Amritha Pillay (MLD):What is the status of GIPL’s projects?
Parvez Umrigar (PU): Out of the total 15 projects, we have already commissioned four while two more will be commissioned by March next year. We have commissioned a bulk cargo port at Vizag, two NHAI projects on Kolkata-Chennai National Highway and a bridge project in Cochin. The Mumbai- Nashik Highway and one biomass project in the state of Punjab will be commissioned in this current fiscal year.
MLD: How much will GIPL be investing in these 15 projects?
PU: Overall, we have a committed capital expenditure (capex) of Rs100 billion for these 15 projects. Our current investments are mainly in three sectors— roads, ports and energy. Our interests lie in all core infrastructure projects like water, ports, energy, airports and roads. We own majority stake in most of these projects, with an average shareholding of about 80%.
MLD: Is there any ratio for each sector you have set from your capex plan?
PU: The road sector is likely to have around Rs30 billion plus, energy sector will have Rs35 billion, ports will have Rs20 billion while our two special economic zones (SEZs) will get about Rs10 billion. All these projects are on build, operate and transfer (BOT) basis.
MLD: What is the revenue model for these projects?
PU: There is a mix of annuity projects and traffic-oriented projects. Annuity projects obviously have more assurance; they are good projects more for the debt markets. They provide a good liquidity cover. There is no upside or downside in the annuity model. There is committed amount of money that the NHAI pays you. These projects serve good in the initial seven to eight years, while the traffic-oriented projects (toll based) take a longer period to grow, so they do better in the future. Thus, we maintain a mix between annuity and toll.
MLD: What is the average breakeven point for toll-based projects?
PU: Breakeven point is not an issue with us as such projects have far better results and less competition. We have already definanced the projects that were commissioned three years ago and they are making their own good money.
MLD: What are your expected returns on these new projects?
PU: As of today, when we bid for projects we expect to cross 20% of the equity.
MLD: Which are the projects that GIPL is looking forward to?
PU: We would like to enter into water transport, as it is a sector of future importance in mass transit. We are planning to bid for projects in the port sector as well as in the road sector where there are continuous opportunities with NHAI and at the State level. In the energy sector, we continue to look for opportunities both in thermal energy and steam energy.
MLD: What are the possibilities of GIPL forming another subsidiary in the near future?
PU: We have bid for a number of projects. We are the lowest bidder in the NHAI project on an annuity model connecting Patna to Muzaffarpur, which will be fully owned by us. However, NHAI is yet to give us a notification of intent on the same. It remains to see whether NHAI decides to award (us the project) or not. Each project that we bid is under a new company and our shareholding decides whether it would be a subsidiary or not. At present, we have around 15 companies for all projects and barring three companies, all other are our subsidiaries.
MLD: How do you expect GIPL to perform in the current fiscal?
PU: We expect our turnover to be about Rs2.5 billion toRs2.75 billion. I expect it to exceed Rs4.5 billion in FY11 and then Rs6.5 billion after that. Thus, I expect our turnover to double each year, in the next two consecutive years.