Gammon Infrastructure Projects files DRHP with ROC
February 28, 2008
Gammon Infrastructure Projects Ltd (GIPL), a subsidiary of Gammon India Ltd, has filed the Red Herring Prospectus with the Registrar of Companies, Maharashtra in connection with its ‘Initial Public Offer’ of 1,65,50,000 equity shares of the face value Rs 10/- each, comprising a net issue of 1,48,95,000 equity shares to the public and a reservation of 16,55,000 equity shares for eligible employees.
The IPO is being made on 100% book building route, with the price band being Rs 167/- to Rs 200/-.
The issue will remain open from March 10, 2008 to March 13, 2008.
Gammon Infrastructure Projects Limited (“GIPL”) is an infrastructure project development company promoted by Gammon India Limited, to participate in the development of infrastructure projects on a public private partnership (“PPP”) basis.
GIPL leads Gammon’s forays into development of infrastructure projects on PPP basis across sectors such as Roads & Expressways, Ports, Hydro Power, Urban infrastructure, Airports, Special Economic Zones, Water and Wastewater management, Railways, Power Transmission lines, and Agricultural Infrastructure.
Source: equitybulls.com
LEAD ROLE OF GOVERNMENT FOR INFRASTRUCTURE DEVELOPMENT TO CONTINUE
February 28, 2008
Economic Survey 2007-08
PRESS INFORMATION BUREAU
GOVERNMENT OF
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Lead role of Government for Infrastructure Development to Continue
Recognizing the importance of development of adequate infrastructure for sustaining the growth momentum and to ensure inclusiveness of the growth process, the Government will continue to play a lead role in infrastructure development during the Eleventh Plan. The Economic Survey 2007-08 tabled in Parliament today, states that accompanying the recent moderation in industrial growth, the growth performance of some segments of the infrastructure such as power generation and movement of railway freight and also the production of universal intermediates like steel, cement and petroleum have shown a subdued performance during April-December 2007-08 as compared to the corresponding period last year. In the power sector, though the plan capacity addition is unlikely to be achieved, the growth in capacity in the current year is distinctly higher than in the previous years. The movement of cargo handled by major ports and air cargo has showed improved performance as compared to the corresponding period last year. The highly competitive telecom sector has maintained its phenomenal growth, the Survey adds.
With the rapid growth of economy in the recent years, the importance and urgency of removing infrastructure constraints have increased. The Government has made an effort to facilitate the entry of private enterprise into this sector through changes in the legal framework. The Survey mentions that the role of private sector participation has also been facilitated by technological change that allows unbundling of infrastructure so that the public and the private sectors can take up the components according to their capacities.
The Survey states that the recent moderation in the growth in the industrial sector has raised concerns in some quarters about sustainability of high growth of the sector. To deal with the situation emerging from the slow down of some export oriented sectors of relatively low import intensity including textiles, handicrafts, leather etc. the Survey states that the Government took certain measures to tide over the situation in short run. It emphasises that, over the medium term, there is little choice but to improve productivity even if there are issues pertaining to the exchange rate of currencies of competing countries.
During the Eleventh Five Year Plan, the power sector is expected to grow at 9.5 per cent per annum. The Survey mentions that a capacity addition of 78,577 MW has been proposed for the plan period to fulfill the objective of the National Electricity Policy 2005. A number of projects envisaged for the Eleventh Plan have made steady progress and most of these are in a position to be commissioned well within the Plan period. It is expected that the total capacity addition during the current financial year would be 10,821.8 MW with thermal, hydro and nuclear accounting for 8,015 MW, 2,587 MW and 220 MW respectively. The Survey also mentioned that for development of coal based Ultra Mega Power Projects (UMPPs) each with a capacity of 4,000 MW or above, project specific shell companies have been set up as wholly owned subsidiaries of the Power Finance Corporation Limited to facilitate tie up of inputs and clearances. The bidding process in respect of Sasan, Mundra and Krishnapatnam UMPPs have been completed. For the development of hydro power potential, the Survey also states that a task force has been constituted under the Chairmanship of Minister of Power. The task force shall examine and resolve issues relating to hydro power development. To achieve the goal of electrifying all unelectrified villages and hamlets and providing access to the electricity to all households as envisaged under the Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGYY), the Government has approved its continuation during the Eleventh Five Year Plan period. With an initial outlay of Rs. 28,000 crore, about 1.15 lakh unelectrified villages and 2.34 crore rural BPL households have been envisaged to be covered in Phase-1 of the scheme.
