Megha Engineering: Winner of marquee infra projects and second highest electoral bond buyer has been a constant participant in auctions

Megha Engineering and Infrastructure Ltd (MEIL), which emerged as the second-largest donor in the electoral bond scheme has been a consistent participant in the auctions, which typically occurred before state assembly elections, from April 2019 to October 2023. During this period, it donated Rs 966 crore to political parties through the bonds.

Three subsidiaries of the Hyderabad-based firm have also contributed. For instance, its subsidiary Western UP Power Transmission donated Rs 220 crore to political parties between October 2023 and January 11 of this calendar year, which marked the final round of electoral bond auction before the apex court invalidated the “opaque” scheme. Additionally, two subsidiaries of MEIL — SEPC Power and Evey Trans Power — contributed Rs 40 crore and Rs 6 crore, respectively, through electoral bonds to political parties.

Cumulatively, the Megha Group of companies have contributed Rs 1,232 crore to different political parties.

Business metrics

According to Registrar of Company (RoC) data sourced by PrivateCircle Research, MEIL’s consolidated revenue from operations for the financial year ending March 2023 stood at Rs 31,766 crore, higher 10% than FY22. Its net profit, meanwhile, rose 7.5% year-on-year (y-o-y) to Rs 2,797 crore in FY23. PV Krishna Reddy is the MD & CEO of MIEL.

MEIL claims to be a “pioneer of the public-private partnership (PPP) model of development in India” on its website. It has significant projects in the areas of irrigation, water management, power, hydrocarbons, transportation, buildings, and industrial infrastructure.

CRISIL Ratings, in a note dated January 10, re-affirmed its “A1+” Rating on the debt instrument of MEIL, citing its “strong and established” market position in the engineering, procurement and construction (EPC) business. It also factored in the company’s healthy operating efficiency, despite dependence on external debt in the medium term, resulting in a comfortable financial risk profile.

“Revenue is estimated to increase to Rs 35,000 crore this fiscal (FY24) with revenue visibility remaining healthy over the medium term due to a strong order book position of Rs 1.87 trillion as on September 31, 2023, along with orderbook to revenue ratio of 5.4 times as on March 31, 2022,” India Ratings said. “The company has already clocked revenue of Rs. 14,341 crore in the first half of the fiscal, which is 10% on year growth, on a standalone basis,” it added.

Project wins

MEIL in May 2023 won two separate packages to build Thane-Borivali twin tunnel project in Mumbai for a total bid amount of Rs 14,400 crore. The company won the contract against construction major Larsen & Toubro (L&T), which moved court Bombay High Court against the contract win, but got their petition dismissed due to lack of merit. Interestingly, MIEL donated electoral bonds amounting to Rs 140 crore in April 2023 to political parties. In 2020, the company bagged the award to build Zojila tunnel connecting Srinagar and Leh.

Further, Olectra Greentech, a subsidiary of MEIL, has been the biggest beneficiary of the Centre’s electric bus programme rolled out across the country, bagging contracts from state transport undertakings across the country. The company has bagged orders of about 8,100 buses, which will be delivered in the next two years, beating established large original equipment manufacturers (OEM) such as Tata Motors and Ashok Leyland.

Olectra received the largest e-bus order worth Rs 10,000 crore from the Maharashtra State Road Transport Corporation. A deal with Mumbai’s BEST for 2,100 buses was legally changed by Tata Motors, but the apex court dismissed the appeal. Olectra will deliver these buses over the next two fiscal.

The majority of these are on the Gross Cost Contract GCC) model. It has tied up with Chinese EV company, BYD for the supply of components. The initial EV kits came from BYD and the company says they are working on localising, baring battery and some powertrain components.

At a recent investor call, the company said they were following a strategy of first bagging orders and then making CAPEX rather than investing into CAPEX and then waiting for the orders. The average cost of the Olectra’s e-buses is Rs 1.2-2 crore.

Olectra already supplies e-buses to the Pune Municipal Corporation. Prime Minister Narendra Modi inaugurated the e-depot from where the Olectra buses are operating in the city. Olectra was the L1 bidder for the PMC order of 300 electric buses. These buses were badged at MEIL Olectra in Pune.

In an extraordinary general meeting, Olectra also awarded a contract in July 2023 for the construction of a greenfield EV manufacturing facility to its parent company, MEIL. The 150-acre plant in Telangana, worth Rs 750 crore, has a production capacity of 5,000 units per year, which can be doubled to 10,000 units. The plant is currently operational, with trials underway.

Lastly, MEIL’s offices in 2019 were reportedly raided by the Income Tax Department for suspected “malfunctioning” in the accounts of the company. MEIL, however, informally denied the raids and said it was a routine inspection by the tax department.