Jaypee Group Striving for Excellence
Over the years Jaypee Group has evolved a lot from a humble beginning to its present leadership status of diversified infrastructure conglomerate of formidable presence. To attain this unique status, what enabling milieu the Group has enshrined and created to translate its business vision into concrete reality?
Jaypee is a single generation enterprise formed in the 1960s that has gone on to become one of the most successful Engineering & Construction companies having the distinction of participation in 54% of hydropower projects in India being developed in the 10thFive Year Plan.
For over four decades now, Jaypee Group has been turning convention inside out. With enthusiasm and courage, we have gone where few ventured. We have explored possibilities where none existed. And while doing so we have established benchmarks for others to follow.
The Group's responsibility, both for its workforce and for the society at large, has been sustained since its inception till today through a continuous cycle of enrichment, which reflects in its core values, vision, mission, corporate governance and social responsibility.
Our Vision is "To strive for excellence in every activity we undertake as we contribute in nation building through our participation in infrastructure sector of the country utilizing resources optimally, while growing with human face."
What are Group's important business?
The Jaypee Group is a well-diversified infrastructural industrial conglomerate in India. Over the decades, it has maintained its salience with leadership/presence in its chosen line of businesses which are –
- Engineering & Construction
- Cement
- Energy (Power, Transmission, Oil & Gas)
- Real Estate and Expressways
- Hospitality
The Real Estate and Expressways are being executed by subsidiary companies Jaypee Infratech Limited (JIL) and Jaypee Ganga Infrastructure Corporation Limited (JGICL). Besides this, JAL in a Joint Venture with Steel Authority of India Ltd. (SAIL) is setting up a cement plant. The company is also setting up another subsidiary JPSK Sports Private Limited (JPSKSPL) for developing a Greenfield state-of-the-art Sports Complex including Car Race track suitable for Formula 1 race with related integrated support infrastructure including townships and auxiliary facilities.
Recently the Group has revamped its organizational structure by amalgamating some of its subsidiaries to fine-tune Group's operation so as to play a bigger role in the growing infrastructure space. What are the salient points of this restructured plan? How much strength it will impart to Group strong Capex fundamentals for more focused diversification?
The amalgamation of four Group Companies, namely, Jaypee Cement Limited (setting up a Cement Plant in Andhra Pradesh), Gujarat Anjan Cement Limited (setting up a Cement Plant in Gujarat), Jaypee Hotels Limited (which is into Civil Engineering Construction, Hospitality & Real Estate) and Jaiprakash Enterprises Limited (Civil Engineering Construction, Limestone mines & Real Estate). The Companies merged have synergy of business with flagship company i.e. Jaiprakash Associates Limited.
The salient points of this restructured plan are :-
- The amalgamation would enable realisation of substantial benefits of greater synergies between the businesses of the companies.
- It will result in consolidation of cement business under one roof.
- It will result in pan India presence in cement business reducing the impact of regional demand-supply factors.
- The amalgamation will achieve economies of scale, management efficiency and reduction in administrative cost.
- It will lead to optimisation of resources and enhanced flexibility in funding of expansion plans.
- The amalgamation will result in expanded asset base, improved profitability, tax efficiency and stronger Balance Sheet of the merged company.
Jaypee Group is one of the pioneers and leaders in developing hydroelectric projects in the country in different parts from North to North-east. What is the capacity created so far, capacity in hand and important projects including those through EPC route which are expected to go into the industrial stream in the next one or two years? What is Group's market share in Country's hydro power market?
Jaiprakash Associates Ltd., the flagship company of the Group, is a leader in construction of river valley and hydropower projects on turnkey basis for more than 4 decades. The company has had the distinction of executing simultaneously 13 hydropower projects spread over 6 states and the neighboring country Bhutan for generating 10,290MW of power.
It is the only Integrated Solution provider for hydropower projects in the country with the track record of strong project implementation in different capacities and has participated in projects that have added over 8840 MW of Hydroelectricity to the National grid between 2002 to 2008 - an unparallel feature in Indian Power Sector.
In addition to the above, the Group has the distinction of executing the largest EPC projects in Hydro power sector in the country. Till March 2007, only five hydropower projects (2,800 MW) have been awarded in India on an EPC basis. Three (1,720 MW) have being executed by JAL's Engineering Division. These are 300 MW Chamera -II HEP, (in HP); 520 MW Omkareshwar (in MP) and 900 MW Baglihar Stage I and II (in J&K).
The Group had successfully completed the 520 MW Omkareshwar Hydropower Project in the year 2008, three months ahead of schedule. Earlier, Chamera – II project was also completed six months ahead of schedule.
