In infrastructure sector last month, the National Highways Authority of India (NHAI) offer 32 projects of the length of 1,500 km under the Toll-Operate-Transfer (TOT) model this financial year as it chalks out a fresh monetisation plan. The work of carrying out the technical due diligence and traffic survey is in process. Based on technical and traffic survey reports and considering the market conditions, the priority and mode of monetisation will be decided to invite bids, on a case-by-case basis. Experts feel there has been continued interest in the roads sector even during the pandemic. The government’s push in implementation of FASTag has given the additional comfort to toll road companies as it improves efficiency in toll operations and ease of doing business.
The National Highways Authority of India (NHAI) has set a highway construction target of 4,600 km for FY22. It has also firmed up plans to award projects worth around Rs 2.25 lakh crore (trillion) in the current fiscal year. The construction target for the year roughly translates into 12-13 km a day. The NHAI constructed 4,192 km of National Highways in FY21. The authority claims it is the highest ever in a financial year by the NHAI. The pace of construction increased by 5 per cent in 2020-21 against 3,979 km in 2019-20 and was 24 per cent more than the 3,380 km constructed in 2018-19.
Kotak Special Situations Fund (KSSF), a special fund managed by the Kotak Investment Advisors (KIAL) said it has acquired 74 per cent stake in HKR Roadways (HKR) in Telangana for Rs 715 crore. The four-lane toll highway project of the existing Hyderabad- Karimnagar-Ramagundam section of State Highway One (SH1) was under design, build, finance, operate and transfer mode. The 207 km toll highway project commenced operations from June 2014 but got delayed due to multiple reasons. The account became an NPA with all lenders. Post settlement of dues, HKR will no longer be a non-performing asset (NPA) account.
Hindustan Construction Company (HCC), in a joint venture with KEC International (KEC), has been awarded Rs.1,147 crore contract by Chennai Metro Rail for the construction of 7.95 km elevated viaduct section and nine elevated stations on Corridor 4 of phase II of the Chennai Metro. HCC share in the JV is 51% (i.e. Rs 585 crore). The scope of work involves civil works, architectural works, plumbing & drainage and temporary services as per the client’s drawings. The nine elevated stations include Chennai Bypass Crossing, Rarriacharidra Hospital, lyyaparithangal Bus Depot, Katupakkam, Kumanan Chavadi, Karayan Chavadi, Mullai Thottam, Poonamallee Bus Terminus, Poonamallee Bypass. The work is to be completed in 36 months.
The maiden Infrastructure Investment Trust (InvIT) of the National Highways Authority of India (NHAI), which was delayed for around a year, will be launched next month. The highways authority plans to raise over Rs 5,000 crore by monetising five operational roads. The initial set of roads to be offered via the InvIT are part of national corridors, providing long-term prospects. In the future, the authority plans to offer 19 projects worth Rs 35,000 crore under the InvIT model.
In the ports sector, Adani Ports and Special Economic Zone Ltd. reported a 288% jump in consolidated net profit to Rs 1,321 crore for the fourth quarter ended March 31, 2021.The company had posted a profit of Rs 340.21 crore in the corresponding quarter last year. Operating revenue for the firm rose 24% to Rs 3,608 crore from Rs 2,921 crore in the same quarter last year.
Adani Ports and Special Economic Zone Ltd. already holds 75 per cent shareholding in Adani Krishnapatnam Port. Now the Competition Commission of India (CCI) also gave nod to proposed acquisition of additional 25 per cent stake to the acquirer. As a result of the proposed combination acquirer will hold 100% shareholding and sole control.
In real estate sector, a study by credit bureau CRIF High Mark has found that despite an ongoing pandemic, people continued buying houses, mostly the affordable ones. The study doesn’t delve into actual property sales, but analyses the housing loans raised for the year ending December 2020. About 60 per cent of the sales by value and 90 per cent by volume were driven by the affordable housing segment, in which less than Rs 35 lakh of loans for each unit were taken. Within affordable housing, loans under Rs 15 lakh comprised 70 percent by volume and 38 per cent by value. The housing loans grew 9.6 per cent in Dec’20 over Dec’19 despite the pandemic.
Godrej Properties consolidated net loss stood at Rs 192 crore in Q4 FY21 as against net profit of Rs 102.39 crore in Q4 FY20. On a consolidated basis, net sales slumped 62.80% to Rs 432.64 crore in Q4 FY21 compared with Rs 1,163.05 crore in Q4 FY20. EBITDA stood at Rs (79) crore in Q4 FY21 compared with Rs 253 crore in Q4 FY20. It recorded its highest ever quarterly collection of Rs 2,041 crore leading to net operating cash flow of Rs 785 crore in Q4 FY21. The company delivered about 2.3 million square feet in three projects in Q4 FY21.
Godrej Properties expects its sales booking this fiscal to surpass the last year’s record Rs 6,725 crore despite the outbreak of second wave of COVID-19 and hopes to cross Rs 10,000 crore mark in the next financial year. The company’s sales bookings grew 14 per cent to an all-time high of Rs 6,725 crore during the last financial year, despite overall demand slowdown in the market because of the pandemic. It achieved sales bookings of over Rs 1,300 crore each across four major markets — Delhi-NCR, Mumbai Metropolitan Region (MMR), Bengaluru and Pune.
