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Archive for the ‘Infrastructure’ Category

$110bn of stalled projects?

Posted by fairval on November 10, 2013

A report by GS has an interesting chart (the one on the right). If you add up the two types of stalled projects (Industrial and Infra) it adn. ds up to a humungous $110bn. How much of this will land up as bad debt?

It is not clear how long these could be stalled since. But the number is big enough to be 20-30% of the chart on the right (cumulative capex of last 4-5 years)

Capex cycle data

Capex cycle data


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Only 3-4 states have solvent electrical utilities in India

Posted by fairval on July 27, 2013

Found some data on finances of Indian electric utilities and they make for abysmal reading. Only about 4 states seem to have positive financials. Of these, 2 get touted for good governance – Gujarat and Delhi, and the chief ministers Narendra Modi and Sheila Dikshit have won 3 times in a row.

West Bengal and Kerala seem to have consistent positive performance. This was a bit of a surprise, given the long communist history of these states. The other state touted for good governence – Bihar – has very poor performance here. No sign of loss reduction either. The worst is Tamil Nadu, where the two parties are only concerned by distributing freebies and coming to power.


Gujarat scores highly in power availability also. Delhi’s performance here has to be discounted, becos, as India’s capital, it is likely to get assured supply in any case.  But given the stories of power blackouts in Delhi, not clear how true is the data here. Bihar and TN have no power either. So Nitish’s claims about good governance need to be taken with a pinch of salt.


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India’s plummeting capex: now at 7 year lows

Posted by fairval on April 2, 2013

Couple of good charts from a Goldman doc, showing how bad India’s capex cycle as got. The first one here is on new projects being awarded. We are now at 2005 levels.

New project orders now at 2005 levelsWhat is important to note is, capex levels were badly subdued for almost 7 years between 1997-2005. There was a capex boom in the 1992-96 period, which cant be seen in the above graph. So capex can stay depressed for several years. Because companies which can fund capex get into trouble in a down cycle, and it takes them a while to get out of it. Currently for ex, most infra cos are in deep trouble, so are steel, power cos.

While in manufacturing things arent as bad as in the previous downturn, still, an quick recovery in capex may not happen. The next chart also supports this point. Stalled projects have hit a high, this will either need to be cleared, or will end up as NPA in the banking system.

Stalled capex at all time high!





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Actual NPAs at 8-10% of bank assets?

Posted by fairval on July 31, 2012

Akash Prakash writes in today’s Business Standardhttps://fairval.wordpress.com/wp-admin/post-new.php?post_type=post

Many investors feel the true NPA picture (including restructured assets) would be in the region of 10-12 per cent of loan assets.

He further writes — As many former bankers point out, properly calculated, stressed assets for the banking system are already over 8 per cent of loans (a multi-decade high). This is based on the official NPA and restructured loan figures (adjusted for recoveries). Most investors continue to hear murmurs of rampant evergreening of loans, with a lot of anecdotal evidence pointing to asset quality being far worse than the reported numbers. (For example, I am aware of a very large infrastructure company which has not serviced any of its debts for over seven quarters now, yet is still not an NPA in any bank balance sheet.)

With Basel III coming up, and actual networth of banks (mostly PSU) considerably lower than reported, even loan funding will hit a road block. IPOs have been dead for a while, PE money is increasingly circumspect. The first rush of PE investors from 2006-08 period, are stuck with investments where holding periods are over, and exit overdue.

Does not look good for revival of investment demand.



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Budget did little for infra..

Posted by fairval on March 27, 2012

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


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Infra projects – the UPA has done nothin

Posted by fairval on August 16, 2011

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


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State of Indian Infra: Project delays abound

Posted by fairval on March 2, 2011

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)

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Power sector JVs

Posted by fairval on July 20, 2010


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.

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Construction equipment market

Posted by fairval on July 18, 2010

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.

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Mumbai Sea Link – a white elephant

Posted by fairval on August 6, 2009

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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