, procurement construction (EPC) basis. Projects like this give an opportunity for asset development in addition to the growth in size for developers.”
The toll project, coming after a gap of almost a year, will be developed on a design build finance operate and transfer model by IRB.
IRB has sought a viability gap funding (VGF) of Rs 189 crore — about 12% of the capital cost of the project — from the NHAI.
In the toll model of the highway funding, the government offers VGF, or upfront grant, to developers, capped at 40% of the project cost. The developer raises the remaining amount in a 60:40 debt equity ratio.
IRB plans to develop the Solapur-Yedeshi section in 910 days. The concession period for this project is 29 years, which means IRB will retain the right on toll revenues from the project for 29 years before transferring the asset to the government.
This project will add up to the companies’ present construction order book of Rs 5,050 crore, which is to be executed in the next two to three years.
The company has 18 toll projects, of which 16 are operational.
(The helper of a driver rests on top of his parked truck along a busy highway on the outskirts of New Delhi June 15, 2012.)
(Reuters) – The chairman of India’s largest road construction firm IRB Infrastructure Developers Ltd (IRBI.NS) urged the government to invite companies to bid to build and operate dozens of new highways, a step regarded as crucial to economic growth.
India sees ramping up the construction of new roads, power plants and ports as crucial to making its businesses more internationally competitive and lifting economic growth out of its worst slowdown in a decade.
But the private sector’s efforts to build new projects have been derailed by problems ranging from coal and gas supply shortages in the power sector to a throttling bureaucracy and a lack of bank funding in the roads sector.
IRB needs to win new government contracts in order to reverse two consecutive falls in quarterly net profit, Chairman Virendra Mhaiskar told Reuters.
Mhaiskar, who until this year was in the Forbes India list of the country’s 100 richest people, said the state-run National Highways Authority of India (NHAI) should offer up for bidding 20-30 highways previously awarded to companies but which failed to take off.
He said in a phone interview he would like to make bids for new projects worth up to 40 billion rupees in the next 3-6 months to prop up an order book that has shrunk to 70 billion rupees from about 84 billion in May.
“Profit growth will entirely depend on new orders,” Mhaiskar said. “Because if they’re going to exhaust our order book pipeline, then the challenge on the profit remains.”
Bank of America-Merrill Lynch and Angel Broking say IRB is in a strong position to pick up new orders and both have a “buy” rating on IRB’s stock. However, BoA-ML in November cited a slowdown in new project orders as a concern.
IRB, India’s largest road construction firm by market value, posted a 12 per cent drop in net profit to 1.1 billion rupees in the July-Sept quarter, compared with the same period last year. Its net debt to equity ratio is 2.55:1.
“PRIME CONCERN”
India awarded under 2,000 km (1,240 miles) worth of new road construction contracts in the last fiscal year, which ended in March, against a target of 9,500 km (5,900 miles).
“We have seen very little orders getting announced by the NHAI in the last whole of the year. So that remains a prime concern,” Mhaiskar said.
“We understand their views as well, that they feel that there is sluggishness and they may not get a good response. But the point is: one needs to keep the good work going,” he said.
The NHAI chairman did not respond to a request for comment.
The government has pushed a public-private-partnership (PPP) construction model in which developers bid for projects in exchange for sharing some of the revenue with the state – a way of getting investment without emptying the public purse.
Besides delay in awarding government projects, an economic slowdown and various mining bans in India mean there are fewer cars and trucks than there might have been on the roads to pay tolls – eating into companies’ revenues.
Two of India’s best known infrastructure companies, GMR (GMRI.NS) and GVK (GVKP.NS), have moved to exit high-profile road projects. In response, the government is working on a formula to ease the payments that companies have to pay to the state in exchange for operating highways.
Recent projects have been designed mainly on a model known as “build-operate-transfer” (BOT), where companies build and own highways for a fixed period before handing them over to the government.
“These days bankers have become more cautious in lending to road BOT projects. They want 80 percent of the land in possession before the financial closure of the project could be achieved,” said Viral Shah, an analyst at Angel Broking. (Editing by Sumeet Chatterjee and Pravin Char)
KOLHAPUR: Collection at the nine toll plazas across the city was disrupted on Thursday as members of the Kolhapur Anti-Toll Committee (KATC) staged protests and formed human chains to stop road construction company, Ideal Road Builders (IRB), from taking the charges from road users.The toll collection resumed at two plazas after protesters dispersed in the afternoon but was suspended again after they returned.
