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NEWS
MARCH 2013 CONSTRUCTION WEEK 11
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NEWS IN NUMBERS
According to CBREs latest report, Indian RetailMarket View H2, 2012, around 2.5 m. sq.ft. of freshretail space entered the market in 2012, mainlyconcentrated in Bengaluru, Kolkata and Pune, asagainst over 15 m sq.ft. in 2011. Most of the supplypipeline is scheduled for completion in 2013; bywhen the existing vacancy levels might reduce.
National Thermal PowerCorporation (NTPC) has tied
up a term loan facility of$250 million with State Bankof India, New York branchand Mizuho Corporate Bank,Limited, Singapore branch asarrangers and lenders. Theloan agreement will empowerNTPC to utilise the proceedsof the loan towards capitalexpenditure for procurement ofgoods and services for ongoingand new projects, renovationand modernisation of stations
of the corporation.
Ministry of new and renewableenergy has allotted 185 grid-
connected solar power plants of1,172 MW aggregate capacity underdifferent schemes during the lastthree years. Of these, 132 powerplants of about 369 MW aggregatecapacity have been commissioned upto January 31, 2013. These includeone solar thermal power plant ofcapacity 2.5 MW and 131 solar PVplants of 366 MW aggregate capacity.
'XULQJWKHSHULRGRIUVW
PRQWKVRIWKHFXUUHQWQDQFLDO
year, Coal India Ltd (CIL) hasregistered a growth of 8 per cent
in supply and 5.8 per cent in coalproduction over the correspondingperiod of the previous year. Duringthis period, 380 million tonnes ofcoal was supplied by CIL, whereaslast year it was 351 million tonnes.Similarly, coal production duringthe period increased to 355.31million tonnes from 335.89 milliontonnes of the corresponding period.
46.42MT
Coal production by CIL during
January 2013 as compared to 44.6
million tonnes in January 2012
1,172MWAggregate capacity
of solar power plants
alloted during the
last 3 years
83%Drop in prime retail
space supply in 2012
$250million
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12 CONSTRUCTION WEEK MARCH 2013
NEWS
Construction of limitedheight subway
Location: Jabalpur
Closes: 11 March 2013
Client: West Central RailwayCategory: Civil Engineering
Fabrication & Erection ofpiping & structural work
Location: Rawatbhata Rajasthan
Closes: 17 March 2013
Client: NPC L
Category: Civil Works
Execution of Civil Zonal Workfor the period upto 30 June 2013
Location: Tamluk-Digha section
Closes: 22 April 2013
Client: South Eastern Railway
Category: Civil Works
Drilling of Vertical Hole &Full Column Grouting
Location: Naheriya UG Mine
Closes: 24 March 2013
&OLHQW:HVWHUQ&RDOHOGV/LPLWHG
Category: Mining
Preparation of DetailedFeasibility report for VLGC
Location: New Mangalore Port
Closes: 11 March 2013
Client: New Mangalore Port Trust
Category: Civil Works
Construction of Road Over
Bridge of span 1 24 00 mLocation: Omatipalli
Closes: 19 March 2013
Client: East Coast Railway
Category: Civil Works
Construction of Four IsolationStoppings at Vishnupuri UG Mine
Location: Pench
Closes: 18 March 2013
&OLHQW:HVWHUQ&RDOHOGV/WG
Category: Mining
Construction of East Section0GDF8BUFS4VQQMZ
Location: NCL Dudhichua, UP
Closes: 10 April 2013&OLHQW1RUWKHUQ&RDOHOGV/LPLWHG
Category: Civil Works
Construction of 220/33KVSub-station on Turnkey
Location: Noida
Closes: 18 March 2013
Client: NTPC Ltdy
Category: Work Contract
Construction of 11VentilationStoppings
Location: Mathani UG Mine,
Closes: 16 March 2013
&OLHQW:HVWHUQ&RDOHOGV/LPLWHG
Category: Mining
TOP TENDERS
ALSTOM BHARAT Forge Power has
secured an order worth over Rs2,251
crore in India. It will supply three units of
660 MW supercritical coal turbine islands
to Nabinagar Power Generating Co, a joint
venture between NTPC and Bihar State
Electricity Board in Nabinagar. Alstoms
share of the contract amounts to around
185 million.
SUPREME INFRASTRUCTURE hasQPTUFEBQFSDFOUSJTFJOOFUQSPU
for the quarter ended December 2012. TheDPNQBOZnTOFUQSPUIBTJODSFBTFEUP3T
crore as compared to Rs25.01 crore for thecorresponding quarter of the previous year.
THE ROAD AND HIGHWAYS ministry
has taken up an ambitious special
accelerated road development programme
for providing connectivity to all the district
headquarters in the north eastern region
by minimum two-lane highway standards.
THE CABINET COMMITTEE on investmenthas cleared a proposal to setup North
Karanpura Super Thermal Power Plant
(NKSTPP) (3 x 660 MW) by NTPC in Jharkhand.The project would lead to generation of 1,980 MWof power. The committee also agreed to restorethe original coal linkage for the project. The coalsupply would be made available in the 13th Plan.
India Ratings has maintained an overall
negative outlook for Indian infrastructureprojects for 2013, considering project
DPNQBOJFTn DPOUJOVFE XFBL DSFEJU QSPMFT
However, some sub-sectors have a split
outlook. It expects that a number of projects are
likely to default on their bank debt obligations.
ATKINS, which is into design, engineering
and project management, opened a new
design centre in Gurgaon. It has a capacity for
375 people, complementing the 1,000 engineersalready working in Atkins Bangalore centre,
which opened in 1998.
Essar Steel has launched a range of high-endbranded steel plates for the Indian infrastructure
TFDUPS&TTBSIBTTQFDJDBMMZDVTUPNJTFEUIFproducts to suit the industrial requirements for
sectors such as construction, oil and gas, power,
and ship building. This will reduce countrysdependence on imported plates.
Ravi Singh, senior vice president, EssarSteel said: We are the only Indian companywho are currently offering a bouquet of branded
steel plates for the multiple requirements ofindustry. All our branded steel products followSEL 1 standard which is the highest amongstEuropean Standards.
Essar Steel launchesbranded steel plates
MATERIALS
With R+T Asia, China is preparing to host itsbiggest event for roller shutters, doors/gatesand sun protection system in Shanghai onMarch 26-28, 2013.
Originally started in Germany as R+TStuttgart over 40 years back, R+T AsiaXBT STU JOUSPEVDFE JO $IJOB JO
In 2013, there will be more than 400 globalbrands and thousands of innovative technologies
coming to join R+T Asia. There will also beInternational Window and Door Summittaking place during the exhibition.
R+T Asia kicks off inChina this month
EVENT
NEWS IN BRIEF
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14 CONSTRUCTION WEEK MARCH 2013
NEWS
Last month we looked at the
first of the three Ps of a
contract: Parties. Lets now
look at Price and three
issues that commonly arise in relation
to Price in a construction contract.
(1) A construction contract in essence
is no different from a contract to
deliver a fridge in that the contractors
entitlement to payment of the contract
price arises only after delivery. However,
because construction contracts are
lengthy, and the contractor havingto nance the materials and labour
during this lengthy period would be
a strain on a contractors nances,
construction contracts often provide
that the contractor will be paid at
regular intervals during the course
of construction rather than at the
end. But while this is common, a
contractor should not assume that it
is understood that the employer will
pay them monthly. Interim payments
have to be expressly provided for in the
construction contract. In the absence ofsuch a provision, the employer would be
entitled to ask for the entire product (the
completed building) before making any
payment, and the contractor would have
to comply.
(2) Contractors often believe that if
the prices of materials or labour go up
they should be compensated for it by the
employer. Sometimes this is a correct
assumption - for instance, where the
contract has a price uctuation clause.
But in the absence of that, the contractor
takes the risk of a rise in prices. This is
regardless of whether the contract is
a re-measurement contract where the
contractor is being paid based on rates,or a lump-sum contract where the price
is xed.9f course, the contractor also
takes the benet of a fall in prices but
such market movements are usually rare.
Contractors should therefore ask for a
price adjustment clause in any contract
that is expected to go on for a lengthy
period, but should be aware that these
clauses are usually drafted in a way that
also allows the employer to share in the
benet if prices fall.
