Budget did little for infra..

Vinayak Chatterjee’s article on Budget support for the infra sector is a good read. He points out that –

It is also the first year of the 12th Five-Year Plan and the anticipation was that the Budget would make some path-breaking announcements that would support, institutionally and otherwise, putting on the ground $200 billion of infra every year for the next five years — double the current run rate.

He says the budget did a bit, but not enuf. For ex, there was hardly anything for the power sector, the biggest bottleneck in Indian infra today.

The full artilce — The Budget and failed expectations

 

Infra projects – the UPA has done nothin

This is a Business Standard article. The link has the full article, listed below are the projects Vinayak Chatterjee points out. The interesting part is – there is hardly anything here the UPA govt can lay claim to. The Vajpayee govt started or came up with the big ones. To think these Congress jokers have more than 3 years to go.

Ten big infrastructure projects that could transform the country

Vinayak Chatterjee / New Delhi August 15, 2011, 12:48 IST

 

The current lacklustre mood of the nation could well be revitalised with a clutch of gamechanging projects. Here are 10 for consideration:

National River Linking Project

The National River Linking Project (NRLP) was mooted by the Vajpayee government in 2002 to artificially link 14 Himalayan rivers in northern India and 16 peninsular rivers in southern India. The idea first emerged in the nineteenth century and was again resurrected when Captain Dinshaw Dastur suggested a “Garland Canal” in 1974. In 2009, it was scrapped citing high cost, environmental concerns, human displacement issues and effects on biodiversity. NRLP could help mitigate regional imbalances caused due to frequent floods and droughts. The project would also lead to fresh inland navigational routes, new sources of hydro power and create millions of hectares of irrigated land.

Kalpasar Project

Jaitapur Nuclear Power Plant

Delhi-Srinagar Direct Rail Link

Samudra Setu — India-Sri Lanka Bridge

Western Dedicated Freight Corridor

Delhi Mumbai Industrial Corridor

Eastern Dedicated Freight Corridor

Mumbai as an International Finance Centre (IFC)

Chittagong Port to Agartala (Tripura) Road Corridor

 

State of Indian Infra: Project delays abound

Here’s something from the Eco Survey released pre budget:

The Department of Programme Implementation monitors the progress in Central sector projects costing Rs 150 crore and above on a monthly basis. The progress report of October 2010 indicates that projects such as roads, power, railways, petroleum, telecom, coal, and steel constitute about 92 per cent of the total 559 monitored projects and overtime project delays have been creeping up.  As on October 2010, out of the 559 projects, 14 are ahead of schedule, 117 are on schedule, and 293 are delayed. Of the balance projects, no dates have been fixed for commissioning.

What this effectively means is that only 131 of the 559 projects are on schedule. This is about 23%. So our infra isnt to going to get better any time soon.

(and we are not talking about the relative freeze in awarding new projects since last 1-2 years)

Power sector JVs

 

JVs in the BTG space

 The emerging battle lines in the power sector. Some of these will try to compete with BHEL and L&T. 

The BGR Hitachi JV status remains unclear to us. Some media reports in May said the deal was signed. Some other reports say the two companies are still in discussion and the deal will be signed by July. Even in Oct09, a series of stories appeared saying a deal with Hitachi was being signed ‘soon’.

While the stock market is going ga-ga over BGR’s prospects in the power BTG space, some industry sources we have been checking with are not so enamoured by the company.

Construction equipment market

Construction Equipment Market

Data from a corporate PPT, tho the source is what looks like some research outfit.

Lot of action in backhoe loader market. Volvo, Escorts and BEML have entered the market this year. Mahindra will enter the market in 2011. JCB dominates the market with something like 75% market share. And it is a big market, around Rs 3000 crore, as per this table. JCB in India has annual revenues around Rs 3000 crore, could be more now.

Mumbai Sea Link – a white elephant

Came across this interesting infobyte.

The average daily traffic on Noida Toll Bridge was 98,746 vehicles for Apr-Jun09. As compard to this, Mumbai Sealink is doing around 20,000 vehicles per day, just about 20%.

The capex in Noida bridge was around Rs 420 crore. The Mumbai Sealink cost Rs 1600 crore, or about 4x.

So there is a difference in economics of about 20x (5x vehicles, 1/4 the cost), in favour of the Noida bridge. So, if in Mumbai they charge Rs 75 for a round trip, the equivalent of that is around Rs 4 in Delhi.

Or look at this way. The Noida bridge it appears charges Rs 20 for one way. At Mumbai they charge Rs 50, about 2.5x. This is actually cheap, considering project cost is 4x. Only catch is – they get only 20% of traffic of Noida.

Consider this – if the toll was Rs 20 in Mumbai, then it needs may 400,000 vehicles a day to generate the same economics as the Noida bridge, or about 20x what it gets now. And not that Noida toll bridge is raking in the money. For FY09, after being operational for maybe 7-8 years, it had an ROCE of around 9%.

It appears rather obvious – the Mumbai bridge is unlikely to be profitable. It is a white elephant, perhaps meant to line political pockets. And it not fully finished even now.

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Telecom Towers – another big infra opportunity

The telecom tower business seems set to offer 3rd party players a strong growth opportunity. That is what players like GTL Infra have been saying and betting upon. American Tower, the US company in this business, is also eyeing the Indian market, perhaps driven by the same thought.
Business will come from existing mobile players, who may want to outsource part of futre tower capacity, or where they may want to share infra with other telecom players. This is clear merit in the sharing argument, particularly in low traffic areas. Mobile market is increasingly moving to semi urban and rural areas. For example, the Vodafone chief said he would target rural India to get to a 100mn subscriber base by 2010 or so in India.
The govt is spending Rs 4000 crore of its own to promote infra. ET reports the bidding process has 22 active players. (see story)

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