In September, the Bombay high court had directed the district police to provide security at the toll plazas. Official sources said around 700 policemen, along with 150 security personnel from the State Reserve Police Force, were deployed at sensitive points in the city and at all the nine toll plazas.
A senior Kolhapur police official said the IRB employees had been instructed by their superiors not to take any action against the protesters during Thursday’s agitations. “Several senior leaders from all political parties participated in the protests and we felt it was not advisable for the IRB staff to collect toll,” he said.
A couple of hundred protesters, most of them from the rural parts of the district, had gathered at the Shiroli toll plaza. Addressing the protesters here, N D Patil, veteran leader and president of the Peasants and Workers Party, said, “The state government has deployed a huge police force to crush this agitation. But we will not be deterred by this. We will not allow the IRB to collect toll.”
The other toll plazas are located at Shiye, Kagal Naka, Sarnobatwadi, Phulewadi, Kalamba, Puikhadi, Uchgaon and R K Nagar.
Chandradip Narke, Shiv Sena MLA from Karvir, led the protest at the Phulewadi toll plaza, which was burnt down during the agitation in May 2013. Around 600 people participated in the protests here.
“People from the rural parts of the district, who commute to the city everyday, have been severely inconvenienced by the toll collection. The poor from the rural areas should not be made to pay toll for roads that are meant for people living in the cities. Despite the issue being raised in the legislative assembly, the state government has kept silent on this issue. Toll has been imposed on Kolhapur due to a nexus between some of the ruling leaders and the IRB,” Narke alleged.
Sadashiv Mandalik, MP, said, “The toll collection process, if allowed, will go on for 30 years according to the agreement. We should try to resist every attempt to collect toll.”
KATC member Baba Indulkar demanded the arrest of the IRB employees, saying they were supporting “illegal work” carried out by the company. “We had filed a criminal complaint against the IRB, which is responsible for the poor quality of roads and for posing a danger to people’s lives. If the police do not arrest them, the public can do so and hand them over to the police. We arrested Vijay Patil, an employee at the Kagal toll plaza, and handed him over to the police inspector of Rajarampuri,” he said.
When several protesters dispersed after 1 pm, the IRB employees started collecting toll at Kagal (from 10 vehicles) and Uchgaon (three vehicles). However, when the protesters got wind of this, they returned to these plazas and the toll collection was discontinued.
Meanwhile, the IRB has issued a public notice, stating that toll collection would be beneficial for the development of the city. The notice states that the company had moved the Bombay HC due to delays in toll collection because of protests by some city-based organizations, who had “spread misconceptions” about the IRB project.
The IRB notice reads: “Toll collection is important since the internal roads of the city will be maintained for the next 30 years through the revenue earned in this process. The HC had given its directive after it studied our stand; we have completed over 95% of the road construction work. The company has submitted a Rs 25-crore bank guarantee with the district collector as a security deposit for completing the remaining 5% of the work.”
Timeline of the agitation
July 2008: Agreement between Kolhapur Municipal Corporation, Ideal Road Builders and Maharashtra State Road Development Corporation to construct 49.99 km of roads in the city at an expense of Rs 220 crore
November 2008: Agitation by social workers on the issue of utility shifting
January 2011: IRB claims completion of construction of the roads
December 2011: State government floats gazetteer allowing IRB to collect toll
January 2012: KATC opposes the state government’s order. Three weeks of mass agitation is followed by the burning down of booths at seven of the nine toll plazas
March 2012: State government constitutes a three-member committee to check the quality of roads built by IRB
December 2012: Chief secretary of state Jayantkumar Banthia allows IRB to collect toll
March 2013: The committee submits its report to the state government
April 2013: KATC opposes the report and gears up for agitation, burning down three toll booths across the city
May 2013: The state government revokes the stay on the proposed toll collection
May 25, 2013: KATC once again launches agitations. Protest at Shiroli toll booth, heavy lathicharge by police administration. Violent mob vandalises three toll booths at Shiroli, Phulewadi, Bawda
July 7, 2013: The anti-toll committee organises a rally against the state government’s decision to revoke the stay on toll
September 26, 2013: The HC directs the district police administration to provide security to IRB for toll collection
October 17, 2013: KATC forms human chain across the city to stop the toll collection
KOLHAPUR: The city has come under a thick security blanket with police making elaborate arrangements to avoid any untoward incident during Thursday’s protests by the Kolhapur Anti-Toll Committee in protest against the government’s decision to go ahead with collection of toll on the inter-city roads.
