Infrastructure order book tops Rs64,500 crore in 5 months
30 May 2009
The Indian infrastructure segment attracted orders worth Rs64,500 crore so far this year, and with a new government in place order-flows in this space is expected to accelerate further, says a study by a leading brokerage firm, IDFC-SSKI Securities.
''There is a clear case for increasing infrastructure investment as the capacity is grossly inadequate and a growing economy would drive up demand for infrastructure services further," it noted.
"With a a stable government, infrastructure capital expenditure will jump sharply over the next 2-3 years as around Rs7.8 trillion of liquidity has been injected into the system," the research paper said. It further highlighted that private players are facing bottlenecks because at present their access to capital is constrained and complete drying up of equity funding as risk aversion took over.
Besides, the global slump in debt markets was aggravated by severe liquidity crunch in India and the impact of increasing debt cost is also keeping away private sector from new projects.
On the other hand, public sector entities backed by strong political will, are expected to push infrastructure capital expenditure as there is a consensus across parties on the need for infrastructure investments.
Besides, the low inflation regime is also providing room for pursuing high growth despite risks of a rising deficit. Moreover, the financial health of key public sector entities or government bodies is robust enough to ensure implementation of stated plans.
''Going forward, the infrastructure sector is likely to get a boost from the recent fiscal measures, substantial increase in plan expenditure and relaxation in external commercial borrowings,'' the report added.
The order backlog of some of the major companies touch up to Rs67,030 crore; these include Larsen and Toubro (Rs67,030 crore), Jaiprakash Associates (Rs40,000 crore), HCC (Rs14,460 crore), IVRCL (Rs 14,300 crore), Madhucon Projects (Rs4,580 crore) and Simplex Infra (Rs10,230 crore).