Road EPC companies set for 15% topline growth in FY18: Crisil
The road ministry’s efforts to improve the financial health of road companies in the country have paid off. According to ratings agency Crisil, credit profile of road engineering, procurement and construction (EPC) companies have shown a sharp turnaround. The Crisil report added that these road EPC companies are set for 15% topline growth in current financial year. “Driven by the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI), over 80% of the highway projects in the past three years have been bid out under the hybrid – or engineering, procurement, construction (EPC) – model. Not surprisingly, 50 road EPC companies rated in the investment-grade by Crisil, have benefited from the trend and delivered 20% compounded annual growth in revenue in the past three years,” the report said. According to the report, better working capital management and capital structure, sharp focus on execution and judicious bidding has led to a significantly improved credit ratio, with the ratio of upgrades to downgrades in the sector improving to 2.0 in the last financial year, up from 0.11 in financial year 2015- 2016. The trend is expected to continue for current financial year. “Crisil-rated companies are expected to maintain their revenue growth momentum this financial year, fuelled by a strong order book of Rs 85,000 crore (as of FY17 end), and expected order-book-to-revenue ratio of three times this financial year, which provides good topline visibility,” said Sachin Gupta, Senior Director, Crisil Ratings. The combined order book of these 50 companies is likely to touch Rs one lakh crore this financial year, driven largely by increased government spending in the roads sector, the report said. However, the trend may hold true only for pure road EPC companies. ” In contrast, many large diversified EPC players are yet to wade out of the credit profile morass they entered in the past because of aggressive bidding, leveraged balance sheets, policy bottlenecks and a sluggish economy,” the Crisil report said. Crisil also expects the interest coverage ratio or (ICR) for road EPC companies to further improve. “Along with healthy revenue growth, Crisil-rated players have maintained a comfortable capital structure, with aggregate gearing of close to 0.5 times. And despite scaling up in business, what helped them control borrowings was efficient working capital management, lower capex, and policy support for build-operate-transfer projects. That has brought about a gradual improvement in key credit metrics such as interest coverage at four times in financial year-2016-2017, which is expected to rise to five times this financial year,” the report said. Linval Joseph Authentic Jersey
Delhi-Saharanpur highway: State recommends CBI investigation
The State government on Tuesday recommended a CBI investigation in allegations of embezzlement of around Rs 700 crore by a Hyderabad-based private firm that was awarded the contract to construct the Delhi-Saharanpur four-lane highway. Principal Secretary (Home), Arvind Kumar confirmed that the letter to Department of Personnel & Training (Ministry of Home Affairs) recommending CBI probe into the matter had been sent on May 16. Former Principal Secretary UP State Highway Authority (UPSHA) Navneet Sehgal told The Indian Express that the contract, worth Rs 2500 crore, was awarded to the firm in 2010 and work had started in 2011. However, the firm stopped work citing environment clearance and despite it being cleared later, the work wasn’t completed, added Sehgal. Upon inspection of the work that it did, he said, it was discovered that the firm had used only Rs 100 crore of the Rs 700 crore it had withdrawn from public and private banks against the state government project. Since it was a matter of misuse of public money, a CBI probe was recommended and forwarded to the then SP government in February this year, added Sehgal. A police case was also registered in Lucknow in this regard. UPSHA principal secretary Avanesh Awasthi, who took over from Sehgal, said, “After taking charge of the office, I came across the serious irregularities and recommended the CBI investigation to the government.” Andre Dawson Jersey
Why Indian roads are always work-in-progress
On a road trip from Mumbai, the ‘go-slow’ signposts are commonplace on the National Highway 48 (formerly NH4) that connects the financial capital with Bengaluru. The first 200km of Thane-Satara stretch has 16 fly-overs under construction currently, some moving at a snail’s pace, some others abandoned midway, a few pillars built by the contractor ensuring perennial traffic mess on the busy highway. In India, building roads, flyovers and bridges is a never-ending process. Apart from the National Highway Authority of India (NHAI) and contractors appointed by it, state public works departments and municipal corporations are busy building roads. Some roads take several years to complete and by then, it’s time to start widening them, considering India’s vehicle population growth. Then, monsoons and unusually high heavy-duty traffic take a toll on the road, some bridges and flyovers remain constantly under repair. The work-in-progress signboards, an inevitable part of Indian roads, should, in fact, read ‘work-never-ends’. Nearly a decade after the Vajpayee government executed Golden Quadrilateral project and linked Indian cities with the hinterland, India is attempting a re-run of the dream project. The road transport minister Nitin Gadkari’s recent claim that India has built 8,144 km of roads in 2016-17 and awarded another 16,800km of roads to be built, creating a ‘world record’ of sorts, should definitely cheer every Indian. He said efforts are being made to further improve the road construction target to 40km a day, up from the current 23km. This, according to Gadkari, is several times what the previous UPA government achieved when it was in power. But as you travel along highways, what strikes you is the slow-paced road development, with the poor land acquisition, unkind court orders and cash-strapped contractors all contributing to the delay. Bankers are wary of lending to contractors even after the government conceived the new hybrid-annuity model (HAM) to minimise risks for promoters. HAM is a combination of engineering-procurement-construction (EPC) and build-operate-transfer (BOT) formats, with the government and the private companies sharing project cost in 40:60 ratio. The government also shoulders the responsibility of revenue collection. While most of our highways are still 2-laned or 4-laned, and always try to catch