State highways put IRB on slow lane

IRB Infrastructure’s traffic growth for the quarter has been slower mainly because its state highway road projects showed de-growth for the second quarter, as compared to last year.

Three of the company’s state highway projects shown 2-3% de-growth. The company’s managing director, Virendra Mhaiskar, says that there are various reasons for the same.  

“There have been interior issues with smaller projects like monsoons and parallel roads. Some of the adjoining corridors have not been in shape, so that has affected,” he said.

Each corridor has its own reason for slowdown. The mining ban in Karnataka affected traffic from cargo movement in the Chitrudurgh area. The Pune-Nasik area too was impacted due to slowdown in the auto industry.

“The auto spare parts industry in the region (Pune) slowed down. Some of them are holding on to huge inventories. Those issues have impacted the localised zones,” said Mhaiskar.

In comparison, the national highways that the company operates have been performing at a much better rate.

“Our Mumbai-Pune highway grew at around 5.5 to 6%, and the traffic has been stable,” he said.

Vikash Sharda, senior manager at PriceWaterhouseCoopers said that state highways are the ones which get affected by slowdown first.

“National highways account to 40% of the total traffic, and are a major contributor. State highways act as feeder roads to national highways, as traffic flows from state highways to them. So, the impact of slowdown would be higher on state highways than national highways,” he explained.

The highways of the state that state governments seek to allot on a public private partnership model are the sectors which have a promised track record of traffic flow. However, if these highways are in trouble, the other roadways would have a much worse track record with traffic, industry analysts say.

The traffic has not been growing as expected on highway projects. Most of the projects which are currently under operation were bid for and won in 2007-08. In those times, it was expected that the country’s GDP would grow over 8%. However, now the projections have reduced to 5.5%. The traffic on the roads has a direct correlation to GDP.

“Everyone had expected growth to come down, but no one expected decline in traffic,” said Sharda.