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Construction : Cover Story | February 2018 | Source : CW-India

Here are India's big construction baggers making headway into mega projects

It's boom time for infrastructure. Just look at the number of projects awarded and bagged in 2017! While the roads segments took the lead this year as well - especially with the announcement of Phase-1 of the Bharatmala programme - pockets of opportunity were witnessed in segments like metro-rail and irrigation, among others.  What's more, companies have benefitted from projects not just in India, but globally as well.

Consider this: Data from projectstoday.com reveals that an L&T has bagged orders to the tune of Rs 91,943 crore from January to December 2017. Adding to this has been Tata Projects with orders worth Rs 1,791 crore; NBCC with Rs 4,064 crore; KNR Constructions with Rs 884.47 crore; PNC Infratech with Rs 4,154 crore; Rs 4,185.49 crore order works for Gayatri Projects; Rs 678.78 crore for Ramky Infrastructure; Rs 1,971 crore for Sadbhav Engineering and Welspun Enterprises with Rs 1,161 crore. These include cumulative project-related orders bagged by contractors in India and overseas.

In terms of big-ticket projects, L&T and Tata Projects recently made headlines with orders to build parts of the much-awaited Mumbai Trans-Harbour Link Project. Also, the NHAI has issued a letter of award to the Punj Lloyd and Varaha Infra JV for the construction of a two-lane highway in the Kalewa-Yargi section of the proposed India-Myanmar-Thailand Trilateral Highway. Further, GVK Power and Infrastructure signed a concession agreement with CIDCO of Maharashtra to create a SPV for developing the state's ambitious Navi Mumbai International Airport. The Zojila Pass tunnel, too, recently received approval for construction. And developments across mega projects, such as Mumbai Coastal Road, Polavaram Dam, and various metro-rail projects, have built considerable traction in the construction segment.

The need to deliver these projects in time and quality will certainly open a new window of opportunities for support industries such as steel, cement and construction equipment, among others. The government's 83,000-km Bharatmala programme alone is set to propel growth.

The value of construction equipment required to support the execution of this programme is estimated to be in the range of Rs 35,000-40,000 crore. Also, the total cement requirement is estimated to be in the range of 100-120 million tonne.

This apart, owing to various construction projects, steel consumption in FY2018-19 is expected to continue at an estimated 4-5 per cent annual rise, indicate reports. Also, one-fourth of the demand for cement comes from infrastructure and about 10-15 per cent from commercial construction. Considering that India needs an estimated investment of Rs 31 trillion over the next five years to keep pace with its growth targets, over 70 per cent of this will be needed for power, roads and the urban infrastructure segment, which will certainly boost demand for construction equipment.
 
As per CRISIL, projections factor an average GDP growth of ~7 per cent and infrastructure investment of ~5.5 per cent of GDP during five fiscals up to 2022, and subdued share of private-sector investments of ~28 per cent.

Power, highways, transport and urban sectors will account for close to 77 per cent of this spending, according to CRISIL (See Table).

Indeed, mega plans, mega projects, and mega optimism in the construction sector have set the pace not just for established majors but emerging entrants.

CW connects with a selected mix of companies to delve into the recently bagged and ongoing projects along with the construction opportunities that will ensue.


 
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