IRB INFRASTRUCTURE DEVELOPERS LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting their 14th report on the
business and operations along with the audited financial statements of your
Company for the year ended March 31, 2012.
(Amount in Rs. crores)
Particulars Consolidated Standalone
Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31,
2012 2011 2012 2011
Total income 3,258.24 2,502.60 1,395.95 352.99
Profit before interest,
depreciation and tax 1,494.58 1,152.74 283.07 128.64
Less: Interest 546.37 351.54 74.86 26.34
Depreciation 297.01 225.37 - -
Profit before tax 651.20 575.83 208.21 102.30
Less: Provision for tax
Current Tax 164.78 157.03 42.34 12.51
MAT Credit Entitlement (12.14) (41.77) - -
Deferred tax 2.55 (3.52) (0.06) (0.37)
Profit after tax before
minority interest 496.01 464.09 165.93 90.16
Less: Minority Interest 0.01 11.71 - -
Profit after tax and after
minority interest 496.00 452.38 165.93 90.16
Add: Profit at the beginning
of the year 929.55 554.48 64.81 29.02
Profit available for
appropriation 1,425.55 1,006.86 230.74 119.18
Interim Dividend /
Proposed Dividend 59.83 49.86 59.83 49.86
Corporate Tax on Interim
Dividend / Proposed Dividend 12.12 9.84 - -
Transfer to General Reserve 34.67 17.61 16.59 4.51
Balance Carried Forward to
Balance Sheet 1,318.93 929.55 154.32 64.81
OPERATION AND PERFORMANCE REVIEW:
On the basis of Consolidated Financials
During the year your Group achieved a total income of Rs. 3,258.24 crores
and an operating profit of Rs. 1,494.58 crores for the year ended March 31,
2012 as against the total income of Rs. 2,502.60 crores and operating
profit of Rs. 1,155.19 crores for the previous financial year 2010-11.
After providing for interest of Rs. 546.37 crores and Rs. 297.01 crores for
depreciation, the profit before tax is Rs. 651.20 crores against the profit
before tax of Rs. 575.83 crores for the previous financial year. The net
profit after tax and minority interest for the year ended March 31, 2012
stood at Rs. 496.00 crores as against Rs. 452.38 crores for the previous
year showing an annualized growth of 9.64% due to increase in level of
On the basis of Standalone financials:
During the year your Company achieved a total income of Rs. 1,395.95 crores
and earned operating profit of Rs. 283.07 crores for the year ended March
31, 2012. After providing for interest of Rs. 74.86 crores, the profit
before tax is Rs. 208.21 crores. Provision of current tax for FY 11-12 was
Rs. 42.34 crores and deferred tax of Rs. (0.06) crores. The net profit for
the year ended March 31, 2012 stood at Rs. 165.93 crores as against Rs.
90.16 crores for the previous year.
During the year, the Board of Directors of your Company at its meeting held
on January 25, 2012 declared an Interim dividend of 18% i.e. Rs. 1.80 per
Equity Share of face value of Rs. 10/- for the financial year 2011-12 and
that resulted in cash outflow of Rs. 59.83 crores. The Board has not
recommended any final dividend for financial year 2011-12.
Fitch Rating India Pvt. Ltd. has assigned / affirmed:
* A-(ind) [A Minus Ind] to the Company with a Stable Outlook. Fitch has
assigned `A-(ind) [A Minus Ind]/F1(ind) F1(ind) (F One Ind]` to term loans
of Rs. 650 crores; `A-(ind) [A Minus Ind]` to fund based limits of Rs. 170
crores and has also assigned ratings of "A-(ind) [A Minus Ind]" F1(ind) (F
One Ind] to the Company`s non-fund based limits aggregating Rs. 700 crores.
* AA-(ind) [AA Minus Ind] to the outstanding loans of Mhaiskar
Infrastructure Pvt. Ltd. aggregating Rs. 1,040 crores with Stable Outlook.
* BBB(ind) [BBB Ind] to the project loans of IRB Surat Dahisar Tollway
Pvt. Ltd. of Rs. 1,300 crores with Negative Outlook.
* BBB+ (ind) [BBB Plus Ind] to the project loans of IDAA Infrastructure
Pvt. Ltd. of Rs. 546 crores with Stable Outlook.
* A- (ind)(SO) [A Minus Ind SO] to the project loans of IRB Kolhapur
Integrated Road Development Company Pvt. Ltd. of Rs. 252 crores with Stable
* BBB-(ind) [BBB minus Ind] to the project loans of IRB Jaipur Deoli
Tollway Pvt. Ltd. of Rs. 700 crores with Stable Outlook.
* BBB-(ind) [BBB minus Ind] to the project loans of IRB Talegaon Amravati
Tollway Pvt. Ltd. of Rs. 475 crores with Stable Outlook.
* BBB-(ind) [BBB minus Ind] to the project loans of IRB Pathankot Amritsar
Toll Road Pvt. Ltd. of Rs. 924 crores with Stable Outlook. Credit Analysis
& Research Ltd. has assigned / affirmed:
* `CARE A` [CARE Single A] to long-term facilities of Rs. 348.52 crores
and `CARE A/CARE A1` [CARE Single A/A One] to long-term/short term bank
facilities of Rs. 250 crores of Modern Road Makers Pvt. Ltd.
* `CARE BBB+ (SO)` [CARE Triple B Plus SO] to long-term facilities of Rs.
831 crores of IRB Tumkur Chitradurga Tollway Pvt. Ltd.
As on March 31, 2012 your Company`s fund based facilities stood at Rs.
