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Feb 28, 2013, 07.51 PM IST | Source: Moneycontrol.com

DFCC received bids for package 1, 2: Kotak Securities

Kotak Securities has come out with its report on infrastructure sector. According to the research firm, the Dedicated Freight Corridor Corporation of India (DFCC) received bids for package 1 & 2 (Rewari-Phulera, 283 kms & Phulera-Palanpur, 342 kms) of the Phase 1 of the Western Corridor in Dec 2012 and is likely to award them in the near future.

Kotak Securities has come out with its report on infrastructure sector. According to the research firm, the Dedicated Freight Corridor Corporation of India (DFCC) received bids for package 1 and 2 (Rewari-Phulera, 283 kms and Phulera-Palanpur, 342 kms) of the Phase 1 of the Western Corridor in December 2012 and is likely to award them in the near future.

DFC: Some progress finally, but still a long way to go. The DFCC has awarded the Khurja-Bhaupur section (343 kms) on the Eastern Corridor to Tata-Aldesa and is likely to soon award the first two packages (625 kms) on the Western Corridor. While this progress is positive, the project is significantly delayed (especially the Western Corridor) with phased commissioning expected to start in 2017 (original target was completion by 2017). Tata’s bid appears relatively aggressive (10-15% lower than L2) at Rs100 mn/km for a double line. Marubeni-Tata-KEC consortium adds to competition for the next package of the Western Corridor (two bidders earlier) adding to competition for L&T.

The progress on the Dedicated Freight Corridor (DFC) seems to be running with a 1-2 year lag (especially the Western Corridor). DFCC expects the commissioning of the Western Corridor, in a phased manner, to start from March 2017. This is against an original target of completing the entire project by 2017. So far, not a single order for civil works has been placed in the Western Corridor, though one is expected to be awarded. The Eastern Corridor still seems to slightly less delayed, with commissioning (in a phased manner) expected to start from December 2013. DFCC expects to complete the award of most of the civil works contracts by December 2013.

A consortium of Tata Projects and Aldesa (Spain) recently (January 2013) won the civil works/track laying contract for the Bhaupur-Khurja (343 kms) section on the Eastern Corridor. The 343 kms stretch was sliced in three sub-segments/lots and a bidder was allowed to bid for one/two or all three sub-segments, offering various discounts. All the three lots had 8-9 other bidders in the running. The contract was won for a cumulative value of about Rs33 bn, implying a per-km rate of about Rs95-100 mn. Prima facie, the bid seems a bit aggressive in light of the next highest (L2) bidder (it was lower by 10-15% in each of the three sub-segments).

DFCC received bids for package 1 and 2 (Rewari-Phulera, 283 kms and Phulera-Palanpur, 342 kms) of the Phase 1 of the Western Corridor in December 2012 and is likely to award them in the near future. Two bidders qualified for the packages: (1) A consortium of Sojitz (Japan) and L&T and (2) a consortium of Mitsui (Japan), Leighton and IRCON. For the third package (Palanpur-Vadodara, 305 kms), Marubeni-Tata Projects- KEC - IVRCL - Simplex -Gammon consortium has been added to the list of qualified bidders (totally, three consortiums are qualified to bid). Assuming bid levels similar to the Tata-Aldesa bid in the Eastern Corridor (bout Rs100 mn per km), each package (of phase 1) on average would be Rs30-31 bn. Assuming L&T will receive about two-thirds of the share of the total EPC contract, this would imply an average EPC order size of Rs20-21 bn per package.

Win by Tata-Aldesa consortium in Eastern Corridor reflects stiff competition A consortium of Tata Projects and Aldesa (Spain) recently (January 2013) won the civil works/track laying contract for a section on the Eastern Corridor (of the Dedicated Freight Corridor). The contract, worth about Rs33 bn, involves construction of a double line rail track for 343 kms, between Bhaupur and Khurja in Uttar Pradesh. The Dedicated Freight Corridor Corporation of India (DFCC) expects the physical work of the project to start in March-April 2013. The project is funded by the World Bank. The 343-km stretch was sliced into three sub-segments/lots and a bidder was allowed to bid for one/two or all three sub-segments offering various discounts, depending on the size of the project won.

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