Tata Projects, the engineering, procurement and construction arm of the Tata Group, could see almost 60% of its order book coming in from contracts bagged in urban infrastructure over the next three years, and industrial segments contributing far little than what they do today.
Industrial segment contracts from power generation, transmission and distribution, which formed almost 90% of its order book till about three years back are on a decline and could contribute to around 40% going forward, Vinayak Deshpande, managing director, Tata Projects told Fe.
In contrast, with rapid urbanisation in India, opportunities to build commercial complexes, houses, metros, hospitals, schools etc are on the rise.
“In the last 5-10 years India has seen a lot of urbanisation and it is only increasing by the day,” Deshpande said. He says that airport contruction hospitals, commercial buildings, schools, transportation systems like metros, water treatment, waste water management etc will be the sectors of the future.
“Looking at this growing urbanisation, Tata Projects has diversified into these sectors, which will eventually change the order book mix,” he said. At present, industrial and urban infrastructure form equal proportion in the company’s order book.
The development will be in line with the sharp drop in orders that India witnessed over the last few years, with large scale industrial orders in sectors like power, heavy engineering, highways, metals, and others coming down to a trickle.
According to CMIE data, average quarterly announcement of new investment proposals which rose continuously during the investment boom period starting 2004-05 and reached a peak of Rs 5.6 lakh crore in March 2009 started slipping after that. The average quarterly announcements dropped to almost Rs 4 lakh crore till 2011, and further slipped to Rs 2 lakh crore in 2011-12, Rs 1.2 lakh crore in 2012-13 and hit a low of Rs 90,000 crore in 2013-14.
As a strategy to grow its urban infrastructure business, Tata Projects has inked a strategic partnership with Brookfield Multiplex, to deliver a range of commercial & retail, residential, healthcare and tourism & leisure projects across India.