How Virendra Mhaiskar plans to take IRB to the next level

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How Virendra Mhaiskar plans to take IRB to the next level

Virendra Mhaiskar, the chairman and managing director of CNBC-TV18, speaks about IRB Infra's future funding, expansion, working the Indian system and diversification on the CNBC-TV18 show India Inc Gen Next

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IRB Infrastructure Developers , a Rs 1900 crore company is one of India's largest toll road operators, which is constructed and maintained over 1200 kilometers of roads.

Paving the way for the company is the Chairman and Managing Director Virendra Mhaiskar.

Calling himself the child of Indian reforms, Virendra - a civil engineer by training - joined his father in a business in 1990 to construct roads for municipalities.

But in 1995, avenues opened up for IRB with public-private partnerships (PPPs) being allowed through road development. IRB's current portfolio includes 11 out of 12 operational build-operate-transfer (BOT) projects including one of the largest in India - the Mumbai-Pune expressway - and the National Highway 4.

CNBC-TV18's Shereen Bhan caught up with Mhaiskar to talk to him about future funding, expansion, working the Indian system and diversification for her show India Inc Gen Next.

Here is the edited transcript of the interview. Also watch the video.

Q: Let me start by asking you I know that you believe you are the child of the reform era in India but many people find your story unbelievable, in ten years the kind of success that you achieved in a sector that is extremely regulated and fraught with uncertainties. The question is how have you managed to do it?

A: It is definitely a regulated sector and it was surely tough. But the way we developed it out it really helped because we were already doing construction. We were doing tolling as agents for government. So when this sector opened up in 1995 it was really a very welcome move for us to get into it. The early entry into it really helped us to build that portfolio.

Q: You believed in the whole public private partnership as early as the early nineties when this sort of boom took place as far as the PPP era was concerned, even so you were an unknown developer really doing roads for municipalities at that point of time. Nobody can imagine that in a short span of a decade you are the largest BOT player in this country today?

A: Yes, we actually believed in this and we started very early. We were doing construction, we were doing tolling and what used to happen is when we would collect toll, we would get people complaining that they are paying toll for a facility, which is not well maintained and that I would think if this opportunity ever comes, we should get to it because we will be able to offer the people the service what they are going to pay it for. So with that in mind we decided to enter this early in the sector.

Q: What were those first few years for you like when you actually were onsite seeing this sort of development take place?

A: My own training is to put it that way would be as an engineer on site was way back when I did the Nagpur airport - that was in 1992-1993. But as far as the BOT is concerned, the early years were quite tough because getting funds for these particular projects was a tough thing because nobody believed in assignment of toll right as a security to fund these projects.

To get funding done was a tough task, we raised money at that time, 18%-20% and by pledging shares of the company, by giving corporate guarantees because security as a toll was not an acceptable security then.

So it was quite tough but as we went on rolling out projects, we could show them that the toll revenues are up to the mark, we are completing projects on time actually that was something which gave confidence to the lenders to come forward and fund it.