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• Reliance Infrastructure has not bagged a single project in the last two years but the company would rather lose out to competition than make "irrational bids". Reliance Infra's CEO Lalit Jalan talks to ET about the slowdown in infrastructure development, fierce competition and company's plans for growth and value unlocking. Excerpts:
• Given that infrastructure growth has stagnated in the last one year, what is your expectation from the Budget?
• The government has talked about $1-trillion investment on infrastructure sector in the next five years. All they need to do is to remove bottlenecks in each segments - roads, ports, power- then the money will come on its own. For power sector, they don't even have to announce a project. If the land, fuel and clearance issues are resolved, independent power producers would set up projects on their own.
• What's the biggest challenge for an infrastructure player?
• One big problem is that the number of projects that have come up for bidding has reduced. As a result, 40-50 companies are bidding for every project. While the opportunity on paper is worth $1 trillion, in reality it is coming in pieces. We are committed to the bottom line and have been conservative in our bids. So, we haven't won a single project in the last two years.
• We are comfortable with our current order book and have no compulsion to bid at supernormal premium (the amount paid by the developer to the government). If I have to bid for a road project where I know I will lose money, why should I bid? There is a need to increase the flow of bankable projects.
• How fierce is the competition? And, is it competitive across all segments?
• The private sector bidding has been very, very irrational. They will kill each other. Bidding for power transmission and distribution, and road projects has been irrational. Some road developers say that they have their share of projects and wouldn't bid anymore but I have not seen the effect on the ground reality.
• Bids for metro and power projects too have been aggressive. Engineering and construction contracts have dried down and companies know they will have to bag a development project to get business; this is leading to crazy bidding.
• Will the aggressive bids lead to more projects in distress?
• It will lead to a lot of companies and projects becoming non-performing assets (NPA) and will also lead to a stage where many projects will not get funded. All this will give privatisation a bad name. So, many road projects are up for sale. I get a proposal every day.
• Buyers want projects at a price and sellers demand their own price. The deal would happen when the banks would completely twist their (sellers) arms. We keep hearing that the next round of rationality would come from the bankers. They would tell developers that we won't finance projects that have been bid so aggressively.

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