Difficult phase for infrastructure is over
The year 2012 has not only affected the economy, it has affected the infrastructure sector as well. With the passing time, the difficult phase is also passing by slowly
Infrastructure industry has gone through a difficult phase in recent past. The biggest challenge was material availability, government policies and the high interest rate regime as it created pressure on its margins. We have rarely seen such as a period where the interest rate and raw material prices are peaking. Vikram Sharma, Managing Director, Supreme Infrastructure India Ltd., talks about the next big challenge the industry is going to face.
Performance of 2012Though 2012 has been a difficult year for the infrastructure sector and economy as a whole, Supreme Infrastructure has continued to see strong and robust growth on both top line and bottom line. Our revenue from operations (stand alone) has been about Rs. 785 crore for the half year, ended September 30th 2012, which is a good 33 per cent growth from our previous year. Our net profit was about Rs. 45 crore with net margin of about 5.8 per cent which continues to be competitive for our segment.
Projects undertakenIn fact, 2012 has been quite a wonderful year as we have acquired a few prestigious projects. To start with, we have undertaken a project for constructing annexure building worth Rs. 264 crore for Supreme Court of India. We are also awarded a cash contract worth Rs. 216 crore for widening and strengthening NH-34 from existing 2-lane to 4-lane. We have also expanded in the water segment and moved a step further to become a fully integrated infrastructure service provider. We have acquired water transport project of more than Rs. 250 crore in the current financial year. We have expanded geographically by entering into Assam, Jharkhand and Sivan (Bihar). Our current order stands at about Rs. 5,000 crores including L1 orders.
Delays in infrastructure sectorIndia’s infrastructure sector has been in depression for quite some time now because of delays in several infrastructure projects. The most challenging element in infrastructure upgrade is alignment of four departments of government: revenue (land), forest, environment, and funding (if government funded project). The Finance Ministry estimates that infrastructure projects worth Rs. 1.46 lakh crore have been delayed. The projects have been delayed largely on account of delays in obtaining regulatory clearances and land acquisition problems. In the road sector, projects have been delayed because of land acquisition and environmental issues. The road projects are awaiting environmental clearances from the Ministry of Environment and Forests (MoEF). The other challenges are multiple approvals, overlapping jurisdiction, socio political conducive areas in eastern region of India and lengthy dispute resolution mechanism.