1,160 crores and non-fund based credit facilities stood at Rs. 384.67
During the year under review, the subsidiary companies of your Company
continue to contribute to the overall growth of the Company. Your Company
has incorporated a new Special Purpose Vehicle (SPV) viz. IRB Ahmedabad
Vadodara Super Express Tollway Private Limited to domicile the Ahmedabad
Vadodara BOT Project awarded by National Highways Authority of India during
the financial year.
Following is the list of Subsidiary Companies:
1. IRB Surat Dahisar Tollway Pvt. Ltd. (SPV for Surat Dahisar BOT Project)
2. Mhaiskar Infrastructure Pvt. Ltd. (SPV for Mumbai Pune NH4 & Mumbai Pune
3. IDAA Infrastructure Pvt. Ltd. (SPV for Bharuch Surat BOT Project)
4. Thane Ghodbunder Toll Road Pvt. Ltd. (SPV for Thane Ghodbunder BOT
5. Modern Road Makers Pvt. Ltd. (EPC Arm)
6. IRB Kolhapur Integrated Road Development Company Pvt. Ltd. (SPV for
Integrated Road Development Project in Kolhapur)
7. ATR Infrastructure Pvt. Ltd. (SPV for Pune Nashik BOT Project)
8. Ideal Road Builders Pvt. Ltd. (Thane Bhiwandi Bypass BOT Project)
9. Aryan Toll Road Pvt. Ltd. (SPV for Pune Solapur BOT Project)
10. NKT Road & Toll Pvt. Ltd. (SPV for Ahmednagar - Karmala - Tembhurni BOT
11. IRB Infrastructure Pvt. Ltd. (SPV for Kharpada Bridge BOT Project)
12. IRB Pathankot Amritsar Toll Road Pvt. Ltd. (SPV for Pathankot Amritsar
13. IRB Talegaon Amravati Tollway Pvt. Ltd. (SPV for Talegaon Amravati BOT
14. IRB Jaipur Deoli Tollway Pvt. Ltd. (SPV for Jaipur Deoli BOT Project)
15. IRB Goa Tollway Pvt. Ltd. (SPV for Panaji Goa BOT Project)
16. IRB Tumkur Chitradurga Tollway Pvt. Ltd. (SPV for Tumkur Chitradurga
17. IRB Ahmedabad Vadodara Super Express Tollway Pvt. Ltd. (SPV for
Ahmedabad Vadodara BOT Project)
18. IRB Sindhudurg Airport Pvt. Ltd. (SPV for Greenfield Airport in
19. Aryan Infrastructure Investments Pvt. Ltd.
20. Aryan Hospitality Pvt. Ltd.
21. MMK Toll Road Pvt. Ltd. (SPV for Mohol - Kurul - Mandrup - Kamti BOT
Project; Subsidiary of Ideal Road Builders Pvt. Ltd.)
22. MRM Cement Pvt. Ltd. (Subsidiary of Modern Road Makers Pvt. Ltd.)
23. J J Patel Infrastructural and Engineering Pvt. Ltd. (Subsidiary of
Modern Road Makers Pvt. Ltd.)
UNDER IMPLEMENTATION PROJECTS
IRB Ahmedabad Vadodara Super Express Tollway Pvt. Ltd.
Ahmedabad Vadodara BOT project involves design, build, finance and
operation of Six Laning of Ahmedabad to Vadodara section of NH 8 from km
6.400 to km 108.700 (Length 102.300 km) in the state of Gujarat and
improvement of existing Ahmedabad Vadodara Expressway from km 0.000 to km
93.302 under NHDP Phase V through Public Private Partnership (the "PPP") on
Design, Build, Finance, Operate and Transfer (DBFOT) Toll basis. Your
Company has incorporated a new SPV viz. IRB Ahmedabad Vadodara Super
Express Tollway Pvt. Ltd. to domicile this project and executed the
Concession Agreement with NHAI on July 25, 2011. This SPV has agreed to pay
premium of Rs. 309.60 crores to NHAI which will be increased by 5% every
year with concession period of 25 years and estimated cost of the Project
is Rs. 4,880 crores. This SPV has achieved financial closure by tying up of
debt of Rs. 3,300 crores from the consortium of banks/Financial
This SPV will commence construction activity and toll collection on receipt
of appointed date from NHAI.
Further, this SPV has increased it`s authorised and paid up share capital
to Rs. 100 crores.
IRB Tumkur Chitradurga Tollway Pvt. Ltd.
This SPV has been carrying out construction activities since June 4, 2011.
So far, approximately 20% of construction work on the project is completed
and it is expected to be completed with in schedule time i.e. December
2013. This SPV has also started collecting toll from this date.
During the year under review, this SPV has availed loan of Rs. 443.41
crores out of the total project loan.
Further, this SPV has increased it`s authorized share capital to Rs. 80
crores and paid up capital to Rs. 47.63 crores.
IRB Surat Dahisar Tollway Pvt. Ltd.
This SPV has completed construction on its Surat Dahisar Project which is
240 km. 6 Lane highway and includes construction of 26 flyovers, 2 Railway
over bridges, 39 Pedestrian under-passes and 15 Vehicular under-passes in a
period of 30 months. The Company has completed this project as per schedule
and also with substantial reduction in estimated project cost. The
completion of this project in time is a significant milestone for the
Company as a whole in terms of its ability to construct such Infrastructure
in such short time. The Company could achieve this feat because of
Company`s project management expertise, cutting-edge technology, large in-
house equipment bank and design innovations.
During the year under review, this SPV has availed loan of Rs. 648.36
crores out of the total sanctioned project loan of Rs. 1,956 crores and
also prepaid part of the project loan of Rs. 400 crores to the consortium
of lenders. The outstanding loan as on March 31, 2012 is Rs. 1,312 crores.
