‘Private participation in hydropower is not large enough’

Om Metals Infraprojects Ltd plans to expand its reach in domestic as well as overseas markets. Its executive director Vikas Kothari speaks to Moneylife’s Amritha Pillay on his expansion plans and order-book growth for the coming years

Amritha Pillay (ML): What kind of turnover does the company expect in this fiscal and in the years to come?
Vikas Kothari (VK):
Last year we did around Rs100 crore, this year we expect to reach more than Rs220 crore. In our engineering construction (segment), our current outstanding order book is Rs600 crore. These will be completed over the next two years. In FY11 we are expecting to do over Rs300 crore plus sales from the engineering segment alone. Going forward, it would be another Rs400 crore as we plan to add another Rs200 crore to our order book soon.

Real-estate revenue would be coming in. Revenue from Mumbai and Hyderabad will start by the next two to three financial years. Real estate would contribute 25% to 30% to our top-line contribution.

ML: Do you have any fund-raising plans for your expansions?
We do not have any fund-raising plans at the moment. It depends on what we decide to foray into. At the same time, we also have enough reserves of our own, so first we will have to utilise them.

ML: You started with irrigation projects, and then diversified into hydropower. What kind of opportunity do you envisage in the hydropower segment?
There was a plan of 50,000 megawatts (MW) of hydropower generation by the Indian government over the next two-five years. I think 2017 onwards we will be achieving only 25,000 MW of this. However, even this 25,000MW is a huge opportunity.

ML: Your major clients in hydro-mechanical equipment are state-run units. Is there any particular reason for this?
At present, private participation in the hydropower sector is not large enough. Despite the same being talked about, nothing is actually happening at the ground level. Thermal projects are easier to implement and the cost of building a hydropower (unit) is much more than a thermal power plant. Thus, we want to focus on the projects from state-run units.

ML: Any there any updates on your plans to acquire engineering, procurement and construction (EPC) companies in India?
We are looking at it in a two-fold manner—one, by entering into EPC through civil contracts or by supplying electro-mechanical equipment. In hydropower projects, there are three main components—civil construction, electro mechanical equipment, and hydro-mechanical equipment. Therefore, while we are addressing the need for hydro-mechanical equipment, we also plan to venture into the civil and mechanical segments. The second is using the existing hydro-mechanical manufacturing facilities to expand our product profile covering thermal power projects, marine projects and others, which would require the same infrastructure that we currently own. We have now grown to become the largest player in the hydro-mechanical business in India and in the world in terms of the size of order book, technical (requirements) and revenues. While we have achieved our leadership in this particular segment we also want to look at other avenues for growth.

ML: Aren’t you also planning to enter into a joint venture as one of the routes for expansion?
It depends on how we structure our expansion. We could look at acquisition opportunities as well as joint ventures. So we are quite flexible at this point of time, it could be in the form of acquisition and then (we could) grow thereon. If it is a joint venture, we will have set up a different company altogether. We will be doing this over the next one year.{break}

ML: Tell us more about the joint venture you plan with foreign companies?
For joint ventures, we are looking at some of the European players. There are two contributions that we expect the foreign player will bring in—technical expertise and a large overseas order book. We wish to balance our order book in terms of domestic and overseas orders. Any European company will have a global presence and will definitely help us. At present, our overseas presence is very marginal. This would be a strategic joint venture to increase our presence globally.

ML: Could you share with us more details on the greenfield project that you are planning?
Considering the growth that we are envisaging, we are looking at setting up this greenfield project in heavy engineering. Over the next one year, we intend to spend around Rs15 crore to Rs20 crore in this greenfield project. However, it depends on whether it is a joint venture or an acquisition. If it is a joint venture, it would be a greenfield project.

ML: How is your investment in real-estate faring?
We have investments that we have made across Delhi, Mumbai, Kota, Jaipur and Hyderabad. Our Kota residential project is being completed in this year. We are now in the process of signing a co-development agreement for our residential projects in Mumbai and Hyderabad.

ML: What is your vision on your other investment in the development of the Puducherry port?
We are expecting that it will take at least a year for financial closure. Currently the environmental study is being conducted. We have building a larger port at the existing one with six container terminals. It would be a phased development in the next five to six years along with the SEZ. We surely see the port contributing phenomenally after five years to our company topline.

