The repealing of the Urban Land Ceiling and Regulation Act bodes well for property developers and urban infrastructure companies in the state.
Maharashtra entitled to get Rs 28,000 crore for urban projects
MUMBAI: The repealing of the Urban Land Ceiling and Regulation Act (ULCRA) bodes well for property developers and urban infrastructure companies in the state. For, the measure is expected to facilitate a smooth flow of funds under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) into urban infrastructure projects.
JNNURM is a fast-paced development programme for identified cities, with participation of urban local bodies, the state government and the Centre. It lays stress on strengthening and modernisation of urban infrastructure and services delivery.
Brijesh Koshal, analyst with Enam Securities Private Ltd, said: “Maharashtra is entitled to get funds to the tune of Rs 28,000 crore under JNNURM. There are a total of 88 projects earmarked in the state for development under the mission out of which 49 projects have already received approvals.”
This amounts to Rs 6,300 crore worth of urban infrastructure work, which would now come into the state.
Gopal Ritolia and Anupam Gupta, analysts with IIFL, in a December 3 report, said: “Big construction players such as Patel Engineering, Hindustan Construction Company (HCC) and many more are likely to be the biggest beneficiaries of the repealment of the ULCRA.”
They said though several projects have got approval from the Centre, Rs 8,300 crore worth of projects are still awaiting approval.
Ashwin Parmar, deputy director, business development, Patel Engineering Ltd, said, with repealment of ULCRA, the company is expecting work orders to grow by almost 25% to 30% in the coming years in the state. Its order book position as regards to Maharashtra currently stands at Rs 600 crore.
He said the road ahead is bright and companies are designing their strategies for a long time in anticipation of the act being repealed.
“Our move of buying 51% stake in Michigan Engineers was with the sole motive of floating a separate vertical in urban infrastructure development,” he said.
Koshal said there is an opportunity of approximately Rs 10,000 crore to Rs 15,000 crore coming up in the urban infrastructure sector on account of the repealment of ULCRA. “Mumbai will bring in most opportunities as the infrastructure in the city is heavily strained and there is a need to redo a number of roads, water supply and sewerage system,” he said.
He said Patel Engineering, having an expertise in micro tunnelling, will benefit the most. Companies like HCC and Nagarjuna Construction will also see loads of work orders coming from Maharashtra, contributing almost Rs 1,200 crore only on this account. Even smaller companies such as Madhucon and Valecha Engineering can also expect orders worth Rs 3 crore to Rs 4 crore because of JNNURM impetus.
A senior official from the country’s biggest infrastructure company - L&T, said: “It is of course a big opportunity for property developers and urban infrastructure companies who are experts in doing smaller city centric projects.” However, L&T will not be benefited much from it as it is especially into developing mega projects and in urban infrastructure such as small patches of road, water supply or sewerage systems, the quantum is usually quite small, he said.
However, an analyst with a leading research firm headquartered in Mumbai, said L&T could also be a beneficiary of the JNNURM funds as the major boost will come in the form of urban transportation and urban sanitation project. “Though companies such as L&T, Punj Llyod, GMR Infrastructure are not into sanitation projects but transportation projects like Mumbai Metro Rail would definitely be their interest area,” she said. She said in spite of the bottleneck now cleared, the funds under the JNNURM would take at least a year or more to come to the state
Ritolia and Gupta in the IIFL report said: “Out of the total projects approved so far, water supply and sewerage systems account for 59% approved under the JNNURM.” Infrastructure major IVRCL has the best-in-class skill sets to execute water supply and sewerage projects. It has already worked with a number of municipalities in South India on such projects, they said.
Water supply and sewerage, mass rapid transit system (MRTS), roads and flyovers are the other focus areas.
m_promit@dnaindia.net
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