Also Read: Govt approves Rs 1,756-crore road project in Gujarat
He also remains skeptical of banks' ability to fund large-ticket projects.
Below is the verbatim transcript of Kishor Kumar Mohanty's interview on CNBC-TV18
Q: Can you just take us through what your understanding is from the cabinet committee meet where premium rescheduling of road projects has been approved?
A: Let me first make it clear that as an organisation we do not have much of a stake in this decision. On overall industry basis if you ask me to give my opinion on this at the present juncture it might be a very positive step from the government, but in real effectiveness it will not have much of an impact because most of the projects due to delay of two years and traffic going down on the road have lost its viability.
So unless the premiums are reduced, just by deferring it the project viability does not improve; that is point number one. Point number two is most of the people still may not be able to avail of this, because still it has to cross the process before its implementation and you have to see what is the implementation process. Thirdly, with so much of negative publicity about the viability of roads, traffic and other things whether these projects can still get financial closure even with the deferment of premium, because at the end of the day these premiums have to be collected from the roads. So you cannot count too much on this.
Q: In your opinion then by when do you expect it to start taking off in terms of at least rescheduling? There were reports that maybe the Finance Ministry would have wanted to look at each company on a case to case basis?
A: To sum it up I have three points. The first point is there is still a distance to be covered before we know exactly how it is going to get implemented. So that will be a critical step. Second point is deferral of premiums does not improve the economic viability of the project; that has to be kept in mind. Unless the economic viability improves the bankers may not be able to fund the project.
So today with a negative environment of projects infrastructure these projects of very high ticket size may not get a financial closure or if they get a financial closure it might be with very high equity base and the present promoters or sponsors may not have that type of equity to make the project viable. So due to these three reasons I do not think it is of any considerable importance today or the news is so important today that it will trigger an activity into the road sector.
Q: Does your project of Vijayawada Eluru get impacted because of this? Would these be among the projects that will get impacted?
A: Fortunately the Vijayawada-Gundugolanu project has only Rs 57 crore premium. This will be a very small benefit if Rs 57 crore just gets deferred and I have to pay Rs 10 crore, so Rs 50 crore might be additional cash flow for a couple of years with me. That is not going to be a critical factor for us to decide whether we are doing the project or not. In any case we have done the financial closure and we are going ahead and implementing the project.
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