up with the increasing vehicle density, countries like China go with 12-lane highways and more. For us, access-controlled, high-tech roads are still a long way off. Liquor shops are shut now, but there are stray dogs and unattended cattle all along our highways, threatening the seamless journey. On the NH66 that connects Goa to Mangalore, cement mixers and mud excavators are busy at work, slowing your pace. Mumbai-based IRB Infrastructure, which won the mega contract to widen the 189-km stretch from Kundapur to the Goa border, has sized down several hills – either for laying the road or amassing mud needed for road widening. The Rs 2,400 crore project, with Rs 536.22 crore in viability gap funding from NHAI, was awarded in August 2012 and was to be completed in 910 days. But nearly five years later, the road work has not reached anywhere. Like in every delayed project, users on NH66 will end up paying a heavy toll for a longer tenure to cover the cost overrun. Joaquin Benoit Authentic Jersey
DGCA to get more teeth soon
The country’s civil aviation regulator Directorate General of Civil Aviation (DGCA) is likely to get new powers including that of imposing penalties for violations. At present, the watchdog can debar, suspend and even cancel the permission to fly for the carriers as well as individual pilots and engineers. However, it cannot impose any monetary penalty. The government has started working on the proposal, which has been in the works for some time. A senior official from the civil aviation ministry said the procedure to amend the Aircraft Act, 1934 has been initiated and the idea is to have “more graded granular penal provisions” for the DGCA in dealing with violations. The government is actively working on the proposal considering the country’s domestic aviation sector has been seeing healthy double-digit growth for over two years and entry of new players are expected with the inauguration of more flights under the regional connectivity scheme. Lenny Dykstra Jersey
Abolishing FIPB: Would be even better if India modified restriction in aviation, retail
Nothing symbolises how far, and fast, India has moved in terms of opening its markets than last week’s abolition of the Foreign Investment Promotion Board (FIPB). Set up as part of the 1991 economic reforms, the FIPB was a high-level inter-ministerial group that cleared foreign investment proposals in the country at a time when most investment avenues were off bounds. At a time when bringing in foreign investment also meant a plethora of clearances from various ministries, the FIPB served as a one-window clearance—and no matter which ministry it was housed in, the prime minister’s office was always keeping a watch on it. Over a period of time, as the economy grew stronger and corporate India became more competitive, various restrictions on foreign investment started getting relaxed. Indeed, relaxing of FDI restrictions went almost hand in hand with the lowering of import duties since both symbolised the ability of Indian firms to take on global competition. In the initial years, for instance, India restricted how much foreign investment was allowed in the telecom sector; later, however, even 100% FDI was allowed. Till even a few years ago, while foreign pharmaceuticals firms were allowed to set up new plants in India—greenfield, in jargon—they were not allowed to take over Indian firms; indeed, at one time, the fear was foreigners would buy out Indian firms and that this would raise medicine prices and reduce availability. DeMario Davis Authentic Jersey
Sure Mr Jaitley, Air India Can Be Sold But You May Have To Pay Someone To Buy It
No statement made by any NDA minister made so far is as significant as the one made by Finance Minister Arun Jaitley on Saturday (27 May), where he called for the divestment of Air India. “If 86 per cent of the flying can be handled by the private sector, they can handle 100 per cent also,” he said. But his views on public sector banks were underwhelming. While pointing out that we don’t need 30-32 public sector banks of various kinds, his solution seems to be the merger of weak banks. He said, “we want fewer banks, but bigger and stronger banks…”. This is a vain hope. Bigger does not always mean stronger, as the sharp drop in State Bank of India’s consolidated profits post the merger with its five subsidiaries and the Bharatiya Mahila Bank shows. Merging the other losers in the banking sector is hardly going to build a stronger bank. The point is simple: why should not the Air India logic work for public sector banks too? If 30 per cent of banking can be handled by private sector banks, why not 70 per cent – the current share of public sector banks? Why not reduce the public sector banking footprint to a level at which it will not sink the government’s fiscal boat whenever the business cycle goes for a toss? One political answer could be that financial inclusion and social needs are better met by public sector banks, since the private sector is unenthusiastic about creating customers who only entail costs. Out of the 286 million Jan Dhan accounts now in operation, barely 10 million was contributed by private sector banks. Sam Reinhart Jersey
Arun Jaitley for Air India sell-off, says private airlines can handle entire market, no need for state-run co
Finance Minister Arun Jaitley has favoured disinvestment of the loss-making Air India, saying the airlines market share is just around 14 percent whereas the debt burden is Rs 50,000 crore. This is the clearest indication yet from the current NDA regime on possible stake sale in Air India, which is staying afloat on taxpayers money. Air India’s market share today is around 14 percent while the debt is Rs 50,000 crore while the government has not put in money in private carriers, Jaitley said at Dialogue@DDNews programme. To run Air India, around Rs 50,000 crore have been put in and that money could have been used for promoting education, the minister added. “In this country, if 87 or 86 percent flying can be handled by the private sector… then they can also do 100 percent,” Jaitley said. According to him, of the total debt, around Rs 20,000-25,000 crore are related to aircraft valuation. “What to do with the remaining amount… Air India also has some assets,” he said even as he emphasised that the civil aviation ministry is making all efforts to explore all the possibilities. Jaitley further said that when he was civil aviation minister for a brief period during 1999-2000, he pitched for disinvestment of Air India arguing that if it was not done, “nothing will be left to disinvest. That was around 18 years ago”.