Around 700 policemen with 150 sub-inspectors and inspectors, three officers in the rank of the deputy superintendent and a one company of State Reserve Police Force have been deployed at the vulnerable points, including nine toll plazas, in the city.
Superintendent of police Vijaysingh Jadhav on Wednesday said, “According to the high court’s order, we will provide protection to the IRB Company for toll collection. There are nine toll plazas in the city and the police will be deployed at all the booths from Thursday. Our duty is to maintain law and order and we are well prepared. We will arrest anybody trying to violate law and order situation or create any kind of disturbance that may affect law and order situation in city. Those arrested will be kept at Yerawada jail because the two jails in the district Kalamba jail and a sub-jail at Bindu chowk are full to their capacity.”
He had called a meeting of all police officers and asked them to take strict actions against those trying to trespass or loiter around toll plazas in groups. The district administration has already issued prohibitory orders and Jadhav has asked the police to take action against anybody violating the directives.
The Bombay high court had directed the state government and the district administration to provide police protection to M/s IRB Kolhapur Integrated Road Development Company to start toll collection in the city.
The IRB had filed a writ petition (6646/2013) in the high court to seek an appropriate writ, direction and order and direct the state government and the police department to provide adequate protection for toll collection. The court asked the state government and the police department to ensure protection at each toll plaza and all other establishments under the Kolhapur Integrated Road Development Project.
A high court bench of Justice V M Kanade and Justice S C Gupte passed the order on September 26 and has scheduled the next hearing on October 21.
The police, in a letter dated May 23, 2013, had expressed their inability to provide immediate police protection, because a large police force would be required for the purpose.
(RB Infra today announced it has commenced operations on its Rs 1,733-crore Jaipur-Deoli build-operate-transfer (BOT) project.)
MUMBAI: IRB Infrastructure Developers today announced it has commenced operations on its Rs 1,733-crore Jaipur-Deoli build-operate-transfer (BOT) project.Implemented by its wholly-owned special purpose vehicle called IRB Jaipur Deoli Tollways, the company has begun partial toll collection from September 27, a statement said.
The company had and sought viability gap funding of Rs 306 crore from the National Highways Authority of India ( NHAI). The concession period for the project is 25 years.
Maharashtra’s ambitious Rs.9630 crore Mumbai Trans Harbour Link (MTHL) project will have one less bidder as IRB infrastructure developers’ ltd has decided to withdraw from the bidding process. IRB has written a letter to the MMRDA and the Chief Minister of Maharashtra saying they have decided to withdraw from the MTHL project because of bad experience on some other infrastructure projects in the state.In the letter Virendra Mhaiskar Chairman IRB has said, “We deeply regret to inform you that we are unable to participate in the bidding process of the project and the reasons are beyond the boundaries of this project. Unfortunately the experience that we have had in one of the infrastructure projects in Maharashtra in the city of Kolhapur has shattered our confidence to invest in the urban infrastructure projects especially in the state of Maharashtra.”
The central government has sanctioned the Viability Gap Funding (VGF) of Rs.1920 crore for the Rs.9630 crore MTHL which will connect South Mumbai to Navi Mumbai directly. Many Indian and international companies participated in the pre-qualification bids for the MTHL. The Mumbai Metropolitan Region Development Authority (MMRDA) had shortlisted 5 consortia M/s. CINTRA – SOMA -SREI, M/s. Gammon-OHL Concessions-G.S. Engineering, M/s. GMR-L & T Ltd-Samsung, M/s.IRB-Hyundai and M/s.Tata Realty and Infrastructure Limited-Autostrade-Vinci Concessions.
The MTHL is expected to carry more than 62,000 passenger car units in the year 2019 and an annual growth of about 5% is estimated. MMRDA has also undertaken a few additional corridors to facilitate the anticipated traffic dispersal.
