IC August 2018 (for web)

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Vol. 08 August 2018 No. 8
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Office Bearers 2018-19 CONTENTS
President Page No.

A. Puhazhendi Editorial ........................................................................................................... 5

Imm. Past President Brain Vita by P. R. Mundle .............................................................................. 6
H. N. Vijaya Raghava Reddy
Tunnel Construction ........................................................................................ 7
Vice-Presidents – D. L. Desai (Shankarbhai)
Ch. Ramakotaiah
Save Environment With Green Construction ................................................ 13
M. Thirusangu – Kishore Kaushal
O. P. Sharma
Pratap B. Salunkhe Announcement - glasspro India 2018 ........................................................... 14
Rajendra Singh Kamboh
BAI’s Achievement – Rising Cement Prices ................................................. 15
Hon. Gen. Secretary
Neerav Parmar BAI News ...................................................................................................... 22

Hon. Gen. Treasurer Photo Gallery ................................................................................................ 23
Pradeep G. Nagawekar
BAI’s parleys with Government ..................................................................... 27
‘Indian Construction’
Committee 2018-19 Waiting for Revival ........................................................................................ 33
Chairman
Neerav Parmar Details of listed Real Estate Company's operation for the year 2018 .......... 35

Members Details of listed Construction Company's operation for the year 2018......... 36
Mohanlal S. Katarya
News on the Road ........................................................................................ 38
Narendra Kumar
IC - 52 - 08 Legal Corner ................................................................................................. 43

Announcement - The Big 5 Construct India Exhibition And .......................... 46
National Conference on GST vis-à-vis Building and Construction Industry

Single copy : ` 100 The Builders’ Association of India as an organisation is not responsible
Annual Subscription for the statements made by the individual authors in this bulletin.

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INDIAN CONSTRUCTION 4 August 2018

Editorial

Home sales across India’s top seven cities have shown a rise of 25% in the first half of 2018 due
to boosting of consumer confidence by the implementation of the Real Estate (Regulation and
Development) Act 2016 popularly known as RERA which came into force in its entirety on
May 1, 2017.

Prior to RERA, most of the developers of real estate projects were taking buyers for granted and
they used to divert funds collected from one project in to another project and there was no
accountability about delivery of projects.

RERA was enacted with the objective to set in motion the process of making necessary operational
rules and creation of institutional infrastructure for protecting the interest of consumers and
promoting the growth of real estate sector in an environment of trust, confidence, credibility
and timely execution of projects.

The developers across the real estate industry are strategizing their business portfolio to align
with strict compliances of RERA and ensuring transparency and increase in investment thereby
changing the entire landscape of real estate sector

Companies which already had a strong corporate governance and compliance system are
benefitting from the renewed interest in the real estate as these are now being translated in to
sales for such companies and the consumers are now aware of what they are buying.

RERA has made it difficult for unorganised and fly by night developers and branded builders
have doubled their market share. The top 10 Branded builders across the seven cities have seen
their sales climbing significantly and they have increased their launch of new projects.

An important aspect of RERA is that each state and union territory were supposed to have their
state rules notified, establish a Regulatory Authority (RA) and appellate authority which will
act as an adjucating body for speedy dispute redressal and also have a state specific RERA
website for displaying the details of regstered projects, by 31st July 2017.

But even with the passage of one year of RERA, it is still work in progress and needs sustained
efforts from all the state governments in implementing the true spirit of the Act so that buyers
across the country can get its benefits.

Even after one year of implementation of RERA, 8 states have not yet notified their rules, most
of the states have an interim regulator and only 13 states have hosted their websites. Only
Maharashtra, Punjab and Madhya Pradesh states have established permanent RA.

Some of the states have diluted the definition of Ongoing projects and hence these projects remain
outside the ambit of RERA. All the state governments should have the political will and ensure
that their state RERA authorities are functioning full fledged and bring each and every project
under the purview of the Act.

The process of statutory approvals in each of the states is not time bound and the developers are
at the mercy of state authorities at various stage of the project and due to which there is lot of
uncertainity in completion of the project.

The central Act should be amended by bringing the statutory authorities also under the ambit of
the RERA so that they have fixed timelines to accord approval to the project and only thereby the
true benefits of the Act will be achieved.

The long standing demand of real estate sector to have a single window disbursal of all statutory
approvals should be immediately implemented by the Union Government and there by increasing
the ease of doing business which has been the cornertones of the current Government.

INDIAN CONSTRUCTION NEERAV PARMAR

5 August 2018

SUBSCRIPTION FORM Once upon a time there
was a king who
To, wanted to go fishing.
Circulation Department,
‘Indian Construction’ He called the royal
Builders’ Association of India
weather forecaster and
G-1/G-20, Commerce Centre,
J. Dadajee Road, Tardeo, Mumbai-400034. enquired as to the

Dear Sir, weather forecast for
Please enrol me/us as a subscriber OR renew
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assured him that there
Enclosed is a sum of ` 1000 sent by a Cheque/
Demand Draft no. ...................... dated .................. was no chance of rain in the coming days.

drawn on .......................................................... bank So the king went fishing with his wife, the
in favour of “Builders’ Association of India” as queen. On the way he met a farmer on his
my/our subscription for the 12-month period donkey. Upon seeing the king the farmer said,
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huge amount of rain to fall in this area".
Given below are the details useful for mailing
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replied: "I hold the palace meteorologist in high
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experienced professional. Besides, I pay him
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forecast. I trust him and I will continue on my
Address : ...................................................................... way." So he continued on his way.

....................................................................................... However, a short time later a torrential rain
fell from the sky. The King and Queen were
....................................................................................... totally soaked and their entourage chuckled
upon seeing them in such a shameful
Tel. : ............................................................................... condition.

Fax : ............................................................................... Furious, the king returned to the palace and
gave the order to fire the weatherman at once!
E-mail : ..........................................................................
Then he summoned the farmer and offered him
Thanking You, the prestigious and high paying role of royal
forecaster.
Yours faithfully,
The farmer said, "Your Majesty, I do not know
anything about forecasting. I obtain my
information from my donkey. If I see my
donkey's ears drooping, it means with certainty
that it will rain."

Signature So the king hired the donkey.

Place : ...................... Date : ............................ And so began the practice of hiring asses to
work in the government and occupy its highest
*For renewals, please quote the number above your address. and most influential positions.

08-2018

INDIAN CONSTRUCTION 6 August 2018

Tunnel Construction

D. L. Desai (Shankarbhai)

Tunnelling construction business is capital intensive, been a key feature of the tunnelling industry.
technology driven but risky. As a result very few
contractors like H.C.C., L&T, Jaiprakash Associates, Tunnelling depends heavily on geotechnical
Patel Engineering, IACON, AFCON, and investigations which offer the best input in
Continental Construction are dominating this identifying the best input in identifying the most
business. Recently foreign players such as Strabag, efficient technique for tunnel excavation. The
CEW Infrastructure Ltd. have entered the field. surveys assess the three most crucial factors for
ensuring the smooth execution of tunnel construction
Tunnel development in India has accelerated over - groundwater conditions, rock quality, and stress
the past decade or so. This is driven by increased state of the land. Further, the geotechnical
investments in the driven by increased investments investigation assesses other factors such as regional
in the hydropower, railway, road and highway, tectonics, palaeo, stress history, etc.
metro rail, and water and sewerage sectors.
According to India Infrastructure Research, over Besides geotechnical investigations, another factor
1,600 tunnels spanning over 2,750 km are at different that greatly influences the choice between
stages of development - completed, under mechanised and non-mechanised tunnelling is cost.
construction and awarded. In terms of length, about Several studies reveal that project components such
63% of this tunnel length has been completed, 36% as material, equipment, transport and personnel tend
is under construction and the remaining 1% has been to very significantly in terms of cost across various
awarded recently. Sector-wise, hydropower has the techniques of tunnel construction. Mechanised
maximum length of tunnels (over 1,484 km), tunnelling usually involves higher equipment and
followed by railways (over 512 km), irrigation, water transportation costs in comparison to the
supply and sewerage (over 332 km), metro rail (over conventional tunnelling technique. However, the
202 km) and roads (over 95 km). former offers speedy completion of projects, thereby
allowing faster inflow of revenues.
In the past few years, India has seen the development
of several challenging projects India's longest road New designs, technologies and construction
tunnel, the 9 km landmark Chenani-Nashri tunnel techniques for tunnelling are becoming a growing
on the Jammu-Srinagar national highway, was area of interest for the industry. Advanced
operationalised in April 2017. The 8.8 km Rohtang mechanised techniques such as the use of TBMs and
tunnel on the Leh-Manali highway is being built at the New Austrian Tunnelling Method (NATM) are
an altitude of 10,000 feet. The world's longest tunnel gaining prominence with increased tunnelling
built using tunnel boring machines (TBMs), the 43.5 activity in congested urban spaces, primarily for
km Alimineti Madhava Reddy (AMR) project is metro rail and urban water supply projects.
currently under construction in Andhra Pradesh. Typically, these mechanised techniques involve
Another ongoing project in the state is the Godavari higher equipment and transportation costs in
lift irrigation tunnel, Phase III, with a tunnel length comparison to conventional methods like drill-and-
of 84.5 km. India's first underwater 520 metre twin blast and cut-and-cover. However, they have higher
tunnel is also being constructed as a part of the 16.6 advanced rates (the average rate of TBM progress in
km long East-West metro project in Kolkata. While a specified period of time), and hence save
the first underwater tunnel is complete, the second construction time. Also, traffic disruptions, quantity
one is expected to be completed soon. of debris and associated environmental impacts are
much less when mechanised methods are used.
The structure of the tunnelling industry is constantly
evolving, with the entry of new domestic and foreign For the construction of water supply and sewerage
players. Domestic players are entering into tie-ups tunnels, a variety of new trenchless technologies such
and strategic alliances with global players to bring as micro-tunnelling and horizontal directional
in the latest technology and equipment. On the global drilling are being deployed. Further, special
front too, consolidation and business expansion has techniques and methods such as the DRESS

INDIAN CONSTRUCTION 7 August 2018

(drainage, reinforcement, excavation, supports and employed in laying water supply pipelines and
solution) are increasingly being considered as a sewers in congested areas where tunnels need to be
viable solution for tunnelling in challenging rock and constructed under roads with high traffic volumes.
soil conditions. There is also an increased emphasis This method is especially used for constructing
on pre-excavation investigation and surveys. tunnels with diameters ranging from 600 mm to 3,000
Overall, the conventional drill-and-blast method of mm. Micro-tunnelling is also used for laying large
tunnelling continues to remain the most widely used diameter gravity sewers in cities where open-cut
technique for the development of tunnels. The installation is difficult; for the installation of product
technique is primarily being used in the hydropower, pipelines in areas where the soil condition does not
road and railway sectors, where tunnels are mostly allow horizontal directional drilling; and for long
built in the Himalayan region and the Western Ghats. individual crossings across rivers. The use of this
technology has gained momentum in the past two
In addition, micro-tunnelling, also known as decades. Mumbai was the first city to test this
trenchless or pipejacking technology, has gained technique, in the World Bank-funded Mumbai
importance in recent years, with the technique being Sewage Disposal Projects.

Sr. Method in Table Method in Method in Total
No. Sector Percentage Method in percentage percentage
conventional percentage
TBM NATM
Drill & Blast

1. Irrigation and water supply 56 34 10 - 100
68 4 5 99
2. Hydropower 22 - 85 9 100
64 - 34 98
3. Metro 6 50 3 45

4. Railways -

5. Roads 3

Tunnel construction in India has picked up pace in equipment providers. Sector-wise, hydropower has
recent years with greater impetus being given by the dominated the tunnelling market, with the largest
government to key infrastructure sectors such as length of tunnels constructed in the country, and
hydropower, railway, road, metro rail and irrigation, accounting for nearly 39% of the total upcoming
water supply and sewerage (IWSS) - the primary projects. This is followed by the IWSS and railway
growth drivers of the tunnelling market. Several sectors with shares of 21% and 18% respectively.
large-scale projects have recently been announced However, given the focus on metro rail development
and planned for development, offering ample across metropolitan cities, the sector is likely to offer
opportunities to contractors, material suppliers and significant opportunities in the immediate future.

