APCO has completed many challenging projects ahead of schedule and claimed it as a record. What would you attribute the successful implementation to?
We have the best technical and non-technical resources to take timely decisions and effective planning in the interest of the projects. Also, our equipment fleet size is commendable. All these factors help the company achieve timely completion of even the most challenging projects. Our preferred model is EPC followed by HAM.
In the last few months, a good number of road projects were awarded, many thousands kms are ready for bidding, and the road and highways Minister wants to step up road construction to 60 km/day. Do you think that we have the resources, expertise, technologies, and the workforce to make this possible?
Yes, India has enough resources, the expertise, and the technologies to take up more work because the speed of highway construction has gone to the next level.
Recently APCO achieved the Highest Financial Value of Work Performed in a month on the Expressway Project in Nagpur Mumbai Package-05 in the State of Maharashtra. Though we faced some shortage of workers, we completed the project in the shortest time frame. Today, the construction industry is effectively managing projects and completing them by spending on high-tech equipment, despite their initial high costs.
Liquidity has been a big issue with most contractors as banks and NBFCs are being extra cautious while lending. How is APCO Infratech managing its fund requirement? Are you looking to raise capital from the market for your new projects?
We are very comfortably placed as regards our fund requirements, and we are managing our financial resources in a well-planned manner. As on date we don’t have any plans to raise capital from the market for our upcoming projects. Also, APCO has 07 Operational Assets (02 BOT Toll Projects and 05 HAM Projects). If any fund is required for the new projects, then we can infuse the funds by selling some stake in certain operational assets.
What are the major hurdles that could delay road projects and which the Government must resolve on a war footing?
As on date, the major hurdle for delay in road projects is the clearance, hence, the Government should place highly efficient officers who can interact with inter government agencies to clear issues of Land Acquisition, Forest Clearance, and ECO Sensitive Zone clearances within the prescribed timelines, so that delays in project implementation can be avoided.
How has the climbing rate of Cement, Steel and Bitumen affected contractors? Do you think this cartelization is hurting sentiments and bringing project viability under a shadow, and thereby slowing down the pace of construction?
Yes, the climbing rate of Cement, Steel and Bitumen is seriously affecting the contractors and the price escalation clause provided in the CA is not fully compensating the increase in prices.
The contractor community is constantly approaching the GoI through the Road & Highway Ministry to control the raw material prices and has also discussed the compensation model for the uncovered escalations; however, no solution has been arrived at yet.
We don’t want to comment on the cartelization as the respective Government agencies have to monitor the prices (in case there is cartelization taking place in the industry). The increase in prices has already exhausted all our profit margins and if the prices are not normalized within the next 6-12 months, then several projects will have to face a serious financial issue.
Artificial intelligence (AI), machine control, and IoT are making inroads in the infrastructure construction and equipment sector. As a forward-looking and professionally managed company, what scope do you see for these futuristic technologies, especially in major infra projects? How will they help streamline the day-to-day activities and curtail project delays, losses, and cost overruns?
In our opinion, implementation of Artificial Intelligence, Mechanization, and Internet of Things (IoT) are already fully implemented in the infrastructure sector. Without their implementation, it is becoming difficult to monitor and control construction as the projects are spread across many states.
Taking timely decisions, following proper workable design methodology, efficient administration and coordination with inter-governmental agencies, and engagements with clients at various stages of project construction can help curtail project delays and cost overruns. Currently, cost overruns in projects are due to the abnormal increase in the prices of construction materials like Cement, Steel, Bitumen etc.
What projects does APCO have in hand and in its order book for FY 2021-22 and what opportunities do you see emerging in FY 22-23?
FY 2021 – 2022 was a very good year for APCO, even though Covid-19 and the increase in prices of major construction materials affected our projects at various levels.
The company achieved a turnover of INR 6030 cr in FY 2021-2022 (provisional) with an increase of 10.55% on a year-to-year basis. The company has an outstanding order book as of 1 April 2022 and we are looking for new opportunities in sectors like Hydro, Tunnels, Railways, Airports, Waterworks etc. for FY 2022 -2023.
APCO recently took over the Versova Bandra Sea Link Project in the State of Maharashtra in association with WEBUILD – a global leader in the field of construction.
Would APCO consider constructing railways and airports?
In our opinion, railways and airports are very tough in nature and very competitive too because these projects are being executed under the restrictive nature of works. Also, while they require high value engineering technologies, the tenders are being quoted at very low prices.
However, we are participating in various airport projects at our workable rates and are also looking for partners to enter other sectors. With the central and state governments providing huge budgetary allocations for the road and other infra sectors, we see huge opportunities which will go well beyond 2022.