Target for highway projects halved
November 11, 2013
Proposal to cut the target of contracting out 4,028km of highway projects to be placed at a review meeting today
Connectivity of northeast India with Bangladesh to be developed
November 11, 2013
IANS
Queensland firm Global Road Technology Australia has landed a $116 million ($US110M) deal to lay its “instant highway” technology on 7,000 kilometres of road in India.
November 8, 2013
The firm, whose biggest projects to date have included infrastructure linked to resource industry development in Queensland, secured the deal with Indian construction and energy giant Triace this week.
It would see the firm’s road stabilisation technology applied on the ground through a joint venture with Indian firm Pearls Group – to be called Pearls GRT.
GRT director Ben Skinner said the technology was expected to create a road network that would transform regional Maharashtra – India’s third largest state.
“Our partnership with Pearls and the signing of the agreement in India demonstrates the demand for our products and their potential to provide infrastructure solutions globally for any number of industries and applications,” Mr Skinner said.
The technology would allow the construction firm to lay up to 6,000 square metres of road a day compared to traditional methods that could take up to a month per kilometre, he said. That meant rollout time from planning to finished road took a matter of days with GRT technology.
The firm expected to have a team of surveyors, geologists, civil engineers and industry consultants on the ground to assist with the project.
Among the firm’s biggest selling points was the fact that its technology was tested under some of Australia’s harshest conditions – at mining sites where haulage roads must remain open 24 hours a day to boost productivity.
The firm was already working across India, North and South America, he said, in major mining, oil and gas developments, and with government sector.
Source-http://www.couriermail.com.au
Government entices foreign developers to build roads in India ahead of general elections
November 8, 2013
Dailybhaskar.com |
New Delhi: The Ministry of Road Transport and Highways (MRTH) is to conduct road shows in foreign lands to entice companies abroad to take up road projects in India. The ‘road shows’ are to be conducted primarily in Australia and China over next few months, according to media reports.
Govt to woo Chinese, Australian firms to build roads in India
November 8, 2013
Move in the wake of domestic developers keeping away from bidding for road projects
With developers in India staying away from bidding for road projects, the Ministry of Road Transport & Highways plans to conduct road shows abroad to attract foreign firms to take up projects here.
According to sources, the road shows are expected to be conducted in China and Australia, among others, over the next few months.
The proposal comes at a time when many private road developers, including infrastructure majors GVK, GMR and Larsen & Toubro, have stopped investing in road projects owing to land acquisition problems and funding constraints, among other reasons. Some other developers have also walked out of road projects due to funding concerns.
With the general elections approaching and road construction turning out to be a crucial factor, reviving construction activity is a priority for the government. It has managed to award only less than 1,000 km so far this year.
Experts, however, say the government will need to sort out problems plaguing Indian companies before inviting foreign developers.
“The Indian road sector is at a crossroads and we need to take policy decisions to help Indian companies. Once the internal problems are sorted, will we be able to see some fruits from the decision to do road shows abroad,” said Vishwas Udgirkar, senior director at Deloitte India.
Private road developers in India have also been plagued by the quantum of premium that companies have to pay to NHAI. The firms have been asking the government to reschedule the payments so as to provide a breather for them. Private developers owe close to Rs 1.51 lakh crore to NHAI as premium over the next 20 years. The government has set up a panel under the Prime Minister’s Economic Advisory Council chairman C Rangarajan to decide the terms and conditions of the premium rescheduling.
Premium is the amount a concessionaire pays NHAI for a build-operate-transfer project, on the assumption the returns will be very high. This is usually decided on the basis of future traffic flow at the time of bidding.
Source-http://www.business-standard.com
IL&FS Transportation ties-up Rs. 3000 crore loans for road projects
November 8, 2013
Press Trust of India |
“The company was issued a Letter of Award by the National Highways Authority of India (NHAI) for development and operation of six laning of Barwa Adda Panagarh Section of NH-2…in the states of Jharkhand and West Bengal,” the company said in a filing to BSE.
“The financial tie-up of loans aggregating to Rs. 1,704.40 crore has been achieved and the loan agreements have been executed with IndusInd Bank and IL&FS Financial Services Ltd,” the company said.
The project, estimated at Rs. 2,434.86 crore, is on toll basis with a concession period of 20 years, including construction period of 910 days, the company added.
In another filing, the company said it has been awarded project by NHAI “for four laning of Khed-Sinnar Section on NH-50…in the state of Maharashtra under NHDP Phase IV on design, build, finance and operate and transfer basis.”
