Shailesh Pathak, Member, CII Infrastructure Council, and Chief Executive Officer (CEO), L&T Infrastructure Development Projects Ltd; Sachin Bhanushali, Chairman, CII National Committee on Railways and Director & CEO, Gateway Rail Freight Ltd; and Vinayak Chatterjee, Chairman, CII Infrastructure Council & Chairman, Feedback Infra Private Limited talks about the impact of lockdown amid COVID-19 on infrastructure sector and ways to recover from it, business activities of Indian Railways and liquidity concerns among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Infrastructure sector had a major impact of the lockdown amid COVID-19 pandemic. Throw some light on the situation of the sector? Also, tell us the steps that should be taken to bring a recovery in the segment?
Vinayak Chatterjee: It is an important question as infrastructure and construction sector has the potential of generating the highest number of employment opportunities after agriculture. And, the government is fully concerned about it. The national infrastructure pipeline plan, which was announced by the government on December 31, 2019, wants to invest around Rs 102 lakh crore in the infrastructure sector in the next 5 years, which means around Rs 20 lakh crore annually. Suppose it can’t be a project of Rs 20 lakh crore in the first year but stands somewhere between Rs 14-15 lakh crore. What is the plan for this Rs 14-15 lakh crore for fiscal 2020-21? However, reaching the mark of Rs 10 lakh crore amid this crisis period will also will be good achievement as little mobilization has started at the sites. But, there are problems related to labour mobilization, material movement, taking permission from the local administration to start the work and everyone has liquidity constraints, which is the biggest problem. And, we are trying to move ahead slowly amid these four constraints. It is a plan Rs 14-15 lakh crore for the year and I think the completion of work worth Rs 8-10 lakh under these situations will be a good achievement. 

See Zee Business Live TV streaming below:

Railway is an important part of the infrastructure and transportation sector and slight activities are happening in the front. What is your view on the business activity of the railway and what the government should do to uplift the segment and help it out?
Sachin Bhanushali: Railways has always played an important role in the Indian economy. It has taken care of its responsibilities even during the crisis of COVID-19. The passenger services were shut down due to the mobility restrictions as it was an important part of it. It would have been difficult to follow the norms of lockdown if a ban on the transportation of people from different part of the country was not placed. But, when it comes to rail transportation, cargo lifting and transportation, then the railway has played an important role on the front. And in the process, it, railways, took care of transportation of the railway cargo as well as of the container transportation that is meant for the international sector. In this segment, the container train operators, both private and public container train operators, have played an important role by picking the containers reaching to the ports and transporting them to the container freight station and inland container depots. Going forward railway is supposed to work on two-three areas (i) Construction of a dedicated trade corridor, which would have stopped due to unavailability of labour and raw material, should be completed and commissioned at the earliest. (ii) Railway has an important role in the supply chain, domestic or international, and to reinforce the same railways will have to make some adjustments in its commercials and introduce some innovative freight structures. Railways share in the logistic sector has come down from 75% to just 37% at present. If you look at the international sector than you will find that 25-27% share of cargo comes from the manufacturing sector, international manufacturing and consumer manufacturing, and the Indian railways have participation is almost negligible on the front. To bring it back, the railways will have to do certain things like (i) Indian Railways should increase its route capacity on the important routes and increase the work on the dedicated corridor. (ii) It will have to increase the access of the terminals. There is a shortage in the availability of terminals for private operators. That’s why new terminals should be developed and made available to them. (iii) Indian railways share in Indian exports is very low. So some concessions should be granted in the direction because it may not move towards railways in absence of these concessions. 

Tell us about how the lockdown has impacted the status of the ongoing infrastructure projects in the country and what is its status at present? Your company has its participation in infrastructure projects and that’s why also talk, about how your business has been impacted and view on recovery soon? 
Shailesh Pathak: Larsen and Turbo Group is very big in itself. And our company, L&T Infrastructure Development Projects Ltd, is a Cog in the Wheel. According to our data, construction work has started at the maximum of our construction projects which were in the development stage. Work has been started at places, where we had labours, for instance, our company has started its construction work in four states. We are facing difficulties like the operators of our technical equipment are facing certain challenges in reaching the site and we will sort them out by holding talks with the local authorities. 

The second biggest thing is that there are some roads and transmission lines developed by our company and we were getting some income from it. And, I will be happy to inform you that our income has increased 22% in the last one week. The collection we had on last Monday has increased by 22% on this Monday. This indicates that the traffic on our roads is increasing. My friend Vinayak and Sachin were talking about the supply chain, which is starting once again. 

If seen at the global level, then India has announced a National Infrastructure Pipeline of Rs 111 lakh crore with a 5-year outline. There are talks that a project worth Rs 14 lakh crore were announced last year that ended in March 2020 and projects worth Rs 21 lakh crore were announced for this year. You were asking about what we need from the government then I would like to say that it should provide a detailed list of the projects worth Rs 21,000 lakh crore so that companies like us can prepare the outline of the projects where they will like to bid. 

