(The helper of a driver rests on top of his parked truck along a busy highway on the outskirts of New Delhi June 15, 2012.)
(Reuters) – The chairman of India’s largest road construction firm IRB Infrastructure Developers Ltd (IRBI.NS) urged the government to invite companies to bid to build and operate dozens of new highways, a step regarded as crucial to economic growth.
India sees ramping up the construction of new roads, power plants and ports as crucial to making its businesses more internationally competitive and lifting economic growth out of its worst slowdown in a decade.
But the private sector’s efforts to build new projects have been derailed by problems ranging from coal and gas supply shortages in the power sector to a throttling bureaucracy and a lack of bank funding in the roads sector.
IRB needs to win new government contracts in order to reverse two consecutive falls in quarterly net profit, Chairman Virendra Mhaiskar told Reuters.
Mhaiskar, who until this year was in the Forbes India list of the country’s 100 richest people, said the state-run National Highways Authority of India (NHAI) should offer up for bidding 20-30 highways previously awarded to companies but which failed to take off.
He said in a phone interview he would like to make bids for new projects worth up to 40 billion rupees in the next 3-6 months to prop up an order book that has shrunk to 70 billion rupees from about 84 billion in May.
“Profit growth will entirely depend on new orders,” Mhaiskar said. “Because if they’re going to exhaust our order book pipeline, then the challenge on the profit remains.”
Bank of America-Merrill Lynch and Angel Broking say IRB is in a strong position to pick up new orders and both have a “buy” rating on IRB’s stock. However, BoA-ML in November cited a slowdown in new project orders as a concern.
IRB, India’s largest road construction firm by market value, posted a 12 per cent drop in net profit to 1.1 billion rupees in the July-Sept quarter, compared with the same period last year. Its net debt to equity ratio is 2.55:1.
“PRIME CONCERN”
India awarded under 2,000 km (1,240 miles) worth of new road construction contracts in the last fiscal year, which ended in March, against a target of 9,500 km (5,900 miles).
“We have seen very little orders getting announced by the NHAI in the last whole of the year. So that remains a prime concern,” Mhaiskar said.
“We understand their views as well, that they feel that there is sluggishness and they may not get a good response. But the point is: one needs to keep the good work going,” he said.
The NHAI chairman did not respond to a request for comment.
The government has pushed a public-private-partnership (PPP) construction model in which developers bid for projects in exchange for sharing some of the revenue with the state – a way of getting investment without emptying the public purse.
Besides delay in awarding government projects, an economic slowdown and various mining bans in India mean there are fewer cars and trucks than there might have been on the roads to pay tolls – eating into companies’ revenues.
Two of India’s best known infrastructure companies, GMR (GMRI.NS) and GVK (GVKP.NS), have moved to exit high-profile road projects. In response, the government is working on a formula to ease the payments that companies have to pay to the state in exchange for operating highways.
Recent projects have been designed mainly on a model known as “build-operate-transfer” (BOT), where companies build and own highways for a fixed period before handing them over to the government.
“These days bankers have become more cautious in lending to road BOT projects. They want 80 percent of the land in possession before the financial closure of the project could be achieved,” said Viral Shah, an analyst at Angel Broking. (Editing by Sumeet Chatterjee and Pravin Char)
SUMMARY-GMR Highways, part of the Bangalore-based GMR Group, has sold a majority stake of 74% in its Tamil Nadu toll road asset
GMR Highways, part of the Bangalore-based GMR Group, has sold a majority stake of 74% in its Tamil Nadu toll road asset —GMR Ulundurpet Expressways (GUEL) — for around R222 crore to IDFC Alternatives’ India Infrastructure Fund 1 (IIF1).IDFC Alternatives is the alternate asset management vertical at IDFC. GUEL operates the highway stretch of 73 km from Tindivanam to Ulundurpet on National Highway 45 in Tamil Nadu. The project commenced commercial operations in July 2009.
GUEL, along with three other road assets of the company, was on the block for the last six months, and GMR was understood to have been engaged with a host of Indian and foreign investors for the stake sale.
The other three assets up for sale are understood to be an annuity project Adloor Yella-Reddy-Gundla Pochanpalli in Andhra Pradesh, and BOT toll assets of Hyderabad-Vijaywada and Hungund-Hospet.
According to market sources, SBI Macquarie and Morgan Stanley had also looked at these assets for a possible stake purchase. At present, sources say IDFC is in discussions with GMR for other road assets as well. However, IDFC Alternatives managing partner and CEO MK Sinha did not comment on the same.
