Recent instances of companies walking out of infrastructure projects over delays have cast a shadow on the sector. What has been your experience
We have faced a lot of difficulties in getting all the clearances. What we do is, we almost become the arms of the government, the NHAI, and the local panchayat, and work with them to make things happen. Also, we have bid for meaningful projects, unlike others who bid for poor projects and then look for clauses to get out.
Look at Larsen & Toubro, they have not walked out of single project, and so havent we. For our Delhi-Agra project, we worked with the authorities for almost 10 months to get the clearance.
But does it not lead to inordinate delays and cost overruns
Projects do end up taking more than three years because of these delays. Then there are time and cost overruns. Sometimes, things also get into a legal tangle. But I call it the learning process in public-private partnerships. Because without PPPs, there is no future. The GMR, GVK walkout was the bottoming out of the sector.
What solution do you propose to remove these roadblocks
I dont think the government should be in this business. They should do defence, police, and create social infrastructure, which are non-profitable in nature. And make the environment enabling for the private sector. Take the example of the Delhi Metro Rail Corporation. It has built a good 200 km of metro in about R35,000 crore, their total revenues is R600 crore, and they say they are profitable. You will give (loans at) zero rate to the public sector, you can give the same rate for private sector too.
You have already burnt your hands in the airport metro project in New Delhi...
I think it is an outstanding project, as we have built it with lot of care. But when we built it as per the project report, it was said there will be 40,000-45,000 passengers under one integrated terminal. There will be connectivity between all stations, and bus lines none of those things happened. The real estate market completely cracked, interest rates and forex went through the roof. It has been done in record cost and time of 27 months. But if the basic statistics change, what do you do
So, its not about safety, as has been widely publicised
No, nothing. Safety was the civil part of it, which we brought to the notice of the government. We agreed with the government that the line has to be shut down. It took them seven months to repair, so if it was some minor repair, they could have fixed it in one day.
So now you will be compensated for it
Of course, that is as per the agreement. The thing also now is that the lines economic dynamics changes perpetually. So, what is the lifecycle cost of maintenance of that line now, I dont know.
So you have a provision of perhaps exiting that project
Yes, as per the agreement, there is a provision. But we are committed to the line. We want the line to be viable. But it is floundering for no fault of ours.
How do you think these things will impact RInfra How will you mitigate these risks
RInfra fortunately is a very stable company. We have three arms. The electrical energy, generation and distribution arms are very stable and have stable cash flows.
Its only our metro business which is undergoing some stress today. The Mumbai metro will start by September this year. But Metro II has not seen the light of day. We are in discussions with the MMRDA (Mumbai Metropolitan Region Development Authority). Unless we get the clearances, this line cannot be built. They want to change the line, the scope, we are ready to work with them but I will not spend R2,000 crore and just build some viaduct in the middle of the road.
Would it see the same fate as Haji Ali-Worli sealink, which you exited last year
Difficult to say. I hope not.
So would you be treading with a lot of caution in future
Yes, we are not bidding for the Mumbai Trans-Harbour Link, because we found the risks were too many. We are exploring the elevated railway project. So I am looking to put R25,000-30,000 crore. It is not a small amount, so I have to weigh the risk. But this is not the only business we know, I can spend half a billion dollars and put up a 5 million cement plant in two years. Cement plant will come up this year.