News Detail

• L Khushu, chief executive officer of ERA Infra spoke to CNBC-TV18 about the infrastructure space and the way forward for the company.
• Q: With the contract from NHAI worth Rs 1020 crore, where does your order book stand  and when can we see execution?
• A: This project is 93.22 km long and it is falling in the state of UP and Uttarakhand. We are expecting to sign the concession agreement by middle of January, and after six months we will do the financial closure. In this case, we are thinking of doing the financial closure little earlier, so maybe we can start the project by end of April.
• Q: How are the margins in this project because what one heard from a lot of road contracting awards lately is that there is not enough EPC contracting work anyway to go around, so projects are being bid at thinner and thinner margins, how would the margin work out for this one?
• A: Actually if you see our project pipeline, for last year, we did not bag any of the NHAI contracts because of this problem. But over the past few months now, the situation has improved, and the concessionaires have come to an understanding that they have to put good margins on the project. We had bid for so many projects within the margins we wanted to have, but we couldn’t bag any of them although we bid for many.
• In this project, we had the advantage that we are already working on three projects in UP and this area falls within the zone where all quarries are available. This Rudrapur and Pantnagar areas are highly industrial areas where more industry growth is expected in coming years. This is the only road which is going to the Nainital area. We expect a good growth in this area in the traffic in the coming years and that is why we have given a yearly premium of Rs 34 crore in this project. We hope that we are going to get 8-10% margins at least in this project.
• Q: When will it be completed?
• A: We have a timeframe of two and half years for completion and 30 years is the concession period for this project. That means from April 2012, take two and half years after that.
• Q: To concentrate on the two BoT on which you faced some delays in the previous quarter, could you take us through the status on these two projects?
• A: Gwalior Bypass is already completed for the portion of the land they had given us; there is problem of 2.6 km of defence land and we have already applied for commercial operation date (COD) for the project. It is already being processed by the authorities and it will be sent to NHAI for approval soon.
• Regarding Hyderabad project, by the end of this month, we are going to apply for the COD because that project will also be completed by the end of this month. We have already thrown open traffic on that highway. There was about 800 meters of the road which was stuck up because of the court case in that road. Although traffic was opened up about three months back, that portion of the road which was held up because of the court case is also now cleared and will be able to freeze that as well by end of December. We will then go for laying whole road for eight-lane traffic by the end of this month and open it to traffic. That is how we will get COD for that project also.
• Q: You have FCCB maturing this month?
• A: On today’s date, we have got 401 bonds of USD 100,000 each which are getting due in the month of January. And we have already arranged ECBs to pay this money because redemption value of these bonds is going to be USD 60 billion. We are already in advance stages of getting the ECB and we will pay them in US currency.
• Q: So we will see extra interest burden in the Q4 and ahead?
• A: There will be slight impact but it is going to be marginal because the impact may be less and it can be sort of merged with our other profits which are coming through in these two quarters.
• Q: So what should we assume by way of revenue growth for the full year and for FY13?
• A: I think by the end of the year, we should be able to touch Rs 4500-4600 crore and last year we did Rs 3800 crore. So it’s going to be a 10-12% growth.
• Q: You have a trading segment which contributed Rs 65 crore in the previous year, on year-on-year basis, it was nil – some sort of increased contribution going forward and what exactly does that comprise off?
• A: This is procurement of steel and cement and other materials which we have done and this is going to improve slightly because we are trying for some trading in the steel sector as well as in the iron-ore sector. So this could increase.

Source