Express profits

There are people who know what they are going to do in life right in college. Virendra D. Mhaiskar is one of them. Mhaiskar decided to join the family business of constructing and operating toll roads even as he was studying civil engineering. By coincidence, his career began just when India had unveiled the reforms of 1991, opening the gates to public-private partnerships in infrastructure. Mhaiskar was first off the block, bagging a buildoperate-transfer road (BOT) project near Mumbai in 1995.

He saw BOT roads as the future and floated IRB Infrastructure Developers in 1998. “At that time I thought this was an extremely good model to grow,” says the 38-year-old Mhaiskar. But, for the next few years, the government offered precious little by way of BOT projects. Even so, Mhaiskar could figure out that, to build and operate roads, you need to have full control on the construction.

IRB INFRASTRUCTURE

BUSINESS: Building and operating toll roads.

TURNOVER: Rs 1,021 crore

TURNING POINT: Getting to operate and maintain Mumbai-Pune Expressway in 2004.

LESS-KNOWN FACT: Family business is a leading toll-collection agency.

LEADERSHIP POSITION: Leader in operations of toll roads in India.

“There is huge potential for BOT projects in the next 15-20 years” - Virendra D. Mhaiskar, CMD, IRB Infrastructure Developers

“Delay in projects increases the cost and affects the internal rate of return of the project and the profitability,” he says. To keep costs down, IRB decided to own its construction equipment. “In road construction, where the profit margin is 8-10 per cent, having our own equipment helps us to be in a slightly better position,” he says.

For IRB and Mhaiskar, the biggest break came in 2004 when the company paid Rs 918 crore upfront to the Maharashtra State Road Development Corporation for operating the Mumbai-Pune Expressway and a parallel national highway connecting both cities. It was IRB which made the Expressway a success by ensuring that both roads would have a toll.

Today, the Mumbai-Pune roads contribute Rs 80-90 lakh every day and are IRB’s cash cows. Another toll road with a similar toll collection is the Mumbai-Surat highway, which IRB bagged this year.

Mhaiskar has decided to continue building highways on a BOT model. “There is huge potential for such projects in the next 15-20 years considering the road infrastructure,” says Mhaiskar. Currently, IRB has over 800 km of toll roads under its operations and has orders for over Rs 10,000 crore.

In highways, the focus will be on National Highway-4 (Mumbai-Chennai) and National Highway-8 (Mumbai-Delhi). Mhaiskar also plans to set up an airport on the BOT model in Maharashtra’s Sindhudurg district to tap into the tourist flood into nearby Goa. “If we are able to attract even 20 per cent of Goa’s tourists it will be big for us,” he says. The investment in the airport will be Rs 150 crore, but it has not yet decided when the project will start.

Another area IRB plans to get into is real estate, but it will not infuse cash in this business and will prefer to go for joint development where IRB will have land and another partner will be the developer. It already has around 1,250 acres along the Mumbai-Pune expressway.