While GMR and IDFC refused to comment on the valuations for GUEL, market sources say the company would have received about 5% premium on the book value. The originally R800-crore Ulundurpet project saw a cost escalation of about R90 crore during construction, taking the project cost close to R890 crore, say sources.
GMR’s equity investment in the project is close to R291 crore, and the project has a term loan of about R596 crore, the source said. “The toll collected on the project is about R203 crore in the 2011-2012 fiscal,” he said.
GUEL is the second divestment in GMR’s roads portfolio. In February, GMR Highways divested 74% stake in Farukhnagar-Jadcherla highway in Andhra Pradesh to SBI Macquarie Infrastructure Investments and SBI Macquarie Infrastructure Trust for R206 crore.
GMR Group CFO Madhu Terdal said the divestment was in line with GMR Group’s ‘Asset Right and Asset Light Strategy’ and will reduce debt by about R459 crore as on August 31, 2013, on a fully consolidated basis.
Sinha of IDFC Alternatives said, “This investment is our first major acquisition and a step in the direction of implementing our road sector strategy. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets.”
Analysts say the deal brings in a much-needed breather to GMR, which is saddled with a debt of over R33,000 crore.
“While this deal will help GMR Group to de-leverage and free up capital to be invested in other projects under development, infrastructure focused funds institutions get opportunity to refinance such assets and further enhance their returns on the invested equity,” Centrum Capital head (infra solutions group) Sandeep Upadhyay said.
IIF1 closed in June 2009 with a fund size of $927 million from Indian and international institutional investors. As of June, IIF1 had invested 84% of its total capital across 15 portfolio companies and R250-300 crore is still left in the fund, said Sinha. IIF has investments in over 1,878 lane km of roads in India.
Company to slash debt by `459 crore following disinvestment
Infrastructure group GMR has decided to sell majority stake in one of its road projects named GMR Ulundurpet Expressways for a consideration of Rs 222 crore. The buyer- India Infrastructure Fund would then get to hold a 74 per cent stake in this project.This is their second such divestment in the roads portfolio and “in line with the asset right and asset light” strategy of the group, it said.
Divestment of this asset will help the company slash debt by about Rs 459 crore as on end of August this year on a fully consolidated basis, in addition to infusing equity funds of Rs 222 crore.
“This transaction signifies GMR Group’s ability to successfully implement its asset-light-asset-right strategy under challenging market conditions. We at GMR Group, continue to focus on creating liquidity and reducing our leveraged position as part of the strategy of churning of assets. The GMR Group will continue to focus in adopting this approach in other businesses as well,” said Madhu Terdal, group CFO, GMR Group.
The highway project operates the stretch between Tindivanam to Ulundurpet on National Highway 45 in Tamil Nadu, counting 73 km. Its commercial operations had begun in 2009.
“This investment is our first major acquisition and a step in the direction of implementing our road sector strategy of acquiring control of operational projects with proven traffic history. Given the uncertainty and delays in implementing under construction projects, we will continue our focus on acquisition of operating road assets,” said MK Sinham, managing partner and CEO of IDFC Alternatives. IIF is a fund managed by IDFC Alternatives.
Infrastructure focused fund IIF has a portfolio with existing investments in roads, ports, conventional and cleantech energy assets. Their investments span across entities that operate in the aggregate, over 1,878 km of roads in India and the fund further hopes to expand its road portfolio.
NEW DELHI: The Road Transport Ministry will approach the Committee of Secretaries for an amicable way out for the Kishangarh-Ahmedabad Highway project which is stalled after GMR’s exit.GMR Infrastructure BSE 0.50 % early this year had walked out of the project citing difficulties in taking up the project due to regulatory hurdles, including delays in environment clearance and land acquisition.
According to sources, GMR Infrastructure was ready to restart the project with some preconditions, including making piece-meal payments.
The Law Ministry, however, had already rejected the developer’s preconditions, including piece-meal payments, for resuming work on the project.
“We are going to the Committee of Secretaries (CoS) on the matter,” Road Secretary Vijar Chibber told reporters here. He said the meeting of CoS may take place in the next 10-15 days. The CoS is headed by Cabinet Secretary Ajit Kumar Seth.
The company has also said it would pay about 50 per cent of the amount to restart the work on project at present and pay the remaining sum including interest in subsequent years.
The Ministry and the company are already in discussions to rescue the project.
Sources added that the proposal from the Ministry is to ask the company to make requisite payments in time and to seek its guarantee to ensure that the project is not abandoned mid-way, leading to financial burden falling on government.
The project is estimated to have required an investment of Rs 5,387 crore. The Bangalore-based group had won the project in western India through international competitive bidding in September 2011 at Rs 636 crore annual premium for 26 years.
