- Anil Kumar Singh, Managing Director, APCO Infratech Pvt Ltd
With several successfully completed and ongoing projects, APCO Infratech has created new standards, overcoming the many challenges in the construction space. With diversified experience in roads, power, and industrial projects, the company has also engaged itself in EPC projects. Anil Kumar Singh, Managing Director, APCO Infratech Pvt Ltd, elaborates on the company´s offerings, strategies and challenges faced.
Working across various sectors, which sector contributes the most to your business and what are its growth prospects?
We work across the roads, power and industrial project sectors, among which the roads sector contributes the most. With governmental commitments at the Centre and states to give a fillip to infrastructure development, particularly the highway network; we believe the sector has adequate growth potential over the next 10 to 15 years. FDI, Make in India and similar schemes depend largely on the infrastructure India can provide, besides other facilitations. India as a good global market is bound to attract business from the developed nations in times to come. The potential for development is, therefore, high in the roads sector. APCO will invest in keeping with growth in the sector and the growth within.
What are the major investment areas while executing a project and how are they different across various sectors?
The total project cost (TPC), which is the sum total of various costs, includes the direct cost of construction with defects liability responsibility for EPC, besides the cost of borrowings, interest during construction, etc. Major investment areas include usually the cost of plant and machinery to be deployed on the project, manpower cost including recruitment expenses, cost of facilities at site, commissions, fees and charges for permissions, clearances and approvals, etc. The investments are all alike for power and industrial projects. However, a road project has fewer inventory items but in large magnitude; it is usually the converse in the power and industrial sectors. In terms of plant and machinery in a major roads project with many bridges and structures, the cost is bound to be comparatively much more.
What are the challenges faced in project execution of roads at the policy level? What are the other factors that contribute to project delays and what measures are taken to overcome them?
The compliance to conditions precedent on part of the authority takes considerable time to materialise. Forest clearance for tree cutting, getting the utilities shifted, meeting with the requirements specified for contractor or concessionaire to accomplish in a time bound manner, appointment of IC in time, etc, are beset with much difficulty as procedures are long and time-consuming. Stone aggregates, a major input, are hard to get. In most states, stone mining is either banned or prohibited. The procedure for winning earth for embankment construction is also long. The main natural ingredients, gitti and mitti, are hard to find in most project areas. In terms of technology, there is no lagging behind, thanks to the modern machinery available. We are on a par with developed nations. However, material and labour do present difficulties, particularly natural materials like soil and stone aggregate and local labour.
Rising cost is a major malady. There is no price variations formula in the case of BOT projects and these have to be executed at a stated cost. The cost of manpower also keeps increasing quarterly in minimum wages payable. The increasing cost of diesel and petroleum products has a direct impact on the project cost as does the increase in cost of other materials. Cash flow gaps give rise to working capital costs.
Non-availability of unencumbered sites, delayed payments and consequent strangled cash flow and inclement weather are usually the main reasons for project delays. Apart from making implementable programmes, staying close to the programme and if possible, ahead of it, is of paramount importance. Regular follow-up, feedback, reviews and action plans are the guiding factors to sail safe without running aground.
Please tell us about cost-effective materials used as substitutes and their benefits.
We use materials as substitutes if we are not strictly to conform to given specifications as mandatory. We use Vetiver plantation, fully or partly, in replacement of conventional stone pitching on side slopes of high embankments. This helps cutting cost by one tenth to one fifteenth, depending on project location. Moreover, this is environment-friendly and adds to the green cover. We also use cement treated sub base (CTSB) and cement treated base course (CTBC), which help in reducing the thickness of the costly bituminous road crust, for the same amount of traffic load, by approximately one tenth, with conspicuous benefit of reduction in bitumen, which is a petroleum product. Besides, we also use fly-ash in place of borrowed earth for construction of embankment.
Tell us about newly innovated technologies used in your projects and their advantages.
Highway construction like tunnel construction, and for that matter, the construction of buildings and other engineering projects is an evolving technology. There were no metal beam crash barriers in the country installed on shoulders of high embankment some 20 years back, neither was there road marking with thermoplastic paint; reflective road signs in use were hardly seen. All these are in abundant use these days improving safety for road users. In terms of road making plant and equipment, all the old and hackneyed machinery have been replaced by new state-of-the-art machinery. The metal beam crash barrier is getting phased-out, yielding place to metal strand crash barrier; we have started using this in our projects. The advantages of deploying the latest equipment and instruments in our projects are either in terms of cost-saving or time-saving or getting a much better performance output or a combination of all of these.
What norms are followed to ensure safety on site? How much does the company annually invest in safety and skilled labour?
Highway safety and engineering project safety measures are well-defined. Safety of staff and workers, road users, safety of plant and machinery and the constructed elements are important. Routine safety drills are conducted and prescribed precautions and measures adhered to, to avoid fatality, injuries and near-miss incidents.
Is there any recently completed project you would highlight as a challenging, yet rewarding one, and why?
The project of widening two lanes with paved shoulder of the Khagaria-Purnea Road from km 270 to km 410 in the state of Bihar. This140-km project was completed five months ahead of schedule, in spite of land constraints, lack of availability of stone mining facility in Bihar, increased cost of diesel and petroleum products, incessant monsoon rains, inaccessibility of earth owing to flooding, cash flow constraints and local issues. The completion depended on a combination of strategies, alternate available solutions, determination to get ahead and bridging cash flow gaps.
Please tell us your plans to expand in the DBFOT space and what impact it will have on the company´s growth.
The company does look for expansion in the concession portfolio and our target has been achieved to an extent. Projects in the DBFOT space call for financing from commercial lenders. There are players for each role with individual and collective interests. However, central to the whole gamut, is the project that needs to be completed within a stated cost and time. If these two-end objectives are achieved, all the players including ourselves are happy. As long as there is room and reason for everyone to smile, growth is an assured end product.
Do you have any plans to expand in the power and industrial space?
We have experience in both these areas. There are recently completed projects as well as projects in the completion stage. A ´quote´ or ´no quote´ decision depends on the project´s features, such as size, location, spare capacity, etc. A portfolio does help. Experienced areas of operation are safe zones.
How was the company´s performance in the last fiscal? With the government focusing on EPC projects, what are your growth prospects for the next fiscal?
The last fiscal was good but it could have been better. The new EPC format is a mixture of a cash project and a BOT-type project. There is time available as the development period is prior to the appointed date. This is an advantage as opposed to cash projects, though there is a performance-linked maintenance liability period with payment. There is scope for value engineering, unlike in the case of cash projects. We are already engaged in one such EPC project that has taken off the ground. We view the prospects positively with hope.
Year of establishment: 1992
Top management: Anil Kumar Singh, Managing Director; Vinod Singh, Joint Managing Director; RP Singh, Director
Areas of operation: Roads, power and industrial projects
No. of employees: 1,495
Centres of operation: Lucknow and Gurgaon
Completed projects: 8
Ongoing projects: 13
Upcoming projects: 1
Turnover: Rs1,166 crore
Order book: Rs4,500 crore
For suggestions on leading contractors in India, write in at feedback@ConstructionWorld.in