Table

Details of upcoming tunnelling projects

Sector Projects State Tunnels Length
(No.) (km)
Hydropower Dibang Hydro Power Project Arunachal Pradesh 1 5.50
IWSS Sawalkote Hydro Power Project Jammu & Kashmir 1 1.50
Subhanshri Middle Hydro Power Project Arunachal Pradesh 1 4.00
Upper Siang Hydro Power Project Arunachal Pradesh 30 22.00
Mahi-Luni Intra-State Link Project Rajasthan 2 290.00
Upper Krishna-Bhima Intra-State Link Project Maharashtra 5 178.53
Par-Tapi-Narmada Link Project Maharashtra 2 5.50
Mulshi-Bhima Intra-State Link Maharashtra 1 3.30

INDIAN CONSTRUCTION 8 August 2018

Sector Projects State Tunnels Length
Railways (No.) (km)

Metro Rishikesh-Karanprayag Railway Project Uttarakhand 81 105.00

Roads and Hubli-Ankola Railway Project Karnataka 29 23.00
Highways
Kolhapur-Rajapur Railway Project Maharashtra NA 19.90

Kanhangad-Kaniyur New Rail Line Project Kerala 1 2.00

Delhi Metro, Phase IV Delhi - 37.01

Varanasi Metro Rail Project Uttar Pradesh - 23.47

Greater Noida-IGI Airport Metro Rail Project Uttar Pradesh, Delhi - 16.50

Meerut Metro Rail Uttar Pradesh - 11.50

Char Dham and Hemkund Sahib Pilgrim routes Uttarakhand --

Goregaon-Mulund Link Road Project Maharashtra 1 5.00

Airoli-Kalyan Tunnel Project Maharashtra 1 1.70

Holi-Uttrala Tunnel Project Himachal Pradesh 1 7.00

Source: India Infrastructure Research.

Overall, the tunnelling market in the country has plan which includes a new south parallel runway,
expanded significantly in recent years, with a taxiways and apron, second terminal building,
number of projects planned for implementation. This eastern connectivity tunnel and related utilities. "If
can be attributed to the impetus being given to key AERA slashes UDF, we may have to relook at some
infrastructure sectors leading to a greater demand expansion plans like the eastern connectivity tunnel
for tunnel construction. project due to lack of funds," he said.

No tunnel route to Kempegowda International The tunnel underneath the under-construction
Airport if user fee is cut second runway was to be linked with State Highway
104 and East Cargo Terminal to give a third access
The fate of Bangalore International Airport Ltd's point for passengers. Currently, there are two access
(BIAL) ambitious eastern connectivity tunnel project, points: through Trumpet Interchange on Ballari Road
planned as the third access route to the airport, and the newly opened South Western Road. With
hinges on the proposed slashing of User the number of air passengers likely to increase from
Development Fee (UDF) to be finalised by the the present 26 million to 70 million by 2030, traffic
Airports Economic Regulatory Authority (AERA). congestion to and from the airport will get worse.
If UDF collected from passengers at Kempegowda
International Airport is slashed, BIAL may drop the "The eastern tunnel was planned considering the
tunnel project due to lack of funds. BIAL had airport's future growth. It would have also reduced
proposed a 2.67-km tunnel at a cost of about Rs 1,200 traffic on the Hebbal flyover by 30%-40% since about
crore to help passengers from East Bengaluru reach 98% of traffic gets choked there" said Marar.
KIA faster.
'Fares won't reduce'
BIAL wants present UDF till March 2021
If AERA slashes UDF for domestic and international
The Airports Economic Regulatory Authority passengers this year, it will result in 'tariff shock' for
(AERA) proposed slashing UDF for domestic commuters from the next control period, says BIAL.
passengers from Rs 306 to Rs 79.20 and for The UDF is revised once every five years based on
international passengers from Rs 1,226 to Rs 316.80. investment in an airport. The UDF in the third control
While this tariff is expected to come into effect from period (April 1, 2021 to March 31, 2026) would be
next month, BIAL wants the present UDF to be higher.
continued till March 2021.
AERA will soon finalise UDF for the second control
BIAL managing director and CEO Hari Marar said period which was due for renewal in April 2016.
it has proposed a Rs 12,000-crore airport expansion Tariffs for the second control period from April 1,

INDIAN CONSTRUCTION 9 August 2018

2016 to March 31, 2021 will come into effect on He said reduction of UDF will not reduce price of
September 1. "If AERA maintains the same tariff for flight tickets as fares are based on supply and
the remaining 2.5 years of this control period, the demand. "It's a myth that ticket prices will decline
amount will be adjusted to the next control period after UDF reduction," said Marar, adding "Collection
to minimise tariff shock for passengers in the next of the same tariff will ensure sufficient cash flow for
control period. There will be a sudden spike in tariff BIAL to ensure timely capacity investment."
in the next control period if we don't maintain the
same tariff till March 2021," said Marar. Source: Times of India, 2-8-2018

BMC to construct 2 water tunnels for Rs 1,875 crore

While one of the tunnels will be from Chembur to Meanwhile, the Chembur-Wadala-Parel tunnel, 9.7
Trombay, the other will run from Chembur-Wadala- km long and 2.5 m wide, will help improve water
Parel. The project will take approximately six years supply in areas of Sion, Matunga and Wadala (F
to complete. north ward), Parel, Sewri and Naigaum (F south
ward). It will also benefit a few areas in Byculla (E
The Brihanmumbai Municipal Corporation (BMC) ward) and Kurla (L ward). This tunnel will start from
has proposed the construction of two underground the same spot from where Chembur-Trombay tunnel
water tunnels to boost water supply in parts of starts, and will pass via Prateeksha Nagar in Sion
central suburbs and the city. While one of the tunnels and from under Sadakant udyan in Parel. The
will be from Chembur to Trombay, the other will Chembur-Wadala-Parel water tunnel will be
run from Chembur-Wadala-Parel. The project will constructed at a cost of Rs 1,125 crore.
take approximately six years to complete.
The entire project of constructing the two tunnels
The first tunnel between Chembur to Trombay, 5.5 will cost the civic body Rs 1,875 crore. The proposal
km long and 2.5 m wide, will pass from under the for the same was tabled before the standing
Hedgewar udyan (garden) at Amar Mahal in committee last week. However, the approval of the
Chembur. It will help improve water supply in the project is still pending. The work will begin only after
areas of Trombay and Chembur (M west ward), the approval of the standing committee, following
Govandi and Mankhurd area (M east ward). This which the work is estimated to be completed in six
tunnel will cost Rs 750 crore. years.

Source: Indian Express, 13-8-2018

Cube Highways in talks for India's longest road tunnel

Chenani-Nashri road tunnel's current owner ITNL is exploring sale of project
to bring down debt, boost financials

Infrastructure company Cube Highways has begun payments from last year. Cube Highways has shown
talks with IL&FS Transportation Networks Ltd an interest in the asset and they are currently
(ITNL) to acquire the latter's 9.2-km Chenani-Nashri engaged in talks with ITNL," said one of the people
road tunnel project in Jammu & Kashmir, two people cited above, requesting anonymity as the talks are
aware of the development said. The tunnel on the private. According to the second person cited above,
Jammu-Srinagar highway links Chenani in ITNL is exploring sale of the project to bring down
Udhampur district with Nashri in Ramban district, its debt burden and improve its financials. He too
reducing travel distance from 41km to 10.9km. It is requested anonymity.
the longest road tunnel in India, which was opened
in April 2017. "The tunnel project has a debt of around ?6,000 crore.
A sale of the asset will help bring down overall debt
"ITNL has been looking at selling off the tunnel position of the company," he said.
project for some time. It is an annuity toll road, so
one doesn't have to bear traffic risk and that makes Cube Highways is backed by global infrastructure
the project attractive. It started generating annuity investor I Squared Capital.

INDIAN CONSTRUCTION 10 August 2018

Construction on the National Highways Authority Founded in 2012 by former Morgan Stanley
of India (NHAI) annuity project was started by ITNL, executives, I Squared Capital is an independent
the roads arm of the Infrastructure Leasing & global infrastructure investment manager which is
Financial Services (IL&FS) group in 2011, and focused on energy, utilities and transport in North
completed in early 2017. America,?Europe?and some high-growth
economies. It has offices in New York, Houston,
At the end of 2017-18, total long-term borrowings of London, New Delhi, Hong Kong and Singapore.
ITNL stood at ?27,086.8 crore on a consolidated level,
up from the previous year's ?23,694.6 crore. The road Cube Highways was set up by I Squared Capital
developer's interest outgo also increased in 2017-18 along with International Finance Corp. (IFC). The
to ?3,748.9 crore, from previous year's ?3,086.3 crore, platform currently owns and operates over 1,700
company's filings with the stock exchanges show. lane-km of highways in India across a diverse
portfolio of toll and annuity-based roads, as in
This week, several rating agencies such as Icra, December 2017.
Brickwork Ratings and India Ratings & Research
downgraded the debt of ITNL. "Icra had earlier The platform has attracted the attention of several
placed the rating on watch with developing investors keen to invest in the Indian infrastructure
implications with key monitorable being a) equity sector.
infusion, b) asset monetisation and c) realization of
claims pending with authorities. The downgrade in Last December, Mitsubishi Corp., which leads a
ratings is on account of the company's failure to Japanese consortium comprising East Nippon
achieve any meaningful progress on all three Expressway Co. Ltd and Japan Overseas
monitorable, thereby resulting in stretched liquidity Infrastructure Investment Corp. for transport and
position," Icra said in its report. urban development, had said that it had agreed to
acquire a 20% stake in Cube Highways. In November
ITNL managing director Ramchand Karunakaran 2017, Cube Highways had sold a minority stake to
declined to comment on the development. Emails sovereign wealth fund Abu Dhabi Investment
sent to Gautam Bhandari, partner at I Squared Authority.
Capital, and Harsh Agrawal, managing director and
India head at I Squared Capital, did not elicit any Source: Mint, 27-7-2018
response.

Ladder from deepest tunnel

Passengers using the East-West Metro will have to evacuation. Safety norms recommend a maximum
climb 300 steps to safety through a ventilation shaft distance of 762m between two evacuation points.
13 storeys tall in the event of emergency evacuation Usually, stations are the evacuation points and
because of a fire or any other threat. ventilation shafts are created where the distance
between two stations is more than recommended.
The shaft at Strand Road will be 44m deep till the
undercroft level, which officials of the Kolkata Metro The ventilation shaft at Strand Road, built with a
Rail Corporation said is the deepest that any budget of Rs 45 crore, is likely to be ready in a year's
underground rail project in India has gone. time. While that will be the deepest point of any
Passengers will have to climb up 40m or 13 storeys Metro route in the country, the East-West Metro in
from the tunnel level. Howrah will be 30m or 10 storeys underground. This
is also a record for an underground Metro station.
The East-West line running from Salt Lake's Sector
V to Howrah Maidan will have another ventilation Metro spoke to architects and engineers of Afcons,
shaft at Subodh Mullick Square. The depth of this the construction company building the ventilation
shaft won't be more than 25m, according to an official shaft, to give the low-down on the steepest
of the implementing agency for the project. evacuation route anywhere in the country.

Shafts are not only used to provide ventilation to Steeped in safety
tunnels during an emergency, but also for

The ventilation shaft, to be used for evacuation if a

INDIAN CONSTRUCTION 11 August 2018

Elevators were not considered because of safety
reasons. "The guidelines of the National Fire
Protection Association prohibits the use of an
elevator for emergency evacuation in a public area,"
the official said.

The flight of stairs will have 10 landings for
passengers to catch their breath during evacuation.

Tunnel ventilation

Above the ground, the ventilation shaft will be linked
to a three-storey building where two giant fans will
be installed for emergency tunnel ventilation.

A moving train usually draws fresh air into the
tunnel and pushes out the warm air. But if a train is
stranded, ventilation stops. This is when the two fans
over the ventilation shaft will come into play. One
of them will suck in warm air or smoke out of the
tunnel. The other is meant to pump in fresh air.