Aviation ministry to plan path for AI this week
The flight path for Air India’s future may be drawn as early as next month. With finance minister Arun Jaitley saying the government is open to disinvesting in the airline, the aviation ministry will this week begin internal deliberations on the issue. Apart from this, the Niti Aayog is also learnt to be in advance stages of finalising its recommendations for the debt-ridden Maharaja. “Internally within the ministry we will take a call on how to take the FM’s statement forward. Once the ministry makes up its mind on the issue of disinvesting in AI, we will take the matter to the Cabinet for approval. If the Cabinet gives its nod, then the department of disinvestment will implement the same,” said a top aviation ministry source. The doubt in everyone’s mind is whether AI — with its debt burden of almost Rs 52,000 crore — will get a buyer. Sources said the government may informally find out if some serious player is willing to run the airline, then it will take the process forward. The FM has also said that this will happen only if there is a strategic buyer. “We hugely respect FM’s opinion that instead of putting thousands of crores in AI, that money can be spent on social sector schemes. We will very soon decide whether we can move in the direction of divesting in AI as that is the fundamental question, along with will there be a buyer and how to attract one, given the issues with AI,” said the ministry source. Quenton Nelson Jersey
Solar panels to attract 5 per cent rate under GST: Revenue Secy Hasmukh Adhia
The centre has finally clarified that solar panels will attract a 5 per cent tax rate under the Goods and Services Tax (GST), contrary to the 18 per cent rate which was announced earlier. “All solar equipments and its parts would attract 5% GST only,” Revenue secretary Hasmukh Adhia tweeted. Power, coal, mines and renewable energy minister Piyush Goyal had on 19 May said the 18 per cent rate for solar will not impact the solar power tariffs. “Tariffs for solar projects vary from project to project. The rise will be compensated by the decline in corruption and operational difficulties,” Goyal had said at a media conference. The government had also announced that the rate finalised for coal stood at 5 per cent. ETEnergyworld was the first to report the anomaly on 20 May. Rajeev Kapoor, Secretary at the ministry of new and renewable energy secretary had told ETEnergyworld that the renewable energy sector and all parts related to it will remain under the 5 per cent tax slab. ALSO READ: How will the higher tax rate impact the solar power sector? As per chapter 85 of the GST rates finalised by the government, all renewable energy based devices and spare parts were classified under the rate of 5 per cent. Kapoor had also stated that there was an anomaly which would be addressed soon. The government is reportedly expected to issue a clarification on the confusion over tax rates for solar power sector at the next GST council meeting which will be chaired on June 3. Kyle Okposo Authentic Jersey
Bihar announces mega renewable power policy; to add 3,400 MW in five years
The Bihar government has come up with a new renewable power policy for the state where it looks to set up over 3,400 Megawatt projects based on non-fossil fuel-based resources in the next five years. The policy is likely to spur investments to the tune of Rs 20,000 crore in energy projects, according to Centre for Energy and Environment Development (CEED), a non-profit organization active in Bihar’s energy space. The state’s Cabinet last week cleared the policy called ‘Bihar Policy for Promotion of New and Renewable Sources, 2017’ and is likely to notify the same soon. Under the policy, the state government is mulling setting up 2,984 MW capacity based on solar energy, 282 MW on biogas and 200 MW small hydropower plants. Of the total solar capacity, the state plans to set up 1,000 MW rooftop solar projects and 1,00 MW as mini grid projects. Composed of solar modules, a battery bank, and an inverter, a mini-grid system can offer solar power as the primary power source and later switch to alternative power sources when solar power is insufficient for meeting demand. The renewable energy capacity addition of Bihar is in line with central government’s plan to have capacity of 175 Gigawatt built on alternative sources of energy by 2022. Of this 175 GW, the government plans to add 100 GW solar power capacity, 60 GW wind, 10 GW from biomass and 5 GW from small hydro projects. “The policy is expected to open up massive new avenues for jobs and livelihood opportunities in the state; particularly in supply chain, operation, and maintenance for grid-connected and off-grid or decentralized renewable energy projects,” CEED said in a statement. It further said the policy provides a host of economic incentives to project developers for setting up renewable energy projects, which includes exemption of electricity duty, Value Added Tax (VAT), distribution charges and cross-subsidy surcharges. CEED said the provisions to de-risk private sector investment in mini-grid projects are also included in the policy given the fact that remote areas of Bihar possess huge potential for mini-grids and it is important to tap those potential with suitable investment climate. Josh Sitton Womens Jersey