“The financial tie-up of loans aggregating to Rs. 1,325 crore has been achieved and loan agreements have been executed with Yes Bank Ltd,” it said.
This project, with an estimated cost of Rs. 2015.29 crore, is also on toll basis with a concession period of 20 years, it added.
Infra funds throw a lifeline at road projects
November 7, 2013
Some deals are stuck because developers are demanding high valuation, even though they are facing a liquidity crisis and banks aren’t lending to them
Merchant bankers say almost every developer is looking at doing some kind of a deal today as nearly all of them are facing a cash crunch. The National Highway Authority of India (NHAI) has bid out 240 odd projects under private-public partnership so far, entailing an investment of Rs 200,000 crore. Of these 240 projects, 80 are operational road projects and 160 are under construction. According to investment bankers, developers are looking at doing a transaction-either equity dilution or outright sale-for nearly half of these operational assets.
In the last six months, at least six large deals involving nearly Rs 6,000 crore have happened where strategic investors/funds have acquired stakes in operating road assets. Some of the big players in the segment are SBI Macquarie Infrastructure Fund, IDFC Alternatives, Piramal Enterprises and Uniquest. And many other large foreign entities are sniffing around.
Despite the slowdown and policy paralysis that has hurt India’s infrastructure sector, foreign funds-sovereign, pension and infrastructure funds-are keen to acquire projects that will earn them annuities. According to investment bankers in the know, nearly 40-45 operating road assets are up for grabs. Subahoo Chordia, head of Infrastructure and investment banking at Edelweiss Financial Services, says that most developers are in various stages of discussion to monetise their assets as their other main business is going through liquidity issues. He says: “Other than known infrastructure funds, new platforms are also coming up which are interested in acquiring road assets in India. A few pension funds from Europe and Canada too are looking for opportunities to pick up stakes in operating roads in India. The currency volatility and other macro issues have slowed the pace of deals, but a few could be announced soon which will help in attracting further investment in the sector.”Road deals
There are four or five big players in the sector who are interested in buying road assets in India which are cash positive and operational. Suresh Goyal, chief executive officer and managing director of SBI Macquarie Infrastructure Fund, says: “The roads sector is an important sector for us and we have invested about $300 million in road assets over the last nine months. This is the first time we have picked up majority stakes in two road projects as so far our investment has been through minority stakes. This is changing as promoters are now more willing to divest assets, at least in the roads sector.” Macquarie owns infrastructure assets worth $100 billion across the globe and is a nascent player in India in the infrastructure space. The fund now runs road projects and has put a team in place to look after it. Unlike private equity funds, infrastructure funds look at managing the asset through its lifetime and earn annuities in return. Other infrastructure funds are also actively looking at acquiring majority stakes in operating assets, especially roads. While buyers are willing to buy a part of a developer’s portfolio, foreign funds are not looking at stressed assets which are facing cash flow issues or are unviable. However, contractors are willing to sell controlling stakes in projects if their overall portfolio is stressed.
Valuation matters
At the same time, not all deals in the road sector are due to stress. Some developers are also getting premium valuation in the market. Satish Parakh, managing director of Ashoka Buildcon, which has raised Rs 700 crore from SBI Macquarie Infrastructure Fund, believes the sector holds promise for investors as only 2 per cent of India’s highways are national highways and plenty of work needs to be done on the existing roadways. He says: “The sector will see a revival as serious investors who have a portfolio of assets globally are looking at India. However, players with viable experience in execution will score. We formed a holding company with seven road projects (six national highways and one state highway), and of this six are tolling. Macquarie has given us a premium valuation for the 34 per cent stake picked up in the holding company.”
However, not all projects are going for a premium, even if they are not being sold below book value (cost of building the asset). Developers are still not climbing down from their expectations, which is why a number of deals are stuck, but many of them could materialise soon. MK Sinha, CEO of IDFC Alternatives, which has also acquired a couple of road projects, does not think that deals are happening below book value. Also, merchant bankers say that since these are operating assets, they are valued on the basis of the cash flow they generate and not on the cost incurred in building the asset.