Pumping station

fire is spotted or a train is stranded for a prolonged The shaft will also act as a drainage pumping station.
period, will be linked to the two tunnels through In the event of the tunnel walls under the Hooghly
cross passages with fireproof doors. springing a leak, water will accumulate in a pit
below. A 1.8m high pump placed 42m below ground
level will suck out the water. In the event of a fire,
water used to douse the flames will be pumped out
in a similar manner, an engineer said.

Source: The Telegraph, 13-8-2018

INDIAN CONSTRUCTION 12 August 2018

Save Environment With Green Construction

Kishore Kaushal

New Cement Research are in progress through
which the constructed concrete
Portland cement is made by a calcareous material, structures will not be called the
such as limestone or chalk, and from alumina and Concrete jungle. Like green forest they will absorb
silica found as clay or shale. The process of CO2 from the air. However, this must be kept in
manufacture of cement consists essentially of mind there is no replacement of trees. To keep the
grinding the raw materials, mixing them intimately balance of nature trees must be planted to fill the
in certain proportions and burning in a large rotary gap of cut trees. Unfortunately this is not being done.
kilin at a temperature of up to about 14500C. When For example at Dehradun (Uttarakhand) city 10,000
the material sinters and partially fuses into balls trees were cut in one year. To replace them only 200
known as clinker, the clinker is cooled and ground trees were planted. This is the situation of whole
to a fine powder, with some gypsum added, and the India.
resulting product is the commercial portland cement
so widely used throughout the world. The The new cement will be marketed after testing its
manufacturing of this cement release in the performance of strength, durability and other
atmosphere 0.8 tonnes of CO2 in the production of properties. This will take quite a long time. In the
one tonne of cement. When water is mixed with mean time we can save our environment by the use
cement and aggregates in the production of concrete of Water Reducers in the production of concrete.
for use in the construction, each tonne of cement can 100% concrete produces in Japan and Canada
absorb up to 0.4 tonnes of CO2, but that still leaves contains Water Reducers/Air-entraining
an overall carbon footprint per tonne of 0.4 tonnes. admixtures, where as in India about 2% of its
In the year 2009 about 2000 million tonnes of CO2 concrete contains Water Reducers. If it is increases
was emitted in the atmosphere in the production of to 25%, the results will be as given below:
cement.
Concrete with water reducers
The above problems have been overcome from
researches by Nikolas Vlasopoulos, Chief Scientist In India 0.93 kg of CO2 is emitted in the production
and his colleagues at Imperial College, London, and of one kg of cement. In the financial year 2009-10
they have set up a company of Novacem's cement India produces 200 million tonnes of cement. In the
which is making cement from magnesium silicate production of this cement 186 million tonnes of CO2
that absorb more CO2 as it hardens. Valaspoulos was emitted in the atmosphere during financial year
responded that magnesium slicates are abundant of 2009-10.
worldwide with 10,000 billion tonnes available. He
is confident that material will be strong enough for The availability of water in India per person per year
use in buildings but acknowledge that getting licence in 1950 was 5177 cu.m. In the year 2009 it is reduces
to use it will take several years of testing. to 1700 cu.m.

Novacem's cement, which has a patent pending on If 50 million tonnes cement in making concrete uses
it, uses magnesium silicate which emits no CO2 water reducers 7500000 tonnes of cement can be
when heated. Its production process also runs at saved. 3750000 kl of potable water will be saved and
much lower temperature around 6500C. This leads the saving of Rs. 3300 crores per year to construction
to total CO2 emission of upto 0.5 tonnes of CO2 per industry. This amount is worked out after adjusting
tonne of cement produced. But the Novacem cement the cost of water reducers. Less cement used means
formula absorb for more CO2 as it hardens about less cement required to be produce by the cement
0.6 tonnes of CO2 from the air. This is competitive factories resulting 6975000 tonnes of CO2 will be
with the Amrican Company of Caera cement. prevented to be emitted to the atmosphere. These
Concrete with olivine as a supplement material can are worked out with an average saving of 15%
absorb large quantities of CO2 to produce green cement and 15% water.
concrete.
CO2 emission is word problem, but for India in
addition to CO2 it has problems of Air, Water, Soil,

INDIAN CONSTRUCTION 13 August 2018

Food and Noise pollutions. Less density populated his or her efforts to save the environment from
countries may cope with these problems but for India pollution. Those involve in the construction activities
it is of the top concern. The population figures of can contribute their share by proper design of
2009 is, India 350 person per sq.km, China 132 person concrete Mixes with Water Reducers.
per sq.km and USA only 34 person per sq.km. The
figures of 2006 CO2 emissions are USA 658.60 tonnes Reference:
per sq.km, China 611.76 tonnes per sq.km and India
459.35 tonnes per sq.km. Every one should contribute 1. Kishore Kaushal - Concrete Mix Design with
Superplasticizers, paper in Civil Engineering Portal.

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INDIAN CONSTRUCTION 14 August 2018

BAI’s Achievement

Rising Cement Prices

– BAI’s stand vindicated AGAIN

NCLAT upholds order levying Rs.6,307 Crore penalty on cement manufacturers

Builders Association of India (BAI) filed a complaint of CCI, approached to Competition Appellate
with the Monopoly & Restrictive Trade Practice Tribunal to seek a stay on deposit of the penalty
Commission (MRTPC Commission) in February 2006 amount and for setting aside the orders of ‘Cease &
with regard to involvement of cement manufacturers Desist’ in June / July 2012.
in unfair trade practices / cartelization and requested
the Commission to investigate the matter. Later on On 17th May 2013, the Competition Appellate
Commission sought some more information in Tribunal passed the interim order of depositing 10%
support of complaint which were made available to of the penalty amount imposed by the Commission
them in November 2006. MRTPC registered the (relevant portion of the order is given below)
complaint vide case RTPE-52/2006. Consequent
upon coming into existence Competition “In that view, we find that there is a prima-facie case for
Commission of India (CCI) in the year 2009, the case granting of stay at least in respect of the penalties, which
was transferred to CCI. are of very substantial nature. The total penalties would
come in the range of Rs.6000 crores. While inflicting the
In July 2010, BAI filed another complaint with the penalties, the CCI has also taken into consideration, not
CCI alleging unfair trade practices being adopted by only the 10% turnover, gross-turnover and other factors,
the cement manufacturing companies in jacking up it has also taken into consideration the net profits earned
artificially the price of cement. CCI registered the by these appellants, which are to say the least fabulous.
complaint as Case No.29/2010 and investigated the The Commission has chosen to impose the penalty at 0.5
matter. The Director General (Investigation) times of the net profit for 2009-10 that too from 20th of
investigated the matter and submitted his report to May, 2009. It is pointed out by the Commission that the
CCI. CCI forwarded the investigation report to the amount of 3 times of net profit calculated, is higher than
respective companies and directed them to file their 10% of the average turnover. In that view, the
replies / objections with the findings of the DG(I). Commission has inflicted the penalties of 0.5 times of the
The case was heard by CCI on 21st, 22nd & 23rd net profit for one year that is from 2009 to 2010 that too
February 2012. CCI passed the order dated 20th June taking from 20th May, 2009 and 2010-11. Under such
2012, declaring 10 cement companies along with circumstances, we would chose to grant stay to the
Cement Manufacturers Association (CMA) penalties, however with a condition that the appellants
indulging into unfair trade practices and ordered to deposit 10% of the penalties inflicted. We make it clear
deposit Rs.6307.32 Crore, as penalty within 90 days that the deposit of the penalty should be within one month
from the date of the order and directed companies from today. We also make it clear that if the penalties are
to ‘Cease and Desist’ from indulging in such not so deposited, the appeal shall be treated as dismissed
activities in future. without further reference to the Court.”

CCI by its order dated 30th July 2012, in the case of Thereafter, all the cement companies approached the
RPTE-52/2006, found 12 cement companies to be Supreme Court of India for seeking stay on the orders
indulging into unfair trade practice. Since penalties of the Tribunal dated 17th May 2013 to deposit 10%
were already imposed on 11 companies including of penalty amount imposed by the Commission, The
CMA other than Shree Cement Ltd. in Complaint matter was heard in detail on 12th June 2013 but the
No.29/2010, a penalty of Rs.397.51 Crore was levied Hon’ble Court refused to intervene in to the interim
on Shree Cement Ltd. with ‘Cease & Desist’ order orders but extended the last date of deposit of the
for not indulging in such practice, in future. penalty amount from 16th June 2013 to 24th June 2013
with the directions that the amount of penalty may
All the cement companies, aggrieved with the orders be kept in the form of Fixed Deposits in the separate
accounts of the each company

INDIAN CONSTRUCTION 15 August 2018

The matter was argued in detail on the technicalities, The Cement companies started filing appeal in
in the Tribunal in October / November 2015 and the Competition Appellate Tribunal against the order of
Tribunal in its order dated 11th December 2015, CCI dated 31.08.2016. The Tribunal directed all the
allowed the appeals and remanded the orders of the cement companies to deposit 10% of amount of
Commission for passing fresh orders. The relevant penalty imposed by the CCI before their appeals are
portion of the orders are reproduced below :- taken up for consideration. Accordingly, the cement
companies deposited the 10% of the amount of
98. In the result, the appeals are allowed. The impugned penalty amount as reflected in the orders of the CCI.
order is set aside and the matter is remitted to the
Commission for fresh adjudication of the issues relating Arguments started in the Tribunal from 8th March
to alleged violation of Sections 3(3)(a) and 3(3)(b) read 2017. As agreed by all the cement companies except
with Section 3(1) of the Act by the appellants. The M/s. Shree Cement Ltd., the issue of Ambuja
appellant shall be entitled to withdraw the amount Cements Limited in Appeal No.61/2016 will be
deposited by them in compliance of the interim order treated as lead case and other companies will be
passed by the Tribunal. argue the matter before the Tribunal, if required, only
on specific point which have not been covered in the
99. The Commission shall hear the advocates/ arguments made by the counsel of M/s. Ambuja
representatives of the appellants and BAI and pass fresh Cement Ltd.
order in accordance with law. We hope and trust that the
Commission shall pass fresh order as early as possible but M/s. Shree Cement Ltd. argue the matter separately.
within a period of three months from the date, which may
be notified after receipt of this order. The matter was again listed for hearing on 11th, 12th
& 13th April 2017. When the proceedings in the
100. The parties shall be free to advance all legally Tribunal begin, Mr. T. Srinivasa Murthy, learned
permissible arguments. They may rely upon the counsel for M/s. Ramco Cements Limited (Appeal
documents, which formed part of the record of the Jt. DG Nos. 54 and 64 of 2016) informed the Tribunal that
or which may have been filed by them before the in Civil Appeal Nos. 4300-4301 of 2017, the Hon’ble
commencement of hearing on 21.02.2012. The parties shall Supreme Court has stayed further proceedings till
also be free to press the applications already filed before the next date of hearing i.e. 2nd May, 2017.
the Commission. However, no application, which may be
filed hereinafter for cross-examination of the persons, Since the appeal came out of the case which was part
whose statements were recorded by the Jt. DG or for any of the bunch matters filed against the impugned
other purpose shall be entertained by the Commission. order dated 31.08.2016 of the Competition
Commission of India, the Tribunal consider it
The CCI, in its meeting held on 17th December 2015, appropriate that all the cases led by Ambuja Cement
discussed the orders passed by the Tribunal on Limited were adjourned for 4th May, 2017 for further
11.12.2015 and in accordance with the directions directions.
contained at Para No.99, listed the matter for final
hearings from 19th Jan to 21st Jan 2016, as conveyed Government of India closed Competition Appellate
vide CCI Letter No.1(29)/2010Sectt & 1/ Tribunal and all the matters pending for decisions
RTPENo.52)/2006/Sectt dated 11.01.2016. Since the in the Competiton Appelate Tribunal were
arguments could not be completed in three days as transferred to National Company Law Appellate
scheduled, CCI allowed the arguments to continue Tribunal (NCLAT).
on 22nd January 2016 which was kept reserved day
for continuing the arguments in case the arguments Bunch of cement appeals that were being heared in
are not completed in 3 days. the Competition Appellate Tribunal came up for
hearing in the NCLAT on 12th July 2017. Due to
The Competition Commission of India passed fresh paucity of time the appeals could not be heard by
orders on 31.08.2016 and found cement companies the Hon’ble NCLAT and the appeals were fixed for
of guilty of acting in concert and involved in the final arguments on 3rd, 4th & 5th August 2017, at the
cartel. The Commission kept the amount of penalty, request of the Senior Counsels.
same for all the companies, as imposed on them in
its earlier order in the year 2012 and directed them It was pleaded before bench that the leading case in
to deposit the penalty amount within 60 days from the matter will be of Ambuja Cement Limited and
the date of order. other companies will plead / make their submissions
before the bench where there is difference and / or

