MEIL-Megha Engineering Infra ltd. Now A motley group of emerging infrastructure companies has seen rapid growth in recent years.

By Mushtak Baig  

Monday, December 31, 2018

Finance Minister Arun Jaitley put the spotlight on infrastructure in the last budget with a massive Rs 3.96 lakh crore allocation for the sector. A signal to infrastructure companies that more projects are coming their way.

But it does not translate into much joy for infrastructure conglomerates - the likes of GMR, GVK, Adani and Lanco - who, for over a decade following India's economic reforms, had begun to look like the new face of Indian private enterprise with their asset-owning developer model. Today, they are all sharply focused on internal housekeeping and dealing with the challenges of restructuring debt. Estimates show that the total debt by the four leading players - GMR, GVK, Adani and Lanco - alone will add up to close to Rs 2 lakh crore. With such high leverage, its difficult for them to venture into newer projects.

Business Today spoke to analysts and industry insiders to get a sense of which infra players are growing rapidly and, consequently, well placed to make the most of Jaitleys largesse. The exercise threw up a motley group spread across the country. The thread common to the companies featured here is their strength in EPC (quickspeak for engineering, procurement and construction) capabilities. In an EPC, a client is billed and he pays for the costs incurred for a project as against BOT (Build, operate and transfer) where the company raises its own funds and recoups them after completion of the venture.

THE DISRUPTOR

River-linking has often drawn flak for its environmental and socio-economic implications. But here is an infrastructure company that entered the Limca Book of Records for the fastest completion of a river-linking project at Pattiseema in Andhra Pradesh. Megha Engineering and Infrastructures Ltd (MEIL) took only a year to link Krishna and Godavari rivers for a lift irrigation project and commissioned the first pump in 173 days. "Our first major river-linking project was in Madhya Pradesh, called Narmada Kshipra Simhastha Link Project. We had commissioned it in March 27, 2014," says P. V. Krishna Reddy, Co-founder and Managing Director of MEIL. He says his company's strength lies in EPC. "In infrastructure, we are working in all the areas - water, roads, power transmission and hydrocarbons."

The company, says Reddy, is currently handling more than 100 projects compared to the 60-70 three years ago. The government projects account for 50 per cent of the work in MEIL's kitty. The company earns about 40 per cent of its revenue from water projects, 20-25 per cent from the power sector, about 15 per cent from hydrocarbons and about 10 per cent from roads.

Krishna Reddy had always wanted to start his own business. He joined his uncle, P.P. Reddy, (MEIL's Chairman) to set up a small manufacturing unit in 1989 that produced pipes for irrigation projects. On the small plot of land where this unit once existed, now stands the multi-storied office of MEIL with each floor named after an Indian river. "Last year we had a turnover of Rs 12,000 crore. This year, we aim to get to $3 billion," he says.

Reddy's detractors, however, attribute MEIL's rise to the political patronage it enjoys locally. "All projects are now allocated via e-procurement. Moreover, we operate in 16 states, and it is not possible to curry favour with all the governments as we get repeat projects across the states," sums up Reddy.