IRB Infra subsidiary in concession agreement with NHAI for four laning project on DBFOT basis
IRB Infrastructure Developers Ltd has informed BSE that Company’s wholly-owned subsidiary Company viz. IRB Westcoast Tollway Pvt. Ltd, (“SPV”) has executed Concession Agreement with NHAI for the project of Four Laning of Goa/Karnataka Border to Kundapur section of NH-17 from Km 93.700 to Km 283.300 in the State of Karnataka under NHDP phase IV on Design, Build, Finance, Operate and Transfer (Toll) Basis (the “Project”).The Project is to be executed on DBFOT pattern with a concession period of 28 years. Scope of work involves upgradation of existing section of NH-17 between Goa/Karnataka Border and Kundapur from existing 2 lane highway to 4 lane highway. Estimated project cost is approx. Rs. 2600 crores and the construction is to be completed within 910 days from the appointed date. The SPV will get tolling rights on NH – 17 upon completion of construction. The grant sought by the SPV from NHAI is Rs. 536.22 crores.Source : BSE
IRB Infra bags order for 4-laning road project, stock gains
Shares of IRB Infrastructure Developers gained more than 2 percent on Tuesday after the company’s subsidiary IRB Westcoast Tollway (special purpose vehicle) has executed concession agreement with NHAI for the road project.
The project includes construction of four laning of Goa/Karnataka border to Kundapur section of NH-17 in the State of Karnataka on design, build, finance, operate and transfer (toll) basis.
“Estimated cost of the project is approximately Rs 2,600 crore and the construction is to be completed within 910 days from the appointed date,” the company said in a release sent to exchanges.
The SPV will get tolling rights on NH-17 upon completion of construction. The grant sought by the SPV from NHAI is Rs 536.22 crore.
At 14:09 hours IST, shares went up 0.72 percent to Rs 112.30 on Bombay Stock Exchange.
Market capitalisation of the company currently stands at Rs 3,732.45 crore.
Dattatraya Pandurang Mhaiskar, the original promoter of IRB, might be insisting that hisRs.164 crore “loan” toNitin Gadkari’sPurti Group was out of his personal savings.
But it cannot be denied that the projects given to IRB duringGadkari’stenure as the Maharashtra PWD minister played a significant role in the company’s rise.
Mhaiskar, a civil engineer, started IRBPL as a private company in 1977. Even though the company did a number of odd road construction projects during the first 18 years of its existence, the turning point came in 1995, when it signed the concession agreement for the first phase of the Thane Bhiwandi Bypass, its first Build-Operate-Transfer (BOT) project.
Incidentally, it was in 1995 that Gadkari became the Maharashtra PWD minister.
Between 1995 and 1999, the years Gadkari was at the helm of the state’s PWD ministry, the Mhaiskars got a flurry of big road construction contracts on a BOT basis. It’s completion of the Thane Bhiwandi bypass within two years worked as an advantage and it got contracts for the construction of a bridge over Patalganga river, the Khambatki Ghat project, the Kaman Paygaon project and the Bhiwandi Wada project during this period.
Gadkari emerged as one of the major champions of the BOT model and IRB was one of the main companies that benefited from the system.
During this period, Gadkari is said to have come into conflict with the then powerful Union minister Pramod Mahajan, over the Mumbai-Pune expressway project. It is believed Mahajan and Shiv Sena chief Bal Thackeray wanted the project to be given to a prominent industrial house but Gadkari pushed the case of the Maharashtra State Road Development Corporation.
Even this worked out in IRB’s advantage in the long run as it got the contract for maintenance and toll collection in 2004.
From a small company started by a civil engineer, IRB is one of the country’s largest road construction and infrastructure companies today.
It’s hardly surprising that the group’s USP is its ability to get crucial government contracts.
According to a report by PINC research, “IRB’s unique ability to win bids at competitive levels is a trademark”. The total worth of the contracts IRB got during Gadkari’s tenure as the PWD minister is estimated to be aboutRs.60 crore.
Gadkari, on his part, denies granting any special favours to IRB. “I gave numerous contracts when I was PWD minister as the maximum road construction took place during my time. I have no stake in IRB. These are just efforts to malign me,” Gadkari said. He also maintains that there is nothing wrong if IRBPL invested in the Purti Group. “Anyway I am no longer the chairman of Purti Group,” he said.
Ashutosh Kumar