The Survey states that improved resource management, through increased wagon load, faster turn around time and a more rational pricing policy has led to a perceptible improvement in the performance of the Railways during 2005-06 and 2006-07. During April-November 2007, the total revenue earning freight traffic grew at 8.2 per cent as compared to 9.9 per cent in the corresponding period of the last year. The Survey mentions that the Indian railways have been taking certain pro-active initiatives in the area of tariff and fare fixations and commercial practices. There has been conscious thrust on bringing in transparency, simplification and making rail tariff competitive to attract more traffic.
In Road sector, the Survey states that 7,962 kilometers of National Highways under National Highways Development Project (NHDP) with the bulk of 5,629 kilometers lying on Golden Quadrilateral (GQ) was completed till
inter-ministerial Committee to appraise and coordinate individual sub-projects under Special Accelerated Road Development Programme for the region. An investment of Rs. 3,14,152 crore has been envisaged for the roads and bridges sector during the Eleventh Five Year Plan.
Regarding Civil Aviation Sector, the Survey states that with the liberalization of Indian skies, the airlines market in
During April-October 2007, the cargo handled by major ports registered growth of 13.9 per cent against 9.5 per cent in the corresponding seven months of last year. The Survey states that there was an impressive growth of 13.9 per cent per annum in container traffic during the Five Year ending 2006-07.
The telecom sector continued to register significant growth during the year and has emerged as one of the key sector responsible for
Regarding Urban infrastructure, the Survey states that with the launching of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in 2005-06, the reform process of urban local bodies has begun. There is now a better appreciation at the state level of the importance of developing and sustaining the infrastructure through appropriate user charges. While sanctioning the projects, efforts are made to ensure public-private participation in the areas where it is feasible. An amount of Rs. 2,805 crore has been provided for the year 2007-08 for the Sub-Mission on Urban Infrastructure and Governance. 279 projects have been sanctioned at an approved cost of Rs. 25,287.08 crore for 51 cities out of the listed 63
While sanctioning these projects, highest priority has been accorded to sectors that directly benefit common man and urban poor namely, water supply, sanitation and storm water drainage. 90 projects are expected to be completed by December this year. A total investment of Rs. 3, 35,350 crore have been envisaged by the
Outlining the investment requirement for the infrastructure during Eleventh Five Year Plan period, the Survey states that to achieve the target rate of growth of 9 per cent for the Plan period, an increase of investment from around 5 per cent of GDP in 2006-07 to 9 per cent of GDP by the end of the Plan period is envisaged. The investment in physical infrastructure alone has been estimated to be about Rs. 2,002 thousand crore (at 2006-07 prices). Such a large magnitude of investment during the Plan period would need to be financed through non-debt and debt resources of the order of Rs. 1, 064 thousand crore and Rs. 996 thousand crore respectively. Keeping in view the need for financing infrastructure, the Ministry of Finance constituted a Committee in December 2006 to under the Chairmanship of Shri Deepak Parekh to identify the constraints and suggest measures for financing infrastructure. The Committee in its report submitted in last year has stated that there are macro-economic and institutional constraints in financing infrastructure. To maximize the role of public-private partnerships (PPPs), the Department of Economic Affairs has taken several major initiatives in the matters concerning PPPs including policy, schemes, programmes and capacity buildings. While encouraging PPPs constraints have been identified and several initiatives have been taken by the Government to create enabling framework for PPPs by addressing issues relating to policy and regulatory environment. To address the financing need of PPPs projects, various steps have been taken such as setting up of the India Infrastructure Finance Company Limited (IIFCL) to provide long tenor debt to infrastructure projects and launching of a Scheme for financial support to PPPs in infrastructure to provide Viability Gap Funding to PPPs projects.
The challenges in implementing the infrastructure projects are immense. The Survey states that there is need to develop appropriate mechanism for financing infrastructure, especially the development of a domestic debt market is overarching. It is also important to ensure synergy in the efforts being made to develop different types of infrastructure through effective coordination between different agencies. “These challenges are serious, but they are by no means insurmountable”, the Survey adds.