During the year, as per the toll notification issued by Government the toll
rates have been increased by 10.51% with effect from September 1, 2011.
Further, this SPV has increased its paid up capital to Rs. 510.54 crores.
IRB Kolhapur Integrated Road Development Company Pvt. Ltd.
This SPV has completed more than 95% of the construction work on the
project and received substantial completion certificate from MSRDC. This
SPV will start collecting toll on receipt of toll collection notification
from the State Government.
Further, this SPV has increased it`s authorised share capital to Rs. 172
crores and paid up capital to Rs. 168.05 crores.
IRB Pathankot Amritsar Toll Road Pvt. Ltd.
This SPV has mobilised its resources and commenced construction on this
Project and has completed approximately 35% of construction work and it is
expected to be completed within scheduled time.
During the year under review, this SPV has availed loan of Rs. 441.57
crores out of the total project loan.
IRB Talegaon Amravati Tollway Pvt. Ltd.
This SPV has completed approximately 50% of construction work on this
project and it is expected to be completed within schedule time.
During the year under review, this SPV has availed loan of Rs. 189.18
crores out of the total project loan.
IRB Jaipur Deoli Tollway Pvt. Ltd.
This SPV has completed approximately 55% of construction work on this
project and it is expected to be completed within schedule time.
During the year under review, this SPV has availed loan of Rs. 449.05
crores out of the total project loan.
Further, this SPV has increased it`s authorised share capital to Rs. 110
crores and paid up capital to Rs. 105.48 crores.
IRB Sindhudurg Airport Pvt. Ltd.
Sindhudurg Airport project involves Design, Built, Finance & Operation of
Greenfield Airport in Sindhudurg District in the state of Maharashtra. Your
Company has incorporated a new SPV viz. IRB Sindhudurg Airport Pvt. Ltd. to
domicile this project. This SPV has executed Project Development Agreement
with MIDC on September 25, 2009.
Further this SPV has received the environmental clearance from the Ministry
of Environment and Forest for the project. Upon receipt of other required
clearances, this SPV will commence construction on the project.
IRB Goa Tollway Pvt. Ltd.
This SPV had executed Concession Agreement with the NHAI in February 2010
and subsequently the Project had also achieved financial closure in March
2010. Construction period of the Project was 30 months. However, NHAI could
not provide necessary Land for implementation of the Project.
This SPV has received a formal letter from NHAI informing this SPV,
termination of the Concession Agreement of the Project due to their
inability to provide necessary Land for implementation of the Project. In
this regard, this SPV has submitted its claim for compensation as per
Termination payment provisions of the Concession Agreement.
J J Patel Infrastructural and Engineering Pvt. Ltd.
During the year under review, EPC arm of the Company viz. Modern Road
Makers Pvt. Ltd. has acquired J J Patel Infrastructural and Engineering
Pvt. Ltd. (JJP) for a total consideration of Rs. 9 crores. JJP holds mining
lease on 100 acres of land near Ahmedabad Vadodara Project, which will
facilitate timely supply of stone aggregates required for this Project.
MVR Infrastructure & Tollways Pvt. Ltd. (MVR Infra)
Your Directors at their meeting held on May 9, 2012, approved acquisition
of 69,10,170 equity shares of Rs. 100/- each constituting 100% of the
issued, subscribed and paid-up share capital of MVR Infra from its
promoters, existing institutional shareholders and other shareholders.
Accordingly, on May 9, 2012, the Company has executed Definitive Agreement
with MVR Infra`s promoters, existing institutional shareholders and other
shareholders of MVR Infra for an aggregate consideration not exceeding Rs.
The transaction will be completed in three tranches, subject to various
terms and conditions including obtaining of necessary approvals from
regulatory authorities (including the National Highways Authority of India)
and lenders of MVR Infra.
MVR Infra was formed for the purpose of implementation of Project of
widening of then existing two lane road portion from km 207.050 (Salem) to
km 248.625 covering 41.55 kms, on NH-7 in Tamil Nadu to 4 lanes and
improvement, operations and maintenance of km 199.200 (start of Salem
Bypass) to km 207.050 (Salem) on NH-7 in Tamil Nadu to 4 lanes. The
Concession Agreement for the Project was executed on February 16, 2006 for
a 20 year period (commencing from the appointed date as per the Concession
Agreement) including construction period of 2.5 years. Toll collection
started in August 2009.
The project stretch of 68.7 km is located on the busy Bangalore Kanyakumari
section of NH-7. The Project constitutes a 68.625 km 4 Lane highway between
Omallur and Namakkal in the state of Tamil Nadu. Also, Salem is surrounded
by steel and mining industry. The Project stretch connects Hyderabad,
Bangalore in the North to Salem, Namakkal, Karur, and Kanyakumari in the
The Statement pursuant to Section 212 of the Companies Act, 1956,
pertaining to holding in subsidiary companies is attached. The Consolidated
Financial Statements of the Company and its subsidiaries, prepared in
accordance with Accounting Standard AS21 form part of the Annual Report.
Upon written request from the member, the Company Secretary will make these
documents available. These documents will be available for inspection at
the Registered Office of the Company, between 11.00 a.m. to 1.00 p.m. on
all working days, except Saturdays, up to the date of the Annual General
For FY11-12 NHAI has awarded approximately 6,500 kilometers of road
projects showing more than 25-30% yearon- year growth. Out of this, the
Company was successful in bagging Ahmedabad Vadodara project covering
roughly 196 km. For FY12-13, NHAI have a very significant outlay of around
8,800 kilometers which they intend to award during the year. This is likely
to translate into approximately Rs. 90,000 crores plus opportunity for
developers. Your Company`s Annual RFQ score stands at Rs. 4,540 crores for
NHAI projects. Your Company has an intention and aspiration to remain a
lead player. Further, your Company will continue to look for value
accretive road projects in future for acquisition.
