The new government has made the right noises

Ashish Tandon, MD, Egis in India, speaks on the group´s growing presence in the country and his vision for infrastructure growth.

You had mentioned sometime back about Egis in India playing a more global role. Could you elaborate on that comment?
Egis in India is a cornerstone for the Egis Group because you know there are two economies in the world which are the ones that would pull the whole world out of the so-called recession; one is China, and the other is India. Now Egis has a dominant presence in India where we have 10 per cent of the total workforce in India of the total group and we are one of the very few subsidiaries which are contributing significantly to the top line (and) bottom line of the group. And we do not have a very big presence in China, so India is the focus area, or was the focus area for Egis Group. That´s what I said last year. But Egis in India was going through a difficult period before that, so the group was sceptical, but we have turned around and we are a cash positive profitable organization today. So in the recent restructuring that has been done at the global level by the group, Egis in India has been identified as a home base country now. So till now, it was only France which was a home-based country, everything was there, and today they have restructured and they are moving towards what they don´t have apart from France, Brazil, Middle East and India as the three home based countries. So that´s the first step towards what I had said last year that we will be playing a more international role. The second thing which has happened is that, with this happening, we would be becoming a hub for this. We have been an autonomous organization for the group today. Not independent, but providing support to business alliances in this part of the group. We also started sourcing people from India for projects in the Middle East, so that´s the second step towards internationalization of the operations. And the third major step that they have done, they have made India as a region now and added three countries to begin with to this region which is Nepal, Bangladesh and Bhutan. So whatever I had said last year has moved considerably in the last six months. Since business has to evolve, it´s a slow process but it is a step in the right direction. They are also looking at investing in India in a big way, to strengthen the base in India. So earlier, we were looking at one acquisition for power, which I had said last year, we are also looking at another acquisition in India which will come faster than power, because power is in the doldrums worldwide today. And plus they were not very many people who fit our bill, we probably moved ahead in one or two projects of acquisition, but we didn´t go through, because there were issues with those organizations. We are still actively looking at that, but we are now also looking at an organization which would complement our existing business and specially the businesses where, I would say we are in India not very strong. So we want to strengthen our base in those things and since there is a huge potential for one development in India, we are looking at that also. These are some of the actions which have been taken by us and the group towards internationalizing our operations.

Looking at that acquisition in power as you had mentioned, how successful have your efforts been and what´s the progress there?
I told you that we moved quite significantly in one or two projects of acquisition. But we are very careful in power segment because it´s a major investment and we have to balance out between the organization that we are taking over; it needs to be a homogeneous organization. I can´t give you details because it´s confidential, but the organization we were looking at was sort of an international organization. But we wanted that it should be as homogeneous as Egis is and not having independent subsidiaries which had just shoestring attachment to the principles. It´s a bit difficult to get an organization in the power segment, but we are still at it and I think it will take a year´s time or a year and half´s time, because power is a difficult area and there are not very many players.

Which are the major projects you are executing currently?
Currently we have a lot of major projects we have got this year, some are pretty big in value, some are not big in value but are strategically very important for us. The major ones that we have got is the UP World Bank funded project for roads and highways. Then as I said, urban is one area we have the competence in France and we want to bring that to India; so we have been very successful in getting a couple of buildings and urban development projects. One is the prestigious police headquarters in Gujarat and second is the International bus terminal in Kolkata, then the Bangalore-Mumbai corridor (BMICTC), a very prestigious one for us. So it´s the focus that we are established as the leaders in roads and highways, and now in water also, so we are putting all our focus to consolidate these positions and grow pretty fast in urban and airports. We have been qualified now for a couple of airport projects also and we are moving towards that. We have recently got a major project of the Mumbai Metro for Line 3.

You have mentioned this roads and highways project in UP that you have recently won. The sector is not in a great shape. But looking at the government and the policy measures being taken, how do you see the sector performing?
I am an optimist and I would say that at least the new government has made the right noises. We are yet to see the action on the ground. Let us analyse what were the issues plaguing the roads and highways sector. I would identify the main issue as land acquisition and then we have environmental clearances, then mining issues were there as you need raw material. I was expecting that in the Budget that the government had brought in July at least they would bite the bullet, but for some reason they have not. So till certain basic laws are put in place, the roads and highways sector will not take off now. The intention is there now, the political will is there, so I hope the Budget they bring in February (and the Prime Minister has already issued instructions) should turn (all this) into reality. So I hope that they do that. If you see in the last one and a half years, no private player is coming to invest in the roads sector. So the NHAI has decided to go through the EPC route. If you really want to build roads the way we expect them, you need private participation. Having private participation, you need to really motivate the private players by changing the approval processes, the norms and above all you need to address the issues of the projects they have already taken and because of which they don´t want to take any further projects. You have to motivate them to come forward which till now, the government has said it would, but the ground reality still has to change. Until it does not change, I really don´t know how will you build 5,000 km of road. Maybe you may complete some existing projects which are there, but that´s short-term. Over the long term, you have to make the atmosphere conducive for people to invest and build roads.

How has the progress been on the Bengaluru-Chennai Expressway project?
We have been working on this for almost three years. It was a difficult project because three States were involved, Andhra Pradesh, Karnataka and Tamil Nadu. The second major issue is there were lot of hilly areas; the forest clearances were required. We are waiting for MoEF clearances. Once we get that we should go for the same. Again the major issues are environment, land and money issues. The detail engineering is complete, only MoEF needs to clear.

What are your investment plans in India?
India is a high-volume, low-profit market. So I would say any and every sector is profitable. The issue is how you manage your projects. It´s a competitive market, so you cannot be expecting a lot of meat in every project, so you have to give value in whatever you are giving to your customers. The customer is ready to pay value for money if he is getting value for money. The technicality involved in Metros and airports limits the number of players in the market. But they are difficult projects so I don´t call them profitable, I call them satisfying projects because these are the areas where you really bring something to the country which does not exist. In building a road, there is hardly any major technology (involved), but building complex structures or building Metros, you are bringing in technology. You are fulfilling the dream of our Prime Minister´s ´Make in India´ concept. Wherever technology comes in, I call that profitable, not in terms of money but in terms of the technology the country gets. We as a group and the company as a whole and the country as a whole benefit from the technology as an input.

– Grima Pant