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Infrastructure firms await bond bounce

india Updated: Dec 08, 2008 21:32 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Infrastructure companies have finally something to cheer about after government announced fiscal initiatives to support projects worth Rs 10,000 crore.

The government has flagged the infrastructure sector as an engine for growth in the coming years and authorised the India Infrastructure Finance Company Limited (IIFCL) to raise Rs.10,000 crore through tax-free bonds.

Credit-starved infrastructure companies welcomed the measures.

“More money will now be available for infrastructure companies and this will lead to generation of more work. This will allow us to maintain the momentum of work and ease the pressure on that was being experienced by companies like us,” Amitabh Mundra, Director Simplex Infrastructure said.

Harsh Shrivastava of Feedback Ventures, an infrastructure consultancy firm feels “the additional stimulus will have a multiplier effect. Work on projects that had to be stalled because of funds will come back on track, he said.

National Highways Authority of India (NHAI), the country’s regulatory authority for the highways sector, is expected to announce bidding for 60 projects covering 18,500 km under the national highway development programme (NHDP).

“I think the stimulus will help bring back the interest rates to single digit levels as it was before,” Mundra added.

Ankinedu Maganti Director Soma Enterprise an infrastructure company that is executive projects roads and Delhi Metro rail projects, said the government should infuse more funds so that old projects are not delayed any longer and new bidders are found for new projects. The government has recently raised overseas borrowing limits allowing infrastructure companies can borrow up to $500 million in a year from overseas markets.

India would require about $500 billion over the next three years to finance its infrastructure requirements.

“Funds should come at a good price, funds are available now but at 14 to 15 per cent and that needs to be corrected,” Maganti said.