INDIAN CONSTRUCTION 16 August 2018

company specific matter. Mr. C.A. Sundaram, respective written submissions by the next date.
learned Senior Counsel appearing on behalf of
Ambuja Cement Limited argued the matter on On 11th October 2017 Mr. Salman Khurshid did argue
3rdAugust, 4th August & 8th August 2017 and the matter for a brief time. Some of the Appellants
concluded his arguments on 8th August. Counsels filed their written submissions by 11th October 2017
appearing on behalf of other companies argued the which were kept on record. Tribunal further noted
matter on 9th & 10th August 2017. All the appellant that hearing has already been concluded and
completed their arguments / submissions on 10th reserved the judgment. Chairperson further ordered
August 2017. that Learned counsel for the Respondents, if so
choose may file short written submissions by 16th
Mr. Salman Khurshid, Senior Advocate assisted by October, 2017 of not more than three pages.
Mr. Vaibhav Gaggar and others, appearing on behalf
of Competition Compitition of India, argued the Finally the NCLAT have pronounced the order on
matter on 23rdAugust, 24th August and 31st August 25th July 2018. The Tribunal Bench comprising of
2017 (on 3 days) and also replied to the objections / Justice S. J. Mukhopadhaya - Chairperson and Mr.
queries raised by the counsels of cement companies Balvinder Singh - Member (Technical) have found
& CMA. He completed his arguments on 31st August the cement companies guilty of cartelization and
2017. upheld the amount of penalty. Last two paras of the
orders about of the penalty and merit of the appeals
Mr. C. A. Sundaram on behalf of Ambuja Cement are reproduced :-
Ltd. Learned Counsel appearing on behalf of the
other appellants further argued the matter on 19th 109. So far as the quantum of penalty order is
September 2017 and 5th October 2017. The Tribunal concerned, as we find that the Commission has
was going to reserve the judgment on 5th October imposed mere minimum penalty, no interference is
2017 itself but Mr. Vaibhav Gaggar appearing for called for against the same.
CCI requested for 10 minutes time on next hearing
for Mr. Salman Khurshid for which the Chairman 110. We find no merit in these appeals. They are
agreed and matter was posted for 11th October 2017 accordingly dismissed. All Interlocutory
with the directions that Parties may file their Applications filed in these appeals stand disposed
of. No costs.

VERY IMPORTANT

Cement Manufacturers have stated in the media that, they will be approaching the Hon’ble
Supreme Court seeking appropriate relief. BAI being the main Petitioner, it is imperative to
be represented the matter at the Hon’ble Supreme Court. It is, therefore necessary to shore
up BAI’s ‘Legal Fund’ for this purpose. Members are requested to send in their support
to BAI’s ‘Legal Fund’ by cheque drawn in favour of “Builders’ Association of India”.

NCLAT upholds Rs. 6,700-crore penalty on 11 cement firms

Competition panel had fined them over cartelisation charges

The National Company Law Appellate Tribunal “Some of the cement companies...stopped booking
(NCLAT) has upheld the Competition Commission in the non-trade segment and there was a shortage
of India’s (CCI) decision to impose a ¹ 6,700-crore of supply of cement,” the order noted.
penalty on 11 cement companies for cartelisation.
“So far as the quantum of penalty order is
In their order on Wednesday, Justice SJ concerned,” the NCLAT said, “as we find that the
Mukhopadhaya, NCLAT Chairperson, and Justice Commission has imposed a mere minimum penalty,
Bansi Lal Bhat, Member (Judicial), said the cement no interference is called for against the same. We find
companies had reduced production and dispatches no merit in these appeals. They are accordingly
across all sectors during a period when the demand dismissed.”
from the construction sector was positive.

INDIAN CONSTRUCTION 17 August 2018

The verdict by the appellate tribunal comes two years “While the company is yet to receive the order of
after the CCI imposed the penalty. The Builders’ the NCLAT, it believes that on merits it has sufficient
Association of India filed the petition in August 2016 grounds for a successful appeal and intends to file
against 11 leading cement companies. The CCI had the same with the Supreme Court,” Ambuja Cement
also asked the cement companies to desist from said in a statement to the stock exchanges. ACC
reducing production to keep prices high. issued a similar statement.

The 11 companies that have to cough up the penalty Added woes
include Aditya Birla Group company UltraTech
Cement (¹ 1,175 crore), Jaypee Cement (now acquired The NCLAT order will add to the woes of the cement
by UltraTech: ¹ 1,323 crore), ACC (¹ 1,148 crore), industry. Despite an increase in demand, cement
Ambuja Cement (¹ 1,163 crore), JK Cement (¹ 128 companies’ profitability is under pressure due to a
crore) and Century Textiles (¹ 274 crore). rise in production costs.

Binani Cement, which may be acquired by UltraTech Higher power and fuel (increase in coal and pet coke
under insolvency proceedings, was also penalised ¹ prices) and freight costs (increase in diesel prices)
167 crore. are expected to put further pressure on the
profitability margins and debt metrics of cement
According to industry sources, most of these companies.
companies will now take the fight to the Supreme
Court. Source: Business Line, 26-7-2018

NCLAT Upholds Rs 6,300-Crore CCI Fine On Cement Companies

The National Company Law Appellate Tribunal
today upheld the Rs 6,300-crore fine imposed on a
group of cement companies by the Competition
Commission of India for cartelisation.

The tribunal said it finds no merit in the plea filed
by the cement companies challenging the antitrust
regulator’s decision to penalise the manufacturers
for cartelisation, Bloomberg reported.

In August 2016, the CCI ruled that 10 cement Cementmakers, including Jaiprakash Associates
companies used the platform provided by the Ltd., ACC Ltd., and Ambuja Cement Ltd., challenged
Cement Manufacturers Association and shared it in the Competition Appellate Tribunal. The
details relating to prices, capacity utilisation, Competition Appellate Tribunal was last year
production and dispatch and thereby restricted merged with NCLAT, making it the appellate
production and supplies in the market. It also authority for hearing appeals against the orders
imposed the penalty. passed by the CCI.

The CCI has also imposed a penalty of Rs. 397.51
crore upon Shree Cement Ltd. via a separate order.
Shares of the cement companies fell with Orient
Cement Ltd. falling as much as 4.46% and India
Cements Ltd. falling as much as 3.67%.

Source: Bloomberg, 25 July 2018

INDIAN CONSTRUCTION 18 August 2018

Huge Rs 6,700 crore penalty to hit bankrupt cement companies’ debt resolution

In a big blow to the cementmakers, National believes that, on merits, it has sufficient grounds for
Company Law Appellate Tribunal has upheld the a successful appeal and intends to file the same with
Rs 6,700 crore penalty imposed by Competition the Hon’ble Supreme Court of India,” ACC said in a
Commission of India on 11 companies for statement on Wednesday.
cartelisation.
Going in details of the findings of the CCI order,
ACC, UltraTech and JaiprakashAssociates will be NCLAT has held that the competition watchdog has
impacted the most as the trio was asked to pay done sufficient groundwork in establishingthat there
upwards of Rs 1,000 crore each. was a formation of a cartel and that prices were
rigged.
The order would also impact resolution value for
companies like Binani Cement, which is still under CCI had highlighted “unprecedented trend for the
National Company Law Tribunal,waiting to know percentage increase in prices in all the five regions”
whether it will be sold to Kumar Mangalam Birla- —central, northern, eastern, western and southern.
led UltraTech or the Dalmia Bharat group.
“It is clear that the commission while dealing with
While ACC said it would approach the apex court, the market dealt with the ‘relevant market’ i.e, all
UltraTech would take “appropriate action” as regional markets of cement, which are the relevant
advised by its lawyers. geographical markets. Commission not only looked
into state-wise market but also region-wise market
But chances of winning are slim as NCLAT, now the and range of percentage change in prices between
appellate body for CCI, has fully supported the 2007-2011,” the order said.
findings and order of CCI, even terming the penalties
as meagre. The CCI case was filed by Builders Association of
India under Section 19(1) (a) of the Competition Act,
2002, alleging anti-competitive agreement against
Cement Manufactures’ Association and 11
companies.

Despite CCI coming out with an order followed by
detail investigations, none of the companies bothered
to make provisions for the full amount of penalty
after paying 10% of their respective shares to the
Competition Appellate Tribunal (Compat).

“So far as the quantum of penalty order is concerned, “Your company, backed by a legal opinion, believes
as we find that thecommission has imposed mere that it has a good case in both the matters and
minimum penalty, no interference is called for accordingly, no provision has been made in the
against the same. We find no merit in these appeals. accounts,” UltraTech has disclosed in its annual
They are accordingly dismissed,” NCLAT order report for FY18.
issued on Wednesday said, dismissing the appeal of
the cement makers. The government, meanwhile, brought all matters
with Compat under NCLAT and hearing was
Reacting to the order, ACC said it would move the completed in August 2016.
apex court. “Competition Commission of India vide
its order dated August 31, 2016, imposed a penalty Among the 11 companies, Jaiprakash Associates
of Rs 1,147.59 crore on the company. On appeal by would be hit hardest as Rs 1,323.60 crore penalty
the company, NCLAT in its order passed today has levied on it is more than one-fourth of its revenues
reportedly upheld the said order. The company from cement at Rs 4,329.72 crore, which is 65.44% of
overall revenues.

But the case of Binani Cement would be curious as
the statutory liabilitieslisted against the company for
the new owner to settle don’t show the penalty

INDIAN CONSTRUCTION 19 August 2018

amount of Rs 167 crore, sources said. case of Binani Cement on a day-to-day basis on cross-
petitionsfiled by Dalmia Bharat Group firm
However, a new unaccounted-forliability wouldn’t Rajputana Properties and UltraTech, the two
surprise its new promoter. prospective bidders.

“Since all assets and liabilities would be with the new IMPACT
owner, it would be its responsibility to settle the
dues. The bidders would have accounted for the ACC, UltraTech and Jaiprakash Associates will be
penalty while preparing their resolution plans,” said impacted the most as the trio was asked to pay
Sutanu Sinha, resolution professional with BDO upwards of Rs 1,000 crore each
Restructuring said.
Source: DNA, 26-7-2018
Beginning August 1, NCLT would start hearing the

NCLAT upholds CCI’s Rs 6,300 crore fine on 11 cement firms

In a huge setback to 11 cement firms, NCLAT has cement companies. These Cement cos will now
dismissed their plea against CCI penalty. NCLAT appeal in Supreme Court against the NCLAT order.
has upheld CCI’s Rs 6300 crore penalty on these 11
Source: Economics Times, 25-7-2018

Cartelisation penalty: NCLAT upholds fine on cement firms, 11 companies
and industry body to pay Rs 6300 crore

Eleven companies and industry body to pay Rs 6,300 cr; may go in appeal to Supreme Court

In a major setback for cement manufacturers, the CCI order, these 11 cement firms together control a
National Company Law Appellate Tribunal market share of around 58% and enjoy a position of
(NCLAT) on Wednesday upheld the hefty penalty dominance and indulged in arbitrary increase of
of about Rs 6,300 crore imposed on 11 leading cement cement prices.
companies by the Competition Commission of India
(CCI) through its order in 2012 and 2016 for price Finding them guilty under Section 4 of the
cartelisation. The companies include ACC, Ambuja Competition Act (abuse of dominance), the CCI had
Cement, UltraTech Cement and Jaypee Cement as levied a penalty of 50% of the profits of these
well as the industry body, Cement Manufacturers companies during the period under consideration.
Association (CMA). Section 27 of the Competition Act allows the
competition watchdog to impose a penalty up to
The CMA as well as the companies concerned had three times the net profit of the company in the last
appealed against the CCI’s order imposing the fine three years or 10% of the gross turnover of each year,
in the NCLAT, which the two-member bench headed whichever is higher.
by the chairman justice SJ Mukhopadhaya dismissed
saying that they found no merit in their pleas. The CCI had passed the order following a probe by
Director General of Investigation on a complaint filed
The companies have no option now but to appeal by Builders Association of India.
against the order in the Supreme Court.
According to the CCI, the cement companies had not
The companies have already paid 10% of the amount utilised their available capacity, thereby reducing
charged from them as per the directions of the supply in the market. Which helped them keep
NCLAT. While they have not made any provision cement prices high.
in their books, most of them have shown the amount
as contingent liabilities. Prior to the CCI order, the Serious Fraud
Investigation Office in the ministry of corporate
The case dates back to 2012 when the CCI imposed affairs had found three cement firms — UltraTech,
the penalty on the 11 cement firms for price ACC and Ambuja — guilty of cartelisation and price
cartelisation during 2009-10 and 2010-11. As per the fixing. The report had been forwarded to the CCI

INDIAN CONSTRUCTION 20 August 2018

guilty are Grasim Cements (now
merged with UltraTech Cement),
Lafarge India, JK Cement, India
Cements, Madras Cements, Century
Cement and Binani Cement.