(3) If you are constructing a project
in a foreign country but are incurringcosts not just in that foreign country but
also in a third country (for example, if
the equipment to be installed is being
bought in Europe for a project in the
Middle East), you are likely to face
issues with movements in currency
exchange rates. Contract prices are
often expressed in a single currency
and also paid in that currency. If your
currency of cost does not correspond
exactly with your currency of payment,
you should address the risk of currency
loss from a change in exchange rates
by either requiring the contract to split
the currencies in which you are paid,
or if that is too late, to take out hedgingcontracts to avoid a currency loss. It is
surprising how many Asian contractors
do not pay attention to this, maybe
because, historically, the US dollar has
always appreciated compared to their
currency of cost. But that is no longer
todays reality, and contractors need to
protect against this invisible loss.
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LEGAL EAGLE
APPOINTMENTS
Bangalore-based Mantri Developers has
announced the appointment of S BAASKARAN
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He would be responsible for strategising
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SUBHASIS CHATTERJEE has been named
as managing director for Eatons hydraulics
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BGR Energy Systems has inducted
SWARNAMUGI KARTIK as a whole-time
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whole time director and is designated as
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responsible for planning companys strategy
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he will lead the entire portfolio of energy
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Issues to keep in mind while drafting price clause
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16 CONSTRUCTION WEEK MARCH 2013
COMMENT
RevolutionisingRY_]SXQXKXMO]OM^Y\
Housing forms one of the
three basic necessities of life.
It is not only an elementary
need, but also an aspect
that bears political, social and economic
signicance. 0or most indi`idualst access
to dwellings encompasses a huge nancial
commitment, often one that is the largest
in`estment that people maUe. Housing
also poses a challenge for most countries,
though the tasU is more pronounced in
emerging and underde`eloped nations
than in de`eloped ones, where hea`ymigration to urban cities and creation of
informal settlements coupled with the
lacU of ade[uate housingnance solutions
has magnied the housing shortfall.
So while a huge demand for residential
units continues to exist, both the hous-
ingnance mechanisms and in`estment
in housing stocU ha e fallen well short of
meeting the housing needs of the masses,
especially those of the urban and rural
poor across the globe. The global econom-
ic crises in addition to nearly half of the
worldts population now inhabiting cities,has also drastically affected the ability of
low income households to access housing
nance and affordable housing.
This aspect has been characterised
by numerous countries, India included,
where housing de`elopment is highly
compartmentalised and extremely
focused at the top spectrum of luxury
housing, where `alue taUes precedence
o`er `olume.+s a conse[uence, the hous-
ingnance system has also encountered
numerous barriers in extendingnance
to lower income groups where there is
The housing finance system has encountered numerous barriers in
extending finance to lower income groups, says Sachin Sandhir
not only uncertainty of income, but also
of land title. ,arriers ha`e also existed at
thenancial institution le`el as a result of
insufcient capacity to introduce special-
ised housingnance products and access
to long-term funding.
To some extent e`en in India, liUe in
se`eral marUets of+frica and the7iddle
/ast, poor and lower income groups ha`e
limited or no access to housingnance.
So while inno`ati e and housing micro-
nance solutions ha`e found acceptance
and usage in de`eloped and regulatedmarUets, these instruments are yet to
be effecti`ely applied in emerging and
underde`eloped economies.
The case for de`eloping and imple-
menting micronance products for the
housing sector is e`en stronger, consid-
ering that in se`eral countries where
micronance loans ha`e been extended
for business purposes, education, employ-
ment, agribusinesses etc., the capital has
been di`erted for meeting housing re-
[uirements. The potential of such nanc-
ing products are further substantiated by
the fact that these can pro`ide successi`e
micro and small loans to indi`iduals
families for housing impro`ements and
expansions, while enabling economically
weaUer and lower income groups to ha`e
nancial access specically for housing.
Ae ha e already seen an uptaUe in micro
nancing initiati`es where countries such
as-ambodia and India are de`eloping and
implementing these products in response
to the huge housing shortfall and the
existent marUet demand within the lower
income groups. So while, major challengesin the form of a regulatory frameworU and
inherent risUs pre`ail, both the go`ern-
ment and pri`ate sector in these and se`-
eral other countries are looUing to address
these aspects through planned initiati`es.
+dditionally, o`er the past decade,
substantial progress has been made to
impro`e the functioning of housing mar-
Uets across nations, primarily through the
deli`ery of formal housingnance, which
helps channelize resources that support
housing demand and allows households
to purchase residential dwellings; whileat the same time facilitating better al-
location of resources between housing
and other essential goods and ser`ices, as
well as sa`ings. To this end, international
experience suggests that there is a linU
between demand for housing, housing
nance,nancial sector de`elopment, and
economic growth.
wThis is the first part of a two-part
article on housing finance. The author
is managing director of RICS South
+sia. He can be contacted by email at
While a huge demandfor residential units continuesto exist, both the housingfinance mechanisms andinvestment in housing stockhave fallen well short ofmeeting the housing needsof the masses.
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COVER STORY
18 CONSTRUCTION WEEK MARCH 2013
CONSTRUCTIVEVISIONARIES
Arvind Nanda, CEO& founder director,
Interarch
Hemant Kanoria,CMD, Srei
Infrastructure Finance
Anirudh Bhuwalka,MD and CEO, AMW
GRK Reddy, CMD,Marg Group
PEB
FINANCETRUCKS
INFRASTRUCTURE
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MARCH 2013 CONSTRUCTION WEEK 19
We feature ten unique
entrepreneurs who dared to
think big and do something
new on their own. Their
success stories continue to
inspire many and shape the
future of the construction
and infrastructure industry
in India
BY SYED AMEEN KADER
Kishore Avarsekar,CMD,
Unity Infraprojects
Tushar Mehendale,MD, ElectroMech
Ranjeet More, exec VC,Universal Construction
Machinery
Vijay Agarwal, CMD,Action Construction
Equipment
VS Ravi, president& founder member,Faade Testing India
Abhisheck Lodha,MD, Lodha Group
EPC
CRANES
CONCRETE MACHINES
EQUIPMENT
FACADE
REAL ESTATE
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COVER STORY
20 CONSTRUCTION WEEK MARCH 2013
It takes more than just hard
work and dedication to
become an entrepreneur.
True entrepreneurs are those
who are willing to take risks that
other people wont dare to. We have
handpicked ten such entrepreneurs
from different segments of the
construction and infrastructure
industry, who have demonstrated
more than just that. These are the
people who have shown immense
level of courage to do something
on their own despite all odds.
Many of them quit well-paid jobsto pursue their entrepreneurial
journeys. They are the visionaries
who have been collectively
playing a very important role in
the growth of Indias construction
and infrastructure sector. Their
success stories are more appealing
than others because they all started
amidst lots of adversities and
challenges that existed in India for
many years. Those difculties made
them to think out of the box and do
something new which their peers
wouldn't think of.
Though each of them faced
different kinds of hurdles on their
way, one thing that is common
among all of them is their untiring
spirit. They have managed to
overcome all the odds, with their
tremendous courage and a sharp
business acumen.And they are not done yet. They
are relentlessly working to scale
new heights in their own respective
elds, and setting new targets for
themselves to achieve. Its this spirit
that is keeping the momentum going
for Indias construction industry.
GRK Reddy is someone who sees
opportunity in adversity. Son of a civil
engineer, Reddy had spent most of his
childhood at construction sites before
getting the job of an investment banker
in Delhi. Soon he realised that he was
not destined to be
a banker, but an
entrepreneur.The obvious
choice was
construction
business, due to
his background.
But to his dismay,
INFRA MARG GROUP
GRK REDDY,chairman and managing director
Destined to be inconstruction business
the real estate market went bust,
putting his rst residential project into
jeopardy. 6eft with no cash ow for the
project, Reddy took up a challenging
job: 20,000-sq. ft of property,
to be built in 110 days at. In
return, the contractor promised
him to release Rs1.5 crore
every week for the work. Onthe 110th day, Reddy too kept
his promise by delivering the
project on time. This made him win
another, and his rst infrastructure
(wind farm) project, from the same
contactor. By that time, he had also
Spent his childhood at construction sites with his civilengineer father, GRK Reddy today owns a Rs2,000-crore
infrastructure company, employing over 1,000 people."
completed his own residential project,
which gave him enough cash ow.
Reddy has come a long way since
then. Today, Marg Group is one of
the most diversified and
fastest growing infrastructure
companies in India. Right
from ports and urban
infrastructure to real estateand townships, Reddy has
spread his business across
wide spectrum of the industry. Today,
Marg has an enviable order book of
over Rs3,800 crore, with a workforce
of 1,000 plus people.
`3,830ORDER BOOKFOR FY12-13
Though each of them
faced different kinds of
hurdles on their way, one
thing that is common
among all of them is
their untiring spirit.
They have managed
to overcome all theodds with tremendous
courage and sharp
business acumen.
