Core firms cheer higher govt spending

Domestic infrastructure companies in the private sector are feeling elated over the new government's resolve for continued infrastructure spending as shown in the Common Minimum Programme (CMP).

The government investment on infrastructure development across all sectors is expected at $50 billion till 2005-06.

Besides, the National Highway Authority of India's (NHAI) highway development project has been planned with a capital outlay of Rs 54,000 crore, which includes the Golden Quadrilateral project.

According to sources, projects worth $10 billion investment is already under implementation for roads, urban transport and railways.

All eyes remain focussed on the infrastructure sector, market sources said. Companies such as ABB, BHEL, Valecha Engineering, Gammon India, Era Constructions, Jyoti Structure, IVRCL Infrastructure and Larsen & Toubro are all set to bag chunks of these government projects.

For example, Valecha Engineering has bagged projects worth Rs 300 crore mainly for road development sector.

The company has been awarded the Rs 90 crore 150 km Satara - Kolhapur project, part of the Golden Quadrilateral project. It has also bagged Rs 25 crore contract from NTPC for hydraulic piling work at its plant at Kahalgaon, Bihar.

There are ongoing projects in Delhi, Rajasthan and Uttar Pradesh. In Eastern India, it has completed Rs 60 crore Guwahati bypass project, which has been opened to the public.

The company has also ventured into a fast growing sector of construction of multi-storied buildings and towers and has completed many above-mentioned projects with distinction and ahead of schedule. The company clients include World Bank, ADB, NHAI, MSRDC, Konkan Railway etc.

The company is expected to post a 100 per cent growth in revenues in FY04 and earning guidance indicates a 20 per cent growth. Its order book position of Rs 300 crore indicates good future growth prospects.