Working on projects worth Rs 150-400 cr: RPP Infra

On the possibility of deficient monsoon, Nithya said that it would not affect the company’s work as they are concentrating on drinking water line or sewage line and lining work for canals.

Below is the transcript of A Nithya’s interview with Reema Tendulkar and Mangalam Maloo on CNBC-TV18.

Reema: Can you give us some details about this joint venture (JV)? First, the financial commitment of this JV and secondly, what would be your share in this JV in terms of equity contribution?

A: The company to whom we have a JV is Hunan Construction Engineering Group based on the province Hunan and its headquarters is in Changsha in China. Today we the second round of meeting to discuss about the participation of work in India. The percentage shareholding is not yet decided. That we will discuss in future. They are keen to participate in work in India to directly.

The execution will be mostly by RPP and we are taking up their pre-qualification criteria from them to participate in the work and to win the project from Indian government.

Mangalam: So, what exactly will be the benefit for RPP Infra in terms of revenue sharing or profit sharing?

A: Profit sharing depends upon the project. Since in some projects our technical qualification will be enough and we are able to bid that project with our financial capability also. In some project financial will be from them. In such kind of projects, depends upon the risk they are taking, the profit sharing will also be different. We decided that profit sharing depends upon the risk factor what we are taking and what they are taking.

Reema: It will be project specific?

A: Yes, it will be decided project by project basis only.

Mangalam: And one leg of the joint venture is also with a UK company which has agreed to come on as a funding partner. So, how will that happen? Will that be in terms of debt infusion, equity infusion or what will the capital structure of that be?

A: Actually the initial discussion was going on with the finance company, Delamore and Owl through them only we got this JV with Hunan Construction and Engineering Group. They are more interested in doing Building, Operating and Transfer (BOT) projects and this private public partnership (PPP) projects. In Andhra Pradesh, Delamore and Owl is concentrating for developing their headquarters. Once they got the project, the financial will be by Delamore and the construction activity for the pre qualification purpose, we are using for the Hunan and the execution will be done RPP.

Reema: Have you identified any large projects which you will execute via this JV?

A Yes, four to five projects are in pipeline. We have to make all the necessary arrangements.

Reema: What is the size of thee four to five projects? When are you likely to bid for them?

A: It ranges from Rs 150 crore to Rs 400 crore.

Mangalam: One question on your irrigation segment. The Indian Met Department has indicated that there could perhaps be deficient rainfall this year. So, how will that segment perform on the back of deficient rainfalls or how will it perform irrespective of the rainfall this quarter?

A: Irrigation does not mean it is related to agriculture. What we are segregating is related to drinking water supply line to all public and lining of the canals because of the insufficient water. The canals lining should be done so that water will not be wasted. It is not directly linked to irrigation or deficiency in rainfall. So, water supply line or sewage line is given to the public.