Post reforms in nineties, out of 786 MW of Hydro Electric Power added by private sector, Jaypee Group has alone set up two Hydroelectric Power Stations contributing 700 MW to National Grid. The Group with its operational projects of 300 MW Baspa-II (Himachal Pradesh) and 400MW Vishnuprayag (Uttarakhand) is India's largest private sector Hydropower producer.
Besides this, 1000 MW Karcham Wangtoo project (HimachalPradesh) under advanced stage of implementation. In addition, with 3200 MW projects (2700 MW Lower Siang & 500 MW Hirong) coming up in Arunachal Pradesh and 720 MW (270 MW Umngot and 450 MW Kynshi Stage –II) in Meghalaya, the Group will have total Hydropower generation capacity of over 5000 MW by 2016.
Recently some of Group’s hydropower projects were conferred with Gold Shield in the prestige National Awards for Meritorious performance in power sector. Which are these projects on which this distinction has been bestowed? What were the key benchmarks of this evaluation meriting consideration?
The prestigious National Awards for Meritorious Performance in Power Sector by the Ministry of Power for the year 2007-08 has been awarded to Jaiprakash Hydropower Ltd. for outstanding performance of 300 MW Baspa-II hydropower station. Prior in 2004-05, the Ministry of Power had awarded "Silver Shield" to BASPA-II Hydropower Station, within its 1styear of operation for the best run power station in private sector.
The two benchmarks of this evaluation were:-
1. High Plant Availability
Plant availability means that the plant is available for generation of electricity. In run of river schemes-such as Baspa-II, the river discharge varies a lot during a year allowing full capacity generation during monsoon and minimum generation (about 15% of capacity) during say in February.
Plant availability thus means its availability for generation (if water is available to that extent) and not actual generation. In case of Baspa the plant availability was 99.91%.
2. Actual generation of electricity (MU) vis-à-vis the projected schedule of generation during the beginning of year.
Every year a projected schedule of generation is given to CEA. Baspa-II achieved higher than the projected schedule during the year, it was awarded Gold Shield. Against the given target of 1213.18 MU, it actually generated 1281.10 MU.
Apart from this, for early completion of 520 MW Omkareshwar project to Narmada Hydro Development Corporation where Jaiprakash Associates Limited was the EPC contractor and leader of consortium with Voith Siemens and Alsthom was also conferred with “Gold Shield” in the prestigious National Awards.
At the national level development and growth of hydropower projects has been a matter of concern' fearing slow pace and slippages in achieving additional capacity planned for 12th Plan Period. What could be the reasons for this concern and how the situation can be resurrected so that there are minimum slippages? Of course the country has a history of such slippages in the past. But should this tag linger on with so much technical advancement and expertise at our command?
The constraints which have affected hydro development are technical (difficult investigation, inadequacies in tunneling methods), financial (deficiencies in providing long term financing), tariff related issues and managerial weaknesses (poor contract management). The hydro projects are also affected by geological surprises (especially in the Himalayan region where underground tunneling is required), inaccessibility of the area, problems due to delay in land acquisition, and resettlement of project affected families, law and order problem in militant infested areas.
To accelerate hydro development, priority should be accorded by the central and state governments, and adequate funds should be released to the central corporations as equity. As a long-term strategy, water should be treated as a national asset, like minerals and hydro development, and should be in the ambit of a central hydro corporation. This will also pave the way for implementation of projects now held up due to inter-state reasons. The rural energy scenario is characterized by inadequate, poor and unreliable supply of energy services. Realizing the fact that small hydropower projects can provide a solution for the energy problem in rural, remote and hilly areas where extension of grid system is comparatively uneconomical and also along the canal systems having sufficient drops, promoting small and mini hydel projects.
Yes, with so much technical advancement and expertise at our command, this slippage tag should not linger on. But again, due attention given to some of the important aspects will go a long way in achieving speedy development of hydro power. Aspects like:-
- A foremost requirement is a strong political will to undertake and complete projects. Lack of will manifests by way of projects lingering on for completion even after hundreds or thousands of crores have been invested or abandoning a project after making huge investments.
- A big impediment to start a hydro project is not getting timely clearances. Presently, it sometimes takes years to get a clearance. For hydro there are basically only three clearances – a techno economic clearance, a forest clearance and an environment clearance. Ways and means therefore have to be found to get speedy clearances for a project. The Government of India has a definite and positive role to play in this regard. A system of single window clearance (which has been in talk for a long time) need to be adopted.
