+
 Increased competition to create stress on road sector
ROADS & HIGHWAYS

Increased competition to create stress on road sector

A report on the sector has shown that the increased competition in the road sector and subsequent aggressive bidding has the potential to build up stress on the working capital cycle resulting in projects getting delayed or stuck.

As indicated by an ICRA report, the competition has heated up with the entry of new players in the road sector and with the bidders quoting a discount as high as 30-35% to the NHAI's base price. In addition, the BOT (HAM) also witnessed heightened competition resulting in average premium to NHAI cost-reducing from around 25-30% to 15% and even negative O&M bid in some cases. All this indicates the potential of putting stress in the sector as discounted bids come at a time of high commodity prices (steel, cement, etc.).

Rajeshwar Burla, Co-Group Head & Vice President, Corporate Ratings, ICRA, told the media that the discounted bids to NHAI's base price are coinciding with the period of high commodity prices (cement, steel, etc.). As a result, the impact on the profitability of the contracting companies could be substantial.

The lowering of bids has come in the wake of raised competition, with the number of bidders surpassing 40 participants, of which 30 were qualified, for some of the EPC projects and 10-15 participants (around 5-10 earlier) for HAM projects.

One of the reasons for increased competitive intensity is that the Ministry of Road Transport and Highways (MoRTH) has provided relaxations in the eligibility criteria of bidders for HAM/EPC projects. As a result, there has been an entry of new players in the road sector from other sectors like hospitals, smart city, oil and gas, stadium, hotel, warehouses/silos, and an increase in the bidding eligibility for existing players as well.

ICRA told the media that the Lower State Capex, higher opportunities and muted private sector opportunities in the road sector have pushed more entities towards the road sector.

Image Source


Also read: NHAI makes Monthly Drone Survey mandatory for all NH Projects

Also read: NHAI to increase size of InvIT to Rs 15,000 crore

A report on the sector has shown that the increased competition in the road sector and subsequent aggressive bidding has the potential to build up stress on the working capital cycle resulting in projects getting delayed or stuck. As indicated by an ICRA report, the competition has heated up with the entry of new players in the road sector and with the bidders quoting a discount as high as 30-35% to the NHAI's base price. In addition, the BOT (HAM) also witnessed heightened competition resulting in average premium to NHAI cost-reducing from around 25-30% to 15% and even negative O&M bid in some cases. All this indicates the potential of putting stress in the sector as discounted bids come at a time of high commodity prices (steel, cement, etc.). Rajeshwar Burla, Co-Group Head & Vice President, Corporate Ratings, ICRA, told the media that the discounted bids to NHAI's base price are coinciding with the period of high commodity prices (cement, steel, etc.). As a result, the impact on the profitability of the contracting companies could be substantial. The lowering of bids has come in the wake of raised competition, with the number of bidders surpassing 40 participants, of which 30 were qualified, for some of the EPC projects and 10-15 participants (around 5-10 earlier) for HAM projects. One of the reasons for increased competitive intensity is that the Ministry of Road Transport and Highways (MoRTH) has provided relaxations in the eligibility criteria of bidders for HAM/EPC projects. As a result, there has been an entry of new players in the road sector from other sectors like hospitals, smart city, oil and gas, stadium, hotel, warehouses/silos, and an increase in the bidding eligibility for existing players as well. ICRA told the media that the Lower State Capex, higher opportunities and muted private sector opportunities in the road sector have pushed more entities towards the road sector. Image Source Also read: NHAI makes Monthly Drone Survey mandatory for all NH Projects Also read: NHAI to increase size of InvIT to Rs 15,000 crore

Next Story
Real Estate

Heena Lalwani Buys Rs 1.13 Billion Juhu Apartment

Heena Lalwani, promoter of Aatman Innovations Private Limited, has purchased a luxury apartment worth Rs 1.13 billion in Mumbai’s upscale Juhu locality, according to property registration documents accessed by Zapkey.com.The 9,862 sq ft apartment, located on the 10th floor of Lodha Developers’ Avalon Tower, was acquired at Rs 115,000 per sq ft and comes with five car parking spaces. The deal, registered on 18 August 2025, also included the payment of Rs 68 million in stamp duty and a Rs 30,000 registration fee.Lodha Developers did not respond to queries regarding the transaction, while the..

Next Story
Real Estate

Godrej Buys KPHB Land for Rs 7 Billion in E-Auction

An acre of prime land in Kukatpally Housing Board (KPHB), Hyderabad, was auctioned for Rs 7 billion, with the Telangana Housing Board generating Rs 5.47 billion from the sale of 7.8 acres through e-auction on 20 August 2025.The auction notification was issued last month, attracting bids from Godrej Properties, Aurobindo Realty, Prestige Estates, and Ashoka Builders, according to Board vice-chairman V.P. Gautham. With an offset price of Rs 4 billion per acre, the three-hour auction saw 46 bid increases, before Godrej Properties acquired the land.Revenue generated from the auction will be utilis..

Next Story
Real Estate

HMDA to Auction 93 Prime Plots in September

The Hyderabad Metropolitan Development Authority (HMDA) is preparing to conduct a three-day auction of prime open plots across Hyderabad, Rangareddy, and Medchal-Malkajgiri districts this September.According to official reports, the e-auction will take place on 17, 18, and 19 September, offering 93 plots. Of these, 70 are located in the Bachupally HMDA layout, with the remainder spread across Turkayamjal, Kokapet, Poppalguda, Chandanagar, Bairagiguda, Gandi Maisamma, Suraram, Medipally, and Bachupally village.The highest upset price has been fixed at Rs 175,000 per square yard for a land parce..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?