Following the CCI’s order the cement
firms had challenged it in the
Competition Appellate Tribunal
(Compat), which in December 2015 had
set aside the penalty and directed the
CCI to hear the matter afresh.

when it started its own investigation on the Builders However, this setting aside of the order
Association of India complaint. of the CCI was not on merits of the case
but on procedure followed by the CCI
As per the CCI order, four cement companies will in deciding the case, which Compat felt
have to shell out a penalty exceeding Rs 1,000 crore. was not in consonance with the
These include Jaypee Cement, which will pay a principles of natural justice. The chief
penalty of Rs 1,323.60 crore, followed by UltraTech issue highlighted by Compat was that
(Rs 1,175.49 crore), Ambuja (Rs 1,163.91 crore) and the CCI chairman did not hear the
ACC (Rs 1,147.59 crore). The other companies found arguments but was party to writing the
judgment and signed the same.

Upon Compat’s direction the CCI heard the matter
afresh and reiterated the penalty in its fresh order in
August 2016. Since later that year Compat got
dissolved and all appeals against CCI’s order were
supposed to be heard by the NCLAT, the companies
concerned and CMA appealed against the order
before the appellate tribunal.

Source: Financial Express, 26-7-2018

Cement stocks take a hit after NCLAT allows CCI’s
Rs 6,300-crore penalty on 11 cos

The penalty was imposed was on the back of allegations of
running a pricing cartel between the firms.

Shares of cement majors fell 1-4% on Wednesday Ultratech Cements,
morning as investors reacted to an order, which Grasim Cements. J.K.
upheld Rs 6,300 crore penalty imposed by Cements, India
Competition Commission of India (CCI). Cements, Madras
Cements, Century
The National Company Law Tribunal allowed CCI’s Cements, Binani
penalty on 11 cement companies. The punitive action Cements, Lafarge
was on the back of allegations of running a pricing India and Jaypee
cartel between the firms. The appellate tribunal said Cements.
that it has found no merit in pleas of cement firms.
The competition watchdog had also imposed a
The companies were reportedly found violating penalty on cement manufacturers’ association as
provisions of the Competition Act, 2002. well.

The 11 cement firms are: ACC, Ambuja Cements, Source: Money control, 25-7-2018

INDIAN CONSTRUCTION 21 August 2018

Western Region Ramvilas as

The ‘First BAI Western Region Meeting 2018-19’ Hon.
was held in Mumbai on 18th May, 2018. Mr. Pratap
Salunkhe, Vice-President, BAI chaired the meeting. Secretary, Mr.
Mumbai Centre was the host for the meeting. Mr.
A. Puhazendi, President, BAI was the Chief Guest Sagar Sudhir News
for the meeting. Others who graced the dais during Shah as Hon.
the meeting were : Mr. L. D. Kotwani, Imm. Past Treasurer and
Vice-President; Mr. Neerav Parmar, Hon. Gen.
Secretary, BAI; Mr. Pradeep Nagawekar, Hon. Gen. Mr. Mangesh
Treasurer, BAI; Mr. K. Chandrasekhar Rao, State
Chairman, BAI Chattisgarh; Mr. Vilas K. Birari, Ashokrao Shinde as Hon. Jt. Secretary.
State Chairman, BAI Maharashtra and Mr. Gyan
Madhani, Chairman, BAI Mumbai Centre. Issues Mumbai Centre
regarding building and construction industry in the
States of Chattisgarh, Gujarat, Goa, Madhya Mr. Gyan Madhani was installed as the Chairman
Pradesh and Maharashtra were discussed along of BAI Mumbai Centre for 2018-19 by Mr. A.
with BAI organisational matters. Puhazendi, President, BAI, who was the Chief
Guest, on 18th May, 2018. Mr. R. Ramana, Executive
Phaltan Centre Director (Planning), Mumbai Metro Rail
Corporation Ltd. was the Guest of Honour. Mr.
Mr. Rahul Laxman Nalawade was installed as the Pratap Salunkhe, Vice-President, BAI; Mr. Neerav
Chairman of BAI Phaltan Centre for 2018-19 by Parmar, Hon. Gen. Secretary, BAI; Mr. Pradeep
Shreemant Sanjivraje Naik Nimablakar, President, Nagawekar, Hon. Gen. Treasurer, BAI & Imm. Past
Zilla Parishad, Satara, who was the Chief Guest, Chairman, BAI Mumbai Centre and Mr. Vilas K.
on 30th April, 2018. Mr. Deepak Chavan, MLA; Mr. Birari, State Chairman, BAI Maharashtra also
Pratap Salunkhe, Vice-President, BAI; Mr. Vilas graced the occasion. Other office bearers who were
Birari, State Chairman, BAI Maharashtra State; Mr. also installed were : Mr. Mohinder Rijhwani as Vice-
Vijay Devi, Trustee, BAI and Mr. Avinash Patil, Past Chairman, Mr. Harshad S. Shah as Hon. Secretary,
President, BAI. were the Guests of Honour. Other Mr. Jaiprakash Bhatia as Hon. Treasurer, Mr.
Office Bearers who were also installed were: Mr. Aniruddha Nakhawa as Hon. Jt. Secretary and Mr.
Jangam Sunil as Vice Chairman, Mr. Karwa Kedar Dinesh Panani as Hon. Jt. Treasurer. Office-bearers
and senior functionaries of BAI Centres from the
States of Chattisgarh, Gujarat, Goa, Madhya
Pradesh and Maharashtra were present for the
installation function. Families of BAI Members from
Mumbai Centre were also present.

Mrs. Priti Gupta passed away Obituaries
on 22nd January, 2018. Mrs.
Priti Gupta was the wife of Mr. Mr. D. Kamath passed away on
Dhanwant Lal Gupta, Past Vice 26th July, 2018. Mr. D. Kamath
President, BAI. was a very senior member of BAI
Amravati Centre.

Mr. C. Ramesh Reddy passed Mrs. Sunetra Shirole passed away
away on 22nd July, 2018. Mr. C. on 26th July, 2018. Mrs. Sunetra
Ramesh Reddy was a General Shirole was the wife of Mr. D. S.
Council Member of BAI from Shirole, senior member of BAI
Hyderabad Centre and son of Late Pune Centre.
Mr. C. Raghava Reddy, Past
President, BAI.

'Indian Construction' prays to the Almighty to rest the departed souls in peace
and grant fortitude to the bereaved families to bear the irreparable loss.

INDIAN CONSTRUCTION 22 August 2018









BAI’s parleys with Government

In our earlier issues, we have informed BAI members / readers about BAI’s continued efforts in trying to convince
Government of India for rationalising labour laws applicable to the building and construction industry. In this
direction, BAI had recently taken up the issue of applicability of the provisions of ‘Employment State Insurance (ESI)
Act, 1948’ to casual and temporary construction site workers and had highlighted to the authorities the overlapping
provisions of ESI Act and ‘The Building and Other Construction Workers (Regulation of Employment and Conditions
of Service) Act, 1996’ (BOCW). For taking things further, Mr. A. Puhazendi, President, BAI called upon Mr. Heeralal
Samariya, Secretary, Ministry of Labour & Employment, Government of India on 25th July, 2018. Mr. A. Puhazendi
addressed a letter to Mr. Heeralal Samariya before the meeting, which we are reproducing herein below.

Mr. Heeralal Samariya Ref: 212/J/2018-19 dated July 19, 2018
Secretary to the Government of India,
Ministry of Labour & Employment,
Shram Shakti Bhawan, Rafi Marg
NEW DELHI – 110 001

Sub.: BAI’s representation on ESI Coverage to Construction Sites and Benefits
under ESI Act vis-a-vis BOCW Act.

Reg.: Proposed Meeting with you on 25th July 2018 at 3.00 p.m.

Respected Sir, BOCW Act, submitted by BAI vide No.407/D/2015-
16 dated 5th December 2015*. Several rounds of
Builders’ Association of India (BAI) is an apex all meetings have also been taken place with your
India body of Engineering Construction Contractors predecessor Mr. Shankar Aggargal ji and Madam M
and Real Estate Companies founded in 1941, with Sathiyavathy ji, but we have yet to see any positive
more than 18,000 business entities as members response from the Ministry on the subject.
through its 170 plus Centres (Branches) throughout
the country. Regional Associations Affiliated to BAI Sir, BAI would like to take up the following agenda
form indirect membership of more than 1,00,000. The for kind consideration:-
fundamental aim of the Association is to bring about
all round improvements in the construction sector, Clubbing of ESIC with Labour Welfare Cess as both
while striving towards resolution of operational as the Acts have identical or overlapping benefits
well as policy level problems faced by the (Details enclosed).
construction industry. This involves making efforts
to obtain from policy makers and authorities, the To explore possibility of utilising Rs.38,000 Core
level of attention that the construction industry lying with various Labour Boards for the benefit of
deserves in view of its tremendous contribution and construction workers including contributing to ESIC.
importance to the economy.
Any other item with the permission of the Chair.
First of all BAI takes this opportunity to congratulate
you on your elevation to the post of Secretary and We are thankful to you for giving us an opportunity
taking the charge of the Ministry of Labour & to meet you in person and discuss the matter for its
Employment. BAI have been pursuing the matter positive outcome.
of implementation of ESIC on construction workers
with effect from 1st August 2015, vide ESIC Circular Thanking you,
dated 31st July 2015, and explained in details the
difficulties in its implementation as has been brought Yours faithfully,
out in our letter No. BAI/DO/03/2017 dated 13th
February 2017* (copy enclosed). The ministry have A. PUHAZHEDI
also been very co-operative in the matter and President
considered the proposal on combining the ESIC and
Builders’ Association of India

Encl: As above

* Printed on next page

INDIAN CONSTRUCTION 27 August 2018

Shri Heeralal Samariya Ref: 211/J/2018-19 dated 19th July 2018
Secretary to the Government of India,
Ministry of Labour & Employment,
Shram Shakti Bhawan, Rafi Marg
NEW DELHI – 110 001

Respected Sir,
Sub.: BAI’s representation on ESI Coverage to Construction Sites and Benefits under ESI Act vis-à-vis

BOCW Act.