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COVER STORY
22 CONSTRUCTION WEEK MARCH 2013
Abhisheck Lodha may not be afirst generation entrepreneurbut there are many firsts that he has
initiated for his company. Starting
his career with McKinsey
& Company as an advisor to
Fortune 500 companies on
business strategy, he soon
realised that he would rather
manage his own company.
After joining his fathers local real
estate business some eight years back,
he transformed Lodha Group into acorporate realty giant. Lodha has not
only brought a new perspective to Indias
real estate sector but also raised the
REAL ESTATE LODHA GROUP
EPC UNITY INFRAPROJECTS
ABHISHECK LODHA,managing director
KISHORE AVARSEKAR,chairman and managing director
Real sprinter
Te dreamchaser
standard by closing some of the biggest
realty deals in the recent past.
Under his leadership, Lodha Group
has dared to venture beyond the
conventional by launching a
series of new projects such as
the World One tower that, once
completed, will rival the best in
the world.
Within a span of few years,
Lodha has taken his company to new
levels of success.
One of the most notable achievements inLodhas career so far has been successfully
raising capital for numerous projects in
Mumbai. From Rs180 crore for Apollo
Construction Company, with just
Rs20,000. Avarsekar took off with small
projects and soon bagged major civil
contracts across Maharashtra.
Having carved a niche for
himself in civil construction,
he later moved on to real
estate, specialising inredevelopment. But, in the
late 1990s, the country's realty sector
touched a new low as property prices
hit rock bottom. Avarsekar was quick
to realise that diversication was the
way out for growth and ventured into
He used to advice Fortune 500 companies on businessstrategy. Today, Lodha Group is among the top real estatecompanies in India, employing around 3,000 employees.
Quitting his civil engineering job at Mumbai MunicipalCorporation, he started his own company to execute some of
the biggest construction projects across India.
Mills to more than
Rs5,000 crore
for a land
in Wadala,
Mumbai, he
managed to get
some big-ticket
projects going
by bringing in
the money; all
this when most
lenders had their
purses moretightly-
stringed
than ever.
infrastructure project development.
The year 2006 was a turning point
for Unity Infraprojects, when the
family-owned enterprise shed
its conservative approach
to restructure itself into
a professional setup and
widened its horizon.During the same year, the
company went public to mobilise
capital for its pan-India ventures. Unity
moved beyond Maharashtra and took
up many prestigious projects across 20
Indian states, Nepal and Bangladesh.
35 ml sq.ftUNDER
DEVELOPMENT
`20,000STARTED BUSINESS
WITH THIS MONEY
While working as a civil engineerfor Mumbai MunicipalCorporation (BMC),
Kishore Avarsekar
used to daydream
about owning
his company
that will executethose buildings
and road projects.
Eager to transform
his dream into
reality, he started
his own rm, Unity
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COVER STORY
At the age of 40, VS Ravi hadprofessionally almost accomplishedeverything as a COO of a well knownfaade company before he decided toquit his job one day to startsomething on his own. In00, he set up Indiasrstfaade testing company ata time when people hardlyknew about them. ButRavi felt the need to establish a faadeperformance test laboratory in India not
as a business unit but as an obligation toensure that faade structures are stableand safe for people to live in.
But the journey wasnt so easy for
FACADE FAADE TESTING INDIA
VS RAVI,president and founder member
ARVIND NANDA,DIJFGFYFDVUJWFPGDFSBOEGPVOEFSEJSFDUPS
A pioneer infaade testing
Beating all odds
him. >he rst question he used to faceoften was about his technical expertise,because no one at that time believed thatany Indian company can do this kind of
work. Initially, he interactedwith one of the biggest testlaboratories for a technical jointventure but realised that hiscompany will not have its ownidentity in the whole process.
He had to think out of the box to create aworld-class testing facility. With a high-
end sophisticated laboratorysomethingwhich never existed anywhere in theworldhe introduced endoscopy,thermal imaging and high denition
many of them had to shut shop. Theonly redeeming factor for him wasthat he was a young and ambitious guy,embodied with lots of self belief thathard work, ethics and honesty will payoff someday.
But it was an era when
most small-sized companiestried to form a joint venturewith foreign companies tosurvive because thats theway Indian economy was structured.In fact, his company, Interarch, alsohad a Dutch collaboration initially but
People questioned his technical expertise, because no oneat that time believed that any Indian company can do this. He iscredited for setting up Indias first faade testing company.
He was successful in overcoming pre-liberalisationchallenges to survive, and then grow to a new level, making
Interarch a formidable name in the PEB industry."
cameras to facade failure analysis forthe industry.
His vision now is to set a benchmark infacade engineering and facade testing atnational as wellas internationallevel. He'sworking ontaking hiscompany toa new level,by providing
learning,training andintroducing astate-of-the-artfacade library.
soon realised that it was not the mostappropriate way as they were always adispensable part of the joint venture.And thats what happened to him whenthe JV partner decided to part ways,
bringing years of his work tonaught. He realised that it is better
to build slowly, with hard workand effort, so that the fruits of hisefforts will remain his.
Today, Interach has a betterand more solid identity than mostmultinationals, executing projects thatrival the best in the world.
2005FOUNDED FIRST FACADE
TESTING COMPANY
5,000PROJECTSEXECUTED IN INDIA
PEB INTERARCH
Arvind Nanda started his companyin the pre-liberalisation era whenit was a nightmare to
run a business. Notonly did he faceregular internaldifculties relating
to production,stafng and
marketing, he alsohad to manage withexternal challenges
such as electricity,communication
and transport.The economiccondition wasso unfavourablefor smallstart-ups that
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COVER STORY
26 CONSTRUCTION WEEK MARCH 2013
Indias CE manufacturing capabilitywas never taken so seriously untilUniversal showed to the world that it
can very well produce equipment not
only for Indian
but also for the
international
market.
Founded by
his father
Rohidaas More
almost four
decades back,Universal started
by taking baby
steps through
supplying
CONCRETE MACHINES UNIVERSAL CONSTRUCTION MACHINERY
EQUIPMENTACTION CONSTRUCTION EQUIPMENT
RANJEET MORE, executive vice chairman
chairman and managing director
Home grownsolutions
oil lubricant pumps and gear boxes
to major industrial giants. In the mid
eighties, Universal proved its mettle by
creating a nitric acid pump to be used
in Indias combat weapon,
Prithvi missile.
Ranjeet More joined Uni-
versal in 1994 only to take it
to a new level by introducing
ve-year plans within the
organisation. He came up with clear-
cut goals for each four ve-year plans$
expanding product range and spread-ing across Maharashtra at 10 locations
(1995-2001); covering all India with 10
regional ofces (2001-200); commission-
salary. The strategy worked for him
as well as his customers, who started
buying more cranes and became hirers.
With his innovative market-building
strategy, he has not only created
new clients, but also retained
them throughout the years.
However, his journey wasnt sosmooth. His competitors went to
court accusing him of copyright
violations. He was barred from selling his
machines in certain markets for few years
before henally won the case. Today, he is
one of the leading players in the pick-n-
He introduced clear-cut five-year goals for hiscompany, and successfully achieved them to take UniversalConstruction Machinery to a next level.
ing of Rudrapur plant and going global
with strong presence in Middle East and
Africa (200-2011); and becoming a world
leader in concrete producing equipment
(2011-201).
He realised that its very
important to have a strong in-
ternational distribution network
to boost global sales. And thats
how the Universal-Tata Inter-
national joint venture happened in 2010
that provided him a bigger international
marketing opportunities. In the very rstyear of the JV, he managed to export ma-
chines worth Rs25 crore, and has now set
a target of achieving Rs100 crore by 2014.
carry crane segment with
substantial market share
in other construction and
material handling equipment
such as mobile cranes,
tower cranes and forklifts.
He continues to offer
indigenously-developed,customised solutions
at a competitive
price for Indian
customers.
`100 CREXPORT TARGET
FOR 2014
24%YEAR-ON-YEAR
GROWTH IN TURNOVER
An entrepreneur himself, VijayAgarwal mentored and transformedhundreds of his equipment buyers
into entrepreneurs. When he started
in 1995, most of his clients
were small-time individual
operators whom he
converted into ownersof hiring companies. He
explained to them a simple
math$ you buy a crane and earn Rs40,000
every month by giving it out on rent; you
pay back Rs30,000 as an installment to
bank and take home Rs10,000 as your
He transformed hundreds of his customers, who wereindividual operators, into entrepreneurs by encouraging
them to become owners of hiring companies.
