Expect 8-10% margins from expressway contract: IL&FS Engg
IL&FS Engineering and Construction Company received EPC contract worth Rs 1,436 crore. The company received a letter of intent from Kiratpur Ner Chowk Expressway Limited, a special purpose vehicle (SPV) incorporated by ITNL (ILandFS Transportation Networks) for the project.
March 13, 2013 / 16:40 IST
ILandFS Engineering and Construction Company received engineering, procurement and construction (EPC) contract worth Rs 1,436 crore. The company received a letter of intent from Kiratpur Ner Chowk Expressway Limited, a special purpose vehicle (SPV) incorporated by ITNL (ILandFS Transportation Networks) for the project.
The project is an EPC contract that involves four laning of Kiratpur Ner Chowk section of NH-21 in the state of Punjab and Himachal Pradesh.Also read: ILandFS Trans subsidiary gets road maintenance contracts in PortugalMD Khattar, CEO, ILandFS Engineering said all the necessary clearances for the project have been received and now they will be starting the execution. He also clarified that they are not the developers and will only be doing construction jobThe time line for the project would be about three years and the project margins could be around 8-10 percent, he added.Below is the verbatim transcript of his interview on CNBC-TV18Q: Can you take us through the recent win, the Kiratpur Ner Chowk Expressway?A: This is a road project that we have got. It is from Kiratpur to Ner Chowk. Kiratpur is in Punjab and Ner Chowk in Himachal Pradesh. This is a four laning project. The existing two lanes are being converted into four lanes. Apart from that what is being done is to improve the alignment. Since this is in a hilly area so where the original curves which were sharp have to be eased out so that you have a better transportation system.Q: Will you need any forest clearance for it?A: All those things have been done; environmental clearances etc whatever is needed. Now, we will be in a position to take up the work and start the execution.Q: When will this Rs 1,400 crore revenue come in? What’s the timeline of the entire project?A: The timeline is about three years. It is in a hilly area, there are about five tunnels and also some major bridges which need to be constructed.Q: Do you only get an Engineering Procurement and Construction (EPC) fee for this or are you also the road developer? Is it a build operate transfer (BOT) and annuity?A: IL&FS Engineering is not the developer. We are only going to do the construction job for this road.Q: Based on the Supreme Court verdict which came out yesterday, do you in anyway benefit from that? Do you have any linear projects for which you will now not require forest clearances?A: At the moment we don’t have linear projects. However, the SC verdict will certainly help because if don’t need all the clearances etc then obviously it will make things a little easier.Q: What are the margins you make in this project?A: The normal margin will be about 8-10 percent. Q: Do you don’t have a cost escalation clause?A: We do have a cost escalation clause. But the project is for a long period of around over three years, so we have to see that we are able to see our costs are within the budget.Q: How is the competition in for these projects now? It used to be very debilitating with people ready to give wafer thin margins. Have things improved in terms of competition and undercutting?A: The competition still remains. I do hope things will improve as we go by. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
