Leighton stepping up infrastructure play

Leighton Welspun Contractors Pvt Ltd is looking at ramping up its presence in infrastructure development after exiting from two road concessions earlier this year, according to managing director Russell Waugh.

Leighton Welspun was Leighton Contractors till April when Welspun Infratech, a subsidiary of Welspun Corp, bought a 35% stake in the company for `470 crore. The remaining stake is held by Australia’s Leighton Holdings, listed on the Australian Securities Exchange.

Waugh said Leighton, which has been in India for over a decade, has traditionally not been an asset-owner. “We do have an interest in a few assets in Australia but it’s on a small scale,” he told DNA.

A development project is one which is owned and operated by an infrastructure company for a specified period before returning it to the government.

A cash contract or an engineering, procurement and construction (EPC) job is one where one company works for another company or for the government which owns the asset.

Leighton Welspun along with Oriental Structural Engineers was a co-developer of two national highway bids, one running between Agra and Bharatpur in Rajasthan and the other from Indore
to Khalghat in Madhya Pradesh. But in March, it sold its interest in both the projects to Oriental.

“When we bid for the projects, that (being a co-developer) was the best avenue,” Waugh said.
Leighton Welspun holds 26% and Sterlite Industries the rest in a joint venture to develop a coal berth at the Vishakapatnam port. This is presently Leighton Welspun’s only asset.

But since Welspun came on-board with the intention of becoming an infrastructure developer, Leighton has been bidding for more development projects, especially in the road sector.

“But we have not been successful because it’s an inordinately competitive sector with 30-40 players. What we need to see is some rational pricing. We are not here to lose money,” Waugh said.

Experts and road developers alike have expressed concerns at the aggressive bidding for National Highways Authority of India (NHAI) projects in the last nine months or so, which could impact the viability of the projects.

He said that Leighton Welspun has the highest qualification points with the NHAI for any highway company barring GMR Infrastructure.

Leighton Welspun is also targeting development opportunities in water and ports. But Waugh said, “We are very focused on construction and Welspun will hold its interest in the development business.” Leighton Welspun has an order backlog of nearly `4,000 crore, most of which comes from the oil & gas space.