Prakash Asphalting & Toll highways (India) Ltd is the leading road construction company in Central India and a pioneer in executing engineering projects. Path India is constantly looking for innovations and challenging projects. In a brief Interview with Mangala Chandran, Director Nipun Agrawal gives an update on the company’s foray into more verticals like logistics parks and wayside amenities
Path India Ltd has a list of impressive projects, both ongoing and completed. It is a mix of BOT, OMT, Annuity models etc. What have been the challenges and how has the inclusion of technology been advantageous?
Working with a multitude of Authorities on different kinds of projects gives us a wide perspective. This experience certainly helps in streamlining the project execution.
The major challenge as we see it, is tracking of project progress, assets and machinery on ground that impacts the resource allocation and overall utilization. We have been working on implementing the Project Management module of our ERP for Tracking the project progress and assets and that has helped in improving the visibility enabling better decision making and overall efficiency.
What is the model of Contract most suitable for road works?
We have worked on almost all models such as BOT, OMT, Annuity, HAM, TOT, EPC. We have seen this industry evolve from simple EPC contracts to current HAM and TOT models. Based on our rich experience with multiple contract models, we feel that BOT and OMT have been the most suitable models for highway construction, operations and maintenance. BOT had options of grants which reduced the upfront exposure of concessionaire while giving them long term revenue generating assets, whereas OMT was very favorable for operation and maintenance projects with reduced capex requirements.
You are lately into creating Multi modal logistics parks…
We are glad to inform you that, recently we have been declared successful bidder for Bangalore MMLP project, for developing and operating MMLP on approx. 400 acres of land, on the outskirts of Bangalore. Our winning bid proposed guaranteed revenue share (NPV) to NHAI of Rs.1276 Crore.
The construction cost is approximately Rs.1000 crore over a period of 15 years and the proposed logistics park will have facilities like warehouses, cold storage, silos, container terminal with railway siding and other allied utilities.
While the concept is still in the nascent stage, it offers immense potential where multiple modes of transport will complement each other to reduce the last-mile logistics cost. We will continue to invest in the logistics sector and will look at other promising opportunities in future as well.
This is in line with GOI’s vision to bring down the logistics cost as a % of GDP in single digits from ~15% currently. As we usually see, in developed countries, the logistics infrastructure is much more advanced and efficient, and we too believe that India is well poised to grow exponentially in this area.
We would also like to hear about your projects connected with wayside amenities. What are the main components in this segment that will add real value to the highway commute?
NHAI and MoRTH have this vision that, with improving highways, there will be an increase in highway travelers as well, and these road users will need rest and recreational facilities on their journey.
We completely agree with this vision of the authorities and are excited to be part of this. We have been bidding for these projects and we have won tenders for 19 Wayside Amenities, which are under various stages of construction and operations. These facilities will have Fuel Pumps, EV Charging, Food Courts, Restaurants, Washrooms, Open Spaces, Parking, and separate facilities for truckers such as Dhabas, Dormitory, Showers etc. We are committed to providing a fulfilling experience to the road users, so that their journey can be smoother and more relaxed.
With these facilities and such experience on highways, we expect there will be a further increase in people opting for road travel. These facilities might also give boost to EV adoption, as there will be sufficient charging infrastructure along the highways. We also expect that road travel will become safer with such facilities providing much needed break on long journeys.
Most importantly, the recent modification by NHAI in RFQ with effect from January 2023 preventing you from bidding for toll collection (TMCC) being a system integrator, must be creating hurdles. What could be the way forward as revenue collected through ETC is anyway very transparent.
Yes, this modification has been disappointing. With 97% of revenue coming on ETC, it is as transparent as it can ever be. Moreover, IHMCL’s TMCC project also gets all the transactions in real time from all toll plaza systems, ensuring the Authority always have access to real time data.
In fact, if the Toll collection agency is the system integrator, there is less risk to Authority, as the Toll collection agency is responsible for ETC system also, which avoids the disputes for revenue losses caused by system issues, for which there is no option of recovery as of now.
Further, we have also submitted that the existing toll collection agency too has similar information about the toll plaza traffic, revenue and demographics, which a system integrator can have. If this is treated as unfair advantage, then current toll collection agency also, should not be allowed to bid for same toll plaza again.