- Jayant Mhaiskar, Chairman and Managing Director, MEP Infrastructure Developers
MEP Infrastructure commands a significant market share of India's HAM market with a basket of 10 projects in Maharashtra and Gujarat valued at Rs 79.42 billion covering 2,144 lane km. Jayant Mhaiskar, Chairman and Managing Director, MEP Infrastructure Developers, shares more on the company's projects and strategies.
How has the change in NHAI awarding projects from BOT to EPC and HAM helped companies?
As far as concessionaires are concerned, HAM is a good model as there is no persistent risk of a tariff risk in case of BOT toll. What is also important is that the capital required for HAM projects is relatively lower than the conventional BOT toll, which allows the concessionaire to bid for more projects in terms of capital adequacy and get better returns within the timeframe. As far as MEP is concerned, we started bidding on HAM in late 2015-early 2016 wherein we bagged around six projects, which the company is currently executing under different construction phases. The original portfolio was close to around Rs 40 billion; financial closure is done and construction is on. Then, we added another four projects from Maharashtra in March FY18 aggregating to another Rs 40 billion. This has taken the total tally to Rs 82 billion of the actual order book; construction needs to be completed over the next two to three years.
Tell us about the key strategy applied by the company while bidding for its projects in FY17-18.
As far as bidding is concerned, one aspect is the demography of the project; second is the availability of resources; and third is availability of manpower, which is important to execute a large number of projects.
Please list your recently bagged projects under NHAI.
We have bagged four HAM projects from NHAI in FY18 in Maharashtra - Ausa-Chakur, Chakur-Loha, Loha-Waranga and Thane-Vadape - aggregating to Rs 41.04 billion covering 1,084 lane km. For these, we expect to complete financial closure by October, after which we should be able to start work. The company's total CAPEX on the existing portfolio of projects is around Rs 5.30 billion. For the new set of projects bagged, we will need to do roughly around Rs 750 million-10 billion of additional CAPEX in line with the requirement of the project.
Are you looking at executing projects in JV, and why?
All our 10 ongoing projects are being executed in JV. For the first six projects, we have a Spanish JV; for the last four projects, we have a Chinese JV. Such JVs add value as it helps in technical qualification for the bidding and technical knowhow, where the technical partner can do better designing and engineering, which allows the overall cost to be controlled or reduced.
How do you intend to raise funds for these projects?
MEP is a listed company for the past three years. The company completed a QIP of Rs 1.65 billion this April. So currently we are adequately funded in terms of existing projects to be executed.
Tell us about the company's performance in FY2017-18. And considering the current market and opportunities, what are your expectations for FY 18-19?
In March 2018, we achieved a topline of Rs 23.22 billion, which includes consolidated revenues of EPC and tolling, which the company also does with a TOT of Rs 70 crore. Also, with the current order book, we expect a topline of close to Rs 30 billion plus on a consolidated basis and profitability will be commensurate to the actual topline.
