Infrastructure firms upbeat on prospects
The Hindu Business Line, January 1, 2010, Page 3
But high interest rates could cause problems.
V. Rishi Kumar, Hyderabad
Infrastructure firms are upbeat on the business prospects next year but want the Government to play a major role in accelerating the sector's growth, in terms of faster clearance of projects and by ensuring adequate liquidity.
An interaction with a few industry players revealed that some of the companies feel that the sectoral cap on banks was a matter of concern as was the prospect of growing cost of finance, which they believe is imminent due to the Reserve Bank of India's intervention to tackle inflation.
The Chairman of Lanco Infratech, Mr L. Madhusudhan Rao, said that 2009 has managed to take on the global economic slowdown in its stride and ended on a positive note for the infrastructure companies.
The options for raising finance too have increased. The capital markets are conducive to raising funds, banks are willing to lend to good projects.
However, the Government's assurances to expedite infrastructure growth are yet to come through. More focussed support and faster clearances are required for road, port and airport projects, Mr Rao said.
“The power sector, for instance is likely to register a strong growth. And we expect this to continue in the current mode. However, the projected Plan targets may be hard to meet as we have already slipped,” he said.
The Chairman and Managing Director of IVRCL, Mr E. Sudhir Reddy, said with the economy growing at 7-8 per cent and greater focus from the Government on infrastructure through the public-private participatory (PPP) mode, this sector will see more investments and the momentum will continue.
There have been a few issues such as special economic zones (SEZs) not delivering to the extent they were intended to as many developers perceived them as real estate ventures, he felt. With the steel, power and cement sectors augmenting capacities, the Government needs to play a pro-active role in creating the necessary demand. Nearly one lakh crore worth road projects are up for award presenting opportunities. “Few years ago, we had only one $1 billion plus infrastructure company, we now have over half a dozen of them, reflecting that the sector continues to witness buoyancy,” Mr Reddy said.
The Chief Financial Officer of GVK Power and Infrastructure Ltd, Mr Isaac A. George, said, “There are some apprehensions that the interest rates will go up as RBI won't be a silent spectator to raising inflation levels, including food inflation.
“Most of the infrastructure companies, which rely on bank loans could face the prospect of higher interest rates. Therefore, the Government needs to play a pro-active role in achieving Plan targets. Already the power sector has slipped targets,” he said.
The Chief Financial Officer of Nagarjuna Construction Company Ltd, Mr Y.D. Murthy, said, "The macro economic conditions for infrastructure are positive. Lot of orders are up for award by the NHAI by middle of 2010."
"When it comes to project finance, bankers continue to lend promoters with strong balance sheet but the double-digit interest rate is a matter of concern. We have an order book of over Rs 16,000 crore and expect to bid for more BOT projects," Mr Murthy said.
The Hindu Business Line, January 1, 2010, Page 3
But high interest rates could cause problems.
V. Rishi Kumar, Hyderabad
Infrastructure firms are upbeat on the business prospects next year but want the Government to play a major role in accelerating the sector's growth, in terms of faster clearance of projects and by ensuring adequate liquidity.
An interaction with a few industry players revealed that some of the companies feel that the sectoral cap on banks was a matter of concern as was the prospect of growing cost of finance, which they believe is imminent due to the Reserve Bank of India's intervention to tackle inflation.
The Chairman of Lanco Infratech, Mr L. Madhusudhan Rao, said that 2009 has managed to take on the global economic slowdown in its stride and ended on a positive note for the infrastructure companies.
The options for raising finance too have increased. The capital markets are conducive to raising funds, banks are willing to lend to good projects.
However, the Government's assurances to expedite infrastructure growth are yet to come through. More focussed support and faster clearances are required for road, port and airport projects, Mr Rao said.
“The power sector, for instance is likely to register a strong growth. And we expect this to continue in the current mode. However, the projected Plan targets may be hard to meet as we have already slipped,” he said.
The Chairman and Managing Director of IVRCL, Mr E. Sudhir Reddy, said with the economy growing at 7-8 per cent and greater focus from the Government on infrastructure through the public-private participatory (PPP) mode, this sector will see more investments and the momentum will continue.
There have been a few issues such as special economic zones (SEZs) not delivering to the extent they were intended to as many developers perceived them as real estate ventures, he felt. With the steel, power and cement sectors augmenting capacities, the Government needs to play a pro-active role in creating the necessary demand. Nearly one lakh crore worth road projects are up for award presenting opportunities. “Few years ago, we had only one $1 billion plus infrastructure company, we now have over half a dozen of them, reflecting that the sector continues to witness buoyancy,” Mr Reddy said.
The Chief Financial Officer of GVK Power and Infrastructure Ltd, Mr Isaac A. George, said, “There are some apprehensions that the interest rates will go up as RBI won't be a silent spectator to raising inflation levels, including food inflation.
“Most of the infrastructure companies, which rely on bank loans could face the prospect of higher interest rates. Therefore, the Government needs to play a pro-active role in achieving Plan targets. Already the power sector has slipped targets,” he said.
The Chief Financial Officer of Nagarjuna Construction Company Ltd, Mr Y.D. Murthy, said, "The macro economic conditions for infrastructure are positive. Lot of orders are up for award by the NHAI by middle of 2010."
"When it comes to project finance, bankers continue to lend promoters with strong balance sheet but the double-digit interest rate is a matter of concern. We have an order book of over Rs 16,000 crore and expect to bid for more BOT projects," Mr Murthy said.
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