Te market maker
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COVER STORY
28 CONSTRUCTION WEEK MARCH 2013
Hemant Kanoria represents oneof the most important segmentsin the infrastructure business cycle.He started his career by running two
defunct flour mills, which his father
gave him to revive. He worked hard
to turnaround those mills for eight
years before giving it up to unfriendly
government guidelines, and start
something new. Realising that there
will be huge growth in infrastructure,
Anirudh Bhuwalka came into this business whenhis uncle, Shashi Ruia, the owner of Essar Group,suggested him to manufacture trucks with special
specifications for him. Bhuwalka began working on it and,
within three years, produced the first AMW truck
from a shed in Hazira.
He realised that it takes out of box thinking to
get into a segment which is strongly dominated
by traditional automotive giants such asTata Motors and Ashok Leyland. An MBA
from Babson College, Massachusetts,
Bhuwalka outsourced and
integrated components from
around 190 suppliers to make
his trucks. But he realised
that its not so easy to become
successful in such a price
sensitive market. He relied on
localised components rather
than imports to keep his cost
low, focusing on design, driver
comfort and overall performanceto carve a niche in the market.
Tushar Mehendale was just 24-years-old when he tookthe reins of ElectroMech after sudden the demise of hisfather in the year 2000. A fresh graduate from a university
in US, Mehendale had no practical
experience in the crane business. At that
time, ElectroMech was a small Pune-
based company with a turnover of
just Rs3.5 crore and 70 employees. He
converted thischallenge into
an opportunity
by steadily
building up on
his reference
lists and
bagging blue-chip customers.
In just over a decade,
ElectroMech has spread its
wings across India, striking a
strategic partnership deal with a
leading crane manufacturer and
notching a turnover ofRs200 crore.
Stimulating India'sinfrastructure growth
Loaded withachievements Scaling newheights
Kanoria founded Srei with his younger
brother Sunil in 1989.
His company started with nancinginfrastructure equipment to contractors
and construction companies. But his
business received huge boost when India
opened up its economy in 1991, paving
way for private participation.
Today, Srei has grown from being
a small Calcutta-based firm to one of
the biggest infrastructure financers in
Under his leadership, Srei has grown from being a smallCalcutta-based firm to one of the biggest infrastructure financers."
`200 CRCURRENT TURNOVER
AGAINST RS3.5 CR IN 2000
TRUCKS AMW CRANES ELECTROMECH
managing director and DIJFGFYFDVUJWFPGDFS
managing director
FINANCE SREI INFRASTRUCTURE FINANCE
HEMANT KANORIA,chairman and managing director
the country, with
a customer
base of over30,000
and nearly
Rs33,500
crore of
consolidated
assets under its
management.
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PEB SPECIAL
30 CONSTRUCTION WEEK MARCH 2013
0\YW^RO\]^L_SVNSXQSXVK^O#]^Y^ROaY\VN]VK\QO]^]^\_M^_\O
Z\OOXQSXOO\ONL_SVNSXQ]SX3XNSKRK`OMYWOKVYXQaKc-YX]^\_M^SYXAOOU^KUO]KVYYUK ^RO\OK]YX]LORSXN^ROS\]_MMO]]
P\OOXQSXOO\ONL_SVNSXQ]]^K\^ON
YXKVYaXY^OSX3XNSK>RO
KNYZ^SYXSX^ROOK\VcNKc]aK]
VYaN_O^YVKMUYPKaK\OXO]]
KWYXQ_]O\]KLY_^^ROKN`KX^KQO]YP
]_MR]^\_M^_\O] 2YaO`O\^RO]ONKc]
XOK\Vc!ZO\MOX^YPKVV^ROSXN_]^\SKV
SXL_SVNSXQ]L_SV^SX3XNSKK\O P/,]
ROKZZVSMK^SYX
SX\O]SNOX^SKVKXNY^RO\]OM^Y\]RK]LOOX
VSWS^ON]YPK\L_^^RSXQ]K\OMRKXQSXQ
[_S^OPK]^
>RO]ONKc]O`OX\OKVO]^K^ONO`OVYZ-
O\]K\OVYYUSXQK^ P/,]^Y]ZOON_ZMYX-
]^\_M^SYXKXNMYWZVO^O^ROS\Z\YTOM^]
YX^SWO>RO_]ORYaO`O\S]VSWS^ON
^YVYa-\S]O]^\_M^_\O]L_XQKVYa]O^M
u>RO P/,WK\UO^S]]^\YXQVcK]]YMSK^ON
aS^RSX`O]^WOX^]KXNQ\Ya^RSX^RO
SXN_]^\SKVKXNMYWWO\MSKV]OM^Y\]>RO
XOaZY^OX^SKVKZZVSMK^SYXK\OK]PY\ P/,
SX^ROXOb^POacOK\]aSVVSXMV_NOZYaO\
ZVKX^]^\_M^_\O]PKM^Y\cL_SVNSXQ]
MYWWO\MSKVL_SVNSXQ]YPMO]KXN\O^KSV
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Although PEBs have been the preferred choice for industrial applications,
UIFZBSFOEJOHVTFJOSFTJEFOUJBMQSPKFDUTUPP
PEB SPECIAL
32 CONSTRUCTION WEEK MARCH 2013
malls), warehouses, and metro sta-
tions, noted a senior research analyst
at Frost & Sullivan.
So what's aiding the growth of PEBs?
Increased awareness among consum-
ers, availability of good quality raw
materials, lowering of prices due
to increased competition and sheerconvenience, thanks to the speed of
construction offered, are all key factors
contributing to the rise in demand for
PEBs. There are other advantages too.
PEB structures usually cost lower
than conventional RCC structures
as they require less labour. The
structures are designed well in
advance, and hence, there is
no wastage of raw materials
as well. Also, PEBs do not
require a huge foundation,
and hence, save on a lot oftime, labour and materials.
In the long term, its easier to
maintain a PEB compared to a
conventional structure. Steel manu-
facturers are also offering high-grade
ASTM Grade 50 steel that is light
in weight and also recyclable. This
has made PEBs a highly durable and
environment-friendly option.
What will drive the demand in the
near future?
The government's target of developing
5.5 MMTSIZE OF STEEL
BUILDING MARKETIN INDIA
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PEB SPECIAL
34 CONSTRUCTION WEEK MARCH 2013
and lack of skilled manpower in the
country is a key challenge. There's also
the presence of alternative structures
i.e. steel and concrete, ever-changing
prices of raw materials, which will
directly impact the cost of PEBs in the
country. Raw material cost accountsfor nearly 60 per cent of the total proj-
ect cost for PEBs.
As manufacturers have no control
over the cost of raw materials (steel),
there is always the risk of PEBs becom-
ing more expensive. Also, most PEB
manufacturers try to sell PEBs as a
product rather than what it is a cus-
tomised solution. Faulty design tech-
niques can cause unnecessary wastage,
and even reduce the safety and durabil-
ity of the structure.
Increasing competition
Sensing the opportunity in the In-
dian market, many international PEB
companies are now trying to set their
feet here. Local PEB companies will
have to strive hard to stay competi-
tive and retain their market share. By
offering better quality solutions, not
just for industrial applications, but also
for commercial and real estate devel-
opments, they can increase the scope
of the market and ensure that there is
enough room for everyone.
ON A GROWTH PATHThe structural steel buildings market in
India was around 5.0 to 5.5 million MT
in 2011, of which, around 9.5-10 per
cent i.e. 5,37,176 MT accounted for
the PEB market in India. It is expectedthat the market in terms of volumes will
reach 9,00,000 MT by 2016, growing
at a CAGR of 11.1 percent.
(Source: Frost & Sullivan)
the power sector and adding 50,000
MW of power capacity in the 12th Five
Year Plan will act as a major boost for
the PEB sector.
Demand from the commercial sector
is also expected to be strong in the
coming years. As the sector is predict-
ed to grow from 7 billion square feet in
2010 to nearly 20.44 billion square feet
by 2030, there will be immense oppor-
tunities for PEBs.
The manufacturing sector has wit-
nessed some growth, coupled with an
increase in the l ogistics infrastructure.
The growth in manufacturing and pro-
duction will lead to a rise in demand
for warehouses, which would help
the PEB market. The government has
also announced the ambitious plans of
rolling out several metro projects inthe coming years, which will add to the
scope of PEBs.
With the focus currently shifting to
green construction and buildings,
many PEB manufacturers have devel-
oped products such as high-efficiency
windows, better insulation for roofs,
walls, ceilings and floors.
By using solar rooftop panels and
sky lights, PEB buildings can meet the
requirements of captive power and
also help in bringing down the carbon
emissions of the structure.
