"There is a scarcity of construction projects"

Some element of government subsidy is needed to make the major infrastructure projects viable and bankable. In infrastructure sectors like roads, big ports and power distribution, the government should have a major role. Generation of power may be easy for the private producers, but distribution of power to distantregions will require government.

You have completed various power projects in the country. What is your opinion about the possibilities in this sector?

Power generation can be satisfactorily given to the private sector. Huge potential exists for power generation in India so that both the government and the private sector can play equally important role. In the case of various hydel power stations in the Northeast region, the government support is vital for transmission of electricity to distant locations. Most of these hydel projects have to be in the Himalayan region. The transmission cost from the Himalayas to other parts of the country is huge.

What about other sectors like ports, roads and telecom sectors?

In the case of big docks, partial privatisation will be welcome. In the case of big ports, government should have a definite role. Even road projects will have to be under the government control because collecting tolls alone will not be sufficient to make them commercially viableprojects. The telecom sector can also be fully privatised.

Do you foresee a revival in the construction business due to infrastructure projects?

Finance Minister P. Chidambaram has started some initiatives to privatise infrastructure sector. Due to political uncertainty, those decisions including his budget could not be implemented. The construction sector has been going through a recessionary cycle as is clear from the drop in demand for cement, steel. While a lot of talk is going on about infrastructure development, only a few have really started. We have acquired some work for the Mumbai-Pune Express Highway for Rs 200 crore. I expect the construction sector to revive in 1999. Even though the government has taken various measures to develop the sector, the actual work will take some more time. There are so many companies and very few construction projects.

You have to get lot of money from various government departments for the work already completed? Have you been able to recover it fromthe government?

Some of our dues have already come in. Due to cost escalation and inefficient project planning, the construction cost often goes up. Some of the cost overruns are due to genuine needs due to time overruns. These disruptions have resulted in a total claim of Rs 200 crore. Sometimes the claims are restructured. Now the government has set up dispute resolution boards. The process of recovering the claims is little painful in India. Sometimes it takes two years and if the claim is challenged in the High Court it may take even seven years. Along with infrastructure projects, the legal mechanism to recover these dues should also be revised for speedy recovery of claims.

Your company has lost some money in Iraq also due to the war in 1990 and the UN embargo on oil export from Iraq?

Some of the money has already come in and we have to get around Rs 11 crore from the government of Iraq. We have constructed bridges for the Iraqi government. We have been issued Iraqi bonds by thegovernment of India in lieu of the dues from Iraq.

Are you able to sell these bonds in the market? Is there any takers for these bonds in the Indian market? Will the recent decision of the United Nations allowing Iraq to sell more oil in the international market and the depreciation of Indian rupee against the dollar benefit you?

We have been able to sell some of the bonds with a minor loss. The exchange rate fall will benefit the bonds. Not only our company, a number of other Indian companies are also waiting for the repayment of huge amount – somewhere around Rs 1,400 crore. We don’t know when this money is going to come back.

Your tie-up with the Malaysian company Reong is still in tact. Some reports said your partner is facing financial crisis due to the Asian crisis?

Our tie-up was to jointly bid for infrastructure projects on Build, Operate and Transfer basis. Since we did not get some of the contracts were were planning to take up, we have got only an understanding with theforeign partner. Now we are taking low margin projects so that there is sufficient order in hand. We have bagged some more projects recently including part of the work on the Mumbai-Pune Express Highway.