Builders’ Association of India (BAI) is an apex all July ‘2015 about the same & in fact to override the
India body of Engineering Construction Contractors notification issue of promulgation, they came out
and Real Estate Companies founded in 1941, with with the plea of interpreting the guidelines issued
more than 18,000 business entities as members them in 1999 & stated that [quote from circular point
through its 170 plus Centres (Branches) throughout no (1]) “All the construction agencies which have
the country. Regional Associations Affiliated to BAI already been covered u/s 1 (5) ,their site workers
form indirect membership of more than 1,00,000. The also be covered & other construction agencies
fundamental aim of the Association is to bring about which may now come under coverage by adding
all round improvements in the construction sector, construction site workers.
while striving towards resolution of operational as
well as policy level problems faced by the Difficulties in Implementation :-
construction industry. This involves making efforts
to obtain from policy makers and authorities, the ESI Act is essentially for organised work force, inspite
level of attention that the construction industry of the term otherwise in Sec 1(4). Payment of
deserves in view of its tremendous contribution and contribution, submission of returns, reporting of
importance to the economy. accidents, submission of returns,& many other
formalities would show that that the scheme is
At the outset, we welcome the decision of the apex employee centric. Yet the ESIC could not extend the
body of the ESIC to provide the ESI Facilities for scheme to construction sector because of many
construction workers thereby enabling them to avail practical considerations. That precisely was the
benefits of complete medical care from primary to reason for so many tripartite talks in decades.
tertiary medical care as well as range of cash benefits Summary of those facts have been recorded in the
in times of exigencies of employment injury, death, Annual standard Notes also. Few of the additional
disablement & employment. The construction points which need to be clarified /discussed with
workers are considered to be part of un-organised the authorities are cited below as they are in conflict
sector but keeping in view the fact that they are with the circular issued.
highly prone to accidents, sickness etc. the ESIC has
decided to go ahead for extending the coverage of The ESI Act is a statute which is applicable by the
RSIC Social security to them. Construction activity appropriate Government on the basis of the Gazette
has been covered by the ESIC under sec 1(5) treating Notification issued for Coverage. In the present case
them as commercial establishment. The coverage no notification has been issued as yet.
under ESIC to a construction site will be extended
u/s 2(12) also, if in any part of the construction unit, As the Construction Site is neither a “FACTORY”
manufacturing process as defined under Factory act nor “COMMERCIAL ESTABLISHMENT”, hence
is carried on. do not come under the definition of ESI Act as the
said Act is only applicable on the aforesaid.
The ESI Corporation vide press release dated 17th July
& 23re July ‘2015 made a declaration that they intend Since the ËSTABLISHMENT” Is covered under
to cover the construction site under the provisions BOCW Act, then the office of the Construction Site
of ESI Act which was not the case till then in view can be termed as establishment only under BOCW
of the guidelines issued by ESI in 1999. The ESI Act which means “Any establishment —————
Corporation also came out with a circular dated 31st who employs building workers in any building or
other construction works————”. Such

INDIAN CONSTRUCTION 28 August 2018

establishments are covered under BOCW Act & not THE Cess remains & for what purpose the welfare
under Shop & Commercial Establishment Act. Board would be required to collect the money
because the workers would be entitled to benefits
As per the OBJECTS & REASONS of the BOCW under ESI Act. Further the question arises that
Act,1996 it clearly lays down the “Application of whether the statute passed by an Act of Parliament
the Workmen Compensation Act to building & can be subrogated by issuance of Circular?
other Construction Workers ‘.This being a
subsequent legislation for the health, Safety & It is also to be noted that whether the practise of
Welfare benefits pertaining to Building/ registering the Building workers would be continued
Construction Workers the provisions of the said Act or there shall be no more Registration under welfare
would override the provisions of the other Acts Board. If that be the case then how come the benefits
wherever there arises a conflict & interpretation. would be passed on by the welfare Board to the
Thus there cannot be two interpretations of as the Building workers & whether that would not amount
legislature thought it fit to cover Building & other to taxing the Employer twice for the same contract?.
Construction Workers under Workmen
Compensation Act & not otherwise. Such a beneficial As per Regulation 4 of the ESI Regulations 1950
piece of legislation has to be construed in its correct which provides for Contribution & Benefit period.
perspective so as to fructify the legislative intention The benefits being passed on to the Insured person
underlying its enactment. The Apex Court has rightly for the first time would be only after nine months as
held in number of cases that when two views are corresponding Contribution & Benefit period are
possible on its applicability to a given set of different. For eg. The Person being registered in the
employees, that view which furthers the legislative Contribution period for the first time in April can
Intention should be preferred to the one which avail the benefits from following January & not
frustrate it. before. Similarly for availing sickness benefit the
Insured person has to pay minimum contribution
Sec 58 of BOCW Act also states that “the provisions for 78 days in a contribution period otherwise the
of Workmen Compensation Act, 1923 shall apply benefit cannot be availed & is foregone.
to building workers as if the employment to which
this Act applies had been included in the second Benefits being provided under the Construction
schedule to that Act”. Welfare Board are in few cases more than prescribed
under ESI Act. For availing the benefits under BOCW
Employees Compensation Act,1923 Schedule II Act a nominal amount of contribution (@Rs 25/-pa (
defines list of employees who, subject to the presently applicable in Delhi for coverage under
provisions of [Section 2(1)(DD) ] ARE INCLUDED Delhi Construction welfare Board) is paid by the
INTHE DEFINITION OF [EMPLOYEES] that is to Beneficiary for availing the benefits provided by the
say any person —— (viii)”employed in the Construction Welfare Board. The benefits being paid
construction, maintaince, repair or demolition of— are in few cases for Natural death, self marriage,
children marriage etc. (which is not covered under
Any building which is designed to be or is or has ESI Act) apart from skill development benefits in the
been more than one storey in height above the form of financial assistance to such beneficiaries.
ground or twelve feet or more from the ground level
to the apex of the roof; or As per Regulation 103-B an Insured person shall
continue to receive medical benefit for himself & his
Any dam or embankment which is twelve feet or / her spouse till the date on which he would have
more in height from its lowest to its highest point; or vacated the employment on attaining the age of
superannuation had he not sustained such
Any road ,bridge, tunnel or canal; or disablement if he produces a certificate from the
employer. This is not practicable as the employees
Any wharf, quay, sea-wall or other marine works at the construction site are engaged for the period of
including any moorings of ships ; contract awarded which is time specific ,hence the
Employer cannot provide certificate for such person
The BOCW Welfare Cess Act Lays down the till the age of superannuation, therefore in the
payment for Corpus to be maintained for Welfare absence of that certificate his claim would be
Board. Thus when the Building workers are to be discontinued.
covered under ESI ACT THEN WHAT PURPOSE

INDIAN CONSTRUCTION 29 August 2018

BAI’s PROPOSAL :- As per the recommendations that ESIC should be
expanded at a fast pace & the ESIC should directly
At this juncture we should not forget about the view run the health services at all the states. Further ESI
propounded by Prof Adharkar, the visionary who coverage for round the clock medical benefits. ( Point
was instrumental in bringing the concept of ESI at no VII c,d &f ) .
the very beginning. Prof. Adharkar has rightly said
that when a scheme is proposed it must be workable The ESIC vide press release dated 7thApril‘2015
in the “peculiar circumstances of Indian labour & discusses amendment in the ESI Act ,1948 for
Industry”. So, if necessary a separate structure may providing option to employees to choose either ESI
be evolved the way it was done in late nineties for or Health Insurance product services recognised by
cashew workers in Kerala. The scheme was IRDA in 165th Meeting of the ESI Corporation held
ultimately discontinued by ESIC. The documents on 7th April ‘2015.This option will not only provide
that show why that scheme meant for cashew the facilities to the door steps of the workers but
workers had been dispensed with may also be gone would also help the employers from unnecessary
through, in the present context. Otherwise it will be paper documentation as all the workers engaged at
meeting the same fate as has happened in the the site can avail the facilities from single source. This
Medical college matter where ESIC is hell bent on would also not only be an effective mechanism but
medical colleges when they know that their financial would also be rid of the bureaucratic hassles.
position would nose drive very seriously in the year
2016-2017 if they continue to run them?. The nitty gitty of the scheme may be changed
depending upon the discussions with the
The proposals being put forth are in tune with the stakeholders as on one side it will leave the
views of the ESIC, as can be evident from the points government from day to day monitoring &
elaborated below. maintaining a workforce to maintain records while
on the other it will also provide leverage to the
Recommendations of the Conference Committee on employers to have a common scheme for all the
social security for Organised, Unorganised & employees engaged at the site without any worry of
Migrant International Workers held at Vighyan the wage ceiling or see if the area is coming in
Bhawan Hall no 4 on dated 21.07.2015 contains other implemented / non implemented area.
recommendations particularly relating to for
Construction Workers ,there should be single Now let us dwelt on the benefits prescribed under
Contribution from Employer ( Point no XI ). ESI Act vis a vis BOCW ACT & in brief the details
are as under ;

Comparison Statement of ESIC and BOCW ACT

Benefits & Contributory Conditions Benefits & Contributory Conditions
UNDER ESI ACT: UNDER BOCW ACT:

Benefits & Contributory Conditions UNDER ESI ACT: Section 12 (1) of the BOCW Act “ every building
worker who has completed eighteen years of age ,but
An interesting feature of the ESI Scheme is that the has not completed sixty years of age ,& who has been
contributions are related to the paying capacity as a engaged in any building or other construction work
fixed percentage of the workers wages, whereas, they for not less than ninty days during the preceding
are provided social security benefits according to twelve months shall be eligible for beneficiary under
individual needs without distinction. this Act.”

Section 46 of the Act envisages following six social Section 12(2) says that “every application shall be
security benefits :- accompanied by such documents together with such
fee not exceeding fifty rupees as may be prescribed.”
(a) Medical Benefit :
Section 11 lays down that ‘ subject to the provisions
Full medical care is provided to an Insured person and of this Act,every building worker registered as a
his family members from the day he enters insurable beneficiary under this Act shall be entitled to the
employment. There is no ceiling on expenditure on the benefits provided by the Board from its fund under
treatment of an Insured Person or his family member. this Act.
Medical care is also provided to retired and
permanently disabled insured persons and their

INDIAN CONSTRUCTION 30 August 2018

spouses on payment of a token annual premium of Section 22 lays down functions of the Board :-
Rs.120/-
(1)The Board may:-
(b) Sickness Benefit(SB) :
a) Provide immediate assistance to a beneficiary in
Sickness Benefit in the form of cash compensation at case of a accident.
the rate of 70% of wages is payable to insured workers
during the periods of certified sickness for a maximum b) Make payment of pension to the beneficiaries who
of 91 days in a year. In order to qualify for sickness have completed the age of sixty years.
benefit the insured worker is required to contribute for
78 days in a contribution period of 6 months. c)Sanction loans & advances to a beneficiary for
construction of house not exceeding such amount &
1.Extended Sickness Benefit(ESB) : on such terms & conditions as may be prescribed;

SB extendable upto two years in the case of 34 malignant d)Pay such amount in connection with premia for
and long-term diseases at an enhanced rate of 80% of Group Insurance Scheme of the beneficiaries as it
wages. may deem fit;

2.Enhanced Sickness Benefit : e)Give such financial assistance for the education of
children of the beneficiaries ass may be prescribed;
Enhanced Sickness Benefit equal to full wage is payable
to insured persons undergoing sterilization for 7 days/ f) Meet such medical expenses for treatment of major
14 days for male and female workers respectively. ailments of a beneficiary or such dependants as may
be prescribed;
(c) Maternity Benefit (MB) :
g) Make payment of maternity benefits to the female
Maternity Benefit for confinement/pregnancy is beneficiaries; and
payable for three months, which is extendable by
further one month on medical advice at the rate of full h) Make provision & improvement of such other
wage subject to contribution for 70 days in the preceding welfare measures & facilities as may be prescribed.
year.
As per the Delhi Construction Welfare Board which
(d) Disablement Benefit : is functioning , under the aegis of Delhi government,
the following benefits are mentioned on the
1.Temporary disablement benefit (TDB) : From day one registration card of the construction workers
of entering insurable employment & irrespective of registered at the Board are being provided by them
having paid any contribution in case of employment to the registered workers ;-
injury. Temporary Disablement Benefit at the rate of
90% of wage is payable so long as disability continues. 1) Old Age pension.

2.Permanent disablement Benefit (PDB) : 2) Family pension.

The benefit is paid at the rate of 90% of wage in the 3) Disablement assistance & pension
form of monthly payment depending upon the extent
of loss of earning capacity as certified by a Medical 4) Housing loan for construction & purchase.
Board
5) Scholarship for children
(e) Dependants' Benefit(DB) :
6) Loan for purchase of Tools
DB paid at the rate of 90% of wage in the form of
monthly payment to the dependants of a deceased 7) Assistance for marriage
Insured person in cases where death occurs due to
employment injury or occupational hazards. 8) Medical assistance

(f) Other Benefits : 9) Medical assistance in case of accident

Funeral Expenses : 10) Maternity benefits

An amount of Rs.10,000/- is payable to the dependents 11) Funeral expenses
or to the person who performs last rites from day one
of entering insurable employment.

