No CBI raid on any offices yesterday: IRB Infrastructure

IRB Infrastructure plunged over 7 percent yesterday on reports of CBI raid. In an interview to CNBC-TV18, the company’s chairman and managing director VD Mhaiskar clarified that there was no Central Bureau of Investigation (CBI) raid on any IRB office yesterday.

He further said that CBI officials visited Pune office a month ago. "We have fully cooperated with CBI on all matters," he asserted 

According to him, vested interests are maligning image of the company. The company, he said, has not received any feedback from CBI so far.

He strongly believes that there is some bear cartel trying to hammer the stock. "We will be complaining this to Securities and Exchange Board of India (SEBI) very shortly," he added. 

Don't miss: The road ahead for Virendra Mhaiskar and IRB India

Below is the edited transcript of his interview on CNBC-TV18.

Q: There was some talk in the market about CBI conducting raids at IRB offices. Can you clarify exactly what the situation was?

A: There was no CBI raid yesterday on any of our offices. As regards this investigation is concerned, we have categorically denied any involvement in this matter from time to time. We have now come to believe that there are some vested interests who keep on maligning the image of the company. There was one media report yesterday, we are making our objections very clear to them.

Q: There was also talk earlier that on Friday maybe there had been some raids in some of your Pune facilities. Are you saying that it did not happen?

A: No, the Pune office was visited by the CBI officials around a month back. We had clarified to the exchanges then. They had come seeking some documents pertaining to our land purchases. We had cooperated with them and given them all the documents that they needed.

Q: Where do things stand right now? You are saying you are cooperating with the investigation. Have you got any feedback from the CBI?

A: We haven’t got any feedback from them. That’s the real tricky part. We see media reports confidently coming out stating what they believe is the fact. But we have not seen the investigation agency spokesperson coming out and giving any such information. So, there is no credibility or there is no authenticity. It is completely shocking. I think we have seen a pattern in the whole thing that every time the stock recovers, somebody comes out and posts some kind of unauthenticated report and takes the stock down. I strongly believe that there is some bear cartel trying to hammer the stock. We will be complaining this to Securities and Exchange Board of India (SEBI) very shortly.

Q: The other bit of news, which came in yesterday, is that the promoters have released 43 lakh share of their pledged quantity. Can you just take us through what's happening there? Are you in a better liquidity position?

A: Yes, the promoter group entities have sold shares in the past. At that time, I had purchased some shares. I had some loans. Against that, from my dividend payouts, I have released those shares. So, the pledge on the stock has certainly come down.

Q: Do you plan to do some more unlocking of shares? Any more pledges to be revoked in the coming days and where do your total pledges stand now?

A: As a promoter, I hold around 60 percent of the IRB stock and 7 percent of that stands pledged. In a continued process, we will be making all attempts to bring this pledge down to zero. 

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Q: How has business been? We have been reading some disturbing reports about the project awards from National Highways Authority of India (NHAI), which have been a small fraction of what they targeted at the start of the year. Is it very sluggish award of road projects?

A: If we look at the broader number last year, they gave out some 6,500 km worth of project. But, to the best of my knowledge, many projects are still to achieve financial closure. So, if I have to look at their net number, which will be in the range of around 4,500 km, they would have done close to 1,000 km this year till now. We have been able to bag close to 200 km of that.

There is a change in the approach. They are now saying that they want to have 80 percent land very much in their hand, which they used to gather till the financial closure was achieved. So, this is a very positive development that they want the land to be in their possession before they sign the concession agreement. So, now because of this, we are seeing the bidding activity has slowed down a bit. But if we give them this time of six months, post that, when we see a continued flurry of project, that will be good for the industry because they would have gathered the land and then they would have come out with the bidding. So, I think there is certain method in their approach. It is a welcome approach.

Q: Do you think the land gathering will become easier, if the Land Acquisition Bill is passed or will it become even a lengthier process?

A: I don’t think it would be a lengthier process because, for the road projects, present Land Acquisition Bill is not going to add much beyond the only fact that the compensation to the people surrendering the land would be much better. This particular bill is not applicable to land acquisition for road projects. The government will continue to have the right to acquire land required for road projects, wherever it is necessary. So, beyond the compensation, I don’t think there will be any improvement in it. The present process is a very robust process. I think there is no problem, as far as the process of land acquisition for road projects is concerned.

Q: Do you think, in the remaining months of this fiscal year, NHAI can get to that net number of 4,500-5,000 km or do you think that will be an uphill task in terms of real awards?

A: I believe that would be an uphill task. But with the ground work that they are doing, I think what's happening is a much more welcome thing rather than just announcing a big number.