GMR Infrastructure expects its highways arm to breakeven and start turning positive by the year end, having narrowed losses to R1.5 crore in the first six months of this financial year. It had posted loss of R38 crore on revenue of R390 crore in 2010-11. In the previous quarter, it bagged India?s first mega highway project on the Delhi-Mumbai corridor. Arun Kumar Sharma, CEO of GMR Highways, tells FE?s Ajay Sukumaran that the company is on the look-out for similar opportunities even as it expects revenue from highways to increase to about R1,300 crore next financial year. Excerpts:

Will the highways arm now start contributing a lot more?

Next year it will because we are commissioning two projects in 2012-13, the Hyderabad-Vijayawada and Hungund-Hospet. Revenue from Kishangarh-Ahmedabad will start from day one. So the top line will increase tremendously, we expect it will go up to something around R1,300 crore from the R450 crore target this year. But because we have to pay premium to NHAI (National Highways Authority of India), the bottom line will not be growing so much.

Are you looking for other big projects like the Kishangarh-Ahmedabad mega highway you won recently?

We are looking for more such projects. The government originally identified nine mega-projects and this is the first of them. They are taking their time for preparation of the detailed project report (DPR) and all those things. They are also going to announce expressways as well. So the strategy is to look at the bigger projects, expressways and mega-highways. Some of the expressway stretches they are planning are good, like Jaipur-Delhi, Jaipur-Chandigarh and Bangalore-Chennai.

When are these expected to come up for bidding?

Even the DPRs have not been finalised. It will take maybe another one or two years.

The perception is that the premium you quoted for the mega-highway was unrealistic…

See, NHAI themselves had come out with a presentation internally, which they gave to Planning Commission, comparing all the bids in the last six months. As per that, it is not very aggressive it is about ninth from the top. The biggest premium was given at Ahmedabad-Baroda by IRB which is almost five times what they were expecting. In our case, it is only one and a half times what they were expecting. It looks big because the number is so huge, it is a R676 crore premium which has been offered. But the length also is huge, no such project has been done so far.

You are looking for private equity investment. What is the progress on that?

That will come at the holding company level, GMR Highways, and we have to do some dilution. We have just started working on that. It will take some time.

What is the target you have for the next couple of years?

This year?s target was R6,000 crore which we have achieved already. The target for the next three years is R6,000-7,000 crore of projects each year. It could be a single project or multiple projects.

Are you looking at other countries for highway projects?

We have some thinking going on but not yet in a big way. India itself has huge potential so the priority has been the country itself, unlike airports where there is hardly any opportunity in India which is why we have gone out. But if any good proposal comes in, we will look at it. But again the issues are same. In all countries, land issues are a problem.