Nagarjuna Construction Company (NCC) is preparing a plan to come out of Maytas Infra’s shadow in the projects being handled by both. NCC and Maytas have joined forces in eight projects. While one of these is operational and three on the backburner, NCC is making arrangements to carry out the remaining projects without waiting for Maytas to bring in funds.
For the remaining four projects, NCC is preparing to either bring in partners in place of Maytas, or contribute the funds on its own. Critical among them is the Pondicherry-Tindivanam road project. The 36 km project is estimated to cost about Rs 315 crore, with an equity component of Rs 90 crore.
While Maytas holds about 51% in this project, NCC holds 49%. “The project is about 30% complete and we are now looking for a third partner to plug the Maytas gap. This will help us in meeting the deadline of June 2010 for operationalising the project,” NCC’s executive VP (finance) Y D Murthy told DNA Money.
Another project is the Himachal Sorang hydro-electric project, being jointly developed by NCC and Maytas along with SSJV Projects. Taken up with an outlay of Rs 600 crore, the three partners have one-third equity in the project. The project is scheduled to commence operations in December 2010. “Maytas has brought in about Rs 18 crore so far and the future equity from Maytas is a question. If Maytas is unable to bring in the required equity, NCC will complete the project,” he said.
The Western UP toll way and Bangalore elevated toll way are the other two projects. Here, however, the work is at an advanced stage. While about 80% of work is complete for the Western UP toll way, the Bangalore project is about 90% complete.
The Western UP project was taken up by Gayatri Projects (40% equity), NCC (30%) and Maytas (30%) with a deadline to make the project operational by December 2009.
Maytas is yet to bring in about Rs 5 crore into the project. For the Bangalore elevated toll way, NCC and Maytas have partnered with Soma with one-third equity each. In this project, Maytas is yet to bring in Rs 7 crore.
“For both projects, NCC and the other partner are bringing in the money that was to be contributed by Maytas to complete the projects on schedule,” Murthy said. The Brindavan express toll way in Karnataka is the only project NCC and Maytas have been able to make operational. The project, built with an outlay of Rs 247 crore, has been operational for the last three years.
The three projects on the backburner include two airport projects — at Shimoga and Gulbarga — and the Machilipatnam port project in Andhra Pradesh. “For the airports, it is the real estate that holds the key. These are small airports and they can’t survive just on air traffic. The real estate that can be created along with the airports is crucial. These projects are estimated to cost about Rs 50 crore each. Considering the market conditions, these projects are on the backburner,” Murthy said.
The Machilipatnam port project is stuck in land acquisition-related issues. The project was planned with an estimated cost of about Rs 1,600 crore spread over 6,200 acres. Along with Maytas and NCC, Srei and the Chatterjee Group too are partners. While NCC has about 25% share, Maytas has 26% equity. Srei and Chatterjee hold 49% together.
“There are land acquisition issues in the project. Even otherwise, Maytas’ ability to bring in equity into this project is under question now. This project is on hold,” Murthy said.
NCC currently has an order book of Rs 12,200 crore. The infrastructure major, which was focusing more on road projects, is now looking at other opportunities.
“Earlier, we used have about 25% of our order book from roads. Now, it is down to 8%. There are other opportunities in power, metals, oil & gas and mining. The focus now is on having a diversified portfolio,” he explained.
The company is also pinning hopes on the freight corridor plans announced by the government for finalising its foray into railways.