Vijay Agrawal writes about the first beneficiaries of PM’s Rs 20 tn package. May 2020
At present, we have projects worth Rs 1,400 crore in hand. Recently, we bagged a project of operation, maintenance and transfer for the 205-km Guwahati bypass; we will operate it for nine years. The project cost is Rs 200 crore of which our ROI will be Rs 100 crore per annum through toll collection. With an annual increment of 10 per cent, the total revenue is expected to be Rs 1,500 crore. Of this, we will pay Rs 41.86 crore to the National Highways Authority of India, which will also increase by 10 per cent per annum, thus amounting to Rs 550-600 crore. The three toll plazas on the highway will be constructed in-house.
Which of these two models - EPC and PPP - do you prefer and why?
EPC has been our forte for the past 30-35 years; however, it has its own shortcomings. For instance, land acquisitions by government bodies get frequently delayed, which delays project implementation. This increases costs, resulting in raised debts on contracting companies. According to us, a combination of EPC-DBFT model for such projects is the best solution. However, many projects are not viable on a DBFT basis and need to be undertaken using EPC only. The new government is laying emphasis on infrastructure, for which we will be bidding in future. Also, we have put in our bid for the Siliguri Connectivity project, which is being finalised.
You have constructed India´s first Greenfield BOT project on the National Highways, the Udaipur bypass...
The project was completed within 18 months against the stipulated time of 36 months, mainly because the land provided by the government was readily available. As it was the first BOT project, we received good government support. Apart from land and financial problems and EPC contractors, such projects generally have no other reasons for delay.
How challenging has it been to execute government-owned projects?
In every government project, dispute resolution is slow. The process includes dispute resolution boards, followed by arbitration, which is both time and cost consuming, and last, the judiciary, thus delaying land acquisition by 10-12 years. Hopefully, the government will launch a special tribunal to cut this process short to one to two years. The decision of such a tribunal should be final and unchallenged.
Any ongoing or new projects?
Ongoing projects include the construction of a Rs 83.19-crore, two-lane highway in Mizoram; Rs 1,064-crore four-laning of NH-30 in Bihar; and rehabilitation, upgradation and widening of existing carriageway under the Punjab Infrastructure Development Board and Public Works Department worth Rs 180 crore.
How much do you invest in construction equipment?
In the current fiscal, we have invested Rs 30 crore in purchase of equipment.
Tell us about your presence in the mining sector. How has the slowdown in the past couple of years affected your business?
In mining, our turnover has come down substantially. We are waiting for policy changes by the new government. The major barrier of forest clearance and agitation by villagers is expected to be resolved to a great extent. Moreover, dealing with the mines via auction, as suggested by the Supreme Court, will get the sector back to action. We are waiting to see if the auctions will be open only to builders with power plants or to all.
And how about the real estate projects that you are executing?
Ongoing projects include the Rs 252.48-crore Atlanta Enclave building project in Thane, spread across 6 lakh sq ft, along with a 5-lakh-sq-ft project in Jodhpur and another in Delhi. At present, we do not want to invest in Tier-II and Tier-III cities as we feel there is no demand in these pockets yet.
How much does infrastructure, mining and real estate contribute to your overall business individually?
The revenue till March 2014 from our infrastructure segment was 97.5 per cent. As we work in JVs in real estate, the sector contributes as less as 2.5 per cent. For the quarter ending June, infrastructure was 99 per cent, the rest being realty. Our mining operations are frozen at present.
How do you view the company´s performance in FY14-15? Also, what are your plans for the company going forward?
Looking at the policies of the new government, we foresee a huge jump in our EPC business. Moreover, our debt being comparatively low û Rs 1,150 crore, of which we have availed Rs 650 crore - we do not wish to sell any assets, or seek any additional funding. Further, we plan to venture into tourism by constructing a 2,500-acre entertainment city in Surat. It will comprise five theme parks, studios, hotels and beach parks. The MoU has already been signed with the Gujarat Government in 2011 and land will be allotted sometime this year.
Year of establishment: 1984
Top management (Promoters): Rajhoo Bbarot and Rikiin Bbarot
No. of employees: Above 400
Centre(s) of operation: Pan-India
Ongoing projects: BOT projects - Ropar and Bihar
Upcoming projects: BOT projects - Assam or Guwahati
Completed projects: BOT Projects - Mumbra and Nagpur
Turnover: Rs.312 crore as on March 2014
Current order book: Rs.1,400 crore
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