Upcoming growth opportunity worth R70,000 crore in the new road projects in the current financial year has led Virendra Mhaiskar, chairman of IRB Infrastructure Developers, to focus his energy on road development and expects the government to take steps for soft rates for infrastructure funding.
With a total market cap of R9,415 crore, IRB Infrastructure, one of the largest road developers in the country, sees the traffic growth at par with the GDP growth rate and the tariffs to rise at around 6 per cent per annum.
"There are a lot of opportunities in terms of new projects, so in the immediate future we do not want to venture into something exotic, however we are open to forward and backward integration of our business," said Mhaiskar.
The company has also shelved its plans to develop a township on the land it holds on the Mumbai-Pune Expressway. "We wanted to develop it by way of a joint developer but that appetite is not very strong now," said Mhaiskar who does not intend to sell the land even as the prices have appreciated.
Mhaiskar looks slightly relaxed as he locked himself in a fixed rate contract for a three-year period in March for the funding need of his projects as the interest rates are rising.
The IRB chairman, however, feels that the government must look to provide infrastructure fund at a soft interest rate in the country.
"It is not advisable to develop infrastructure with high cost of money as it gets passed back into the system. Government should provide some subsidy on interest rates or make long-term money available for infrastructure development," IRB chairman said.
Sitting on a cash reserve of R500 crore, Mhaiskar does not see a need for raising equity and says that IRB can go up to another $1.5 billion (R7,000 crore) worth of projects with the funds it has.
While India needs to develop its roads faster, the IRB chairman feels that the minister’s vision of building 20 km of road per day is achievable but the government will have to look for faster allotment of projects, their rollout and its implementation in a focused manner.