India's Leading Infrastructure Companies

India's Leading Infrastructure Companies 2015

Q. Please give us a brief profile of the company.
A. Megha Engineering & Infrastructures Ltd. (MEIL) is an infrastructure major headquartered in Hyderabad. We started our operations in 1989 in the engineering sector. The company started by taking up small projects in the areas of irrigation and water management. In due course of time, we have employed several diversification strategies to gain entry into key infrastructure verticals like power, hydrocarbons, transportation, buildings and industrial infrastructure. Currently, we are operating in more than 15 Indian states. We have also entered the international arena by executing projects in Bangladesh, Zambia and Tanzania.
In the manufacturing sector, MEIL has developed a complete suite of solutions which help us in our backward integration for efficient execution of our projects.

Q. What are the major challenges faced by the construction sector? What steps will help overcome these challenges?
A. [1] The regulatory environment should be standardised across the country so that the projects can meet the strict deadlines. Some states have already adopted a single window clearance system which significantly reduces a lot of hassles with regards to procuring approvals and permits. This is a big relief for the industry.
[2] Land acquisition issues of various types have been hampering timely completion of projects in a very serious manner. A fresh look into the land acquisition norms would help. Also a uniform policy across all Indian states will also mitigate the delays in land acquisition.
[3] Another major challenge is with regards to acquiring bank financing for projects involving emerging and new technologies.
[4] The government can help by simplifying its tax structure in order to attract foreign investment for future projects.

Q. MEIL is largely involved in irrigation and water management projects. What other segments is the company seeking to venture into?
A. In addition to irrigation and water management, MEIL also has a marked presence in the areas of power transmission and distribution, power generation, renewable energy, hydrocarbons, roads & railways, etc. The company constantly seeks to strengthen its position in the current sectors that it operates while seeking opportunities in other important and upcoming areas.
In recent years, due to the dynamic nature of business and the ever-changing nature of certain external factors, the management is slightly cautious before venturing into new sectors. We seek the right partnerships before we can employ any diversification strategies. Such partnerships have yielded satisfactory results in the past and we are sure that they will work well in the future also. The management is actively seeking projects that aim at promoting balanced regional development in the country. For this purpose, MEIL has plans to venture into areas like urban infrastructure, hydrocarbon engineering, roads & railways, mining, etc. in a more aggressive manner.

Q. Which aspect of Indian infrastructure do you think requires urgent attention?
A. The regulatory framework governing the various parts of project execution needs to be seriously reviewed and revised on an urgent basis. A few aspects which we would like to mention in this context are taxation, land acquisition, forest clearances, import policies, etc.
In particular, we feel that a serious examination of the reasons behind the various failures of the BOOT model in infrastructure projects may lead us to new ideas for financing of large projects.

Q. How does the company meet its financing requirements and which form of financing does the company prefer?
A. For the purpose of meeting its financing requirements, MEIL completely relies on internal accruals and bank financing. The sound policies adopted by the management ensure that the business continues to expand at a constant rate. Such commendable growth over the years has helped us to win the confidence of bankers and financial institutions.

Q. What kind of reforms do you expect from the new government at the Centre to give a boost to infrastructure in the coming years?
A. Compared to the rest of the world, our economy has grown considerably in the liberalisation era. Though the industry has not grown according to the expectations, we have still witnessed good growth. The Indian government, in its yearly budgets and five-year plans, is putting a lot of emphasis on improving physical infrastructure. The overall investment requirement runs into an immense amount of one trillion US dollars.
The government should provide incentives like tax holidays and other concessions to the private sector to boost the overall growth of construction industry.

Q. What opportunities do you see for the infrastructure sector in the next five years? How is your company planning to tap those opportunities?
A. The exponential growth that we have witnessed in the infrastructure industry is largely due the immense support of the government and the overall positive outlook of the market. The government has already doubled the spend in this sector because it is eager to develop infrastructure of world-class standards. In the power sector, over 150000 MW of hydel power is yet to be tapped. India, which has the second largest road network, might trigger the need to build better quality roads for future generations. MEIL plans to expand its business on the strength of such opportunities.
The company is geared to handle more complex projects with shifting focus on timelines and technological competence. The Indian government is geared to create an environment that can boost the prospects of the infrastructure industry. As a result, foreign players are keen on investing in the Indian market. MEIL plans to cash in on such opportunities by doing a proper feasibility analysis. In spite of such prospects, we will continue to be cautious and conservative in the selection of projects.