NHAI had said that the company exited the project on account of financial hurdles in arranging finance for the project and not due to lack of regulatory clearances.
It is to be implemented through the Public Private Partnership (PPP) model on Design, Build, Finance, Operate and Transfer basis.
(GMR Infrastructure was ready to start the project with some preconditions, including making piece-meal payments.)
NEW DELHI: In a bid to salvage the stalled Kishangarh-Udaipur-Ahmedabad highway project of GMR Infrastructure, the Ministry of Road Transport and Highways will soon approach the Committee of Secretaries for the matter.
“The matter will go to the Committee of Secretaries, we want that the net present value of the project does not change,” a Road Ministry official told reporters.The difference between the present value of cash inflows and the present value of cash outflows is the net present value of a project.
The Ministry and the company are already in discussions to rescue the project.According to sources, GMR Infrastructure BSE 0.76 % was ready to start the project with some preconditions, including making piece-meal payments.The company has also said it would pay about 50 per cent of the amount to restart the work on project at present and pay the remaining sum in the subsequent years, including interest.The official added that the proposal from the Ministry is to ask the company to make the requisite payments in time and to seek its guarantee to ensure that the project is not abandoned mid-way, leading to the financial burden falling on the the government.
Earlier this year, GMR Infrastructure walked out of the Kishangarh-Udaipur-Ahmedabad project 16 months after securing the order.The project is estimated to have required an investment of Rs 5,387 crore. The Bangalore-based group had won the project in western India through international competitive bidding at Rs 636 crore annual premium for 26 years.It is believed that the company terminated the contract on account of difficulties in taking up the project due to regulatory hurdles, including delays in environment clearance and land acquisition.However, NHAI had said that the company exited the project on account of financial hurdles in arranging finance for the project and not due to lack of regulatory clearances.The company had won the project in September, 2011, through the international competitive bidding route. It is to be implemented through the Public Private Partnership (PPP) model on Design, Build, Finance, Operate and Transfer basis.
GMR Infra’s Canadian arm Homeland Energy to sell stake in 2 African projects
GMR Infra’s Canadian arm Homeland Energy to sell stake in 2 African projects
NEW DELHI: GMR InfrastructureBSE 3.11 % today said one of its Canadian arm, Homeland Energy Group Ltd (HEGL), has decided to sell stakes in two of its coal mines in Africa.In a statement, the company said that HEGL “has entered into an agreement to divest 50 per cent equity interest in TshedzaMining Resource (Pty) Ltd, which holds the license for the development of Eloff Mines.”
The purchaser of HEGL’s interest in the Eloff Mines is its existing partner, who holds rest of the 50 per cent stake in the property.
According to a filing of HEGL to Toronto Stock Exchange (TSX), the deal value is about USD 12 million for selling 50 per cent stake in Eloff Mines.
“HEGL wishes to announce that it has entered into an agreement dated March 25, 2013 to dispose of its 50 per cent interest in the Eloff Property, through the sale of shares of Tshedza Mining Resource (Pty) Ltd, in consideration for the payment of ZAR 110 million (approximately USD 12 million),” it said.
According to HEGL, the coal from Eloff can get exported to India but due to logistics infrastructure difficulties and evacuation costs, it would be uneconomical. Besides, risk associated with the project are too high, it said.
Moreover, HEGL has also entered into an agreement for selling its entire stake in Ferrat Coal (Kendal) Pty Ltd,GMRBSE 3.11 % said but did not disclosed the deal value.
GMR Energy, a subsidiary of GMR Infra, is the majority shareholder in HEGL. The two deals are subject to necessary regulatory approvals.
The Kendal mine is an operating mine and sell coal in African market, while the Eloff mine is under development stage, it added.
The two sell offs are part of GMR’s “asset light – asset right” strategy. Under this, the Bangalore-based infrastructure firm had raised about Rs 2,500 crore some time back by selling its entire 70 per cent stake in a Singapore-based power project and 74 per cent stake in a highway project.
Shares of GMR today closed at Rs 21.55 apiece on the BSE, up 3.11 per cent from the previous close.
Preliminary hearing on GMR arbitration on April 10
Source: PTI
Four months after Maldives terminated the contract given to Indian infrastructure major GMR to develop and operate the international airport in Male, the two sides will sit down next month in London to begin the multi-million dollar arbitration process.
The preliminary hearing that will structure the arbitration process over the abrupt termination of the 25 year contract with GMR Group for the development of Ibrahim Nasir International Airport (INIA) by the Maldives government has been slated for April 10.
