Trade Resources Economy India's Infrastructure Players Are Passing Through a Tough Phase

India's Infrastructure Players Are Passing Through a Tough Phase

Business Line reported that the India’s infrastructure players are passing through a tough phase as this year comes to an end. They expect a turnaround early next year as the Government seeks to fix sector concerns with reforms.

According to sector players, while the government plans to accelerate the implementation of roads projects to about 20 kilometer per day, the pace is barely 5 kilometer to 6 kilometer. They are also shying away from build, own and operate projects preferring EPC deals.

Interaction with some of the leading infrastructure firms show that the implementation of projects has been impacted due to delays in securing clearances, the high interest rates sapping their profitability and last mile hurdles.

The sector’s momentum witnessed over the last decade up to 2010 is missing in the past two years.

Mr Harsh Kumar Bhanwala executive director of India Infrastructure Finance Company Ltd said that the country expects nearly USD 1 trillion investment in the infrastructure sector. Efforts are on by the Government to address some of the sector concerns by setting up a Cabinet sub committee to focus on these.

Mr Bhanwala said that tt is hoped things will get better as several steps have been initiated by the Government and PM Dr Manmohan Singh is personally looking into the concerns.

Mr N Goutham Reddy executive director of Ramky Infra said that the infrastructure sector companies are strained due to three broad concerns. The cash flows have been affected due to project delays and receivables, equity market has dried up for some time, debt market is stretched and interest rate is high and receivables from Government are taking much longer time than normal.

The debtor days have gone up in the past up to 160 to 170 days impacting the operational cash flows. Yet, the outlook is positive and by the financial year end, things should get a lot better, he said.

Mr Hemanth Kanoria CMD of SREI Infra said that the Government has to fix policy issues to accelerate the growth of the infrastructure in terms of land related issues, environment, fuel policy for power plants. Overseas investors are watching from the cliff and awaiting reforms to make further investments.

Mr Kanoria said that while most companies are looking at divestment of stake, which is a normal thing, the market conditions are not encouraging.

Source: http://www.steelguru.com/indian_news/Infra_sector_turns_around_in_India_likely_in_early_2013/296279.html
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