Hybrid model turns out to be a big draw

    Hybrid Annuity Road Model
    Establishing its popularity among the road builders in a short span of 6 months, the hybrid annuity road model has walked away with 21 highway projects entailing a whopping investment worth Rs. 15,000cr. In the new model, interest of private players picked up after the government approved the model for road construction, under which 40% of the project cost is borne by the government and the rest is taken care by the project developer. The companies that have bagged projects include APCO Infratech, Sadhbhav Infrastructure, MBL Infrastructure and Welspun Enterprises. A joint venture between MEP Infrastructure Developers and Sanjose India Infrastructure & Construction has also been awarded two projects. The size of the companies that have bagged hybrid projects is small to medium, but the industry is of the view that it is a step in the right direction. The balance sheets of these companies are not heavily leveraged and, therefore, securing loans for hybrid annuity projects will not be difficult. Commenting on the emerging scenario in the road sector, chairman, Feedback Infra, Vinayak Chatterjee, said that some of the big players in the infrastructure sector like Larsen & Tubro, IL&FS Transportation Networks, GVK Power and Infrastructure, GMR Infrastructure, IVRCL, Gammon Infrastructure Projects, Hindustan Construction Co, Tata Realty & Infrastructure, and Ashok Buildcon are staying away from highway projects because they do not have the appetite to bid for hybrid annuity projects because their balance sheets are highly leveraged, making it tough for them to secure loans.
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