‘Create SPVs for each project with approvals to get FDI’

Hinduja Group plans to focus on value creation for both promoters and shareholders, by listing companies it has incubated over the years.

Hinduja Leyland Finance has already filed for IPO with SEBI and Hinduja Realty Venture, with a huge land bank, is in the pipeline, followed by its digital company. From its grand plan to invest $10 billion in India two years back to the current focus on value creation, there has been a lot of changes in economy. Ashok Hinduja, Chairman of Hinduja Group of companies in India, spoke to BusinessLine on the Group’s future plan. Excerpt:

What is the progress in your $10 billion investment plan announced in 2014?

We are negotiating with various banks on infrastructure projects, including the power sector. Like any other investor, we expect a good haircut (discount) for distressed assets.

We are not in greed to take over any asset available cheap. The strategy is to take calculated risks.

We have huge plans for India, but not in a rush. Unfortunately, we see implementation is a problem.

For instance, our power project in Visakhapatnam that started in 2008, should have been completed in three years, but it took eight years.

We lost about one-and-a-half years because of Hudhud cyclone.

But even without the Hudhud impact, the project has taken five years.

Is the Group put off by slow progress in reforms?

Yes, to an extent. We saw a great push on reforms when the new government took over, and decided that we should move in.

The reforms announced were brilliant, but the concern is with the implementation. We are reviewing our investment plan and have decided to buyout existing projects. We are willing to negotiate if the seller takes a haircut (offer discount).

Instead of putting new projects from scratch, we may go in for buying out distressed assets. We see good opportunity in roof-top solar projects because we are directly dealing with the owners and there is no issue of dealing with discoms.

What are your suggestions to attract FDI in manufacturing sector?

India is a favoured investment destination. Investors do not like to invest money and wait endlessly for approvals.

What the government can do is create special purpose vehicles (SPVs) for each new project in different sectors, across different States. They should ensure the SPVs get the land clearances and requisite approvals. Any of the top international consultancies can be asked to carry out the feasibility study and IRR (internal rate of return) etc, of the projects. The government should then e-auction these SPVs to attract foreign investment.

It is important for the Centre to get State governments into confidence in each venture, because at the end of the day, an investor has to deal with them. Today, investors in manufacturing do not know how long it will take to get approvals and start manufacturing.

Apart from power are you considering any other sector?

We are looking at new innovative companies. We had invested in MindMaze, a neuro-medical device company. It has a product approved by the US FDA. We have installed the equipment in Hinduja Hospital in Mumbai.

Since the last one month, eight to nine patients have been using the device. The company is owned by an Indian settled down in Switzerland. We have a majority stake in the company; it has many products for defence, transport and entertainment sectors.

Do you think FDI in defence can flow with delay in awarding contracts?

In defence, one needs lot of guts to award contracts. During the previous defence minister (AK) Antony’s tenure, I do not think they awarded any contract.

So before him, whoever signed them – whether it is right or wrong – came into controversy.

Do you think e-auctioning of defence projects helps?

As a policy, it is good for the government. They will not get into any controversy. But see what happened in solar – somebody bid it at ₹4.31 and now he is not putting the plant. He spoilt the market for others.

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