Top Seven Road Developers Bag 40% Of NHAI’s Orders
National Highway Authority of India awarded record road contracts worth Rs 1.22 lakh crore in the year-ended March, helping almost all large construction companies improve their order tally over the previous year.
The state-run road developer awarded 150 projects spanning 7,400 kilometres, nearly twice the previous year in terms of length as well as value.
Top seven companies got 40 percent or Rs 50,000 crore worth of the fresh contracts by value, according to data compiled by BloombergQuint. KNR Construction Ltd., Ashoka Buildcon Ltd. and Dilip Buildcon Ltd. doubled their orders over the year ago. Only PNC Infratech Ltd.’s order inflows declined for the year, largely because of a higher base.
Who Gained Or Lost Share
Barring Dilip Buildcon, Ashoka Buildcon and KNR Construction, the share of most road developers fell in the NHAI awards for 2017-18. That’s because the growing share of the hybrid annuity model in the projects. It involved fixed payment in the first five years and variable payouts for the remainder depending on performance and assets created.
“Highway construction is not engineering intensive—smaller players in the past have tied up funding from private equity firms and formed consortium to meet qualification requirements,” Bank of America Merill Lynch said while initiating coverage on Dilip Buildcon. “But with the rising share of projects based on the hybrid annuity model, we expect less competition given the need for a superior balance sheet.”