‘Moving away from the pandemic, traffic has normalised to a great extent’

IRB chairman and managing director
Virendra D. Mhaiskar

With an asset base of over Rs 55,000 crore, IRB Infrastructure Developers (IRB) is the country’s largest private roads and highways infrastructure developer. In an interview with Rajesh Kurup, IRB chairman and managing director
Virendra D. Mhaiskar said the company would use the recent Rs 5,347-crore fund raised from global investors to put its business on “autopilot”. Edited excerpts:

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For IRB, Q2 was a stellar quarter with a 315% rise in net profit?

The second quarter of last year was badly impacted by the pandemic. Moving away from that and as things got normalised the topline and bottomline have come back, yet not meaningfully, but there are good signs of improvement. Things have normalised, particularly on toll roads as traffic has normalised to a great extent.

What’s your order book now?

The order book is about Rs 13,000 crore. The construction order book of about `6,500 crore is executable over two years and the remaining operations and maintenance order book is executable over the next 5-10 years.

How do you plan to use the proceeds of the Rs 5,347-crore fund raised from Ferrovial and Singapore’s GIC?

This is the largest fund-raise by a listed holding company. The two marquee investors — GIC and strategic investor CIntra — are majorly into toll roads. So, those are the synergies where they found IRB as a good opportunity to look at the Indian market.

In the last two years, we had picked up a lot of projects and that increased our debt levels. We wanted to deleverage the balance sheet and at the same time, we wanted the business to be put on autopilot. We also wanted growth capital to come in so that newer opportunities can be tapped. Of the proceeds, largely about `3,500 crore will be used for prepaying the debts of the holding company.

After the deal, how much is the debt?

Now the consolidated net debt to equity ratio will come down to 1.2 is to 1. The debt would be about `13,000 crore, which is self-liquidating ads it is linked with cash flow.

Now that IRB’s greenfield airport in Sindhudurg has started commercial operations, would you look at similar projects?

It was an interesting opportunity and it works out to be a very good asset. We have no debt on the project, and it has been completely built out of internal accruals. We have spent close to Rs 800 crore on the asset in the last 7-8 years, and it’s a 90 years concession with no revenue share.

While it might take 3-4 years to fully stabilise, given the proximity to Goa and the tourism potential in the region, it will be a great asset over a period of time. No, we are not doing any other airport project; this was a one-off non-core asset we have.

Infrastructure Investment Trusts (InvITs) are not gaining momentum in India. Why?

The product faces headwinds as it is not well understood. It’s a hybrid product and not an equity product, and as a debt product, it’s giving significantly great returns. So probably there was a disconnect in understanding the concept in the early days.

Your take on the Government’s Rs 6-lakh core asset monetisation plan?

When you’re creating a big pipeline of assets, you need to churn that capital. So if the government now decides to put out some more projects on BOT (Build Operate Transfer) or on TOT (Toll Operate Transfer), I think it’s more of a churn. I think it is necessary because you don’t want stagnation where you just keep investing and you don’t churn that capital. So it’s part of the capital churning process.

I think this is where you will be able to bring in private participation, more foreign capital, and that’s what we need.On the status of the Gandeva-Ena Section of the Vadodara-Mumbai Expressway Project?

We will be starting the project now that the formalities are completed. We have to complete the project in 730 days.