Source: pib.nic.in
Nagpur Sical Gupta road terminal project launched
February 24, 2008
Country’s leading provider of integrated multi-modal logistics solutions for bulk and containerized cargo and offshorfe logistics, Sical logistics on Sunday launched Nagpur Sical Gupta road terminal at Multi Modal International Hub Airport at Nagpur (MIHAN).
Union Minister for New and Renewable Energy, Vilas Muttemwar and State BJP President Nitin Gadkari laid the foundation stone of Rs 119.3 crore project. Chairman of Chennai-based Sical, Ashwin Muthiah and Chairman of Gupta Group of Industries, Padmesh Gupta were present on the occasion.
Speaking to reporters Muthiah and Gupta said a special purpose vehicle, Nagpur Sical Gupta Road Terminal (NSGRT), comprising Sical with 51 per cent stake, Maharashtra Airport Development Company 26 per cent and Gupta Coal with 23 per cent stake, will build, operate and manage the road terminal.
Sical MD and Group CEO, Sudhir Rangnekar said road terminal will stretch across 60 hectares of area and have parking facilities for 1150 vehicles including multi axle vehicles and cold storage. It would be completed by January 2009, he added.
NSGRT was formed in April 2007 and agreements were signed in August 2007. Rangekar said Sical was handling 22 mn tonnes of BUL and 5,00,000 teu (twenty euqal units) of containerized cargo.
Sical’s delivery network includes walk-in-berth at Chennai for ships carrying bulk cargo, a container terminal at Tuticorin.
Source: economictimes.indiatimes.com
Wilbur Smith appointed consultant for 4-laning
February 23, 2008
PANJIM, FEB 23 — The Bangalore-based Wilbur Smith Associates has been appointed consultant to prepare a feasibility report on the much talked about 4-laning of the National Highway-17 from Patradevi to Polem, to be undertaken by the National Highways Authority of India (NHAI).
Wilbur Smith Associates Private Limited (WSAPL) — an affiliate of Wilbur Smith Associates Inc, USA — is a full service professional consulting firm engaged in the planning and designing of public infrastructure and transportation facilities.
According to a source in the Public Works Department once the highway becomes ready it will help reduce the traffic congestion and the number of accidents on this 139-km stretch.
He said NHAI will acquire 60 meters of land one both side of the existing highway.
The project is the part of the project undertaken by NHAI to upgrade NH-17 from Panvel to Kochin into a 4-lane.
However, the source said, the stretch between Mapusa and Margao will be a 6-lane as this area has the maximum traffic flow.
The source further said that the project would see several new bridges at Colvale, Mandovi, Zuari, Talpem and Galgibag while a multiple fly-over at the KTC circle at Panjim, the source said.
The department has already acquired 30-metre width of land on both sides of the highway from Patradevi to Porvorim Bazar and the problem appears to be between Porvorim Bazar and the Mandovi Bridge. Therefore a few flyovers on the road have also been suggested.
When pointed out that the stretch from Porvorim to Mandovi already has a four lane, the source replied, that the entire stretch has to be re-done as it does not have service lane, breakdown lane etc.
“Steps have been taken to expedite the implementation of these projects and the actual work is likely to start in 2010 as the forest clearances consume lot of time,” he said.
If everything goes well, the source said, the entire project should be complete by 2013-14. The project is expected to cost around Rs 1,200 crore, The project will be undertaken under built, operate and transfer basis and the PWD National Highways division will take all the government department concerned into confidence and a plan will be developed before going ahead with the project, the source said.
Source: oheraldo.in
L&T, IRB among 5 to bag Rs 11k cr road projects
February 23, 2008
NEW DELHI: L &T-ECC, Emirates Trading Agency-KMC Construction, IRB Infrastructure Developers-Deutsche Bank, IJM Corporation-IDFC Ltd and Isolux Corsan Concessions-Soma Enterprise have bagged five national highway projects worth Rs 10,912 crore.
The projects, part of the fifth phase of National Highway Development Project (NHDP), are the first one to be under the new model concession agreement.
Secretary (road transport and highways) Brahm Dutt said this at a media briefing on Friday.
Under NHDP V, a total of 6,500 km of existing four-laned national highway have to be widened to six lane through build operate and transfer basis.
Two projects aggregating to 148 km had earlier been awarded based on the old concession agreement.
In the earlier awarded two projects, grants used to be the bidding criteria and NHAI got an upfront negative grant of Rs 975 crore.
Under the new MCA, the concept of grant has been changed to revenue share model.