What can potentially slow down the
growth of PEBs?
There are quite a few things that can
affect the growth of PEBs. Rising costs
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PEB SPECIAL
36 CONSTRUCTION WEEK MARCH 2013
PEBs grow biggerNot only is the demand for PEBs picking up, the size of the structuresis also growing. The Renault-Nissan plant in Chennai, built by Kirby, is thelargest pre-engineered building in the world.
R
enault-Nissan
plant in Orag-
adam, Chennai,
Tamil Nadu, is
the worlds largest PEB,with a covered area of
3,00,000 sqm involving
over 20,000 MT of steel.
The main structure was
completed in a record
time of seven months
and two buildings were
handed over in full in
December 2009. The
structure has two rafters,
purlins, sag rods andbracing, all assembled
at ground and lifted as a
single lift. Trim & chassis
building is of size 220m
x 483m, consisting of 46
bays with process beams
carrying 120 kg/sqm
loading and mezzanine.
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METRO RAIL INDIA SUMMIT 2013
38 CONSTRUCTION WEEK MARCH 2013
CONCEPTUALISED & ORGANISED BY:
PLATINUM PARTNER
GOLD PARTNERS
SITE VISIT PARTNER
SILVER PARTNER
EXHIBITORS
BADGE & LANYARD PARTNER
BUSINESS DEVELOPMENT PARTNERS
MEDIA PARTNERS
KNOWLEDGE PARTNER
OFFICIALLY ENDORSED BY CHENNAI METRO RAIL LIMITED (CMRL)
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It is a unique gathering.Such a large gatheringon this theme is rare. Ihave been attending suchconferences in various partsof the country and this isone of the largest gatherings
I have ever seen on thistheme, not just in numbersbut also in terms of quality.This showsthe increasingsignificance ofmetro projects."
Dr Sudhir Krishna, secretary,
ministry of urban development, GoI
MARCH 2013 CONSTRUCTION WEEK 39
The second annual Metro RailSummit held in Chennai
last month brought together
leading experts from
industry, which included the Secretary
of Ministry of Urban Development, Dr
Sudhir Krishna, key decision-makers
from Delhi, Hyderabad, Kochi, Gurgaon,
Bangalore, Ahmedabad, and Chennai
metro, along with leading solutions
providers, planning, designing, technical
and nancial experts to learn about
the challenges, discuss solutions and
facilitate knowledge sharing among allthe stakeholders.
With a number of metro projects
being planned in the country, there is
a dire need for the government and
metro professionals to come together
and discuss various issues to ensure
the success of these projects.
Pressing the need for such
knowledge sharing platforms for the
metro rail sector, Dr Sudhir Krishna
said that the summit was an excellent
way to bring together all the key
stakeholders and solve the challenges
Metro rail professionals from across the world came together at thesummit in Chennai last month to learn, discuss and share ideas
plaguing the sector. "It is a uniquegathering. Such a large gathering
on this theme is rare. I have been
attending such conferences in various
parts of the country and this is one of
the largest gather gatherings I have
ever seen on this theme, not just in
numbers but also in terms of quality.
This shows the increasing significance
of metro projects," he said.
The three day summit included a visit
to the Chennai metro rail construction
site along with a conference that
featured some power-packeddiscussions on project nance, alternate
sources of revenue, use of renewable
energy in metro projects and so on.
The summit also featured some
interesting new innovative technologies
and solutions available for metro
projects in rolling stock, signaling and
telecommunications, control centers,
security, lighting, and re safety.
Read on to know about the key discussions
that emerged during the summit and get
some glimpses of the site visit.
Like a rolling stock
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METRO RAIL INDIA SUMMIT 2013
40 CONSTRUCTION WEEK MARCH 2013
One of the biggest challenges in India is
project nance. While there are a number
of models to fund infrastructure projects,
PPPs are being considered for many up-
coming metro projects across the country.
However, the experience with PPPs has
been a mixed one. The Mumbai metro and
Delhi Airport metro projects are excellent
examples of how things can go wrong,
especially when the construction gets
delayed and the costs shoot up.
The question is: is PPP the right model
for metro projects? Arent there better
options available? The panel discussion
moderated by J Ravikumar, CFO, L&T
Metro Hyderabad on day one of the summitbrought out some interesting views. Manish
Agarwal, executive director, infrastructure,
PriceWaterHouseCoopers started the dis-
cussion by saying, We should try to select
the best model suited for the project based
on its own cash ow prole and the risk
prole of the project rather than picking a
model and then force-tting it.v1lobally,
only about 12 per cent of the total 113 metro
projects are on PPP mode, the rest are all
public sector undertakings. S Krishnan,
secretary ofnance,1ovt of Tamil8adu,
concurs, We shouldnt be so rigid abouthaving only PPPs for metro projects." He
adds, What might work for one project
might not work for the other.vThe problem
perhaps lies in the primary reason why the
government is looking at PPPsynance.
It does not have adequate funds tonance
the upcoming metro projects and risks
increasing thescal decit further. Agarwal
explains, We shouldnt look at PPPs as
747 KMLENGTH OF METRO
NETWORK NEEDED
DURING THE 12TH FIVE
YEAR PLAN
a source ofnance but look at them as
a source of better management, quicker
implementation, etc.v
GOING HYBRID
8Kumar, chief general manager for
project nance at Chennai Metro Rail
suggests something better. The tried
and tested model is the hybrid
model i.e. the government
of India, participating state
government, with multilat-
eral funding arrangements.JICA has been quite instru-
mental in spearheading the
metro movement in India.
The Asian Development Bank
is also slowly making its entry.
However, the funding from agen-
cies such as ADB is not so easy to come.
Their due diligence takes too long,v scoffs
Ravikumar.
We should try to select the best funding
model suited for the project based on itsown cash flow profile and the risk profile ofthe project.Manish Agarwal, executive director, infrastructure, PWC
Coordinating with multiple agencies is aproblem. The ministry of railways wont listento the ministry of urban development.4,SJTIOBOTFDSFUBSZPGOBODF(PWUPG5BNJM/BEV
There is no shortage of funds with these
agencies, but there is a lack of proper
bankable models for investors. Also, the
extent to which each of these investors is
willing to fund is a question. Kumar ex-
plains, Everyones risk appetite is not so
good. Is metro their only priority? I believe
the debt route is still the way to go
forward. Of course, theres the
challenge ofnding a long
tenure loan with reason-
able interest rates.v
Ravikumar highlightedthat resource mobilisa-
tion under urban infra for
MRTS is a challenge in the
given political and economic
context. He asked the panellists,
What would be the best strategy
which will work? Can dedicated transport
funds work? What should be the strategy
for advocacy or acceptance in the face of
competitive funding requirements?
Krishnan believes that building a dedi-
cated transport fund is possible. However,
theres a huge mix of challenges. Takethe fare issue for example. If you take the
Chennai metro rail, its virtually parallel to
the suburban railway in certain segments.
On the suburban railway line, the fares
havent been revised for years, which are
as low as Rs 5 per ride. A city like Mumbai
would face similar challenges, when it
comes up. If you are talking about efcient
transportation and efcient movement
of people, we would need some mecha-
nism of pricing it at rate where you dont
promote one mode over the other due to
lower fare.vThe next thing, Krishna states,
PROJECT FINANCE
(L-R) CK Khaitan, jt secy; Dr Sudhir Krishna, secy, MoUD; SK Lohia, OSD, Urban Transport, MoUD, and K Rajaraman, MD, CM
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METRO RAIL INDIA SUMMIT 2013
42 CONSTRUCTION WEEK MARCH 2013
is transit-oriented development, How
can you increase development in those
corridors and then how the government
can benet with an increase in land use
through single point transactions such as
stamp duty, registrations and so on. The
other thing that we must look at is the
tax-GDP ratio. In states like Tamil Nadu,
the ratios are already on the higher side
and hence higher rates of tax are a little
difcult to sustain.
We can however look at increasing the
property tax as it hasnt been adequately
tapped. We can also look at other sources
of taxation such as tax on petrol, diesel and
so on, suggests Krishna.
Krishnan suggests that we need to ad-
dress these issues in two parts$rst, take
care of construction risks by preparing the
project better and nishing the construc-tion and then look of take-out nancing
options, etc., through the pension fund
market around 3-4 years down the line for
low-cost, longer time nancing. The fun-
damentals are strong, the demands
there, we just have to get the
policy mix right, he asserts.