Mr. Bhalchandra K. Khare and Mr. Chandrashekhar S. Kaptan, Directors of the
Company, are liable to retire by rotation at the forthcoming Annual General
Meeting and being eligible, offer themselves for re-appointment. Your
Directors recommend their re-appointment.
Your Directors also appointed Mr. Mukeshlal Gupta as a Whole-time Director
of the Company with effect from February 1, 2012 for a period of 3 (three)
years. Appropriate resolution seeking your approval for the appointment of
Mr. Gupta as a Whole-time Director of the Company liable to retire by
rotation has already been included in the notice of the Annual General
Your Directors have approved the re-appointment of Mr. Virendra D. Mhaiskar
as Managing Director of the Company, for a period of 5 (five) years with
effect from September 7, 2012. Appropriate resolution seeking your approval
for the re-appointment of Mr. Mhaiskar as a Managing Director of the
Company not liable to retire by rotation has already been included in the
Notice of the Annual General Meeting.
As required by the Clause 49 of the Listing Agreements, a Report on the
Corporate Governance and Management Discussion and Analysis form part of
the Annual Report and a certificate from a Practicing Company Secretary on
the compliance with the provisions of Corporate Governance is annexed to
the Corporate Governance Report.
M/s. S. R. Batliboi & Co. (Firm Registration No. 301003E), Chartered
Accountants, Statutory Auditors of the Company, will retire at the ensuing
Annual General Meeting and being eligible, have offered themselves for re-
appointment. Your Directors recommend their re-appointment. As required
under the provisions of Section 224(1B) of the Companies Act, 1956, the
Company has received a written certificate from the above Auditors proposed
to be re-appointed to the effect that their re-appointment, if made, would
be in conformity with the limits specified in the said section.
Pursuant to Section 209(1)(d), 600(3)(b) of the Companies Act, 1956 and
rule 2 & 5 of The Companies (Cost Accounting Records) Rules, 2011, Mr. P.
D. Phadke, Practicing Cost Accountant (Membership No.1893) is appointed to
issue Compliance Report for the financial year ended March 31, 2012. The
Compliance Report along with the duly certified Annexure issued by Cost
Accountant is annexed to this report.
The Company has not accepted or renewed any deposit from public during the
year under review.
DIRECTORS` RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
confirm the following:
1. In the preparation of the annual accounts, the applicable Accounting
Standards have been followed along with proper explanation relating to
material departures, if any;
2. Your Directors have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the Profit of the Company
for that year;
3. Your Directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
4. Your Directors have prepared the attached Statement of Accounts for the
year ended March 31, 2012 on a going concern basis.
HUMAN RESOURCE MANAGEMENT
Your Company has a large pool of experienced and skilled technical manpower
with which your Company executes world-class high quality projects -
qualities which have become synonymous with IRB. To continuously update the
technical knowledge and keep abreast with emerging technologies relating to
construction of roads & structures and toll collections systems, your
Company nominates its senior executives to attend Seminars and Symposiums
conducted by professional bodies of world repute. Employees are also
nominated to attend other professional skill building programmes.
The reputation of your Company as the one with favourable work environment
that respects individuals and encourages professional growth, innovation
and superior performance, acts as a strong pull to attract new talent from
the industry. Human resources continue to be one of the core focus areas of
the Company. Respect for individual, open work culture, effective
communication, fair and equitable treatment and welfare of employees are
significant employee value propositions, which help your Company to retain
a pool of large number of highly engaged professionals and generate high
level of trust amongst its employees. Your Company remains `employer of
choice` with one of the lowest attrition rate of employees of less than 1%
in the infrastructure sector since last four consecutive years.
CORPORATE SOCIAL RESPONSIBILITY
Towards its commitment to help the underprivileged sections of the society,
your Company has focused on one area for its attention and that is Right to
Education. Keeping in mind the spirit of this laudable initiative of the
Government, your Company has started its first primary school for the
children of Village "Maalion Ka Jhopra" in Tonk district in Rajasthan,
where your Company is executing Jaipur Deoli BOT project. The permanent
primary school building with about 10,000 sq. ft. of constructed area on
7.5 bighas of land with large sports ground provides totally free
education, summer and winter uniforms to 136 underprivileged children
studying in standards I to IV. The school is being professionally managed
by a NGO renowned in the area of education. IRB Primary School with six
full time teachers and one Head Master are clocking a regular attendance of
95%. The School with electricity, Computer Lab, Video Training CDs and
purified drinking water has already become a school of choice in the
Your Company has encouraged persons with disabilities to seek suitable
employment opportunities and has employed such persons.
Your Company continues to financially support and foster brilliant and
promising sports persons and artists. Over last few years the Company came
out with an annual calendar, based on the jury selected paintings of
promising artists of Sir J J School of Arts, Mumbai, who are especially
commissioned to paint on a different theme each year. The original
paintings of these talented artists are sold at private auctions and the
funds generated are ploughed back in promoting more talents.
Your Company has also endeavoured to foster the spirit of supporting worthy
social causes in its employees also. One such initiative to support various
NGOs is through financially sponsoring corporate participation of employees
of the Company in Mumbai Marathon organised by Standard Chartered. For
second year in a row, employees of your Company have been participating
enthusiastically in the marathon.
Many social and cultural institutions continue to be supported by your
Company without seeking any publicity or glorification in line with the
Company`s ethos that to serve humanity is the best service of all - in
addition to constructing world class highways.