Valuations of road projects are also being driven by their viability. The road sector projects can largely be classified into two distinct phases. Projects that are most viable were bid between 2003 and 2006. Thereafter, things went awry and overbidding became the norm by 2007. Jayesh Desai, head of investments at Piramal Enterprises, which has acquired a stake in Hyderabad-based road developer Navayuga Engineering, says: “Road projects which were bid before 2006 are viable and have an internal rate of return, or IRR, upwards of 15-16 per cent.” While things did improve marginally in 2008-2010, the “blue-sky bidding” came back into vogue with developers offering unrealistic premiums to NHAI as order inflows started drying up from 2011 onwards.
Investors are looking at consistent returns rather than high returns, explains Parakh of Ashoka Buildcon. Even though traffic growth has fallen 4-5 per cent on a year-on-year basis, investors are happy to put their money in road projects that have been tolling for three to four years. Investors believe that things are unlikely to worsen from here and once interest rates start coming down, the IRRs will inch up from 16 per cent levels to around 20 per cent. It’s the anticipation of an improvement in the macro-economic environment and possibility of a fall in interest rates that is driving these deals.
ONE FOR THE ROAD
ROAD PROJECTS WHICH HAVE SEEN INVESTOR INTEREST IN THE LAST SIX MONTHS
ASHOKA BUILDCON
Assets on the block: Seven highway projects, of which six are tolling with concessionaire period of over 20 years
Investor/Acquirer: SBI Macquarie Infrastructure
Size of deal: Rs 700 crore. The holding company with these roads gets premium equity valuation (30 per cent of project cost) of Rs 2000 crore
Deal Structure: SBI Macquarie picked up 34 per cent in a holding company with seven road projects for Rs 700 crore
NAVYUGA ENGINEERING
Assets on the block: Seven road projects in different stages of development. Company owns 100 per cent in these assets
Investor/Acquirer: Piramal Enterprises
Size of deal: Rs 530 crore is what Piramal has invested in the holding company with seven road assets
Deal Structure: Investment through convertible debentures, stake rises or falls depending on the performance of the roads
GMR JADCHERLA EXPRESSWAYS
Assets on the block: Farukhnagar-Jadcherla highway in Andhra Pradesh
Investor/Acquirer: Macquarie SBI Infrastructure Fund & SBI Macquarie Infrastructure Trust
Size of deal: Rs 206 crore
Deal Structure: Acquiring companies buy 74 per cent in the road project
GMR INFRASTRUCTURE
Assets on the block: Sells 74 per cent in its Ulundurpet highway project in Tamil Nadu stretching over 73 km
Investor/Acquirer: IDFC Alternatives
Size of deal: Rs 222 crore paid to acquire 74 per cent in the special purpose vehicle
Deal Structure: Acquisition is in a single road project that will earn annuity for the investor
IVRCL
Assets on the block: Three road projects in Tamil Nadu: Salem Tollways, Kumarapalayam Tollways and IVRCL Chengapally Tollways
Investor/Acquirer: TRIL Roads, a Tata group company
Size of deal: Rs 2,200 crore
Deal Structure: Salem and Kamarapalayam project have been tolling for the last few years and the controlling stake gives buyer annuity income.
Four-laning project hits a roadblock
November 5, 2013
GURURAJ JAMKHANDI, TNN |
The government had already sanctioned Rs 177 crore for converting the 10.5 km stretch between Alur Venkatrao Circle in Dharwad and Hosur Cross in Hubli into a four-lane concrete road. The 13.5 km stretch between Vidyagiri to Unkal Cross was to be 55m wide while from Vidyagiri to Alur Venkatrao Circle and Unkal Ccross to Hosur Cross the width was to be 35m. The work was assigned to GVR group of Andhra Pradesh.
The preliminary work of cutting the trees on either side was completed earnestly. Even as the work had begun, the idea of introducing Bus Rapid Transit System (BRTS) was mooted. The idea was to convert the road for BRTS and provide the two central lanes for BRTS while the two lanes on either side were to be for use by other vehicles.
When the demand came for upgrading the road into a six-lane stretch, more land was needed to make the road a six-lane. A team of experts from CEPT University of Ahmedabad prepared a plan for the BRTS between City Bus Terminus (CBT) in Hubli and CBT Dharwad covering a distance of 22.2km. The plan envisaged that the RTS track would have 39 stops, three underpasses, three subways for pedestrians and an overbridge. The RTS was to enable nearly 70% of commuters reach the destination fast and also reduce pollution. The World Bank-funded BRTS was to be completed in three years from 2011. BRTS involves providing two lanes exclusively for movement of buses, construction of depots, bus bays, subways, additional hi-tech buses and comprehensive ticketing system among others which would cost Rs 450 crore.
