EPC awards are trending in roads

01 Mar 2019 Editorial Team

Going forward, EPC will remain the preferred mode of bidding.

Source: Equirus Capital

According to Vijay Agrawal, Executive Director, Equirus Capital, “In the past, lenders have given bank guarantees (BGs), which have been devolved owing to workmanship issues and dispute with authorities. Hence, now bankers are cautious in issuing BGs.” Around nine public sector banks (PSBs) are in Prompt Corrective Action (PCA). Hence, there is delay in receiving BGs or working capital because of a liquidity-starved banking system growing increasingly discomforted by recent market events. Banks are thus looking for healthier credits.

Nonetheless, Agrawal believes many financial instruments and credit enhancement comfort structures are available in the market today for players to survive this temporary glitch. “Further, EPC is the short term way to go forward as fresh equity tie-ups take some time and banks are not willing to lend to BOT or HAM projects,” he reasons. Hence, the mindset has temporarily changed in favour of the EPC model.

Non-fund based (NFB) exposure to the construction sector has grown at a CAGR of 11.5 per cent over the past four years and stands at over Rs 1 trillion at present, compared to Rs 900 billion of fund-based exposure. Over two-thirds of the NFB exposure is from public-sector banks, of which more than 20 per cent is from the 11 banks under PCA at present. Including the infrastructure sector, the total NFB exposure of banks is close to Rs 4 trillion. Further, the change in national highway EPC contracts since 2014 involving a longer defects liability period (increased from two years to four years) will also elongate the BG release cycle.

Sharing ICRA estimates, Rajeshwar Burla, Assistant Vice President & Associate Head-Corporate Ratings, ICRA, predicts the construction sector will require incremental BGs of Rs 150-200 billion per annum over the next three to four years. This will require additional collateral of Rs 30-60 billion. “Given that many mid-sized players have been able to secure multiple projects, getting the BG limits enhanced and arranging adequate collateral could become challenging and constrain them from taking up additional projects,” he reasons. “At the macro level, limited availability of BGs could also constrain pace of infrastructure development.”

SHRIYAL SETHUMADHAVAN

Going forward, EPC will remain the preferred mode of bidding.Source: Equirus CapitalAccording to Vijay Agrawal, Executive Director, Equirus Capital, “In the past, lenders have given bank guarantees (BGs), which have been devolved owing to workmanship issues and dispute with authorities. Hence, now bankers are cautious in issuing BGs.” Around nine public sector banks (PSBs) are in Prompt Corrective Action (PCA). Hence, there is delay in receiving BGs or working capital because of a liquidity-starved banking system growing increasingly discomforted by recent market events. Banks are thus looking for healthier credits. Nonetheless, Agrawal believes many financial instruments and credit enhancement comfort structures are available in the market today for players to survive this temporary glitch. “Further, EPC is the short term way to go forward as fresh equity tie-ups take some time and banks are not willing to lend to BOT or HAM projects,” he reasons. Hence, the mindset has temporarily changed in favour of the EPC model.Non-fund based (NFB) exposure to the construction sector has grown at a CAGR of 11.5 per cent over the past four years and stands at over Rs 1 trillion at present, compared to Rs 900 billion of fund-based exposure. Over two-thirds of the NFB exposure is from public-sector banks, of which more than 20 per cent is from the 11 banks under PCA at present. Including the infrastructure sector, the total NFB exposure of banks is close to Rs 4 trillion. Further, the change in national highway EPC contracts since 2014 involving a longer defects liability period (increased from two years to four years) will also elongate the BG release cycle. Sharing ICRA estimates, Rajeshwar Burla, Assistant Vice President & Associate Head-Corporate Ratings, ICRA, predicts the construction sector will require incremental BGs of Rs 150-200 billion per annum over the next three to four years. This will require additional collateral of Rs 30-60 billion. “Given that many mid-sized players have been able to secure multiple projects, getting the BG limits enhanced and arranging adequate collateral could become challenging and constrain them from taking up additional projects,” he reasons. “At the macro level, limited availability of BGs could also constrain pace of infrastructure development.”SHRIYAL SETHUMADHAVAN

Infrastructure Transport

10 Jul 2026

Uttar Pradesh unveils infrastructure-led growth roadmap at RAHSTA

Mumbai, 9 July 2026: Uttar Pradesh’s ambitious infrastructure-led growth strategy took centre stage on Day 2 of the 16th RAHSTA Expo, where senior government officials outlined how expressways, industrial corridors and technology-driven governance are transforming the state into one of India's most attractive investment destinations.Delivering the keynote address, Srihari Pratap Shahi, IAS, Additional Chief Executive Officer, Uttar Pradesh Expressways Industrial Development Authority (UPEIDA), highlighted the state's long-term vision of integrating world-class expressways with industrial dev..

Real Estate

10 Jul 2026

NCW closes PRIME Offices Fund at Rs 40 billion

Nuvama and Cushman & Wakefield Management (NCW) has announced the final close of its flagship PRIME Offices Fund at approximately Rs 40 billion, exceeding its original target of Rs 30 billion following strong investor demand.The fund was launched to provide Indian investors with access to institutional-grade commercial office assets across key office markets in the country. According to NCW, the increase in the fund size was supported by strong investor participation and the availability of investment opportunities in India's office sector.The fund has already committed around 45 per cent ..

Real Estate

10 Jul 2026

Mayfair Housing adopts Autodesk Forma for digital project planning

Mayfair Housing has entered into a three-year strategic partnership with Autodesk to deploy Autodesk Forma, an AI-enabled cloud platform, as part of its digital transformation programme aimed at improving project planning and execution across its development and redevelopment portfolio.The platform will be integrated into the company's Building Information Modelling (BIM) workflow to support architects, planners and project teams during the early stages of design and development. Autodesk Forma combines real-world data, environmental simulations and collaborative workflows to facilitate data-d..