As far as the matter of migrant labours is concerned who is going back to the eastern states than we can make a virtue out of necessity. As they will reside in Uttar Pradesh, Bihar, Jharkhand, Odisha and Chhattisgarh then we can work on the Nal Jal Yojna of these states. Jal Jeevan is a signature project of the government led by Prime Minister Narendra Modi and it has the capability of providing employment opportunities to all labours. 

The sector has been facing issues related to liquidity and it has been here even before but the concerns have increased amid the epidemic. What is your view on it and what role the RBI should play for the sector at this juncture? What steps the government should take to resolve the cases of construction projects that are in arbitration or are stuck? 
Vinayak Chatterjee: You have asked many questions and let me split the problem. The liquidity position of construction and infrastructure companies was very weak even before COVID-19 had an impact. The same was a topic of discussion on different channels including yours in December, January and February. The liquidity position was deteriorating very badly largely because delayed payments by corporate institutions like PSUs and departmental undertakings among others. Money was coming at a slow pace for various reasons. COVID has added on the problem and therefore liquidity is the prime need. The infusion of liquidity at construction sites where work has started in the immediate solution. The banks should be instructed to raise the sanctioned working capital limits of all construction and infrastructure development companies at least 10-15% without engaging things under bureaucracy so that liquidity comes into their accounts. This is a request from the government, the RBI and the banks. They are established players and the increased limit will bring ready cash enabling them to restart the operations at the earliest and get over the pre-COVID handover of the liquidity crisis. 

Secondly, the period of moratorium granted on loan repayment till May 31, 2020, should be extended for a complete year so that the available liquidity that is available – because payment problem is existing till date, as many of the government authorities are not working amid COVID and are not going to the offices and clearing the cheques - can be used in protecting the salaries of labours and construction workers, order new materials and increase the work at the sites. The moratorium of a year should be granted to increase the country’s GDP and economic activity. It should reset the interest and loan repayment up to one year, March 31. 

A few days back, the government has issued a detailed note on arbitration saying the arbitration process is being simplified more. There were many complications and so more simplification was needed. At the same time, the government should also release the money of the private sector companies who have won the case. These are my principle suggestions about the sector. 

You have said that activities have increased on the freight segment of railways. What is your outlook on business opportunities including freight segment in the post-COVID era and how the small and medium enterprises can participate in it?  
Sachin Bhanushali: The restrictions imposed during COVID pandemic has established a fact that rail sector is more dependable and resilient sector than the road sector. Therefore, every small and big industry should transport some part of their products through railways. 

Secondly, the trade receivable cycles have got disturbed a bit in this phase. That’s why the receipt cycle of the logistics sectors, as Mr Vinayak has also said, should be reset by providing liquidity support. 

The industries MSME industries were not getting the benefits of the Indian Railways and its train container operators, to date, because Indian railways transportation services are still provided in the train mode. And, the inter-modal service provider also provides transportation services in at least one container size. So to bring the goods of this sector to the railways, there is a need to have focused on inter-modal sector and the containerized transportation service. The freight segment was completely dependent on import arrivals in April and it stood around 65-70% of the normal level of activity. The level has depreciated a bit in May because import arrivals have gone down a bit and the export activities which were closed suddenly is reviving but at a small rate. I think it will be stabilized by end of May or mid-June and till then the Indian railways should continue with the 100% waiver on the empty wagon trade, which was assigned earlier to train container operators. It will help them, the train container operators, to bring back the import containers with ease. 

Besides, Railways can give a boost to its sector by completing the work on trade transit corridor at the earliest as it will allow it to provide a transit time assurance to its clients. It may allow small operators and businesses to bring their business to railways. Quality of services level of road transportation - in terms of short and medium distances - is still better than that of railways. Therefore, Railways will have to start giving transit assurance to improve the quality of their offerings. 

There are concerns that the private CapEx cycle will be delayed further due to the slowdown. At the same time, experts have a view that focus on infrastructure will increase after the lockdown is lifted and the government will increase its spending on the sector. What is your view on the segment? Do you think that the government’s commitment to spending Rs 100 lakh crore by 2024 on the infrastructure sector is realistic in this situation as well?
Shailesh Pathak: There are two aspects of your question and they are (i) what is happening on our sites and (ii) what money will be offered at the national level and how much we can make it happen. I will like to talk first about the second point. The private sector players should also understand that the government’s income has also reduced in the same way as our income has decreased slightly. Either it is a direct tax or indirect tax the government’s income has reduced a lot. Therefore, expecting that the government will provide enough money to us is not practical, yes, what the government can do for us without giving money is practical. As Mr Vinayak has said the government should sit with us and settle the arbitration and resolve the claims and move ahead without wasting 2-5 years in the courts. Secondly, certain relaxations should be provided where we will not have to pay any money to the government like certain flexibilities should be granted to the labours at the inter-state check-posts. It should be granted with certificates mentioning the reason for which they are moving and allow them to go. 

As far as private CapEx cycle is concerned then private sectors participation in the national infrastructure pipeline that has been announced for 5 years stands at around 28% and the larger portion is divided between the states and centre. We, must not waste much time in these big figures and make efforts to start work at our sites and provide employment to our workers/labours. You had said earlier that infrastructural sector is the second biggest employment provider after agriculture but I would like to add real estate sector with infrastructure and there is a need to find the ways to make this sector, real estate, functional.