However, doing it is not
an easy task, with so many
agencies and stakeholders
involved, coordination is
always a challenge. We
know it for a fact becausebesides coordinating with
state agencies, sometimes the
ministry of railways wont listen to
the ministry of urban development. If we
are able to sort these issues and get the
policy coherence right, funding shouldnt
be a problem.Krishnan points out.
DEDICATED FUNDS
Ravikumar asked the panellists about the
institutional challenges and the develop-
ment of bond market, IIFCL and IDFs
in metronancing.+garwal stated thatlong term capital can be become available
through these sources. Some infrastructure
debt funds have also been set up, that are
looking for assets. +n operating metro
`1TNFUNDS NEEDED FOR
METRO RAIL PROJECTS
IN INDIA
The dedicated Urban Transport Fundis a wonderful concept. However, there isno accepted or clear formula to get therevenues for such a fund./,,VNBSDIJFGHFOFSBMNBOBHFSQSPKFDUOBODF$.3-
brought out the need for ?nied7etro
Transport+uthority ?7T+and?rban
Transport Fund ?TF,as envisaged in the
National Urban Transport Policy. Kumaragrees that U7T+ is indeed the need of
the hour. He however cautions about Ur-
ban Transport Fund UTF, The dedicat-
ed UTF is a wonderful concept. However,
there is no accepted or clear formula to get
the revenues for such a fund.Transit-ori-
ented development T9D in a Greeneld
environment is one thing, but doing it in
an already developed city like 7umbai or
Chennai is a huge challenge, he explains.
Implementing T9D itself is a huge chal-
lenge. For example, the government needs
tond out what should be the FSI or F+Rallowed to manage the development, with-
out burdening the civic infrastructure or
affecting the potential revenue from such
development, Kumar explains.
GROUND REALITY
Concluding the session, Ravikumar shared
his experience with the lenders and
government: From the date of signing
the concession agreement, the condition
was imposed on us to achievenancial
closure within 180 days. That took away
the chance of getting a World Bank loanat a much lower cost. Fortunately for us,
we were able to secure funds from PSU
banks and achieve nancial closure within
180 days." Thereafter, there was a delay
of nearly 15 months in procuring land by
the government, which made the SPV go
through the entire project again as the
banks werent willing to continue with
the previous one. "We had to get the RBI
to intervene and explain to the banks that
since we hadnt utilised any of the funds,
we should be allowed to go ahead with the
previous nancial closure," he concludes.
with a steady cashow is an excellent
asset for institutions like these. However,
this funding comes into picture when the
construction period risk, stabilisation, etc.,is taken care of. We still have the challenge
ofnding the initial capital for construc-
tion, which can perhaps come through
short term loans," he says. The fare box
revenue can take care of only about
25 per cent of the total cost even
in the best of cases. In worst
cases, where the metro is be-
ing laid in newer areas for
city development, it may be
as low as 10 per cent of the
capital cost. This makes it
important to have addi-tional revenue streams. This
is where the concept of an urban
transport fund becomes really impor-
tant,"+garwal asserts. There are several
international examples of tax incremental
nancing through various sources such as
betterment levy, development charges, etc.,
explains+garwal.
IIFCL is ready to give long tenure loans
at a coupon rate of 10.25 to 10.50 per cent,
but they do not want to assume the lead
position. They want the lead bank to offer
a handholding of 10 per cent after theinitial tenure is over. But PSU banks are
not willing to extend the tenure beyond
15 years due to their limitations and RBI
restrictions, stated Ravikumar. He also
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METRO RAIL INDIA SUMMIT 2013
46 CONSTRUCTION WEEK MARCH 2013
Besides the panel discussions, a num-
ber of interesting presentations were
made at the summit. Peter Johnson,
regional director for TUV Rheinland
made some interesting points on safety
in metro rail projects. He explained
how metro operators can benchmark
their safety levels against the best in
the world. There's a need to continu-
ously evaluate and assess safety stan-
dards and requirements, he asserts."
What might be viewed as acceptable
today, might be challenged in courts in
10, 20 or even 30 years' time.
The acceptance of a target less than
current Best Practice, requires careful
and thorough evaluation of future re-quirements," says Johnson. Regulatory
Authorities have insufficient resources
to undertake detailed assessment of
newly built metro projects, especially
with the number of proposed projects
being implemented in India.
Johnson also shared the Indepen-
dent Competent Person (ICP) concept.
"The ICP is the professional body to
provide apropriate assurance to the
regulators that the metro is safe for
network objectives," he explains.
FOCUS ON SAFETY
Rajiv Kumar, director, markets & seg-
ments at Eaton brought out the issue ofarc ash in metro projects. "Un-
derstanding and mitigating
or reducing, arc ash had-
ards is important when
you consider that ve to
10 arc ash explosions
occur in electrical equip-
ment every day in the
U.S.," said Kumar. Metro
projects are also prone to arc
ash accidents due to the high
power consumption involved. Kumar
What might be viewed as acceptabletoday, might be challenged in courts in 10, 20or even 30 years' time.Peter Johnson, regional director for TUV Rheinland
Understanding and mitigating or reducing,arc flash hazards is important in metro projects.Rajiv Kumar, director, markets & segments at Eaton
showcased some effective ways to
prevent arc ash related accidents. He
suggest that the simplest way to makinga facility safer is by ensuring
that equipment is labeled,
having the right minimum
approach boundaries
marked on the oor in
front of the gear and
restricting access to elec-
trical equipment to only
people who are qualied to
be around it.
Vivekanand, director of sales
at Barco showcased some innovative
cloud-based network visualisation solu-tions for metro projects at the summit.
He also shared a case study of Metro Rio,
that has 33 stations with two separate
lines, serving nearly half a million pas-
sengers every day. "High speed rail
networks, such as the metro, demand
high-precision information collection
and transmission," he says.
Benjamin Samuel, manager, build-
ing & construction sector, Kirloskar
Brothers highlighted the importance
of using energy-efcient and space-
saving products such as pumps in metroprojects. "Often we tend to overlook the
energy, operating and maintenance costs
of a pump which amounts to almost
95% of a pump life cycle cost. Any given
pump today loses efciency at 2 to 3 per
cent per annum; as years pass by a pump
consumes more and more energy for the
same amount of output," stated Samuel.
The three-day summit proved to be
an excellent platform for debating,
sharing knowledge, networking and
learning about new technologies avail-
able in the market.
1015YEARS NEEDED FOR
METRO RAIL
PROJECTS TO
GENERATE PROFITS
SAFETY & EFFICIENCY
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The Metro Rail India Summit 2013 started with
a visit to the Chennai Metro construction site.
The officials of CMRL led all the delegates to two
different locations to give an on-ground account
of the project's progress. The delegates were
first given a guided tour of the Shenoy Nagar
site, which recently achieved a record tunnel
boring speed of over 53 metres in a single day.
More than 50 per cent of the total metro net-
work planned currently will be underground.
The next visit was to Alandur station. It is one
of the two metro stations where Corridor I (Air-
portWashermanpet) of the project will intersect
with Corridor II (Chennai CentralSt Thomas
Mount via Egmore and CMBT). Alandur would be
Chennai's first multi-level metro station.
The site visi t to both these stations offered ex-cellent insights about the challenges and com-
plexities involved in the planning, design and
construction of metro rail projects.
CHENNAI METRO SITE VISIT
(L-R) Vineet Kashyap of UTC moderating the panel discussion on Renewable Energy in Metro along withN Prasad of CMRL, Ankit Srivastava of Rapid Metrorail Gurgaon and Mangal Dev of Alstom
-33BWJ,VNBSPG0UJTQSFTFOUJOHBDFSUJDBUFof appreciation to Ankit Srivastava of RMGL
N Mohan of Philips Lighting making a presentation
(L-R) Bibhor Srivastava of ITP withDr Sudhir Krishna
(L-R) Sandeep Majumdar of NIIT presenting amemento to K Rajaraman, MD, CMRL
5IFQSFFWFOUCSJFOHPOSTUEBZPGUIFTVNNJU
Under construction site at Alandur station
METRO RAIL INDIA SUMMIT 2013
MARCH 2013 CONSTRUCTION WEEK 47
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48 CONSTRUCTION WEEK MARCH 2013
BIG INTERVIEW
Dr Sudhir Krishna, secretary, ministry of urban development, on
how the government is gearing up for developing efcient and
effective urban transportation in the country
While preparing a detailed project report
(DPR), care must be taken not to get
carried away by the existing scenario, and
carefully analyse the statistics that are
abound today and also the projections for
future. In Delhi RRTS, when the DPR was
being prepared, the Delhi government was
nervous. They did not want the RRTS to
come up in Delhi as they were scared that
a lot of people would start moving to Delhi
and overcrowd it.To allay their fears, we conducted a
study on the utilisation of Delhi metro,
in different segments, which proved that
people coming from Gurgaon to Delhi
are much fewer in number than people
coming from Delhi to Gurgaon.
