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September 21, 2008

Profiles of L&T wannabees

Business Today has short profiles of mid-tier Engineering & Construction companies that are aiming to bag more Build-Own-Transfer infrastructure projects. Extract from profile of IRB Infrastructure that went public recently.
The prominent toll roads IRB has on its hands include the Mumbai-Pune Expressway, along with two highways that connect Pune with Sholapur and Pune with Nashik. The company also recently bagged toll collection rights for a 239-km highway between Mumbai and Surat. “Currently our toll collections are Rs 1.2 crore a day, and from next year, it will be Rs 3 crore,” says Mhaiskar.

In 2007-08, IRB’s revenues of Rs 785 crore were equally split between construction and BOT projects. When executing BOT projects, IRB functions as a holding company, and each project is spun off into a special purpose vehicle (SPV). These separate entities help diffuse risk and make capital-raising simpler.

To further mitigate risk, the company is looking at developing the area around highways. For instance, along with road development in Kolhapur city in Maharashtra, IRB has taken on a 99-year-lease a 30,000 sq. metre plot.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.