On the Delhi-Jaipur section of national highway eight, the wining consortium of Emirates Trading Agency and KMC Construction has quoted 48.06% as the revenue share for NHAI.
IRB Infrastructure in tie-up with Deutsche Bank quoted 38% for Surat-Dahisar section on national highway 8. For Chennai-Tada on NH 5 and Panipat-Jalandhar on NH 1, L&T-ECC have quoted 17.07% and Isolux Corsan, have quoted 20.14% as revenue share that the government will get out of tolling revenue.
“All the revenue share will start right from the appointed date within 180 days of signing of the agreement.
In only one case, where the traffic is low, the share of revenue will start at 2% after nearly four and half years,” said Dutt. Isolux Corsan-Soma Enterprise quoted the 2% revenue share for the Panipat-Jalandhar section.
As the existing highways are already under tolling by NHAI, toll collection by the private entrepreneurs will be integrated with the existing tolling infrastructure though there will not be any increase the tolling rates.
The five consortia will be required to furnish an additional performance security, the toll will be credited to an escrow sub-account, drawal from which is linked to the achievement of project milestones.
Source: dnaindia.com
9 infrastructure firms booked for evading import duty
February 20, 2008
Nine infrastructure firms having interests in road building have been booked by the Customs authorities for allegedly evading import duty totalling Rs 20 crore on heavy engineering equipment.
The firms, including Punj Llyod Ltd, Gammon India and Era Constructions, have allegedly imported machinery for purposes other than for which they were allowed to be imported duty free, a Customs official said here.
“Duty exemptions were granted to the firms working on National Highway Authority of Indian projects and other projects funded by international development agencies like those of Asian Development Bank and United Nations,” the officer said.
The companies, however, have been found to have diverted machinery imported under duty exemptions to other private projects and hence were liable to pay necessary duties, he charged.
During initial investigations, the authorities have established alleged duty evasion of Rs 20 crore.
Notices were sent to all the nine firms and Rs 12 crore in duties have already been recovered, he said, claiming the firms have admitted to have diverted the machinery.
“We started investigations into the matter around five months ago. Though many of the firms are based outside the city, the cases have been made in Mumbai as all the machinery had landed at the Mumbai port. It will take some time for us to impose the penalties,” the officer said.
Source: timesofindia.indiatimes.com
Gayatri Projects to hive off invesments in BOT road projects
February 19, 2008
Gayatri Projects is planning to hive off investments in BOT road projects to its subsidiary company with an intention to dilute a part to strategic investors to raise funds for further investment into BOT projects.
A meeting of the board of directors of the company will be held on Feb. 26, 2008, to consider the issue of convertible equity warrants to promoters in accordance with the provisions of SEBI Guidelines, 2000 and allotment of equity shares to FCCB holders upon conversion.
The board will also consider incorporation of new objects clauses in the memorandum of association.
Shares of the company gained Rs 8.4, or 1.62%, to settle at Rs 527.75. The total volume of shares traded was 13,891 at the BSE. (Tuesday)
Source: myiris.com
Concrete gains
February 18, 2008
Mega investments in infrastructure and the recent market correction offers an exciting investment opportunity in construction stocks.
The robust GDP growth rate experienced by the country in the last few years is indeed commendable and was aided by investment in infrastructure. To sustain growth rates, it is imperative for India to make higher investments towards setting up world-class infrastructure. As per the planning commission estimates, investments in infrastructure is set to go up by a whopping 130 per cent to $520 billion for the eleventh Five Year Plan (FY 2008-12) as against the $226 billion made during the tenth plan (FY 2003-2007).
Construction companies will be among the first beneficiaries of these investments and will deliver good and sustainable long-term growth.
Since the investment plans for each of the sub-segments in infrastructure space varies, based on priorities, there is reason to believe that not all the segments or companies will grow at all times. For instance, regional players or less diversified ones may experience volatility in revenues. For companies, faster project execution capabilities and access to key construction machinery (equipment) are equally critical, which in turn will determine the growth rates and profitability margins, respectively for any company. For example some companies are looking at purchasing their own equipment to tackle rising hiring costs and protect margins.
Thankfully, despite issues, the huge opportunity dwarfs concerns. Says Satish Ramanathan, head equities, Sundaram BNP Paribas, “While the future is promising, earnings could be volatile. Choose companies on valuations, order book and services portfolio.”
