Logistics

‘Cost/EPC contracts to drive infra sector growth’

V Rishi Kumar Hyderabad | Updated on January 11, 2018 Published on January 11, 2018

Vinayak Deshpande, MD, Tata Projects

Tata Projects bullish on opportunities, says MD Deshpande

The country’s infrastructure sector is poised for an accelerated growth where cash contracts and EPC contracts will be major drivers, according to a senior executive of Tata Projects Ltd.

Vinayak Deshpande, Managing Director of Tata Projects Ltd, and Chairman of CII National Task Force on EPC, said: “We are at an inflection point in the infrastructure sector, which is poised to boom. This will be driven by cost contracts or EPC deals as against earlier modes of BOT projects.”

Speaking on the sidelines of a CII National Conference on Engineering, Procurement and Construction, Deshpande said the Government has taken a number of initiatives seeking to address various pain points of the infrastructure sector having realised that some of the concerns such as land acquisition and rehabilitation have slowed down the projected growth.

“The changes brought about in the hybrid annuity model will attract fresh investments by infra companies,” he said.

Referring to public-private partnership (PPP) mode projects, he said, “There have been some sub-sectors such as power transmission lines which are attracting investments from several private players, including Adani Group and PTC.”

“With the Government providing fresh impetus to the infra sector, we expect to see a number of projects coming up for development in the roads sector, including those under the Sagarmala project, several new ports, airports in particular where the Airports Authority of India (AAI) will take up development of about 100 airports,” he explained.

The Railways is another major opportunity for private sector players to engage with in terms of creating new infrastructure and strengthening the existing network of lines. Earlier, there was more risk than reward. But this is changing towards reward, he said.

Tata projects

Referring to the Tata Projects, Deshpande said that the company has been growing at about 35 per cent and closed last year with a turnover of about ₹9,000 crore.

“We have an order book of ₹30,000 crore and are scouting for new orders. The order book includes some of the marquee projects such as Mumbai Trans Harbour Sealink, Mumbai Underground Metro and Krishnapatnam project. These are to be executed over the next three and a half years,” he said.

Digital tech

Manish Chandra, Managing Director of Accenture Strategy, Operations, said the company’s global study input suggests that adoption of latest digital technologies in the infrastructure sector, including in the road projects has the potential to boost the income by 200-400 basis points or about 2-4 per cent.

Citing the example of Rio Tinto, he said this involves the process of making workers connected workers, developing the concept of connected machines and materials with traceability and then having a logistics hub that provides an overview from a “central tower or a control centre.”

Several companies in India have started working on similar initiatives, he explained.

Published on January 11, 2018
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