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 Energy

17 Dec 2025

Vedanta Aluminium Uses 1.57 bn Units of Green Energy in FY25

Vedanta Aluminium, India’s largest aluminium producer, recently reported consumption of 1.57 billion units of renewable energy in FY25, marking a significant milestone in its 2030 decarbonisation roadmap. The company also achieved an 8.96 per cent reduction in greenhouse gas (GHG) emissions intensity compared to FY21, reinforcing its leadership in India’s low-carbon manufacturing transition. During FY25, Vedanta Aluminium expanded its renewable energy portfolio through long-term power purchase agreements, strengthening its strategy to source nearly 1,500 MW of renewable power over the lon..

Real Estate

17 Dec 2025

Oberoi Group to Develop Luxury Resort at Makaibari Tea Estate

EIH Limited, the flagship company of The Oberoi Group, has announced the signing of a management agreement to develop an Oberoi luxury resort at the iconic Makaibari Tea Estate in Darjeeling. The project marks a key milestone in the Group’s long-term strategy of creating distinctive hospitality experiences in rare and environmentally significant locations. Established in 1859, Makaibari is one of the world’s oldest tea estates and is globally recognised for its Himalayan landscape, primary forests and exceptional biodiversity. Spread across 1,236 acres, the estate houses one of the world�..

Real Estate

17 Dec 2025

GHV Infra Secures Rs 1.09 Bn EPC Order in Jamshedpur

GHV Infra Projects Ltd, a fast-growing EPC company in India’s infrastructure and construction sector, has recently secured a Rs 1.09 billion work order in Jamshedpur, Jharkhand. Awarded by a reputed group entity, the contract covers end-to-end civil construction, mechanical, electrical and plumbing (MEP) systems, along with high-quality finishing works for a large building development. The project will be executed over a 30-month period, with defined benchmarks for quality, safety and timely delivery. The order strengthens GHV Infra’s footprint in Jamshedpur, a key industrial hub known fo..