INDIAN CONSTRUCTION 31 August 2018

Confinement Expenses : 12) Assistance in case of death

An Insured Women or an I.P.in respect of his wife in 13) Other benefits being in vogue by the Board.
case confinement occurs at a place where necessary
medical facilities under ESI Scheme are not available. In the last hearing at the Delhi High Court the
Hon`ble Court was very particular about the benefits
In addition, the scheme also provides some other need being provided to the construction workers engaged
based benefits to insured workers. at the site & therefore has impleaded Delhi
Vocational Rehabilitation : Construction Welfare Board as an additional party
& asked them to file an affidavit in detail the steps
To permanently disabled Insured Person for taken by them for the welfare of Construction
undergoing VR Training at VRS. workers.

Physical Rehabilitation : In case of physical disablement Reference is also cited of the two Supreme court
due to employment injury. judgments the details in brief are as under :-

Old Age Medical Care : 1)In Regional Director, Employees State Insurance
Corporation, Trichur v. Ramanuja Match Industries
For Insured Person retiring on attaining the age of , the Court pointed out that “there is no doubt that
superannuation or under VRS/ERS and person having beneficial legislations should have liberal
to leave service due to permanent disability insured construction with a view to implementing the
person & spouse on payment of Rs. 120/- per annum. legislative intent but where such beneficial
legislation has a scheme of its own there is no warrant
Rajiv Gandhi Shramik Kalyan Yojana : for the Court to travel beyond the scheme and extend
the scope of the statute on the pretext of extending
This scheme of Unemployment allowance was the statutory benefit to those who are not covered
introduced w.e.f. 01-04-2005. An Insured Person who by the scheme”.
become unemployed after being insured three or more
years, due to closure of factory/establishment, 2) In Lanco Anpara Power limited vs State Of Uttar
retrenchment or permanent invalidity are entitled to :- Pradesh & others the Hon`ble Apex Court has held
that “ Construction workers not covered by the
•Unemployment Allowance equal to 50% of wage for Factories Act, 1948 and are entitled to the welfare
a maximum period of upto one year. measure specifically provided under BOCW ACT,
1996 and Welfare Cess Act, 1996”.
•Medical care for self and family from ESI Hospitals/
Dispensaries during the period IP receives
unemployment allowance.

•Vocational Training provided for upgrading skills -
Expenditure on fee/travelling allowance borne by ESIC.

Incentive to employers in the Private Sector for
providing regular employment to the persons with
disability :

•Minimum wage limit for Physically Disabled Persons
for availing ESIC Benefits is 25,000/-.

•Employers' contribution is paid by the Central
Government for 3 years.

Thanking you,

Yours faithfully,

INDIAN CONSTRUCTION A. PUHAZHEDI
President

Builders’ Association of India

32 August 2018

Waiting for Revival

There is new optimism in boardrooms, driven by the recent improvement in
both GDP growth and India Inc’s financial performance. The long-awaited

recovery may be around the corner

It is probably the longest and most anticipated wait “Nifty companies’ earnings estimates for FY18 and
in the history of corporate India. For nearly four years FY19 have been cut by 1-3%. With this, FY1SE is likely
now. India Inc’s top honchos and investors in their to see 8-10% year-on-year growth in earnings per
companies have been waiting for the economy and share (EPS) against 20% projected at start of the year
corporate earnings to reclaim the high growth — FY19E asking rate remains steep (20% plus),”
trajectory. writes Edelweiss Securities analysts Prateek Parekh
and Aditya Narain in their report on corporate
In 2014, Kumar Mangalam Birla, chairman of the earnings for the October-December 2017 quarter.
Aditya Birla group, had written to the shareholders
of group flagship company Grasim Industries: “The Faster growth on the horizon
increasing traction of the global economic revival and
plans to restore vim to India’s economy through a Notwithstanding the setbacks in the last few years,
slew of timely measures by the new government there is a new-found optimism in corporate
should play out positively in the coming year.” boardrooms and in the analyst community about the
India growth story. “I believe that the medium-term
That optimism, however, failed to translate into faster prospects in India are favourable and that the
growth for corporate India. The last three fiscal years structural reform process will continue over the next
have been the slowest for BS1000 companies since few years, culminating in an uptick in the investment
1991; with average annual revenue growth of 0.6% momentum,” wrote A M Naik, chairman, Larsen &
since 2013-14. The biggest disappointment has been Toubro, in the company’s annual report for 2016-17.
on the investment side, with a sharp slide in the
corporate sector’s capital expenditure (capex). Automakers also expect strong growth in
forthcoming quarters. “Definitely, there’s a strong
The combined assets of BS1000 companies were up revival happening. With a major change like the
4.3% year-on-year (y-o-y) in 2016-17, growing at the goods and services tax (GST), a blip for a quarter or
slowest pace since 199L In the last three years, two was not surprising. With these disruptions
combined capex has grown at an annualised rate of behind us. the economy is well on track to achieve
six%, the slowest since early 1990s. The number 7.5% growth: said Venu Srinivasan, chairman, TVS
would be even lower if not for Reliance Industries Motor.
(RIL.), which accounted for a third of all incremental
capex in the last three years. Excluding Rile the rest Infrastructure projects that had been announced are
of corporate India reported a decline in assets in 2016- being implemented, while road projects, have picked
17, the first in nearly 25 years. up pace. There is a positive sentiment in the cement
and steel sector, Therefore, the capex cycle is bound
Analysts say it is tough to imagine a growth revival to revive, Sriaivasan added.
without a meaningful rise in corporate capes, and
the capex data for India Inc are not inspiring. Others are betting on a revival in the rural sector.
“The rural growth cycle has started picking up and
Dalai Street has been equally bullish on corporate it’s on a firm growth path,” said S Parthasarathy,
India’s prospects through the last four years. Leading group chief financial officer at Mahindra & Mahindra.
brokerages expected the combined earnings (or net Manufacturing too is on an upswing, he added.
profit) of the country’s top 50 companies that are part However, there are specific big industries that are in
of the Nifty 50 index to grow by 20% in 2017-18 over a logjam. With infrastructure projects picking up and
2016-17. the ongoing bidding for stressed assets, he expects
those too to join the growth story. “On the back of all
Brokerages have now scaled back the earnings these, the second half of FY19 should see bigger
growth forecast to 8-10%, making it the seventh growth,” he said.
straight year of earnings downgrades. Analysts are
now postponing the big earnings recovery to 2018-19. Equity analysts also expect acceleration in corporate

INDIAN CONSTRUCTION 33 August 2018

earnings, beginning in 2017-18. Their optimism is inability of corporates to take advantage of the uptick
based on the recent improvement in the index of in global growth and demand. Export revenues of
Industrial production and GDP growth figures and nearly three-fourths of BSE500 companies (excluding
an uptick in the top line growth of listed companies. those in energy and finance) either declined in 2016-
17 or grew less than did overall revenues. The trend
Headline GDP growth improved to 7.2% in the persisted in 2017-18 as well, with textile and garment
December 2017 quarter, compared with a four-year manufacturers reporting their third consecutive
low of 5.7% during the first quarter of 2017-18. month of declining exports in December 2017.

The combined net sales of listed companies “We have seen a double-digit dip in our exports
(excluding finance and energy companies) were up despite a benign demand environment globally. This
124% y-o-y during the third quarter (ie, October- could only be attributed to domestic structural issues
December 2017), growing at the fastest pace in three- that are making our industry uncompetitive
and-a-half years. This has kindled hopes of a compared to our peers in other Asian countries,” said
sustainable recovery in growth that has eluded Prabhu Damodaran, secretary; Indian Texpreneurs
corporates and markets for over three years now. Federation, a Tamil Nadu-based association of textile
manufacturers and exporters.
Earnings growth has accelerated in the last two years
after a contraction during the period 2011-12 to 2014- The decline in exports across sectors has led to a
15. The combined net profit of BS1000 companies was steady decline in the share of India’s GDP that comes
up 18% in 2016-17, growing at the fastest pace in the from exports. Exports of goods and services are
last six years, driven by higher margins on the back projected to account for 18,7% of country’s GDP,
of a decline in energy and commodity prices. which is the lowest in the last 13 years. In contrast,
the previous boom in GDP growth and corporate
An improvement in corporate profitability along with earnings (between 2003 and 2008) was accompanied
a slowdown in fresh capex and borrowings had led by a sustained rise in the ratio of exports to GDP. A
to a perceptible improvement in corporate balance slowdown in exports is weighing on capacity
sheets, which augurs well for the future of the utilisation in the industrial sector.
corporate capex cycle.
“Capacity utilisation is currently around 71% and it
or example, BS1000 companies’ gross debt to equity has been moving in a narrow band of 70-75% for the
improved to lx in 2016-17, from a record high of L12x last four years now. Historically, companies go in for
in 2014-15. During the same period, the return on expansion only if the utilisation level crosses 80% and
equity was up nearly 130 basis points to 11% from stays there for some time,” said Devendra Pant, chief
97% over the same period. economist, India Ratings.

Internal accruals or shareholders’ equity accounted A slowdown in exports coupled with strong import
for a record 83% of ES1000 companies’ incremental growth has pushed India’s current account deficit to
capex in 201647, against 32.E% in 2014-15. In the past, a three-year high, making the economy vulnerable
a combination of higher return on equity and strong to external macroeconomic shocks.
internal accruals has always resulted in a growth-
capex boom and strong revenue and profit growth Corporate India also faces headwinds from the recent
for corporate India. increase in commodity prices, including crude oil,
and a sudden rise in interest rates in the last six
Economists also see gains from a recent uptick in months, with yields on 10-year government bonds
global economic growth. “World GDP growth is on rising 150 basis points. While the former could
an upward trajectory and it should boost our squeeze profit margins, the latter will raise the
economic growth, as has happened in previous financial cost of capex for the corporate sector.
cycles. The quantum of gains will however depend
on our ability to scale up exports in line with the A combination of high interest rates and potential
recovery in world trade,” says Madan Sabnavis, chief rise in consumer inflation owing to currency
economist, CARE Ratings. depreciation could also hit demand in the economy.
A lower interest rate in the last three years has
Some headwinds ahead resulted in a boom in retail credit boosting demand
for loan-financed products such as passenger cars,
The optimism has, however, been marred by the
emergence of new headwinds that have the potential (Contd. on pg. no. 37....)
to slow the pace of recovery, First, it is the seeming

INDIAN CONSTRUCTION 34 August 2018

INDIAN CONSTRUCTION Details of listed Real Estate Company's operation for the year 2018

Sr. Name of Company Operating Profit Operating Profit Net Profit Networth FSI
No. Rank

