Infra: Environmental clearances a major hurdle for progress

UR Associates has come out with its report on infra sector. According to research firm recent focus by the government to speed up infrastructure projects and regular monitoring of the projects is step in the right direction.

The recent focus by the government to speed up infrastructure projects and regular monitoring of the projects is a step in the right direction. However, lack of government action and policy paralysis is a major reason for the delayed project execution in the Indian infrastructure space. There are various road projects of National Highways where the environmental and forest clearances are/were pending. However, as per government sources, the MoEF has given environment clearance to few projects in a day.

Though, road sector has witnessed tremendous development so far, building metro projects is also on a priority list of the government and has provided for financial assistance for most of the metro projects under development in various cities in the country.

Ashoka Buildcon raises $150 mn from SBI, Macquarie- With an increased focus on the infrastructure sector, private equity funds managed by State Bank of India and Australia's Macquarie Group will jointly invest $150 mn in Ashoka Buildcon subsidiary company. Macquarie SBI Infrastructure Fund and SBI Macquarie Infrastructure Trust will together invest in the infrastructure firm's subsidiary, Ashoka Concessions Ltd (ACL), which is currently executing seven large-sized road projects. With this deal, the two PE fund managers will hold 34% stake in ACL, while 64% will be with the parent company, Ashoka Buildcon. ACL currently has a portfolio of seven projects worth $1.6 bn. 

BHEL to set up new plant in Maharashtra- Engineering major BHEL plans to set up a new manufacturing facility in Maharashtra for which it would invest Rs 1,590 mn, a top company official said. BHEL Tiruchirapalli Complex Executive Director A V Krishnan said BHEL, which has a special focus on power plant equipment, plans a 90,000 tonne capacity production facility of seamless tubes products at Bandara in Maharashtra. Though it is in the initial stage, pending land acquisition, BHEL has decided to invest Rs 1,590 mn to augment tubular products available in the western region, where requirement is high, he said. Krishnan said given the transportation bottlenecks all over the country, the location of the new plant has been chosen near Nagpur due to its easy access to major steel plants like Bhilai and Rourkela. He expressed hope that things would fortify for the actual blueprint by next month and is expected to crystallise in the next two to three years.

Lanco Infratech to raise Rs 20 bn by March 2013 via stake sale- Lanco Infra expects to raise Rs 20 bn by March 2013 to reduce debt and invest in ongoing projects. The firm had appointed Macquarie Capital Advisers, a Macquarie Group advisory, to find a strategic investor into its power and solar power businesses. In power, the company is trying to offload stakes in both thermal and hydropower at the project level. According to T. Adi Babu, Chief Operating Officer of Lanco, with the proposed divestment the debt to equity ratio of 4.38x is likely to drop to 4.0x. The company is also looking to unlock value from its non-core businesses such as roads, wind power and real estate.

L&T may buy entire stake in Audco- L&T is planning to acquire the entire stake of US-based Flowserve Corp. in their 50:50 joint venture (JV) Audco India Ltd, according to an internal discussion held last week, to strengthen its core valves business. The development was confirmed by three company executives who declined to be named as they are not company spokespersons. They said the company is reviewing its partnerships and will mostly seek majority shareholding in JVs going forward. L&T is a big brand now and wants to strengthen its core businesses, valves being one of the most critical ones, one of the executive added. Valves contributed Rs 7.8 bn to the sales of L&T in 2011-12, the second highest revenue generator after switchgear. L&T’s engineering and construction business gets nearly 60% of its valves from Audco India, which has manufacturing units in Tamil Nadu. Audco India, which began operations in 1962, reported gross revenue of Rs 5.9 bn in 2011-12. 

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