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Flaqship Event

ILS 2011

Club Theme for ILS
“Sustainable drivers for successful execution”
In the past decade, India has achieved exceptional growth in the infrastructure sector due to the increase in foreign investments as well as several government initiatives. Yet, the sector itself is still in its infancy, with significant growth opportunities in Tier 2 and 3 cities as well as rural areas, for the next few decades.

The discussion aims to highlight the challenges facing this field for the next generation and the capabilities that need to be
developed in order to meet the future challenges. In particular,
the panel will highlight how the execution of projects has become
the critical factor in this segment, and funding of projects has become
less of an issue. The panel will also discuss the for strong leadership
and the professionalization of companies in the infrastructure sector
to sustain success in the future. The panel, featuring eminent business
and thought leaders, has been carefully selected to provide a holistic
and multi-faceted view of the topic at hand.

Speakers:

Mr. K. Ramchand

• Chief Executive Officer (Infrastructure) of the IL&FS Group and Managing Director, IL&FS Transportation Networks Ltd (ITNL)
  
• Over 25 years of experience in urban and transport infrastructure development sector and was pivotal in pioneering the 1st toll road project in India.
  
• Significant contributions in formulating the Public Private Partnership (PPP) programme in the road sector and in initiating the concept of the Special Purpose Vehicle for BOT projects in our country.
  
• Mr. Ramchand holds a Bachelor’s degree in civil engineering from Madras University and a Post graduate degree in ‘development planning’ from the School of Planning, Ahmedabad.

• Chairman & Managing Director, Srei Infrastructure Finance Ltd: Manages assets from international financial institutions of over Rs. 9,000 crore.
  
• Member of Economic Affairs Committee, Confederation of Indian Industry; Member of the Managing Committee, Indian Chamber of Commerce; Council Member of the Indo German Chamber of Commerce and Member of Infrastructure Committee, Federation of Indian Chambers of Commerce and Industry.
  
• Prior to above, President - Calcutta Chamber of Commerce; Director – Board of Governors, Indian Institute of Management (Kolkata); Chairman – NBFC Task Force of the Federation of Indian Chamber of Commerce & Industry, Member of Regional Direct Taxes Advisory Committee, Ministry of Finance, Government of India.

Manikkan Sangameswaran

• President – Infrastructure Group, ICICI Ventures
  
• Prior to above, Manikkan was with Babcock & Brown India Private Limited as Managing Director (Head of Infrastructure)
  
• Highly experienced in M&A transactions, advisory, fund raising and privatisation mandates
  
• B.E. from Mumbai University, Masters of Management Studies & Post Graduate Diploma in Securities Law from Mumbai University and M.Sc in Business Economics from UK.

Dr. Anumolu Ramakrishna:

• Former President, Deputy Managing Director and Advisor of Larsen & Toubro Ltd
  
• Provided leadership for the construction of hundreds of cement plants, steel plants, power projects, refineries, petrochemical complexes, Bridges, Harbors, Airports and Nuclear Power Plants in and outside India
  
• Holds a Director’s seat on the boards of 12 of India’s leading companies
  
• Bachelors degree in Civil Engineering and M.Sc., in Structural Engineering
  
• Honorary Degree of Doctorate of Science in 1997 from Andhra University
  
• Honorary Degree of Doctor of Philosophy in 2004 from Jawaharlal Nehru Technological University

ILS Panel Discussion

The infrastructure development space in the Indian context is at the inflection point of attaining maturity. With increasing private sector participation in the industry, it is critical that the Indian Government address the issues of inadequate policy to make the business environment more encouraging. The discussion started with the panellist outlining the most critical contenders for policy attention, mainly the concession agreements across sub-sectors of infrastructure. The main concern, as. Anumolu Ramakrishna, Former Deputy Managing Director and Advisor of Larsen & Toubro Ltd pointed out, is the need for an independent regulator to ensure quick dispute resolution. Ratiranjan Mandal, CEO of Srei Infrastructure Finance Limited, also discussed the importance of including the Engineering, Procurement and Construction (EPC) Contractor as an equity partner to ensure quality of the asset over its life-cycle.

As the discussion moved to the financing drivers, Manikkan Sangameswaran, President of the Infrastructure Group at ICICI Ventures, emphasised on the need for deeper equity markets for the outlay of the next five-year plan, which estimates investments of approximately USD 1 trillion. This calls for a minimum of 25% of equity investments. With the insurance players and pension funds kept away from investing in the infrastructure market, huge potential for equity investments is being left untapped. The need for debt may well be met, but without access to deeper pockets for equity, implementation of the coming five-year plan is difficult unless there is adequate effort made by the Government to find a solution.

Sameer Vyas, Managing Director of IL&FS Water Ltd, said that one of the prime drivers for successful implementation is ensuring high quality of Detailed Project Reports (DPRs). Consultants need to put in significant effort to deliver quality DPRs that can be used by the bidders with confidence. This also brought about the issue of difference in Bid Price and DPR Price. The intense competition and the resultant aggressive bidding is a major concern for the financial sector participating in infrastructure. Due to the high premiums quoted for winning bids, developers are bidding on wafer thin margins and internal rate of returns (IRRs) of approximately 13%, a trend that is considered unhealthy for the sector. The lack of cushion for debt servicing is making it uncomfortable for the banks to participate in such projects, leading to projects being stuck in a long and mostly unsuccessful development cycle.

As the discussion progressed into the Q&A session, the students were eager to know about the prospects for strategy implementation in the infrastructure planning space in the Government and allied sectors.  Mandal and Vyas ensured that given the young and growing stature of the Indian economy, and the increasing shortfall for infrastructure, the future holds significant opportunity that calls for qualified individuals. While issues such as corruption and cartelisation in the infrastructure space are bottlenecks, it is very encouraging to see the progress of India in the sector. The institutional capacity building effort that is now being undertaken through public-private partnerships (PPPs) is a welcome sign of change and will take the country farther on its path of building world-class infrastructure. 

In conclusion, India stands at an inflection point of development and growth. We, the next generation, need to identify the drivers that will steer development successfully and ensure that the capacities we build sustain this leap.