PARTICULARS OF EMPLOYEES
As required under the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended, particulars of employees shall be provided as an annexure to
Directors` Report. However, as per the provisions of Section 219(1)(b)(iv)
of the Companies Act, 1956, the Annual Report, excluding the aforesaid
particulars, is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars shall
be provided the same on receipt of written request addressed to the Company
Secretary at the Registered Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
Particulars of Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo are mentioned in the Forms A, B & C of the
Your Directors take this opportunity to thank the Ministry of Road Surface
Transport & Highways, National Highways Authority of India, Maharashtra
State Road Development Corporation, Maharashtra Industrial Development
Corporation, various State Governments, Central Government for their
support and guidance. Your Directors also thank Ministry of Corporate
Affairs, Bombay Stock Exchange Limited, National Stock Exchange of India
Limited, Financial Institutions & Banks, Credit Rating Agencies,
Stakeholders, Suppliers, Contractors, Vendors and business associates for
their continuous support and look forward to their support. Also, your
Directors convey their appreciation to the employees at all levels for
their enormous personal efforts as well as collective contribution to the
growth of the Company.
For and on behalf of the Board of Directors
Virendra D. Mhaiskar
Chairman & Managing Director
Place : Mumbai
Date : July 27, 2012
FORM - A
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
The Company is engaged in infrastructure activities and the same is not
covered under the Schedule.
The Company`s efforts are to conserve energy wherever possible by
economising on the use of power at the various sites.
FORM - B
TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT (R & D)
i) Specific Areas in which R & D has been carried out by the Company
No R & D activities carried out during the financial year 2011-12.
ii) Expenditure on Research & Development: No Expenditure incurred on R & D
Technology Absorption, Adoption and Innovation, Efforts made, Benefits
derived, Import of Technology: N.A.
FORM - C
FOREIGN EXCHANGE EARNINGS AND OUTGO
a) There are no Export related activities. However, your Company may
explore the opportunities for executing projects abroad.
b) Details of foreign exchange earnings and outgo during the year are as
(Amount in Rs.)
For the Year ended March 31 2012 2011
Foreign Exchange earnings NIL NIL
Foreign Exchange outgo 223,237,762 47,155,656
MANAGEMENT DISCUSSION AND ANALYSIS
The Infrastructure Industry in India has been experiencing a rapid growth
in its different verticals with the development and urbanization leading to
increasing interest shown by foreign as well as domestic investors and
infrastructure players in this field. The Indian government has been taking
initiatives to develop the infrastructure sector, with emphasis on
construction, engineering, IT, entertainment, food and utility to name
some. However, FY11-12 saw a subsidence in the growth of the Infrastructure
industry except the Road sector. Almost 6,500 km of National Highways was
awarded by the NHAI against 5,000 km awarded last year, a rise of 30%.
With a Trillion Rupee investment envisaged for the next Five Year Plan
(2012-17), Infrastructure investment in India is set to grow dramatically.
For the Indian economy to maintain its growth momentum, the provision of
adequate infrastructure facilities is critical. Unreliable services or a
disruption in infrastructure facilities may restrict output or hinder
investments in productive capital. The Eleventh Five Year Plan (2007-2012)
of the Planning Commission of the Government of India identified high
quality infrastructure as the most critical physical requirement for
attaining faster growth in a competitive global environment and also for
ensuring investment in less-developed regions. Also, a preliminary
assessment suggests that investment in infrastructure during the Twelfth
Five Year Plan (2012-17) would need to be of the order of about US$ 1,025
billion to achieve a share of 9.95% as a proportion of GDP, according to
the Planning Commission. The Indian government is attempting to improve the
country`s infrastructure as a top policy priority. While presenting the
Union Budget 2012-13, the Finance Minister has an allocation of Rs. 25,360
crores for the Road Sector for FY12-13 under the Twelfth Five Year Plan,
which is 14% higher than FY11-12.
SECTOR OVERVIEW: ROAD AND HIGHWAYS
India has an extensive road network of 4.24 million kms - the second
largest in the world. The National Highways have a total length of 70,934
kms and serve as the arterial road network of the country. It is estimated
that more than 70% of freight and 85% of passenger traffic in the country
is being handled by roads. While Highways/ Expressways constitute only
about 2% of the length of all roads, they carry about 40% of the road
traffic leading to a strain on their capacity. Road traffic volumes as
measured by the consumption of automotive fuel, have grown by about the
same rate as overall GDP. The Government of India has launched major
initiatives to upgrade and strengthen National Highways through various
phases of the National Highways Development Project (NHDP). NHDP is one of
the largest road development programmes to be undertaken by a single
authority in the world and involves widening, upgrading and rehabilitation
of about 54,000 kms, entailing an estimated investment of more than Rs.
Indian roads sector has witnessed increased traction in terms of bidding
activities, with National Highways Authority of India (NHAI) awarded
approximately 6,500 kms length of Highways & Roads projects in FY11-12 (in
comparison to 3,360 kms in FY09-10 & 5,000 kms in FY10-11). The accelerated
pace is driven by several policy and structural reforms being implemented,
with intent to build 20 kms of National Highways every day. Revised work
plan by NHAI now proposes to award approximately 8,800 kms of projects till
end of FY12-13; this compares with project awards of 19,073 kms during
FY02-10, 5,000 kms in FY10-11 & 6,500 kms in FY11-12. Government`s
initiatives towards conversion of approximately 10,000 kms State Highways
to National Highways, Expressway development in various states etc.
indicates the latent opportunities for both, infrastructure developers and
Also, NHAI has, based on its experience and the discussions with various
stakeholders, standardised essential documents involved in a typical road
project award i.e. the Request For Qualification (RFQ), Request For
Proposal (RFP or financial bid) and the Model Concession Agreement (MCA)
which are being updated continuously. Some of the important changes made in
these documents are as under:
1. All applicants meeting the threshold technical and financial experience
criteria set out in the RFQ shall be eligible to participate in the RFP
stage. Annual Prequalification of the Prospective bidders has been
implemented in order to reduce the time lags between issue of RFQs and
2. Submission of RFP is now done through electronic filing only which
3. Equity Support under VGF has been increased to 40% of project cost.
4. Termination provisions under capacity augmentation situations modified
to give more comfort to investors and lenders. The concession period can be
extended up to 5 years to yield post tax equity IRR of 16%, in the event of
capacity augmentation option exercised by the concessionaire. Annual Report
11 - 12 | 34
5. Exit option allowed for principal promoters of road SPVs after two years
from Commercial Operations Date (COD).
