Require Rs 150 cr for stalled project from govt: Gammon

The cabinet today approved one-time fund infusing of upto 50 percent into languishing highway projects.
The Cabinet also increased investment in the Kaladan Multimodal Corridor project by Rs 2090 crore.

Kishor Kumar Mohanty, Managing Director (MD) of Gammon Infra said the move is a positive one as it will help in reducing halted projects and add to revenue in long run. Mohanty told CNBC-TV18 that the industry requires funds to the tune of Rs 10,000 to 15,000 crore for revival of projects. One will have to wait and see the structure in which funds are given and how the scheme is rolled out, he said. The criteria for getting funds could be related to the percentage of work completed in the project under consideration, Mohanty said adding that the interest by National Highway authority of India (NHAI) must be lower than that of banks. Mohanty said there is a possibility of a combined structure between NHAI, promoters and lenders to fund the stalled project completely. Gammon India requires Rs 150 crore for one of its stalled projects for which the bank consortium is led by Yes Bank, he added. Below is the verbatim transcript of Kishor Kumar Mohanty’s interview with Mangalam Maloo & Reema Tendulkar on CNBC-TV18.Reema: How much of a relief will it be and secondly for your company what is the requirement?A: First of all, the stalled projects in the roads sector were almost keen for an intervention since the time the new government came. If something like this has been done, then it is a very positive step by the government. We need to see the fine print and what are the terms and conditions. Secondly, there are large number of projects. This will give comfort to especially more than concessioner the private parties and the lender. Because lenders were suffering the most and their non-performing assets (NPAs) were going off in those stalled projects. So, 50 percent is the NHAI comptroller to contribute naturally the balance part can always come from the lender which will make the stalled projects going. The third thing talking about our projects, presently we have one project which is enduring completion in Hazipur–Muzaffarpur in Bihar which requires Rs 300 crore funds requirement for completion. So, 50 percent if the government gives it will be a Rs 150 crore. However, finally we have see what are the fine prints, what are the structure that has been created, how it is delivered and how fast it is quickly being rolled out so that it reaches the project level to see the difference.Mangalam: Could you give us a sense of what is the amount or what is the proportion of the contribution that you are seeking from the government in the sense that we have got 50 percent as a number but any more than that or any less than that? What is your level of comfort zone which the government would put in for the NHAI fund infusion?A: New flow has just come, so you have to study what is the total scope and prospect of it. At the face of it, today if the NHAI comes forward to fund 50 percent of it, the lenders are there. So, lenders will be always so happy to provide balance 50 percent or 40 percent and rest 10 percent might come from the promoters or sponsors. That will make the situation much more than going rather than being in a stalled position for so many year and the projects are languishing and the economy values are getting destroyed. I am sure it will be win-win situation for lenders for the concessioner and for NHAI also because few of the projects will get completed the economic activity will start moving. So, it will kick-start the economy or it will kick-start the infrastructure sector which is still waiting for some direct intervention by the government after the new government came into power.Reema: What could be the potential criteria which the government will consider in order to enable this money from the government according to you? A: First thing is they might put a condition that - what percentage of work has been completed. The project which are then completed beyond 50 percent might be applicable. Secondly, what has to be seen is what type of repayment structure NHAI is giving. What type of interest they will charge and whether it is creating additional comfort. More than the concessioners and the private parties, it will create a lot of comfort to the lending banking sector and the investors. So, it will depend upon few of the criteria’s and at what stage the government which project they will select to infuse the funds. What type of interest rate and what is the repayment structure whether it will suit the banking requirements because there is always a senior lender who will have a priority of repayment once the money comes from the NHAI.