Last, but not the least, the recent correction in stock markets provides an opportunity to buy good companies in the space at reasonable valuations. Among many stocks, we have picked 10 stocks—four large caps (Read: Bigger the better) and six mid-caps, which are likely to emerge as key beneficiaries of the ongoing investments in the infrastructure sector. Bigger companies are well-established, diversified and less risky. Investors with low risk appetite can consider them. The smaller ones are efficiently managed and are on the growth path with good earnings visibility. Notably, they may also grow faster, given the size of the opportunity and their individual strengths. But, small size also means that there is an element of risk and hence, investors need to review them on a quarterly basis and look at the flow of new business and financial performance.
| ON THE HIGHWAY |
Era Infra Engineering
Era Infra Engineering, which was earlier into the construction of industrial and commercial space, has diversified into verticals such as railways, roads and highways, airport, urban infrastructure and oil and gas. The company now commands a sizeable order book of Rs 4,100 crore, which is thrice its FY08 estimated revenue.
The company is also developing commercial and residential buildings on its 500 acre land in and around Delhi and Jaipur. Though some of these projects will only be completed by FY10 and FY11, four of them will be completed in FY09 thus providing significant revenue growth.
Besides, the company is also investing about Rs 200 crore in growing the building structure segment. Building structures, which includes the construction of metal structures used at public and private places, is a high growth and high margin business accounting for 21-22 per cent operating margins. The company is currently having total capacity of 45,000 tonne per year of structure, which will be expanded to 185,000 tonne per annum by September 2008. The contribution from new capacity will reflect partially in FY09 and fully by FY10. The expanded capacity at current realisation of Rs 58,000 per tonne can get additional revenue of Rs 750-850 crore per year, assuming 70-80 per cent capacity utilisation.
Additionally, the company is also investing in plant and equipment to scale up its in-house capabilities; currently, 75 per cent of its equipment requirement is met in-house (gross assets at Rs 500 crore). The company will further spend about Rs 200-250 crore over the next year towards purchase of equipment. This will help cut costs and generate additional revenues by way of renting out to third parties.
That apart, Era also plans to increase its Ready Mix Concrete (RMC) capacity 10-fold by installing about 50 new RMC plants over the next 2-3 years, at an estimated cost of Rs 350-400 crore. About 90 per cent of the new RMC production will be sold to third parties. Expect this business to contribute a large chunk to revenues.
Given its in-house equipment and RMC facilities, Era enjoys healthy operating margins of about 20 per cent and RoNW (return on net-worth) of 30 per cent, among the best in the industry. The company’s core business is growing at robust pace, which along with the strong order book and investments will drive growth.
| RISING HIGH |
Sadbhav Engineering
Sadbhav Engineering, with a focus on the road segment, would be a key beneficiary of the ongoing investments in this segment. Of the company’s current order book of Rs 2,300 crore, road projects account for over 70 per cent, including 32 per cent from BOT projects. Enhanced focus on BOT projects has seen the company win four BOT road projects in consortium with other players over the last six months; Sadhbav’s equity contribution is pegged at Rs 92 crore. Going forward, the BOT projects are expected to contribute significantly to revenues as the company has achieved financial closure of Aurangabad-Jalna and Nagpur-Shinoi project during Q3FY08. It expects the Mumbai-Nasik expressway project to achieve closure by December 2008.
From Q4FY08 onwards, its projects in the relatively higher margin mining segment (9 per cent net margin) would be a positive trigger, and will help in improving its bottom line. The revenue will accrue from its ongoing project with GHCL and the recent Rs 245.24 crore order from the Northern Coalfields. Sadbhav Engineering currently has 15 per cent of its current order book from mining. However, the mix is expected to go up as domestic companies are allotted more mines and thus, reflects huge potential for excavation work.
Considering its current order book, which is over three times its FY08 estimated revenue, the company is expected to maintain revenue growth of over 50 per cent for the next two years. Also, with the increasing share of mining and the captive resources, the operating margins are expected to improve from 11.9 per cent in the FY07 to 12.5 per cent in FY08 and 13 per cent in FY09. The expansion in margins will also lead to the higher earnings growth. While these positives are partly reflecting in the higher valuations, the stock has good potential.
