What is the investment opportunity in infrastructure space in India at the moment
If you look at the transportation sector roads, railways, airports, ports, ever since the PPP programme started in the 10th five-year plan we may have 700-800 special purpose vehicles (SPVs) in all. Maybe roads itself will have around 500 SPVs. In the last 10-15 years, only 10-15 assets have changed hands. So, the demand has built up a lot, and we should see far more deals in the next 12 months.
Does the market continue to be led by buyers, or have the expectations of sellers started moving up with optimism on growth leading to increase in traffic
Valuations will keep going up and down. The point is that either you can sit and say that my value will go up tomorrow, or you can churn it and get on with your new job, which gives you profits and strengthens your networth, because you don't have the ability to hold the same asset for 25 years. I will not give much importance to how may times the book deal happens. The project that were bid in early days have better numbers because there were less competitions and people were prudent in bidding. Once the competition came in, people started taking 8-10% call on the economy, while the earlier ones were conservative at 4%-5% only. So, I feel every project will find its own level. There are as many assets today which are below book, and then there are some which maybe worth even two times.
In India, situations when promoters are willing to sell below book are very rare...
It is right, the dilemma of liquidity versus valuation keeps coming. The Indian industry is blessed, because we have the most generous, most liberal and benevolent set of bankers. They are willing to hold their hands through thick and thin. If the same guys were there in some other country, they would have been taken by the liquidation route long ago. So, that way Indian industry is lucky to have bankers who are very tolerant. Whether bankers should be tolerant, the answer is no. They are playing with public money ultimately. So, why the promoters necessarily don't sell, the answer is that bankers don't pressurise enough. The people who have to take a tough stance will be the bankers. They have to say that it is my money at stake, I have given you four times the leverage. Start retiring that.
Is the pressure from banks building up now on promoters to sell
Unfortunately, I don't think the bankers are still doing enough. While they talk about NPAs, the fact is that I have not seen a single bank, even today come out and sell the asset, pressurise promoters. They always keep complaining, but nothing happens. They have been given all the rights. They have substitution agreements and so many other rights given to them. But the fact is whether they have exercised their rights, the answer is no.
In this scenario, what sort of opportunity would come your way in terms of investing in some of these assets
We are not contractors. We just look at the fact that there are 400-500 spas that are created. They will all change hands one fine day. We believe time has come when even the patience of the bankers is wearing out. We believe even if the time turns good and more jobs come, the contractor or the developer will not be able to take advantage of it unless he monetises his past assets and take that money for the next round of projects. So, irrespective how the sentiments move, we believe the time is right for the assets to change hands and that is why we decided that there will be opportunities around and look at the possibility of building up the road assets.