- Lack of/inadequate investigations is another area of concern. Proper and comprehensive investigations should be undertaken before taking up a project. Modern means of electronic and laser equipment for surface and sub-surface investigations should be adopted replacing the outdated modes and system in this regard. This would avoid making frequent changes during detailed design and construction stage and check time and cost over-runs.
- A project should not suffer for lack of finance. Financing of the projects should be well organized ensuring regular flow of funds during their implementation. Government projects many times suffer badly on this account.
- A project oriented system for quick decision making in technical and administrative matters should be in place.
The Yamuna Expressway Project is an 165 km, 6 lane expressway between Noida and Agra along the left bank of the River Yamuna and the ribbon development of 25 Million Sq Mtrs of land for commercial, industrial, institutional, residential and amusement purposes will be undertaken as an integral part of the project.
At present, construction work is in progress and the land has been acquired for Right of Way (ROW) along the entire stretch of 165 km long, 6 Lane Access Controlled Expressway connecting Noida to Agra. The construction work is in full swing and 46%
Ganga Expressway, the largest private sector infrastructure project in India with 8 lanes, 1047 km long connecting Greater Noida to Ballia (U.P.-Bihar Border). The expressway connecting Western U.P. to Eastern U.P. is under construction.
Ganga Expressway is a challenging work involving huge quantities of earthwork (35 Crore CM3–9 times higher than Tehri Rockfill Dam), stonework (4 Crores CM3–15 times of Tehri Rockfill Dam), concrete work (1 Crore CM3 –5 times of Tehri Rockfill Dam) and large number of structures including 7 numbers 8-Lane bridges on River Ganga.
Besides, there is going to be ribbon development of 8 land parcels totaling to 30,000 acres of land along the Expressway. School of Planning & Architecture has been appointed for finalization of Building Regulations for Land Parcel development. Topographic survey (expressway including link roads) has been done till 846.69 kms and land proposals along expressway for around 333.76 kms. has been submitted to UPEIDA.
The benefits from this projects will be -
- Boost to real estate, independent townships/cities, industrial model townships, food processing units, education city, satellite dwelling units (SDU) etc.
- Large employment potential for the local people; training facilities to be created for the local youth.
- Connecting NCR with other parts of the state will boost economic activity.
- Decongestion of existing roads and reduction in pollution.
- Employment generation.
- Development of tourism and pilgrimage.
- Facilitating import and export of goods in the state.
- Development of high speed transport expressway.
- Permanent flood protection in sensitive areas on the left bank of river Ganga by which around 3 lakh hectare of additional land will be available.
- High-end infrastructure development along the expressway corridor i.e. economic, residential, industrial and commercial.
- Reduction in travel time by 10 hours and vehicle operating cost (VOC) saving up to 30%.
- Great potential for agro-based industry, infrastructure facilities and development of new towns would take place, thereby transforming life of over 40 million people for good.
The construction of Zirakpur-Parwanoo Highway connecting Punjab, Haryana & Himachal Pradesh is on BOT basis. The total length of the highway is 28.690 kms.
Project consists of 17.44 Km of widening of existing 2-lane carriageway to 4 - lane and 10.14 Km of new 4 lane bypass. The existing carriageway consist of 12 structures, 24 km of service road and 24 km of drain, while bypass consist of 11 no. of viaducts, 5 nos. of vehicular underpass, 3 km of service road and 3 km of drain. Existing Carriageway-6.38 Km main carriageway, 7.88 Km Service Road and 13.2 Km of Drain is completed. Work on 11 Nos structures out of 12 are in progress. 0.97 km of main carriageway on the Bypass is completed. GSB and WMM work from Km 61.000 to 62.000 has also been completed. 3 no structures out of 16 are in progress.
Over the years NHDP has not proceeded the way it should have been. While the Government has been pressing kick start buttons time and again to fast track these highway projects, there is no end to the roadblocks in the way. Does it point out to faulty planning, dithering policies, flawed procedures and related skewed approach?
The basic problem is of financing and land acquisitions beside delay in giving decision to the Concessionaire by the controlling Govt. Agency. The other problems are too many infrastructure works started at a time and there are shortages of contractors, skilled technical persons beside financial crunch. Govt. has to take a view on this issue and has to provide finance at a very low rate of interest in order to sustain the increasing cost of the project.
Jaypee Group is the 3rd largest cement manufacturer with highest cement production growth rate. What are its future expansion plans ?
The Cement Division of Jaiprakash Associates Ltd. (JAL) has 6 state-of-the-art, fully computerized Integrated Cement Plants (ICPs), 3 Grinding Units and 1 Blending Unit with an installed capacity of 13.5 million tonnes per annum (MTPA). JAL is in the process of setting up new capacities in Northern, Central, Western & Southern parts of the country and is targeting a capacity of 24.30 MTPA by 2010 and 26.80 MTPA by 2011, along with 327 MW of Captive Thermal Power Plants (CPPs).