Pratibha Industries
Pratibha Industries is emerging from being a small player handling projects with an average size of Rs 10-20 crore to a bigger player. The most recent order bagged by the company is as big as Rs 300 crore. The company, which was primarily into the water projects (about 70 per cent), has diversified into other construction segments such as industrial projects, roads, urban infrastructure, airports, railways, pipeline and tunneling. The company has a strong focus and expertise in handling water-related projects, accounting for 60 per cent of its total order book.
Further, to grab the growing opportunities in the water segment, micro tunneling and piping projects, the company has formed a JV with Ostu Stettin of Austria, the world’s third largest tunneling company. It will help getting complex projects involving tunneling for laying pipes in high density urban areas for underground tunneling.
Besides, the company is also integrating backwards into manufacturing of SAW spiral pipes, with a capacity of 90,000 tonnes per annum. These pipes will be used for captive consumption as well as commercial sales to other companies for use in water transmission, oil and gas, sewerage and other industrial usage.
Within construction, the company has also diversified into some of the high potential segments, having undertaken (either independently or jointly) construction of complexes, buildings, airports and roads.
A strong order book of almost 4.5 times its FY08 estimated revenue and better outlook for urban infrastructure and water-related projects, indicates a robust future for the company. Besides, growth would be driven by the increasing revenue share of pipe manufacturing business in FY09. According to estimates, the SAW pipe segment alone can add about Rs 240 crore of revenue in FY09 at 60 per cent capacity. Overall, the stock is attractive from a long-term perspective.
Ahluwalia Contracts
Ahluwalia Contracts, primarily into construction of residential and commercial projects, is now diversifying into the urban infrastructure space. Although urban infrastructure still contributes just 3 per cent of its revenues, the company plans to increase its share to 20-25 per cent over the next three years.
On these lines, the company will bid for select BOT projects, especially multi-level car parking and bus terminus. The company has already been awarded a BOT project in Rajasthan for constructing a bus terminus, which also includes a commercial complex, wherein the targeted IRR (internal rate of return) is a sound 20 per cent. There is huge opportunity in the multi-level car parking segment, as over 30 projects are likely to be awarded in Delhi alone.
The company being an established player in the National Capital Region (NCR) is expected to gain from the residential and commercial projects consequent to the 2010 Commonwealth Games, to be held in Delhi and also the all round infrastructural development in the NCR region. It has already won some of these projects, including the recently bagged Rs 688 crore Commonwealth Games 2010 village residential project.
Considering its growth plans and projects in hand, the company is incurring a capital expenditure of around Rs 55 crore in FY08 and Rs 110 crore in FY09. This will also include the expansion of its RMC capacity from 210 cubic meter per hour currently to 300 cubic meter per hour in FY09. The RMC division, which contributed over 18 per cent to revenues in FY07 (Rs 81.40 crore), should see its revenues grow at a healthy pace over the next two years.
The healthy order book (3.24 times of FY08 estimated revenues) provides earnings visibility over next two years. Over the long-term, growth will be aided by the company’s diversification.
Tantia Construction
North East and eastern India are considered to be underdeveloped. Investments are required towards construction of roads, ports, power and other infrastructure facilities. The Centre has already indicated that it intends to spend Rs 50,000 crore towards construction of roads and another Rs 2,000 crore for rail connectivity in the North-East over the next five years.
Tantia, which generates about 96 per cent of its revenue from the eastern and north eastern region by undertaking roads and railway projects, will be the key beneficiary.
To further capitalise on this, the company is foraying into other segments of infrastructure and BOT projects. Its relatively smaller size and limited presence is reflecting in the lower valuation it enjoys vis-à-vis its peers, which should hopefully correct as the market gains confidence in the company. What is currently playing in its favour are opportunities and relatively less competition in the North East.
Considering the industry outlook and healthy order book to be executed over the next 30 months, the company may maintain revenue growth of over 50 per cent in the next two years.
Gayatri Projects
In a recent development, Gayatri Projects signed an MoU with DLF to jointly undertake construction of road projects on BOT basis. The new entity will leverage the capabilities of the two companies and, is expected to develop projects worth over Rs 1,000 crore every year. The tie-up with DLF is also expected to provide Gayatri Projects an entry into the real estate business; it would be developing properties along with DLF. Gayatri Projects is a focused player in the construction of roads and irrigation segment, which account for about 98 per cent of its order book. The company is now venturing into urban infrastructure and the water treatment segments, which will not only help diversify revenue streams but also improve margins; these are already high at over 15 per cent compared with the industry average. That’s because, the company owns nearly 100 per cent of the project related equipments.