Motilal Oswal Real Estate (MORE) has announced that it has raised Rs 650 crore fund and that it plans to deploy the capital in mid-income/affordable residential projects across the top seven cities in India while selectively investing in commercial projects. This Fund has been raised from high net worth individuals (HNIs) and family offices. The Fund is set up as an alternative investment fund (AIF Category II). MORE is a part of Motilal Oswal Private Equity (MOPE), the alternative investments platform of Motilal Oswal Financial Services Limited.
With uncertainty over coronavirus waves, investors in shopping malls are stalling construction or postponing the launch of their new properties in 2021. Many might be forced to sell off their properties to new players or repurpose them to create some office or co-working space to hedge their bets. This year, over 54 new malls with over 22 million square feet of space were expected to open across India. According to estimates by Colliers India, only five with a total space of 2.5 million square feet are looking to go ahead, even though malls with six million square feet of space will be completed. About 68 per cent of these malls are in Tier 1 cities (the metros) and the rest in Tier 2 cities.
Century Textiles & Industries, which nets over 70 per cent of the income from the first is diverting its focus onto the real estate business and has lined up Rs 1,000 crore for capex this fiscal for its ongoing and upcoming projects, including the super-premium Worli project. Of the Rs 1,000 crore sales, Rs 600 crore is from the Gurugram project and the rest from the Kalyan project, and can be booked into the P&L account only in FY23 when these projects will be completing.
After an increase in sales of apartments in tier-2 and tier-3 cities in the March quarter of 2021, the transactions fell in April as several states imposed regional lockdowns to prevent the spread of Covid-19. In the March quarter on a year-on-year basis, housing transactions in these cities jumped to 19% to 41,270 units. The sales in April this year reached 5,980 units, nearly 2.5 times higher than in April 2020. The April 2021 numbers were declining compared to the average monthly purchases of 13,757 units in the March quarter. In Q1 CY2021, home purchases in tier-2 and tier-3 cities grew 6% regularly. In the December quarter of CY2020, these cities reached 38,906 units sales, turning into monthly sales of 12,969 units.
In private equity sector, Blackstone has acquired Embassy Industrial Parks, a joint venture of Warburg Pincus and Embassy, which controls 22 million sq ft (MSF) of largely Grade-A warehousing space across major industrial hubs including Bengaluru and Delhi. The deal is worth around $700 million or roughly Rs 5,200 crore. The acquisition of Embassy Industrial Parks makes Blackstone India’s largest warehousing space provider with 40 MSF of assets, most of which is Grade-A space. It had last year inked agreements to acquire 18 MSF from the Hiranandani group and All Cargo.
As per the latest annual report of the Canada Pension Plan Investment Board or CPP Investments – Canada’s largest pension fund manager – will increase its presence and investments in Indian equities and credit markets. It says ‘building on the progress made in 2020-21 (FY21), active equities (AE) will focus its efforts to increase exposure in emerging markets (EMs) by expanding our presence and investment capabilities in India.’ It looks to deepen local market expertise and networks in Greater China and India, and build a local team in the Mumbai office to enhance deal origination efforts.
Bharti Airtel Ltd reported a March quarter profit of Rs 759 crore from a loss of Rs 5,237 crore a year ago, as it clocked higher revenues and one-time gains. Consolidated revenue rose 17.6% from a year ago to Rs 25,747 crore, while India business revenue rose 17.5% to Rs 18,338 crore. Both consolidated revenue and profit trailed Bloomberg analysts’ poll estimates of Rs. 26,164.80 crore and Rs. 58.80 crore, respectively. During the quarter, the company also recorded net one-time gains of Rs 440 crore from the reversal of asset impairments and re-assessment of certain network assets and regulatory levies.
As mentioned above, government’s objective of pushing infrastructure funding through the process of asset monetization has been continued by planning to monetize more than 30 projects this year. Due to the lockdown imposed in several states amid of second wave of coronavirus, many projects have been stalled and overall transactions in the real estate sector has seen a marginal decline in the month of April, 2021. But according to some views, the momentum of affordable housing will pick up pace post covid 19 as people with salaried incomes are facing difficulties in paying rents during this time. Also the recent announcement of banks switching to reduced home loan rates will also give a boost to the affordable housing sector.
The government has plans to spend up to Rs 111 lakh crores over the next four years on infrastructure projects as a continued emphasis considering the ongoing economic downturn COVID-19 health crisis which pulled the economy on serious downward trend. The infrastructure projects as part of the Nationak Infrastructure Pipeline include highways, roads, railways, ports, airports, power projects, renewable energy, industrial and social infrastructure. However, it seems that the large chunk of funding for these projects will come from the public sector due to the challenges in raising private finance for infrastructure projects with the formation of a new DFI and the asset monetisation plan of the government are major steps in this direction. Though the experiences of the DFIs financing infrastructure projects have shown mixed results in the past. The financing of infrastructure projects through non-banking finance companies has also proved unsuccessful with the collapse of Infrastructure Leasing & Financial Services Ltd. in the recent past. The financing of long-term infrastructure projects through commercial banks is fraught with problems as seen with rising the non-performance assets of the banks with a big chunk of it coming from the infrastructure projects. So it seems the solution lies somewhere else rather than with the institutions, mechanisms or investors.
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