Emphasis on infrastructure projects will create a value chain for business prospects

Ratan Lal Kashyap, Vice President, Procurement, G R Infraprojects Ltd., in an interview with B2B Purchase.

How would you rate the current state of the construction and infrastructure markets?

The infrastructure sector has been able to maintain its recovery due to the government’s focus and ambitious plans with large investments. Since this is one of the government’s primary emphasis areas, bidder involvement has skyrocketed, resulting in fierce competition among bidders and, at times, unviable bids by a few companies, which could result in project non-completion or low-quality work. It has, however, aided all ancillary businesses, such as equipment vendors, consultants, steel, cement, and other building material supplies, in overcoming the terrible phase and resuming normal operations. The infrastructure industry has created a slew of new jobs in both core and peripheral businesses, as well as increased market liquidity.

What are the major determinants of productivity in your industry? 

Major materials prices, including steel, cement, bitumen, and HSD, which are used in big volumes in industry, have increased by 50 percent to 100 percent, wreaking havoc on enterprises’ cash flows and putting them in unviable economic situations. Companies are suffering as a result of such a large increase in major material prices; the industry is also experiencing a demand-supply imbalance at times. Domestic logistics costs have increased dramatically as a result of the increase in HSD price, and international logistics/shipping costs have increased three to five times as a result of the increase in HSD price, further impacting the cost of imports. Additionally, scarcity of vessels and containers has caused delivery timelines to be delayed, impacting the cost of imports.

What kind of policies, rules, and investments are needed to help the market recover?

The policies and regulations must be reviewed on a regular basis by the relevant authorities, given the frequently changing market scenarios and market dynamics. Few pricing characteristics have been adversely impacted, as domestic players have taken advantage of growing international pricing parity and demand, as well as supply imbalances in the market. Opportunists must be adequately punished by establishing norms that clearly outline the government’s breaches. Also, bidding criteria should be revised so that only bidders with a good track record are considered, and only bids with financial feasibility are considered.

How would you rate the construction and infrastructure sector’s growth prospects over the next five years? 

One of the key factors could be political stability in our country and states, with a focus on infrastructure development. The infrastructure sector has become the government of India’s primary focus. India intends to spend $1.4 trillion on infrastructure between 2019 and 23 in order to ensure the country’s long-term development. The government has proposed a 5,000,000 crore (US$ 750 billion) investment in railway infrastructure by 2030. Governments should focus on international benchmarks for commuters riding on highways with all amenities along the way to help him stay focused on his deliverables and business commitments, thereby creating a value chain throughout the entire business cycle.