Apart from constructing infrastructure, like other companies, the company is looking at capitalising on the growing opportunities in the BOT segment. It currently has five BOT road projects, which have already achieved financial closure. Of this, revenue from three projects is expected to start flowing from March 2010. Analysts value the BOT projects at Rs 120-170 per share, based on the discounted cash flow method. The BOT projects will provide a sustainable or steady cash flow in the long run and help in improving its profitability on the back of higher margins.
Given the high opportunities in the infrastructure sector and diversification into other geographies and segments, the cash contract (non-BOT) business will continue to grow at a robust rate, over the longer term. For the next two years though, earnings will grow on a sustainable basis, backed by the strong order book of Rs 3,400 crore (almost 4.5 times its FY08 estimated revenue) executable over the next 30 months. At current price levels, the stock is trading at a relatively lower valuation, compared with its peers and, is capable of delivering good returns.
Bigger the better
Bigger companies score heavily on size, services portfolio, strong execution capabilities and have a proven track record, all of which provide great comfort and hence justify premium valuations.
IVRCL Infrastructures & Projects
The increasing allocation towards water-related projects augurs well for IVRCL, which generates 57 per cent of its revenue from it. Besides, IVRCL is also present in other growing segments such as roads, building & structures and power. Its order book of Rs 11,000 crore provides strong revenue visibility. Analyst value the company at Rs 550-650 per share on a sum-of-parts valuation of its different businesses and investments in subsidiaries like Hindustan Dorr Oliver and IVR Prime.
Hindustan Construction Company
A dominant player in transport segment, Hindustan Construction is now focusing more on profitable segments such as water and power. Of its order book of Rs 9,050 crore, power projects accounts for 44 per cent and water projects 22 per cent. This diversification will not only help it grow faster but also improve margins. Long-term growth will be aided by improving revenue mix, strong order book and its real estate business (12,500 acre Lavasa project, valued at Rs 60-100 per share. On a sum-of-parts basis, analysts value its share between Rs 210-260.
Nagarjuna Construction
Nagarjuna Construction has been growing at 58 per cent annually over the last four years and is expected to grow at about 40-45 per cent during FY08-10. The growth will be driven by robust order book coupled with expansion of volumes and margins, led by diversification into segments like metal, oil & gas and real estate development. Nagarjuna is investing in BOT projects; has five road projects, two hydro power and two sea port projects. Its businesses are valued at Rs 315-395 per share.
Punj Lloyd
After acquiring Singapore-based Sembawang in FY07, Punj Lloyd tapped the growing global energy market with extended services portfolio. In the domestic market, it has forayed into onshore drilling, real estate and ship building business with 25.1 per cent stake in Pipavav Shipyard. Its consolidated order book of Rs 18,500 crore, provides reasonable comfort. Going forward, net profit is expected to grow faster on the back of turnaround of Sembawang; consolidated operating margins are expected to improve to 10 per cent by FY09 (8 per cent in FY07).
Source: Jitendra Kumar Gupta : business-standard.com
South India�s road to future may soon be completed
February 16, 2008
South India�s much-touted road to the future may be finally here. Industry in Bangalore is pushing for the completion of the expressway between the city and Mysore.
After 13 years, work is speeding up on the road connecting Bangalore and Mysore, popularly known as the Bangalore Mysore infrastructure corridor or BMIC. The road will cut the driving time from the three and half hours to just 90 minutes.
The BMIC is still mired in controversy over land acquisition but all that may change soon. We hear from sources that the governor of Karnataka is taking a special interest in the project and the sudden activity on the project is partly due to pressure from the industry. Sources say the governor is speeding up land acquisition and clearances from forest, revenue and other departments. And though nice officials declined to comment on camera, they say they are glad that industry is finally taking a stand.
“I think it’s the single most important project for Bangalore. It will not only provide more employment but also improve the quality of life of the people of Bangalore. ” says Mohandas Pai, director-HR, Infosys.
“If you want private players to develop roads, the government has to address these land issues very seriously.” Adds Kiran Mazumdar Shaw, CMD, Biocon.
The Nandi infrastructure corridor enterprise had envisaged a four-phase project that included a 111-km super expressway to Mysore with 5 satellite towns on the way, a 41 km peripheral ring road on the outskirts of Bangalore and a 9.5 km connecting road to the expressway.