6. Where the projects are bid out on a revenue share basis, the base
premium (fixed amount) (revenue share proposed by the successful bidder)
will be increased at the rate of 5% year on year with respect to the
immediately preceding year for the entire tenure of the concession.
IRB Infrastructure Developers Ltd. (IRB) incorporated in 1998, has strong
in-house integrated project execution capabilities. IRB is the pioneer in
the road BOT business and is one of the largest road BOT operators in the
country with 16 Road BOT projects under its umbrella. IRB also has
approximately 11.07% share of the Golden Quadrilateral. Its construction
business complements its BOT vertical by executing the Engineering,
Procurement and Construction (EPC) and the Operation and Management (O&M)
portion of BOT concessions. Following is the list of IRB`s road BOT
Name of the Company/SPV Project Road Length
Ideal Road Builders Pvt. Ltd. Thane Bhiwandi Bypass BOT 24.00
Aryan Toll Road Pvt. Ltd. Pune-Solapur BOT 26.00
ATR Infrastructure Pvt. Ltd. Pune-Nashik BOT NH 50 29.81
Mhaiskar Infrastructure Pvt. Ltd. Mumbai-Pune BOT MPEW & NH4 206.00
Thane Ghodbunder Toll Road Pvt. Ltd. Thane-Ghodbunder Toll
Road BOT 14.90
IDAA Infrastructure Pvt. Ltd. Bharuch-Surat BOT NH 4 65.00
NKT Road & Toll Pvt. Ltd. Ahmednagar-Karmala-
Tembhurni Road, SH 141 60.00
IRB Infrastructure Pvt. Ltd. Bridge over Patalganga
River-Kharpada BOT 1.40
MMK Toll Road Pvt. Ltd. Mohol-Kurul-Kamtee-Mandrup
Road, SH 149 33.40
IRB Surat Dahisar Tollway Pvt. Ltd. Surat-Dahisar Road, NH 8 239.00
IRB Kolhapur Integrated Road Integrated Road Development
Development Company Pvt. Ltd. in Kolhapur 49.99
IRB Pathankot Amritsar Toll Pathankot-Amritsar NH 15 102.42
IRB Talegaon Amravati
Tollway Pvt. Ltd. Talegaon-Amravati NH 6 66.73
IRB Jaipur Deoli Tollway Pvt. Ltd Jaipur-Deoli NH 12 146.30
IRB Tumkur Chitradurga
Tollway Pvt.Ltd. Tumkur-Chitradurg NH 4 114.00
IRB Ahmedabad Vadodara Super Express Ahmedabad-Vadodara NH 8 &
Tollway Private Limited Ahmedabad-Vadodara
IRB has over the years developed rich in-house expertise in both EPC & O&M
verticals. Out of IRB`s 16 road projects, 11 are operational, 5 under
implementation. The Company`s major clients are government agencies
undertaking road development in India e.g. National Highways Authority of
India (NHAI) and Maharashtra State Road Development Corporation Ltd (MSRDC)
etc. In last two years, IRB has strategically spread its reach in states
other than Maharashtra & Gujarat and now it`s Road Portfolio as per lane
kms is located 41% in Maharashtra, 33% in Gujarat, 11% in Karnataka, 9% in
Rajasthan and 6% in Punjab.
(I) CONSTRUCTION AND DEVELOPMENT (EPC)
IRB has successfully constructed more than 2,000 kms length of highways as
BOT projects including improvement of National Highway and sections of
Golden Quadrilateral so far.
IRB practices integrated approach towards project execution by doing
construction and operation & maintenance activities in-house with least out
sourcing. IRB has a large equipment bank and experienced & skilled manpower
which help the Company to complete project execution in time within given
The Company`s total order book stands to Rs. 8,515 Crore, comprises of Rs.
6,466 crores as construction order book to be executed over 3 to 4 years
and Rs. 2,049 crores as Operation & Maintenance order book to be executed
over the concession period.
In terms of the existing projects, construction work on Surat Dahisar
Project and IRDP Kolhapur Project has been substantially completed.
Further, the Company has completed approximately 55%, 50% & 35%
construction work on its Jaipur Deoli Project, Talegaon Amravati Project
and Pathankot Amritsar Project, respectively. Construction work on these
projects is expected to be completed within scheduled time.
The Company has also started toll collection and construction activity on
its Tumkur chitradurga BOT Project from June 2011 and completed
approximately 20% of construction work so far and the construction work is
expected to be completed by scheduled completion date i.e. December 2013.
In February 2012, IRB has achieved Financial Closer for the Ahmedabad
Vadodara BOT Project, the first mega road project in the country. The
Project Company has tied up Rs. 3,300 crores debt from the Lenders for
execution of the Project. The Company will commence construction and toll
collection upon receipt of appointed date from NHAI.
(II) OPERATIONS AND MAINTENANCE (O&M)
IRB is one of the largest BOT operators in India today having 4,097 lane
kms under Operations and Maintenance. The daily toll collection is now
stands at approximately Rs. 3.55 crores on gross basis.