Principal secretary to the department of surface transport V Manjula at a meeting in 2011 said that the World Bank had already sanctioned Rs 202 crore and the remaining amount should be contributed by the Hubli-Dharwad Municipal Corporation, NWKRTC and Hubli-Dharwad Urban Development Authority.
Considering the financial constraint and delay involved in finishing the preliminary work, the authorities had decided to go ahead first with the four-lane project.
The work which had started earnestly in 2011 has slowed down considerably. The passengers and the residents complained that people residing on either side of the road were facing trouble as the works have been stopped. Incomplete work has created pollution by generating dust. Commuting between Hubli and Dharwad has turned cumbersome.
IN A NUTSHELL
* The 22 km stretch between Dharwad and Hubli was taken up for conversion into four-lane and the work of widening commenced in 2010 by Karnataka Road Development Corporation Limited (KRDCL).
* 30 acres of land acquired for the purpose
* Trees along the road on either side felled to facilitate road-widening
* When this process was on, the idea of introducing Bus Rapid Transit System mooted
* BRTS needed acquisition of more land as there were plans to make the road a six-lane stretch
* Since the process of land acquisition was time-consuming, it was decided that the work of converting the road into four-lane stretch be finished first
Surat-Nashik road connectivity on the cards
October 28, 2013
Tushar Pawar, TNN
NASHIK: Road connectivity between Surat and Nashik is set to improve, with the Gujarat government taking up paving work of the Surat-Nashik Road, Gujarat principal secretary S S Rathore said in Nashik on Saturday.
Rathore, principal secretary, department of roads & buildings of the Gujarat government, was attending a engineers’ award presentation at the Nashik centre of The Institution of Engineers (India) on Saturday. “We are focusing on improving connectivity between Gujarat and Maharashtra, from Surat to Saputra, which is the border of Gujrat adjacent to Nashik district. We have already handed over a road to the National Highway Authority of India (NHAI) for widening. Around 98 per cent work has already been completed, while the rest of the stretch before Saputara is to be developed shortly,” Rathore said at the programme.
Rathore said, “We are planning to develop 18,000 km of roads across the state of Gujarat over the next few years. We have improved connectivity between districts. We have also improved road connectivity in 98 per cent of villages. We have decided to resurface roads that are over seven years old.”
S Subrahmanyan, managing director of Hindustan Aeronautics Ltd (HAL) said, “There are several technological challenges and engineers must focus on finding solutions over these. They must be innovative to bring quality and competitiveness.”
Sanjay Khandare, Nashik Municipal Corporation (NMC) commissioner also attended the event.
Various engineering awards instituted by the Nashik local centre of The Institution of Engineers (India) were presented at the event to Anil Lodha, Nayana S Rao, Rajesh Atmaram Patil, Chandrashekhar N Kulkarni, Rajan Bhagawat, professor Prakash Kadave, Naresh Sahare, Vikas Agrawal, Ghanashyam Patil, Atul Jadhav, Sopan Talekar, Shrikant Agarkar, Smita Paithankar, Manisha Suryavanshi and Priyanka Shirude.
More Buses Under JNNURM Scheme
October 25, 2013
While presenting the budget for year 2013-14, Mr. Chidambaram proposed to allot Rs 14873 crore for Jawaharlal Nehru National Urban Renewal Mission (JNNURM). He made it known that the buses sanctioned during 2009 to 2012 which amounted to 14000 have helped a lot with the transport. As a result, most of the allotted money will result in buying of more buses. It is proposed to give the public transport a boost of 10000 new buses during 2013-14. These new buses are mostly to ply in the hilly areas providing better and timely service.
It is also seen that many of the cities have already started placing orders for low floor buses as well as semi-low floor buses. It is assumed that they were just waiting on centre govt to provide the funding. Through this announcement the govt hopes to connect more areas with JNNURM as buses are still the most preferred means of transport.
Road Transports and the State Transport Undertakings have started procuring the buses under the JNNURM scheme for improving the structure of transport.
Ever since the Delhi rape case, there has been a need for better and safer public transport.
It has been asked by the centre govt to increase the number of state run govt buses. With this announcement the major manufacturers of buses like Tata Motors Ltd, Volvo buses India Pvt. Ltd and Ashok Leyland can expect an increase their sale of buses.
It is expected that besides centre govt providing Rs 15000 crore for this scheme, the state governments will invest Rs 10000 crore by themselves too.
Source-http://www.jnnurm.co.in
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