People coming from Ghaziabad to Delhi
are far more in number than people
coming from Delhi to Ghaziabad as
evident by the Origin Destination Study
(ODS) report. The report shows that
Gurgaon has become a hub for economic
activities and people are travelling fromDelhi to Gurgaon for better opportunities.
It means that the metro has not caused
people to migrate to Delhi, it has allowed
people to move out of Delhi. On the other
hand, people from Ghaziabad do not have
many job or business opportunities, and
hence, are migrating to Delhi.
Is single-window clearance a myth?
How do you get the multiple agencies
to work together more cohesively?
Clearances are of two types, mainly.
One is the technical, and the other,
Metro talk
Indias growing fast and its
needs are growing even
faster. Right from basic
necessities for survival such
as food and shelter, to the essentials
for economic growth such as
transport: the country needs more.
Spearheading the movement in
India is Dr Sudhir Krishna, secretary,
ministry of urban development. On
the board of many of the country'smetro projects, Dr Krishna is currently
working on various fronts to make
them viable, efcient and effective.
We speak to him at the summit to know
the government's side of the story.
The existing urban transport is
crumbling, especially in cities
like Mumbai. Can we make
these new metro projects
future proof?
We did not give enough
attention to the cities,particularly to the
urban transport, in
the initial half century
post Independence.
The recent efforts
of the GOI and the
States, including
the cities, have
attempted to
correct the
situation and
are showing
good results.
INTERVIEWED BY IMRAN MIRZA
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BIG INTERVIEW
MARCH 2013 CONSTRUCTION WEEK 49
from land use regulators. The former
comes mainly from the Railways, while
the latter, from civic authorities. For
the former, which includes the RDSO,
the MOR facilitates the single-window
clearance. For the latter, the respective
States have constituted a High Powered
Committee (HPC), chaired by the State
Chief Secretary. These arrangements are
constantly being reviewed, to improve
their effectiveness.
There are some under-subscribed lines
in Delhi. People are also asking questions
about the alignments in Bangalore and
Mumbai. Whats your view?
There are some undersubscribed lines
on the metro, primarily the line that
goes towards Mundka (Bahadurgarh)
and the line that goes towards Badarpur(Faridabad). But that does not mean
that people over there do not need a
metro. Statistics will show that the
lines roads are undersubscribed, but
the truth is that the roads over there
are choked. They are always crowded
as people are not migrating from roads
to metro.
The reason is obvious. From
Faridabad, there is no connectivity.
If you start with your own vehicle
or any other mode of transport and
come up to Badarpur, then you mightas well travel another few kilometres
and conclude your journey. If you have
travelled 10 kilometres, then you do
not want to migrate to metro for just
7-8 kilometres. Once connectivity is
provided, the subscription rates would
improve. This makes it important to
have origin-destination studies. This
also calls for conjunctive use of other
modes of transport.
So, while preparing a DPR
for metro rail, we should
see the potential of gettingpeople from different
sources. You cannot take
the metro everywhere,
bus feeder services are
essential to keep metro
optimally utilised and
make them viable. Choice
of metro rails has to be based
on a comprehensive mobility plan
and alternative analysis of network
connectivity in the region as the focus.
Before a city proposes a metro rail, it
should have a ridership of at least 1
million on any mode of transport, so that
the shift to metro is easier. Furthermore,
since the metro rail corridors will be
the main transit corridors, they should
have good integration with other feeder
networks. We should interact with each
other more frequently and closely to
address social, economic, environmental
and mobility issues to make these
projects successful. Certain sections
of the Delhi metro were
undersubscribed because all
these dimensions were notfully taken care of.
But how do we ensure
multi-modal integration
of transport?
For multi-modal integration
of transportation, the
integration should be at four
levels: infrastructure, operation, fare
collection and information. Fare
collection is very important as it
motivates people to take the metro.
With a single card for the feeder bus
and then the metro, we can denitely
increase the ridership. We would like
all metro projects to have feeder bus
services, operated either by the metro
company itself, private operators or
through state transport corporations. To
ensure infrastructure and operational
integration, the Govt of India has
decided to carry out appropriate smaller
projects alongside large-sized metro
projects, for example, pedestrianisation
and public cycling network.
What are you doing for fare
integration?
For fare integration, the MoUD has
recently initiated common mobility
card for all operators of all modes,
including parking, across all cities. In
the rst step, the common mobility
cards can be at the city level and then
eventually at the state level under a
national architecture specied by the
ministry of urban development. DMRC
has already initiated it. In Bangalore,
the state government is also planning
Choice of metro rails has to be based on acomprehensive mobility plan and alternative analysis ofnetwork connectivity in the region as the focus.
19CITIES TO GET SUPPORTFROM CENTRAL GOVT
FOR METRO PROJECTS
More than two million passengers travel daily by the Delhi metro.
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BIG INTERVIEW
50 CONSTRUCTION WEEK MARCH 2013
an integrated fare card between
Bangalore metro and city bus service,
which can also be integrated with
the Karnataka State Road Transport
Corporation later on. The software and
other architecture will be amenable for
integration with other states for the
national mobility card.
How do you plan to have information
integration?
For information integration, the MoUD
has initiated has a national public
transport helpline, on the lines of 100
number for police control room. We
have already taken the universal short
access codes 155220 and 155221 from
the Department of Telecommunications
and advise all state governments andpublic transport corporations to move
over to these numbers for public
transport helpline.
Today, people are highly mobile,
they move from one city to another
frequently. We can have one national
mobility helpline number so that
passengers do not have to remember
different numbers in different regions.
With so many metro projects being
planned across the country, how is the
government gearing up?In order to facilitate the massive
expansion of metro rail projects in the
country, we have taken many important
steps, whether it is within one
municipal area or beyond, to be taken
under the central metro acts, namely:
The Metro Railways Construction of
Works Act, 1978 and the Metro Railway
O&M Act 2002, which have been
extended to whole of India.
Some more amendments to the act
to make it more clear, especially with
regards to PPPs and designating somepower to the state governments are
under progress in consultation with
various metro rail administrations and
the ministry of railways and, of course,
the ministry of law.
The ministry has nalised common
set of general rules for all metro rail
projects so that metro rail operators do
not have to approach the government of
India for separate rules, which can be
very time consuming. These rules shall
be notied very shortly. Furthermore,
we also envisage setting up a National
Urban Rail Transit Authority to act as
the standards setting body and also
act as a regulator for metro rail in
the country. We have also proposed
to set up a national research design
and standardisation cell for metro rail
projects to develop low-cost indigenous
technologies for metro rail.
We have already set up technical
committees incorporating senior
experts from metro rail companies,
Indian railways, RDSO, MoUDand the National Manufacturing
Metros across the country have com
a boon to the lower and middle cl
Considering the global experience about PPPs inmetro projects, most of them might be on governmentfunding to a significant extent.
Competitiveness Council to take part
in this activity. These committees are
expected to nalise their rst draft
report by 1st March 2013.
To increase the manpower
capability and availability, special
courses on Urban Transport and
Planning with specialisation in metro
technology are also proposed to be
taken up by premier educational
institutions, including the IITs so
as to get adequate manpower forsuch projects. Chennai Metro and
Delhi Metro are already conducting
post-graduate programs in metro rail
technology in association with the
respective IITs.
How is the government planning to
facilitate funds for such projects?
We cannot complete anything that
we have discussed so far without
adequate nancing mechanisms.
We have envisaged an innovative
nancing mechanism in the phase 3
In 2006, only about 20 cities had
organised bus services due to lack of
funding. However, in a short span of
just six years, the number has gone
up to 65 cities, thanks to the funding
provided by the government.
GOING PLACES
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BIG INTERVIEW
52 CONSTRUCTION WEEK MARCH 2013
of the Delhi metro project, which will
also be replicated in other projects. This
in`ol`es nancinQnot onlc from m_lti
national nancinQinstit_tions s_ch
as 43-+ b_t also domestic nancinQ
instit_tions s_ch as 2?D-9, 330-6
and so on. The Q_arantees will either be
so`ereiQn or compancts own. ,anQalore
metro has proceeded to obtain a loan
from 2?D-9 of o`er
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INTERVIEW
54 CONSTRUCTION WEEK MARCH 2013
With increasing urbanisation, there will be a greater demand for elevators
and escalators in the country, says Sebi Joseph
Gone are the days when
elevators and escalators were
limited to a few tall buildings
in the country and accessible
to only a fraction of the countrys
population. Today, almost every newbuilding has an elevator and every mall
has escalators. Public infrastructure
projects such as the metro are also
adopting elevators and escalators. We
speak to Sebi Joseph, MD, Otis India to
know how the market is shaping up for
this industry.