Today only two stretches of the peripheral ring road are open and the company is not collecting toll, as the link is not complete. But despite losses of over Rs 10 crore a month, officials are glad there’s been some progress.
Source: moneycontrol.com
India’s Largest Toll Plaza – Delhi-Gurgaon
January 28, 2008
Kapsch Metro JV has commissioned the Delhi Gurgaon Expressway with 3 Toll Plazas with a total of 59 toll lanes. The largest toll plaza has a total of 32 + 4 reversible toll lanes.
The Project has a total of 24 ETC with some of them mixed type with cash and smart card facility ; the remaining being cash and smart Card type.
All lanes are equipped with Automatic vehicle classification systems . All the three plazas are interconnected through a WAN.
The First Kapsch Toll System In India Finalized: Toll System For One Of The Most Frequented Highways Is Up And Running.
Since End of January 2008 runs the operation of the first road toll project of Kapsch TrafficCom AG in India with no problems. Within a joint venture structure – the Kapsch Metro Joint Venture – Kapsch TrafficCom alongside the Indian Metro Road Systems Ltd. fitted one section of the National Highway No. 8 with a modern manual/electronic toll system. This highway covers the route from Delhi to Gurgaon and is one of the most frequented roads in the region. The central toll plaza with altogether 32 toll lanes is one of the largest toll stations in all of Asia.
Since January 2008, the road from Delhi to Gurgaon features a modern manual/electronic toll system based on microwave technology (CEN 278). Completion of this toll system marks the successful finalization of the first road toll project of Kapsch TrafficCom in India. The principal, licensee DS Constructions Ltd., decided to award the contract to the Kapsch Metro Joint Venture in September 2006.
“For us, the selection of KapschMetro JV as a technology partner was an important step in the management of the traffic volumes on the project. The technology selected is stable, secure and has processed over 3 million transactions to date with no problems. The installation of the equipment was done in difficult circumstances with live traffic of over 130,000 per day travelling through the lanes during the installation period. The equipment implementation of the Delhi-Gurgaon toll project is a success story, Kapsch Metro JV delivered the project on schedule and to our complete satisfaction“, explains Allan Le Roux, Chief Operations Officer- Tolling of DS Constructions Ltd.
“Kapsch has already performed successful projects in India in the past, contracting GSM-R work for Indian Railroads, the Indian national railway system. With this commission, we were able to enter the Indian toll system market within an extremely short time, owing our success largely to our staff’s wealth of know-how and to the many years of experience we have in the Asian area. For me, the route that has now been completed is just the beginning of numerous further business ventures in Asia“, says Erwin Toplak, Board Member of Kapsch TrafficCom AG.
The Toll Road project is constructed on a 20 year BOT basis and has a length of 27 km long and rates among the most heavily trafficked projects in the region and provides important connectivity to the Indira Gandhi International Airport of New Delhi and the “New Millennium City” Gurgaon which boasts as having one of the worlds biggest shopping malls! The three toll plazas on the project have a total of 56 toll lanes. The main toll plaza located on the Delhi Haryana Border has 32 toll lanes. Motorists are able to use cash or use a Smart Card in at all lanes except the 4 dedicated non stop lanes with exclusive payment via microwave TAGs.
Kapsch TrafficCom AG is a global provider of innovative road traffic telematic systems, products, and services. Kapsch TrafficCom develops and supplies electronic toll collection systems, in particular multi-lane free-flow (MLFF) systems, and is also able to act as the technical and commercial manager for operating these systems. Further, Kapsch TrafficCom offers traffic management solutions (with the focus on road safety and traffic control), electronic access control systems, and parking space management. Kapsch TrafficCom has established itself among the global market leaders for ETC systems with more than 140 installed toll systems in 30 countries in Europe, Australia, Latin America, the Asian/Pacific Area, and South Africa, which altogether feature more than eleven million transponders and about 11’000 fitted lanes. Kapsch TrafficCom is headquartered in Vienna, Austria, and has subsidiaries and representative offices in 18 countries.
Vienna on 27th March, 2008
For further information, please contact:
Brigitte Herdlicka
Public Relations & Sponsoring
Kapsch Group
Phone: +43 (0) 50 811 2705
1120 Vienna, Wagenseilgasse 1
E-Mail: [email protected]
www.kapschtraffic.com
www.kapsch.net
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