Infrastructure companies — Stack up with discretion

October 14, 2006

Driven by infrastructure spending, the demand side for construction companies remains robust. The key to success will lie in their ability to ramp up resources and capitalise on order flow.

Compound Annual Growth over 3 Years (%)
Indicative OPM across segments (%)

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Infrastructure has been the new market mantra the past two years. While private equity investors showed keen interest in infrastructure/construction companies, a number of mutual funds also jumped on to this booming bandwagon, investing a chunk of their assets in the sector. An annualised revenue growth of 30-40 per cent over the past three years and an average order size of three-four times the revenues also seem to justify this newfound enthusiasm.

Written by ITW Editor · Filed Under Uncategorized

4-laning of Amritsar to Wagah road okayed

October 14, 2006

With elections to the Punjab Assembly due early next year, the Union Cabinet today cleared the long-pending demand of four-laning of the Amritsar-Wagah section of National Highway 1 on built-operate-transfer (BOT) basis at an estimated cost of Rs 207 crore.

Written by ITW Editor · Filed Under Investment and Finance

New path or alleyway

October 12, 2006

Are contractual ‘innovations’ holding up the showpiece highway project?

It continues to be a slow trudge on the fast lane. Barely 35 per cent of the contracts for the North-South East-West corridor (NHDP-II) have been awarded. This lethargy in the awarding of contracts by National Highway Authority of India (NHAI), under the UPA, is predictably bound to lead to long delays in the construction of the highway network across the country.

Written by ITW Editor · Filed Under Investment and Finance

Rethink Tolling

October 12, 2006

There’s better road-pricing technology, use it

Recent news reports about the government’s new tolling policy rationale are disturbing. Marginal cost pricing permits tolls only to reduce congestion, but in India, tolls are more a user charge than a traffic management tool. Even so, project viability should not be the primary basis for setting tolls. Sensible public policy on tolls should focus on fostering development, by promoting use of the road, tempered by cost recovery. A key benefit of roads is the large spillover from better connectivity. High user charges would dampen usage and reduce this benefit, and may be self-defeating, even for viability.

Written by ITW Editor · Filed Under Uncategorized

Toll to be Delinked from road length

October 12, 2006

NEW DELHI, OCT 12: The government has finalised the toll policy for national highways, with the toll to be based on the cost of construction of roads. The toll will neither be uniform nor be based on the road length as suggested earlier.

Written by ITW Editor · Filed Under Uncategorized