IRB has in-house expertise in handling operation and maintenance of BOT
road Projects. IRB routinely carries out maintenance of toll roads
including major maintenance periodically. Our O&M work has won many
accolades in the past. IRB has been awarded CNBC TV18 Essar Steel
Infrastructure Excellence Award in the Highways & Flyovers category for its
Mumbai-Pune section of National Highways (NH-4) in FY09-10 and Bharuch
Surat Section of NH8 in FY10-11.
(III) RELATED DIVERSIFICATION
IRB has executed Project Development Agreement for Sindhudurg Greenfield
Airport BOT Project with MIDC. IRB has also received Environmental
Clearance for the Project from Ministry of Environment & Forest. Requisite
land has already been acquired by MIDC for the Airport. IRB intent to start
construction work during FY12-13.
IRB has also started work on its Gateway Hotel Project in Kolhapur which is
expected to be completed in 3 years.
KEY COMPETITIVE ADVANTAGE
IRB has the following key advantages to lead:
* Robust order book of over Rs. 8,515 crores (as on March 31, 2012).
* One of the largest Domestic BOT project portfolios in the Roads and
* 16 BOT projects out of which 11 are operational.
* Strong financial track record and healthy banking relationship with
leading Banks/financial Institutions.
* Integrated and Efficient project execution capabilities supported by
large equipment bank.
* Professionally managed Company with qualified and skilled employee base.
NHAI is having plans to award approximately 8,800 kms aggregate length of
projects during FY12-13. The following table shows the upcoming
opportunities for IRB either on RFP stage or on RFQ stage as on March 31,
Amount in Rs. crores
Name of the client RFP Stage RFQ stage
NHAI Projects Phase III - 2,814
NHAI Projects Phase IV, IVA & IVB 3,056 12,705
NHAI Projects Phase V 1,014 3,524
Mumbai JNPT Road Com. Ltd (SPV of NHAI) - 2,260
NHAI Projects BOT Annuity - 706
NHAI Projects OMT - 104
NHAI Projects NE - II - 2,699
Other clients - 11,844
TOTAL 4,070 36,656
In line with IRB`s strategy to grow inorganically, IRB have been evaluating
various BOT projects in the secondary markets since a year. IRB has
successfully culminated one of the transactions for acquisition of Omallur-
Salem-Namakkal BOT project in Tamil Nadu which will be a good addition to
its existing portfolio of assets. IRB will continue to look for such value
accretive road assets in future.
RISKS AND CHALLENGES
The Company`s ability to foresee and manage business risks is crucial in
achieving favourable results. While management is positive about Company`s
long-term outlook, which are subject to few risks and uncertainties as
The Company is operating in a highly competitive environment. During the
year, the Company has observed that the Projects which were much sought
after had seen aggressive bidding and the projects which were not much
sought after had lower number of participants. Further, the bidders have
also shown preference in certain geographies. IRB believes that such
competitive intensity may come down in future.
Further, NHAI has earlier stipulated that a Company cannot have more than 3
NHAI projects where it has yet to achieve financial closure. So to some
extent, this may limit the prospective bidders` ability to bid for the
projects and thereby reduce aggression in the bidding.
Availability of Capital and Interest rates
Infrastructure projects are typically capital intensive and require high
levels of long-term debt financing. IRB intends to pursue a strategy of
continued investment in infrastructure development projects. IRB believes
that though in the past it has been able to infuse equity and also arrange
for debt financing for its infrastructure development projects on
acceptable terms at the relevant Project SPV level, its ability to continue
to arrange for capital requirements is dependent on numerous factors, like
timing and generation of internal accruals; timing and size of award of
projects as well as availability of credit from banks and financial
institutions, the success of its current infrastructure development
projects and other factors outside its control.
However, your Company`s track record has enabled it to raise funds at
competitive rates. Further, the Company has already hedged itself from any
hardening of interest rates, by locking lower interest rates eg. for Mumbai
Pune Project, the weighted average cost of debt is 10.6% p.a. fixed for the
remaining tenure; for under construction projects, the rate of interest is
fixed to approximately 10.5% p.a. for a period of 3 years covering the
entire construction period. Further, IRB has availed External Commercial
Borrowing facility for its Jaipur Deoli, Tumkur Chitradurga & Pathankot
Amritsar Projects which will help it reduce the interest rate burden.
Toll revenue is a function of the Toll rates and Traffic growth.
Toll rates: The Government has been implementing policy of linking increase
in toll rates to change in Wholesale Price Index (WPI). The Toll rates of
the Company`s Bharuch Surat, Surat Dahisar projects are linked to average
WPI. Toll rates for the projects awarded after 2008 are linked to a formula
i.e. 3% + (40% of average WPI). Toll rates of all other projects of the
Company have fixed annual or periodical increase in their toll rates, as
per their Concession Agreement. Toll rates have been increased on the
Company`s Bharuch Surat Project by 10.50% in July 2011 and Surat Dahisar
Project by 10.51% in September 2011.
Traffic: Vehicular traffic varies with overall economic activities in the
country, specifically in the corridors in Golden Quadrilateral. Therefore
Bharuch Surat and Surat Dahisar Projects are having high corelation with
over all economic activities in the Country. However, some of the Company`s
projects e.g. Mumbai-Pune, Thane-Bhiwandi Projects are having fair mix of
passenger and freight traffic which comparatively is less sensitive to the
level of economic activities in respective corridors and thus have been
able to contain the impact of muted traffic growth on a few other projects.
