• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Bureau

The IL&FS - L&T combine will focus on surface transport, water supply, urban development, ports and airports.

NEW DELHI, July 24

THERE'S reason for some cheer on the infrastructure front. Two of the country's key players in the infrastructure sector, Infrastructure Leasing & Financial Services (IL&FS) and Larsen & Toubro (L&T), have joined hands. In a first of its kind agreement, the two have decided to jointly develop and implement large-scale infrastructure projects in various States of the country.

Both the companies being active players in the infrastructure sector with complementary skill sets, combining the skills and expertise of the two entities is expected to optimise efforts as a result of the obvious synergy, industry sources feel.

According to the plans drawn up, IL&FS and L&T will develop and plan the implementation of infrastructure projects jointly. This will include the entire process, ranging from identification of needs to feasibility studies, financial structures and implementation. Both the parties will provide the initial seed capital for development work and thus address one of the lacunae contributing to the failure of bids seeking private participation.

Commenting on the agreement, Mr Ravi Parthasarathy, Vice-Chairman and Managing Director, IL&FS, said, "This effort will facilitate critical infrastructure asset creation, enhancing economic development in the country. The pooling together of expertise of the two major infrastructure players will contribute substantially to the on-going efforts for commercialisation of infrastructure in India."

The partnership is to work closely with the planning and implementation agencies of State Governments. Projects, ready for implementation, will be proposed to those States that offer an enabling legal framework for development on an "unsolicited" basis.

Some of the State Governments that either offer or are in the process of developing such a framework include Gujarat, Karnataka, Maharashtra, Andhra Pradesh, Tamil Nadu, Himachal Pradesh and Chattisgarh.

The joint effort, company sources feel, will facilitate the identification of new projects in new areas and bring to the table projects, which can be immediately implemented.

To start with, the combine has decided to focus on the non-telecom and non-power sectors, as it is in these areas that they have significant experience in developing and implementing infrastructure projects. In particular, the IL&FS - L&T combine will focus on surface transport, water supply, urban development, ports and airports. The objective, according to company officials, would be to identify those projects where substantial benefits are likely to accrue to the State in terms of economic and social development.

While IL&FS has the expertise in project development and financial engineering in line with international best practices, L&T, the country's largest EPC (engineering, procurement and construction) company, has been actively involved in constructing the most difficult and complex infrastructure projects under diverse formats in India and abroad.

The concept of "unsolicited bids", also known as the "Swiss challenge", is based on a successful format initiated in Switzerland and implemented in the Philippines.

Under the framework, which permits an unsolicited bid being submitted, an independent study is conducted and an "unsolicited" proposal is presented to the Government. The Government, in turn, is then free to ask for competitive bids.

If a lower bid is received, the Government compensates the initial proposer by reimbursing the cost of his efforts in putting together the unsolicited proposal. Such a process encourages innovation, generates new ideas and ensures thoroughness at the initial study stage itself.

Send this article to Friends by E-Mail

Stories in this Section
`India right on development track'

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line