ML: What is your take on the volumes expected at this port?
We are focussed on the container segment. The Chennai and Karaikal port are bulk based. The container cargo segment is increasing and has a huge future growth. With the congestion in Chennai city and other issues, we feel we will have enough business coming to our port from Chennai. We will be able to have enough volumes from the container segment alone.

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    Going down the tubes

    A surfeit of channels, shoddy programming, clueless anchors and financials that would make a Greek cringe. Is the Indian television industry scripting its own epitaph?

    Apni auqaat nahi bhoolna chahiye.” If you think that these are words lifted out of a very bad Hindi flick, circa 1964—when the village headman comes thundering down on the protagonist who has finally mustered up the courage (after copious amounts of alcohol, endless circumambulations around trees and other assorted inane activities) to ask Roop Kumar Narain Singh Thakur (or some such suitable name) for the hand of his daughter—you have another think coming.
    According to a lawsuit filed by business channel Bloomberg-UTV, rival CNBC TV18 aired this sentence on 4 March 2010 during its ‘Bazaar’ segment.

    Bloomberg alleges that its rival has accused it of “copying”, “cheating” and “lying” about its viewership ratings on the day of the announcement of the Union Budget.
    Moneylife has in its possession a copy of the lawsuit which has been slapped on CNBC TV18 by Bloomberg-UTV. While the lengthy defamation notice goes on to describe—in great detail—about the alleged “accusations and representations” of CNBC TV18 against Bloomberg-UTV, our objective here is not to comment on the merits (or shortcomings) of the case, since the matter will eventually become sub-judice.

    However, one cannot help wonder if this case is just part of a wider malaise that seems to have gripped the Indian television industry as a whole. Enough and more has been written on the no-holds-barred battles that are being fought between various TV channels—across genres—to grab viewership.

    These skirmishes, somehow, don’t prevent the same talking heads from appearing on ‘live’ news capsules across various channels—one has to hand it these various spokespersons, they seem to flit in and out of various newsrooms in the span of a few minutes, (almost being in two places at the same time), mouthing the same platitudes, delivering the same slogans and flogging the same ideologies. And shouting down the same opponents. As far as the viewer is concerned, no, she is not spoilt for choice.

    The financials of various broadcast houses are swimming in deep seas of red, as readers of Moneylife will know. But when will the wake-up call come about? Many viewers would agree that the battle for viewership has caused a steady deterioration in the quality of programming, across channels and cutting across all genres. So much so, people are fondly looking back on those days when we only had State-run programming—remember, there was no need for a remote control in the heady days of our ‘mixed’ economy? Even the latest Chinese remotes cannot keep up with the abuse that the ‘change channel(s)’ button is currently facing, as you read this, in a number of Indian households.

    As far as ‘TV journalistic ethics’ go, this must be the biggest three-word oxymoron ever. News is not being reported, it is being manufactured. To call the soaps currently being aired ‘operas’ is surely not cricket.

    When a smug anchor looks at you straight in the eye (or rather, camera) and proclaims, six hours in advance: “At 7.30pm, we’ll have ‘breaking news’ from our studio (or ‘journalist’) at (insert suitable Indian city/town/village/taluka/district/slum here),” one cannot but wonder if the world is actually more surreal than what our mystics make it out to be.

    The great Indian television saga has been playing out for more than a quarter of a century now. Risking the taint of schadenfreude, one can only sit back and watch the drama unfolding before our eyes, and hope that the show picks up. Else, the audience will pack up and leave, with a poor score wailing in the background, even before the credits start flashing on the screen.  

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    K B Patil

    1 decade ago

    God save us from Hindi serials. All of them are destroying our eardrums with the loudest sounds and they call it background music. Colors channel shows a disclaimer before each serial stating that it's serials are a campaing against child marriage, female infanticide, violence against women blah blah blah. But these things are woven into each one of its serials. The channel seems to be catering to the basest instincts of men. All that the I & ministry can think of is banning FTV.

