Steel-to-shipping conglomerate Essar Group is planning an aggressive business expansion with diversification into areas like highway construction, railways, water supply, pipeline and urban infrastructure development.
The $18-billion group (by revenue) has planned investment of $2 billion or close to R10,000 crore in these sectors in the next four years.
It has created separate verticals for each of these sectors under umbrella company named Essar Infrastructure, which was floated earlier this year, and is putting together specialised teams to pursue business opportunities in infrastructure construction space.
?We foresee an order book of $4 billion (or R20,000 crore) worth of projects in the next two years. We will invest 51% of the total cost of projects while our partners will contribute the rest,? Essar Infrastructure senior vice-president and head (business development) Neeraj Sanghi told FE.
An infrastructure project normally takes at least two years to complete. So if the group bags projects worth R20,000 crore in next two years, the company will invest its share of cost in two years following that.
India is planning expenditure of $1 trillion in infrastructure in the next five years to replace dwindling infrastructure and create new capacity mainly in roads, ports, oil pipeline and railways.
This is expected to open up new avenues for private sector. In fact the government foresee 50% of the total investment coming from private firms.
At least half of the planned expenditure of Essar Infrastructure will go in highway sector as the company is looking to bag projects worth R10,000 crore in this segment. The company currently has an order book of R2,500 crore and is operating two projects namely four-laning of Lucknow-Sultanpur national highway in Uttar Pradesh and a state highway in Bihar.
?We want to compete for projects not less than R1,500 crore each. We already have tie-ups with some firms and are open to more partners with the expansion of expressway programme of the government,? Sanghi said.
The company will focus on build, operate and transfer projects with rights to charge toll from users of the infrastructure facility.