How is the market shaping up in India
for the escalator and elevator market?
There is a lot of demand. We will have more
escalators, more trav-o-lators, as more
malls come up. The rise of the middle-class,
thanks to the growth in the IT sector in
cities like Bangalore, Pune, Hyderabad,
and also in cities such Chennai, Gurgaon,
Ahmedabad and Baroda, has led to in-
creased urbanisation, which will lead
to demand for our products.There will be increased
need for escalators, eleva-
tors, trav-o-lators, etc., in
residential, commercial
as well as infrastructure
space. I recently met one
of our top customers at
an innovation forum who
pointed out an interesting phe-
nomenon. A lot of people, who live in
old buildings that are less than four storeys
tall, need elevators today. He suggested
that theres a lot of demand for elevators in
such buildings not the standard ones, but
custom made elevators. They have ceased
to be a luxury and soon become a necessity.
The story would be the same for escala-
tors. Customers prefer to go to malls that
are convenient and deploy suchmobility solutions.
Similarly, when it comes
to metros or any other pub-
lic infrastructure, people
will demand such facilities
that offer them convenience
as they are getting accus-
tomed to it.
Are there any special design require-
ments for metro projects?
Metro projects are not really high-rises,
they are mostly horizontal structures.
India on the move
57,000OTIS UNITS
CURRENTLY
INSTALLED IN
INDIA
Image used is for illustration only
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56 CONSTRUCTION WEEK MARCH 2013
Exhibitors at bC India believe that the worst might be overand demand will pick up soon, launch new products at theexpo. But will their hopes come true? Imran Mirza explores
DOWN,BUT NOT OUT
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EVENTS
MARCH 2013 CONSTRUCTION WEEK 57
The last two years havent
been the best ones for the
construction equipmentindustry. A general
slowdown in the infrastructure sector
and dwindling demand for equipment
was the story throughout last year.
However, the exhibitors at bC India
seemed very upbeat and positive about
the markets future.
Construction Week spoke to many
exhibitors at the event, who seemed
to unanimously agree that the India
growth story is still intact and the
current sluggishness in the market
would disappear.
K Vijay, managing director, Ajax Fiori
says, We are optimistic and we are
hoping that this year will be better thanthe last year. There have been some
green shoots in last two-three months
but its too early to say if its a rm trend
or not.
Their optimism isnt completely
misguided. The country needs heavy
investments to develop and improve
its infrastructure in almost every
sector roads, energy, housing, water,
ports, and so on. The government has
announced plans to invest US$ 1 trillion
in infrastructure development during
FY 2013-17. Most of this investment will
be in large projects that require heavy
machinery and construction equipment.
Even in the housing sector, the averageproject size and height of buildings has
gone up (especially in metros), leading
to the requirement of special machinery
and equipment.
Also, with increasing competition
in the market, contractors are now
focusing on building quickly and
efciently through the use of highly
specialised equipment.
Delays in projects directly imply
increase in costs and lower margins for
developers and contractors. Although
cheap labour is available in plenty,
Despite the challenging situation in
the construction machinery industry,
A BAUMA CONEXPO SHOW bC India
impressively strengthened its position
in the Indian market. More than 28,000
professional visitors attended the show,
which took place at the Bandra Kurla
Complex in Mumbai from February 5 to
8, 2013.
A total of 710 exhibitors from 33
countries took part in the second edi-
tion of this International Trade Fair for
Construction Machinery, Building Ma-
terial Machines, Mining Machines and
Construction Vehicles, which occupied150,000 square meters of exhibition
space. Of the 710 exhibitors, 437 (61
percent) were international exhibitors.
As a result of this global interest, the
show featured nine national pavilions,
namely from China, France, Germany,
Italy, Japan, Korea, Poland, Spain and
the United Kingdom.
Thomas Lffler, chief executive officer
of bC India looks upon the results highly
favorably: The visitor numbers are satis-
fying in times like this. Therefore, I hope
that the success of bC India indicates areturn to growth in the Indian construc-
tion market.
The Indian Construction Equipment
Manufacturers' Association (ICEMA) and
Builders' Association of India also host-
ed a conference alongside the event.
BC INDIA 2013
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EVENTS
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throughout the country, construction
companies are now focusing on
leveraging technology to reduce their
costs and complete projects on time.
So,what is the reason behind a
slowdown in the sector, despite the
presence of all the right ingredients?
The governments austerity drive to
rein in scal decit and rising interest
rates are perhaps among the biggest
reasons behind this sluggishness.
Despite the huge investment
planned for the current Five Year Plan,
Finance Minister, P Chidambaram
might tighten the purse strings in
Budget 2013. Reports suggest that
Chidambaram has already cut down
the actual public expenditure by nearly
9 per cent against the original target for
thenancial year ending March 2013.The main intention of the government
seems to be to avoid a sovereign
ratings downgrade and prevent
further economic turmoil due to poor
corporate investment sentiment.
Critics term this approach as awed
as reduced public spending by the
government might further deepen
Indias economic slowdown.
Despite this, the industry remains
hopeful as not investing in the
countrys infrastrcuture is not an option
for the government. The volume andscale of investments might be trimmed
as the government struggles to combat
decelerating growth, rising ination
and increasing scal decit.
The austerity measures and cut
down on public expenditure might ease
down towards the end of 2013 as the
government lowers its subsidy burden,
which, in turn, will help rein in the
scal decit.
According to Indian Construction
Equipment Manufacturers'
Association, the recent policy initiativesannounced by the central government
and lowering of interest rates by the
RBI are being looked at as early signs
of revival by manufacturers. Many
domestic manufacturers are planning
to enhance their capacity while others
are looking at tieups with foreign rms
to offer new technology and products.
Read on to know the views of some of
the manufacturers we met at bC India
and the products showcased by them at
the expo.
India's investment in infrastructure as a % of GDP is amongst the highest in the world
Infrastruclure inverstment
over GDP (%)1
Nominal GDP USS (2010) Real GDP Growth
2005-2010 (%)1
8
6
6 8 10 12
4
4
2
20
0
Colombla
Argenbina
Indonesia
Brazi
France
UKItaly
South
Korea
India
ChinaChile
Note: 2010 data: Investment over GDP does not include Oil & Gas investments:Eafimated 2010 dataSource: World Economts forum Report, 2010, Economist interllegence Unit (CIU) intermational monelary fund (MP) World Bank
Note: Projection has been made by applying growth rate during 2007-15 (given in ECE Vision 2015 report) on actual2010-11 market size published in eIndia publications. Source: Analyst Report (eIndia Publications), ECE Vision 2015
Growth in earth moving andconstruction equipment
INRBn
600
400
300
500
200
100
0
100
145
193 200213
227
282
350
435
540
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
+18%
+24%
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EVENTS
60 CONSTRUCTION WEEK MARCH 2013
JCB
HESS
JCB, which showcased its tracked
excavator, wheel loader, tandem
roller and pick-n-carry
cranes besides others,
said it was an excellent
opportunity for them
to showcase India centric
technologically advanced
machines to the visitors of bC India.
We displayed our world class range
of tracked excavators with prime
focus on the recently launched JS 120.
It is among the most fuel-efcient
machine in this segment as it saves
upto 2,500 litres of diesel per year,
the company said.
It also had 430ZX wheel loader,the latest offering in the wheel loader
segment, on display. Popular for its
best in class efciency, 430ZX has the
lowest operation cost and provides up
to Rs2 lakh savings per year, said a
company ofcial.
JCB also showcased 9 T tandem
roller VMT 860 and Liftall 1553 pick
n carry crane. Its 3DX Xtra and 3DX
Super from Backhoe Loader category
were also a part of the product display.
Apart from machines, JCBs world
famous Dancing Diggers show wasanother attraction for the visitors.
Hess exhibited its Multimat RH 500, which is completely
assembled in India. Until now, Hess used to import these
machines from Germany but now only a part of the machine
is brought from Germany and the balance accessories are
manufactured here.
The Multimat RH 500 has a very compact structure. It is
capable of producing curbstones, pavers, hollow blocks or similarconcrete products in a semi-automatic or fully automatic version.
The German rm, which is expanding its manufacturing
facility at Bangalore with an investment of 3 million, plans to
manufacture four machines at a time. We are targeting to do
export some of it from India, may be in a couple