IRB Infrastructure Developers, a major build-operate-transfer (BOT) road developers, is changing strategy as it plans to bid also for the new hybrid annuity model (HAM) road projects. Virendra Mhaiskar, CMD, IRB Infrastructure, shares the company’s plans with Rouhan Sharma. Excerpts:
What has been the impact of the GST?
The government did take about two months to reduce the rate to 12% from 18% and another month to clarify that annuity payments would not attract any GST. Most things have been sorted out. However, the traffic volumes have not picked up nor there has been an increase in inter-state traffic. However, all these should pick up over a longer term. However, the waiting time at toll plazas have reduced due to another move of the government – the demonetisation. A higher number of people are opting for RFID cards and point of sales (PoS) and Paytm, etc. At present, around 25-30% of our toll collection is on electronic platforms compared to less than half a percent prior to demonetisation. T
his can certainly be flagged as one of the positives of the demonetisation exercise. Today, we have just one dedicated lane for RFID tags but seeing the promising growth on electronic platforms, we are currently upgrading our toll plazas where RFID cards can be used in other lanes as well.
What are the opportunities for the company to build the order book with the Bharatmala programme?
There are 20 hybrid projects that the NHAI is planning to bid out in coming months and there is a huge opportunity with the new toll-operate-transfer model, which is currently under the bidding stage. We have decided to now start bidding for the HAM projects because of the lack of BOT projects. Beyond this, we will of course look at various aspects of the whole Bharatmala programme, as it is progressively rolled out.
Do you have more plans for fund-raising?
After unlocking value through the InvIT, we are sitting on a decent amount of cash and have to studiously deploy this cash so that it is value accretive from a shareholder’s perspective. Plus, there will be a cash flow generation over the period of time, so there is no fund-raising plan. With the InvIT, IRB is in a self-sustaining zone where it will bid for projects, execute them, stabilise and transfer them to the InvIT, realise its capital with whatever upside is possible, and redeploy that. We are not dependent on fund-raising for future growth and are well-funded at this point in time for immediate opportunities, whether it is ToT or the HAM projects.