- Arvind Patel, Managing Director, Patel Infrastructure
In 2017-18, Vadodara-based Patel Infrastructure made bids for selective HAM projects in which competition was lower. (We were lucky to bag four HAM projects at rates much higher than NHAI's estimated cost, says Arvind Patel, Managing Director, Patel Infrastructure. He shares more on the company's projects and expected growth.
How has the change in NHAI awarding projects from BOT to EPC and HAM helped companies?
Three to four years ago, NHAI focused on awarding road projects on BOT basis. In BOT, many developers got hit on account of less than estimated traffic and toll revenue. Now, NHAI is awarding most projects on HAM or EPC basis. In both models, revenue is certain and not dependent on toll collection. Banks and other financial institutions are also coming forward to fund HAM projects as there is no revenue risk and NHAI involvement in project supervision has increased as it is funding 40 per cent of the project in the form of a grant during construction period. Profitability in HAM projects will increase on account of less competition and sensible bidding by contractors.
List your recently bagged NHAI projects and related requirements in terms of equipment, technologies and materials.
We are procuring the latest world-class construction equipment for project execution. As a policy, we use our own machinery and avoid hired equipment to ensure quality and speedy execution. A substantial part of the machinery is already being procured or transferred from existing projects.
Are you looking at executing projects in a JV, and why?
Our company is qualified to bid for over Rs 12 billion of projects as a single bidder. So we are qualified for most NHAI and MoRTH projects. In case an opportunity comes for larger projects, we are open to partner with respectable players.
How do you intend to raise funds for these projects?
Part of the equity requirement will be funded through IPO. We have SEBI approval for an IPO and will hit the market soon. The balance equity requirement will be met through internal accruals and surplus from an existing SPV.
Tell us about the company's performance in FY2017-18, and your expectations for FY18-19?
Our company has capitalised on the Centre's focus on the road sector; this has strengthened our order book in FY2017-18. All our new projects are at the starting phase. In addition to existing orders, we will bid for new projects on a selective basis.