Once the expansion plans have been implemented, the Group will have 12 Integrated Cement Plants, 9 split location plants (Grinding & Blending units), 11 Railway sidings and a captive jetty across the states of Madhya Pradesh, Uttar Pradesh, Gujarat, Himachal Pradesh, Haryana, Uttarakhand, Chhattisgarh, Jharkhand and Andhra Pradesh, giving the former a pan-India presence in the cement sector.
Hospitality and real estate sector have been worst affected by the recent recession. What has been the impact of this on Group business plans?
Well, it's true that the recent recession has badly affected these two sectors but the fact remains that this has not influenced our business plans.
The Hospitality subsidiary is in the process of building its fifth hotel - "Jaypee Greens Spa Resort" in Greater Noida. The resort is planning a tie-up with Thailand based Spa chain "Six Senses" and is expected to be operational before the start of the Commonwealth Games in 2010.
As far as the Real Estate division is concerned, the Jaypee Greens Wish Town in Noida, claimed to be the India's largest township over 1162 acres is an integral part of a large infrastructure project and is located along the expressway connecting Noida to Agra thereby having an edge in terms of cost and valuation and has received an overwhelming response from the customers.
Within the Noida development, we have introduced a new residential community – Wish Town Klassic, which is showing impressive sales figures.
Group's residential project Jaypee Greens AMAN the latest addition in the vast range of projects being offered by the company & has received robust demand, signaling the revival of the property market. Jaypee Greens has sold the entire 3300 apartments within 24 hours of the launch.
Spectre of manpower crunch is looming large on all industries. What needs to be done at the national level to offset manpower shortage of new and trained manpower? What system is placed in the Group to address the problem to serve the Group to the best of its abilities and expertise?
At National level, there is a need to focus on developing more vocational skills. These are as important as technical skills which are necessary for success in any enterprise. Our education system has done little to address this changing paradigm but still we need to revamp up the educational infrastructure through public-private initiatives.
Well, I have always believed that every human being is an asset to the company and brings extra power and extra luck to the company. Dedication and perseverance of our human resource has resulted in making Jaypee Group one of India's largest infrastructural conglomerate. Jaypee Group in - houses a wide array of multi talented and skilled manpower to its advantage, making us one of the best companies to work for in the country. Our training programs enhance the capabilities of the individuals. We try to attract, support, retain and motivate our employees. The quality of our training ensures this. We provide opportunities to develop skills and increase knowledge in order to maintain a competitive advantage. For instance the Structure Training Plan is an in - house training programs which focuses on technical side of various disciplines like civil, mechanical and electrical.
Jaypee Group is very proactive in discharging its social responsibility and has been supporting educational, social, community programmes. What have been its most recent initiatives including those for rural development, environment protection as its social commitment and corporate social responsibility?
Jaiprakash Sewa Sansthan [JSS], a 'not-for-profit Trust' promoted by Founder Chairman Shri. Jaiprakash Gaur has been established to discharge its responsibility towards the society. The Sansthan functions with a holistic approach for overall socio-economic development.
The activities of Comprehensive Rural Development Programme (CRDP) include free medical camps, Consultancy and distribution of medicines / diagnostic facilities are totally free to the villagers through mobile medical van, free animal care camps, launching literacy campaign both for young girls and adult education, delivering safe drinking water supply and creating huge water reservoirs in different villages, creating opportunities for self-employment and other social activities including renovation of old temples, other schools and hospital buildings in the adjoining adopted villages surrounding the various project sites across India.
Recently, a new initiative in providing health care has been launched wherein Advance Intensive Care Life Support Ambulances are being provided to sites/plants. Six such ambulances have been procured to be positioned at Karcham Wangtoo, Jaypee Himachal Cement Plant, Rewa, Dalla, Sewagram and Noida (Yamuna Expressway project site). These ambulances are equipped with state-of-the-art life support equipment designed to provide fast and direct response to save life by providing timely treatment to critical patients while being evacuated to a hospital. This step will go a long way in ensuring the prompt and full range of medical services being made available to all.
A continual afforestation drive in Mines, Plants & Township areas and all along road is undertaken to improve the overall environment as a safeguard against pollution. Upto 4, 95,719 trees have already been planted in plant and mine areas.
Besides this, other construction/renovation work has already been completed in various villages surrounding Rewa and construction / improvement of roads within villages has also been undertaken by Jaiprakash Sewa Sansthan.
NBMCW July 2009