“It is the initial meeting of the arbitration process,” Sidharth Kapur, Chief Financial Officer of GMR Group told PTI in New Delhi. “We will sit down and talk. The GMR has not given us any figure as yet. Forensic audit is still going on,” Maldives’ President Mohamed Waheed’s Press Secretary Masood Imad told PTI in Male.
In addition to the three arbitrators, government and Maldives Airports Comp any Limited (MACL) lawyers along with representatives of GMR will participate in the sit-down.
“It’s not a hearing to argue the case. The hearing will only decide a date to start arbitration proceedings and its structure. Things that need to be decided before the proceedings begin will be discussed during that hearing,” Maldives’ Deputy Solicitor General of the Attorney General’s Office Ahmed Ushaamhe said.
Singapore National University Professor M Sonaraja will represent the Maldives government while GMR’s arbitrator is former Chief Justice of UK Lord Nicholas Edison Phillips, Haveeru news reported.
Retired senior British Judge Lord Leonard Hubert Hoffman is the arbitrator mutually agreed by GMR and the government, the report said.
The arbitration will go on at the Singapore Arbitration Centre as mentioned in the agreement. GMR had previously stated a figure of USD 800 million as compensation based on their intial estimates. However, company officials said they are yet to come to a final figure.
Sources in the Maldivian government too said GMR has not given a final figure yet.
However, the sources reiterated the Maldivian government’s stand that the airport operator agreement with GMR had been annulled on “void ab initio” (invalid from the outset) and that the government does not have to bear any compensation for the termination.
VIJAYAWADA: The much-awaited widening of Hyderabad-Vijayawada National Highway No.9 project is likely to be delayed for another three to four months as farmers on either side of the highway are not agreeing to part with their land.
The GMR Infrastructure Ltd has bagged the 181-km long road project worth of Rs 1,200 crore on a BOT basis through international competitive bidding and its works are scheduled to begin in January, 2010 after completion of the land acquisition process by Dec, 2009.
However, with the Government intending to acquire land at half its market value, many farmers are not interested in handing over their valuable land for the expansion work.
The 181-km four-laning work on Hyderabad-Vijayawada National Highway would be taken up from 40th km near Malkapuram in Nalgonda district to 221-km mark at Nandigama in Krishna district. For this, a total of 1,053 hectares land would be required in 53 villages in Nalgonda district and 13 in Krishna district.
According to a senior officer in the National Highways Authority of India (NHAI), the Government which is scheduled to complete the land acquisition process by the first week of December, has so far acquired not even 50 percent of land from the total of 1,053 hectares.When revenue authorities visited the land to be acquired at Nakirekal and Chityala in Nalgonda district and Jaggayyapet in Krishna district some days ago, they experienced a stiff resistance from landowners.
According to local people, the market rate of land in the villages surrounding Nandigama is Rs 15 lakh per acre and Rs 20 lakh per acre in Nandigama town. However, the Government is willing to acquire the land by paying amounts not exceeding Rs 6 lakh per acre.
The game is very popular among many people and fans do not mind taking a bat and ball and hitting a few lusty blows. You can find people from all age groups involved in playing a cricket match whenever they find the time and the space too.Playing in the highest levels with the best teams in the world may not be something that they can do; nonetheless they play the game just because there is so much of passion involved.All you need to do is gather some people around who are passionate about the game and would love to play the game anytime and thus keeping this in mind INDIAN TOLLWAYS LEAGUE was started and the first match took place between KapschMetroJV and DGSL on 6th of December 2008 at Dwarka sports club.
The First league match was played between KapschMetroJV and Delhi Gurgaon Superconnectivity Ltd.
Mr. Gerald Becvar along with Mr. Sachin Bhatia and Mr. Sachin Sharma tossed the coin for their teams accompanied by the captains , Mr.Gaurav Singh and Mr. Nipun Soni for KMJV and DGSL respectively. KMJV won the toss and invited the DGSL team to bat first. Kicking off to a good start with the bat DGSL managed to score a respectful total of 133 runs. KMJV started slow which ultimately led to the increase of run rate due to which the players were in rush to score and couldn’t perform under building pressure and rising run rate and ultimately lost the match by 32 runs. The organizers were happy to have a match in a true sportsmen spirit and the enthusiasm which kept the match alive throughout thanks to both the teams for a wonderful game. Until next match its the editor signing off assuring you to bring more action from INDIAN TOLLWAYS LEAGUE.
Indian Tollways Cricket League is a series of cricket matches planned between various tolling companies.
First match, 6th Dec, 2008:
Kapsch Metro JV vs DSC
Leading infrastructure companies like GMR, INT, SOMA, KMC are kindly invited to come on this Saturday (6th Dec, 2008) and join the league for the next matches.