    Kingshuk Mukherjee

    1 decade ago

    Devarajan is absolutely right. The current "Mad Race" for TRP's by all these Business Channels is leading to nowhere. These business and other so-called " News Channels" have taken the “Dumbing Down " of “News” to new heights. Next time whenever you see any NEWS STORY or a very glorifying tribute to any Indian "Industrial or Corporate group understand this is a very carefully thought of PR, sponsored advertorial or ADVERTISING and MEDIA spin that is out to FOOL YOU and CHEAT and a make a " MOCKERY " of our DEMOCRACY. I can only pray to God to inject some SENSE into the people who run our electronic MEDIA groups.

    Government to give aid worth Rs50 crore to five food parks

    Out of six food parks approved last year, five parks will receive Rs10 crore each in the next financial year for setting up their infrastructure

    The Indian government has said that it will provide financial aid to five out of six food parks already approved across the country over the next financial year. The government is providing financial assistance of Rs50 crore to catalyse investment in these mega food parks. This amount will be released by the government in various tranches, depending on the status of development of each food park.

    “We will give Rs10 crore each to the remaining five food parks in the next financial year as they have reached various stages of implementation,” said Ashok Sinha, secretary, ministry of food processing industries.

    Last year, the government had approved six food parks in Uttarakhand, Andhra Pradesh, Jharkhand, Assam, Tamil Nadu and West Bengal. Out of these units, only two food parks—one in Uttarakhand and the other in Andhra Pradesh—are in an advanced stage of infrastructure construction.

    Apart from the six mega food park projects, the government is also in the process of approving four more food parks out of the ten parks which applied for permission last year. The government had earlier decided to come up with 30 food parks till 2012 but now the authority has slashed down the number to 10. Currently, the government is in the process of giving permission to four food parks, which would receive the go-ahead in six weeks (approximately by mid-April 2010).

    “We have received 37 proposals for mega food parks, out of which we are currently processing four proposals. A few of them are from private players also,” said Mr Sinha. 

    The government is providing Rs50 crore in financial aid to these food parks to encourage the setting up of more parks. Last year, the government allocated Rs45 crore (Rs5 crore advance to five food parks and Rs15 crore to one food park) to six food parks. The project at Uttarakhand had received Rs15 crore last year and the remaining five projects will receive Rs50 crore (Rs10 crore each) in the next financial year.

    The government’s contribution will be used to create infrastructure facilities like cold storage, incubation centres, warehouses, roads, core-processing centres, quality control labs, drinking water facilities and collection centres.

    The ministry has received 37 proposals for mega food parks of which 16 are for Maharashtra, 10 for Karnataka, six for Punjab and five for Uttar Pradesh (UP). In Punjab, Mrs Bector’s Food Specialties (a part of the Cremica Group), Brattle Foods Ltd, International Fresh Farm Products Ltd, Maninder Rice Mills, Kolkata-based LMJ Ltd, and an entrepreneur from the US have shown their interest.  

    In Karnataka, Capital Foods Ltd has shown interest in these food parks. In Maharashtra, Pantaloons Retail (India) Ltd, Paithan Mega Food Park, Temptation Foods Ltd, Dhoot Developers Pvt Ltd and Skil Infrastructure Ltd have shown their interest in these units. Temptation Foods Ltd is one of the applicants among the five with interest in these facilities in UP.

    The government is encouraging the public-private partnership model for setting up the food parks. “The government gives Rs50 crore assistance for each food park, but that is not enough. You also need about Rs50 crore or more of private investment (in each food park) in infrastructure,” said Mr Sinha.

    “We are encouraging three-four private players to come together to set up a food park so that the investments are shared,” he added.

    The joint investment of three–four players lowers the cost of the land and infrastructure. Every food park would have a special purpose vehicle comprising around three entrepreneurs, representatives of banks and financial institutions and also from the food processing ministry. The special purpose vehicle will require an investment of around Rs120 crore, which includes the government’s contribution of Rs50 crore, for each food park.  

    Every food park will have around 27 processing and ancillary units which will process about 1,80,000 tonnes per annum of raw materials—primarily comprising fruits and vegetables, rice and spices and will draw an investment of Rs250 crore. Each food park needs an investment of Rs370 crore and takes a minimum of two years for completion. Infrastructure Leasing & Financial Services Limited (IL&FS) is assisting the government in project management for all these food parks spread across the country.

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    Sushil Singh

    10 years ago

    Though I appreciate the encouragement from Indian Government however we need more assistance from them. If they want they could increase their share in the project.

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