Continuous supply of raw materials like bitumen, stone aggregates, cement
and steel are essential for timely completion of the projects. There is
also a risk of escalation of cost or shortage in the supply of raw
The extensive experience of the Company, it`s standing in the Industry and
bulk purchases have helped to plan and procure raw materials at competitive
rates to the Company. Also, the Company procures stone aggregates from it`s
leased mines which, besides ensuring quality and lowering the cost as
compared to bought out aggregate, also reduces events of disruption in
supply or price escalation.
The timely availability of skilled and technical personnel is one of the
key challenges. The Company maintains healthy and motivating work
environment through various measures. This has helped the Company to retain
and recruit skilled work force resulting into the timely completion of the
HUMAN RESOURCE MANAGEMENT
IRB has a large pool of experienced and skilled technical manpower with
which IRB executes world-class high quality projects - qualities which have
become synonymous with IRB. To continuously update the technical knowledge
and keep abreast with emerging technologies relating to construction of
roads & structures and toll collections systems, IRB nominates its senior
executives to attend Seminars and Symposiums conducted by professional
bodies of world repute. Employees are also nominated to attend other
professional skill building programs.
The reputation of IRB as the one with favourable work environment that
respects individuals and encourages professional growth, innovation and
superior performance, acts as a strong pull to attract new talent from the
industry. Human resources continue to be one of the core focus areas of the
Company. Respect for individual, open work culture, effective
communication, fair and equitable treatment and welfare of employees are
significant employee value propositions, which help IRB to retain a pool of
large number of highly engaged professionals and generate high level of
trust amongst its employees. IRB remains `employer of choice` with one of
the lowest attrition rate of employees of less than 1% in the
infrastructure sector since last four consecutive years.
INTERNAL CONTROL SYSTEMS
IRB maintains adequate internal control systems, which provide, among other
things, reasonable assurance of recording the transactions of its
operations in all material respects and of providing protection against
significant misuse or loss of Company assets. The Company has a strong and
independent internal audit function. The Internal Auditor reports directly
to the Chairman of the Audit Committee. Professionally qualified, technical
and financial personnel of the internal audit function conduct periodic
audits to ensure that the Company`s internal control systems are adequate
and are complied with.
The total consolidated income for FY12 has gone up to Rs. 3,258 crores from
Rs. 2,503 crores in FY11, registering a growth of 30%. Substantial increase
in total Income is due to increase momentum in project execution during the
year. Construction Revenue in FY12 increased to Rs. 2,275 crores from Rs.
1,670 crores for FY11 registering a growth of 36%. Toll Revenue in FY12
increased to Rs. 981 crores from Rs. 832 crores for FY11 registering a
growth of 18%. Earning Before Interest Tax Depreciation and Amortisation
(EBITDA) for FY12 has gone up to Rs. 1,495 crores from Rs. 1,153 crores in
FY11 registering a growth of 30%.
Interest costs for FY 12 has gone up to Rs. 546 crores from Rs. 352 crores
in FY11 resulting in an increase of 55% mainly due to increase in interest
cost and loan drawl in Surat Dahisar and Tumkur Chitradurga projects.
Depreciation for the FY12 has gone up to Rs. 297 crores from Rs. 225 crores
of FY11 resulting in an increase by 32% as the amortization of Surat
Dahisar project has started since the project substantially completed in
December 2011. As a result of above, the Profit Before Tax (PBT) for the FY
12 has gone up to Rs. 651 crores from Rs. 576 crores of FY 11 registering a
growth of 13%.
The Profit After Tax (PAT) for the FY 12 has gone up to Rs. 496 crores from
Rs. 464 crores of FY11 registering a growth of 7%.
Post minority interest PAT for the FY12 has gone up to Rs. 496 crores from
Rs. 452 crores in FY11 registering growth of 10%.
An earnings per share on basic and diluted basis is Rs. 14.92 for the FY12
as against Rs. 13.61 of FY11 registering growth of 10%.
The Net Worth of the Company as at March 31, 2012 stood at Rs. 2,857 crores
as against Rs. 2,433 crores as on March 31, 2011 registering a growth of
During the year, the Company declared an interim dividend of Rs. 1.80 per
equity share. Various SPVs of the Company has raised project term loans to
meet ongoing construction of BOT projects. The net consolidated debt of the
Company as on March 31, 2012 is Rs. 5,250 crores compared to Rs. 3,425
crores as on March 31, 2011.The increase is primarily due to drawl of
project loan by Amritsar-Pathankot project, Talegaon- Amravati project,
Jaipur - Deoli project, Surat - Dahisar project and Tumkur-Chitradurga
The project term loans comprises of Rs. 1,300 crores by Surat-Dahisar
project, Rs. 980 crores by Mumbai-Pune project, Rs. 545 crores by Bharuch -
Surat project, Rs. 250 crores by IRDP Kolhapur project, Rs. 445 crores by
Pathankot-Amritsar project, Rs. 285 crores by Talegaon-Amravati project,
Rs. 595 crores by Jaipur-Deoli project, Rs. 470 crores by Tumkur-
Chitradurg project and balance for the other BOT projects/Short term
Word "IRB", "the Company" are interchangeably used and mean IRB Group or
IRB Infrastructure Developers Ltd., as the case may be. Statements in the
Management Discussion & Analysis describing the Company`s objectives,
projections, estimates, expectations may be "forward looking statements"
within the meaning of applicable securities, laws and regulations. Actual
results could differ materially from those expressed or implied. Important
factors that could influence the Company`s operations include economic
developments within the country, demand and supply conditions in the
industry, input prices, changes in Government regulations, tax laws and
other factors such as litigation and industrial relations.
Note : 1 Billion = 100 crore, 1 Million = 10 Lakh, 1 US $ = Rs. 50