FY17 % CHG FY17 %CHG FY17 %CHG Rank FY17 %CHG Rank 178
14.17 8.3 1.81 4 0.86 1.9 418 550 951
1 Ahluwalia Contracts (India) 4.95 3.8 1.69 0.77 445 5.08 20.4 107 982
2 Anant Raj 8.55 1.7 0.94 5.1 -0.21 11.1 851 288 749
3 Ansal Properties & Infrastructure -22 1.06 16.7 0.67 * 477 41.32 3.2 438 795
4 Ashiana Housing 4.63 -31.2 1.53 298 292 456
5 Brigade Enterprises 20.1 -11.6 6.1 16.3 -36.7 469 14.71 0.2 696 863
6 Capacite Infraprojects 11.96 24.5 1.67 37.2 0.7 23.5 890 160 717
7 D B Realty 4.29 -35.6 0.57 -30.2 -0.62 42.6 159 7.23 11.1 247 665
8 Dilip Buildcon 38.77 16.3 11.72 17.6 3.58 455 383 822
9 Delta Corp. 4.61 18.2 27.8 0.74 * 90 14.59 3.8 29 874
10 DLF 94.69 -10.6 1.7 7.15 55.7 238 217 635
11 Godrej Propert. 17.76 -26.1 45.82 2.5 2.07 265 2.94 75.9 50 956
12 Housing Development & Infra 19.2 10.1 41.8 1.79 93 895 269 880
13 Hubtown 7.24 13.6 4.01 -18.9 -0.66 133.4 147 28.28 -0.7 135 439
14 Indiabulls Real Estate 25.83 -19.2 6.48 -2.2 3.97 30.4 373 299 769
15 J. Kumar Infraprojects 16.96 15.1 3.71 1.06 -45.7 875 17.19 84.4 575 818
16 JMC Projects 24.87 -2.6 11.69 13 -0.42 415 489 694
17 Kolte Patil Developers 9.74 26.4 4.4 0.87 * 382 9.04 11.8 257 463
18 Mahindra Lifespace Dev. 8.76 27.8 2.8 6.5 1.02 34.1 152 83 776
19 Oberoi Realty 11.61 -20.4 2.91 15.5 3.79 384 244.49 2.1 206 990
20 Omaxe 19.89 18.6 2.48 -7.7 1.02 9.9 917 193 710
21 Parsvanath Developer 1.64 -14.1 -1.45 * 281 20.04 13.5 224 974
22 Phoenix Mills 4.5 3.1 6.17 15.7 1.68 929 297 744
23 Peninsula Land 19.08 -2.6 3.43 -19.5 -2.17 48 201 114.69 3 104 841
24 Prestige Estates Projects 7.76 14.9 11.5 337 186 922
35 25 Puravankara 48.74 32 1 ** 2.7 -13.1 767 16.05 -3.8 677 553
26 SPML Infra 25.56 -16.3 8.95 -24.8 1.27 240 245 616
27 Sunteck Realty 24.02 37.6 -0.02 20.8 0.07 33 290 33.32 5.4 170 905
28 Sobha Developers 14.8 10.19 23.7 2.04 * 950 58
29 Unitech 9.55 4.67 775.4 1.61 13.89 7.5
30.25 268 3.16 -1.9 -4.03 30.2
15.55 15.8 3.51 * 4.81 -9.3
-24.6 4.71 *
-2.03 -55.7 5.97 24.9
53.4
16.56 4.1
***
787.9 57.26 7.2

16.4 21.04 4.2
*
23.13 -5.3

19.08 23.2

14.35 -13.2

42.53 7

23.88 4.6

3.24 -9.7

August 2018 17.25 12

26.44 3.1

91.79 0.4

INDIAN CONSTRUCTION Details of listed Construction Company's operation for the year 2018

Sr. Name of Company Operating Profit Operating Profit Net Profit Networth FSI
No. FY17 % CHG Rank
FY17 %CHG
67.32 26.9 FY17 %CHG Rank FY17 %CHG Rank 550
173.87 29.9 40
1 Adani Ports & Special 94.79 20.9 39.12 35 22 843
Economic Zone 794
929
2 Ashoka Buildcon 30.98 6.6 10.17 7.9 -0.1 * 837 12.23 6.1 321 987
0.89 -2.5 -0.13 * 840 3.87 -3.1 629 225
3 B. L. Kashyap & Sons 8.91 3.2 4.37 23.6 0.12 *** 737 0.55 909 998
-0.03 * 920 -1 27 952 857
4 C & C Constructions 12.57 -5.7 5.39 * -1.6 18.6 175 - 159 963
-1.87 17.8 3.3 * 984 28.45 989 771
5 Consolidated Const. Consortium 6.11 46.7 2.13 -13.83 12.8 470 -20.74 0.8 432 909
2.93 * 0.69 * 909 - 486 515
6 Engineers India 17.02 -4.8 35.61 3.2 -1.04 * 959 7.41 115 836
16.89 -23.4 -5.75 * 982 6.04 7.5 985 800
7 ERA Infra Eng. 12.11 2.9 4.86 331.5 -13.44 24.1 197 39.34 -12.6 204 307
3.38 0.5 2.82 * 816 -17.02 547 753
8 Ganesh Housing Corp. 4.16 16.9 7.27 9.8 * 969 21.42 5.4 959 937
2.35 49.2 0 *** 551 5.11 - 517 873
9 Gammon Infra 6.88 -36.4 31.81 -37.7 -7.58 12 89 -1.67 943
-4.22 161.9 0.48 * 960 5.51 2.6 92 833
10 GMR Infra 101.73 17 35.95 13.8 7.15 22.4 304 52.72 -10 976 868
3.45 -5.77 * 858 -8.75 123 406
36 11 GVK Power & Infrastructure 40.49 8.9 -12.46 * 1.49 * 1000 37.49 - 928 161
-3.78 25.8 -0.26 * 974 0.27 8.4 190 924
12 Gujarat Pipavav Port 7.51 3.3 2.94 -87.06 2.5 361 23.46 9.8 955
6.44 *** -9.89 1.4 134 51.66 93 718
13 Gyatri Project 22.01 30.3 1.24 ** 1.15 8.9 746 7.49 - 430
** 4.25 ** 967 14.86 -2.8 286
14 Hindustan Construction 98.68 12.6 3.9 34.8 0.11 201.4 537 0.63 900
1.6 6.6 -7.25 -9.33 - 977
15 ITD Cementation 31.15 0.7 49.2 0.53 6.11 -68.8 482
-62.7 -13.1
16 IRB Infra. Devel. 59.69 13.6 135.6 21.3
39.3
17 IVRCL Infrastructure 26.7 -12.8
-1.8
18 IL&FS Transportation Network 84.02 0.5 -

19 IL&FS Engineering & Construction 20.96 -7.6 6.3

20 Jaiprakash Associates 137.45 -25.7

21 Jaypee Infratech 11.64 -59.8

22 KNR Construction 17.18 38.1

23 Larsen & Toubro 33.07 5

August 2018 24 Madhav Infra Projects 5.6 125.8

25 Madhucon Project 15.98 -41.2

26 Man Infra Constr. 5.72 48.5

INDIAN CONSTRUCTION FY17 % CHG FY17 %CHG FY17 %CHG Rank FY17 %CHG Rank

27 Marg 4.64 20.3 1.16 6 -2.63 * 935 -8.65 - 975 999

28 MEP Infra. Dev. 19.74 -0.1 15.33 -4.3 1.09 *** 370 -0.08 - 937 893

29 MBL Infrastructure 23.32 -1.3 0.72 -74.6 -0.66 ** 896 6.47 -12.8 468 958

30 NBCC (India) 65.53 5.3 5 20.5 3.55 22.6 162 16.93 9.9 251 6

31 N.C.C. 90.27 -8.2 7.62 -28 0.32 -73.7 626 31.19 1.7 147 560

32 Patel Engineering 41.38 -1.3 5.86 33.2 -1.03 * 908 20.69 32.1 208 837

33 Pratibha Industries 17.48 -66.4 -2.64 ** -8.39 ** 972 2.42 -63.8 749 991

34 Punj Lloyd 62.17 32.3 3.33 *** -9.2 * 973 -18.47 - 987 848

35 PNC Infra 22.47 -20.1 6.44 1.5 1.18 -43.3 355 14.61 7.6 291 798

36 PSP Projects 4.64 -5.4 0.8 77.1 0.41 80.5 575 1.05 64.7 865 488

37 Ramky Infra 20.7 -11.2 5.08 17.3 -0.06 * 832 2.33 0 759 889

38 Sadhbav Engineering 46.54 11.5 13.46 21.4 -0.54 * 883 5.58 -3.6 513 902

39 Shriram EPC 7.49 20.3 0.34 -53.6 -2.18 * 930 15.9 248.7 273 957

40 Simplex Infrastructure 56.89 -4.9 7.97 1.8 1.37 27.1 323 15.35 9.5 282 604

37 41 Simplex Projects 5 15.7 0.58 340 0.02 *** 801 1.13 -3.6 861 983

42 Sadhbav Infr. Projects 14.04 -32.2 9.25 23.4 -3.53 * 945 0.45 -90.2 917 927

43 Sunil Hitech Eng. 25.74 26.2 2.16 -2 0.39 -26.1 586 5 11.6 562 627

44 Supreme Infrastructure India 11.51 -9.9 0.54 -76.3 -3.4 * 944 2.38 -57.8 753 954

45 Technofeb Engineering 4.1 -8.7 0.39 1 0.09 -23.5 759 2.4 3.7 751 747

46 Valecha Engineering 4.63 -39.7 -0.56 * -2.34 * 932 -1.94 - 960 1000

47 Vascon Engineers 5.63 -9.1 0.52 -17.6 0.02 -76.3 803 6.37 3.8 477 919

48 Welspun Enterprises 4.05 38 0.46 27.6 0.05 687.3 785 12.58 -11.4 317 918

(....Contd. from pg. no. 34)

August 2018 two-wheelers, household appliances, mobile phones and affordable corporate earnings and tax revenue could lead to a vicious cycle of
housing. higher fiscal deficit, higher interest rates and even more public debt,”
said G Chokkalingam, managing director, Equinomics Research &
Experts also see a risk from the growing reliance on government ‘ Advisory. However, he remains optimistic about India’s growth
expenditure to maintain demand levels in the economy. Nearly 40% of prospects in the medium-to long-term: “There are some structural issues
incremental GDP growth in the last 18 months came from higher hampering economic growth and the corporate cycle. This is likely to
government revenue expenditure — nearly four times the share of be resolved in the next 12-18 months, setting the course for strong
government consumption expenditure in GDP in a normal year. growth in corporate earnings thereafter.

“Higher public expenditure without a commensurate growth in Source : Business Standard. March 2018

Highway development plan has the potential to
add 3% to GDP: Nitin Gadkari

The government’s ambitious highway development
plan has the potential to add 3% to the nation’s gross
domestic product (GDP) and provide 10 million jobs,
road transport and highways minister Nitin Gadkari has said. In an
interview, Gadkari said the construction industry, including cement
and equipment companies, will grow 100% to meet the demands for
the Bharatmala scheme, projects for which will be awarded next year.
Edited excerpts:

The government has announced an ambitious plan detailed origin and destination study, freight flow
to construct 83,000-km roads with an investment projections and verification of the identified
of Rs 7 lakh crore in next five years. Is the infrastructure gaps through geo-mapping, using data
construction industry equipped to undertake this from Bhaskaracharya Institute for Space
enormous task? Applications and Geo-informatics (BISAG). Around
3,300 km of border roads have been identified to be
In last three years, I have already awarded works built along the international border for their strategic
worth Rs 6 lakh crore in the road transport and importance. Around 70-80% freight will move on
highways ministry alone. My target is to award national highways against 40% at present. Around
highway works worth Rs 15 lakh crore before we 550 districts will be linked to national highways as a
complete our five-year term in 2019. Today, the result of Bharatmala programme against 300 districts
heavy equipment industry in this country doesn’t at present. We have identified new corridors in a way
have the capacity to provide the quantity that would that it saves 20-25% travel time for all road users.
be required. Construction companies, including Bharatmala will also have a positive impact on the
cement and equipment companies, would see a 100% Logistic Performance Index (LPI) of the country.
growth. I believe through highways sector only, we
can add 3% to the nation’s GDP. My target is to Given that current highway construction pace per
provide 1crore jobs. Then Bharatmala would give a day has been 23 km per day, what’s being done to
further push to our road construction programme. meet the deadline?
However, I’ll seek more budgetary allocation from
the finance ministry so that projects could be The National Highway Authority of India (NHAI)
delivered in a timely manner. has been empowered to approve all EPC projects.
The need of going to cabinet has been waived off for
What does the Bharatmala plan entail? Bharatmala. We have the CEO of Niti Aayog as part-
time member of NHAI board. The expenditure
Overall, we plan to build almost 60,000 km under secretary is also on the board. This will reduce the
Bharatmala at a cost of Rs 8 lakh crore. In phase one, time required for implementation as approvals
for which we already have detailed projects ready, would be quick. Also, since a lot of these projects
we’ll build 34,800 km at a cost of Rs 5.35 lakh crore. would be done on the government funding, it will
The remaining 25,200 km would be taken up in phase take away the risk of delay in land acquisition and
II. We’ll complete the phase I by 2022 and awarding construction. My target would be to do more than
of projects for the same should be done before 2019. 40 km a day. This way we’ll meet the deadline of
After that we’ll start awarding the projects under 2022 for the entire highway development
phase II. The work on the expressways and the programme.
economic corridors would be taken up first on a
priority basis. We’ll have around 50 economic As per government estimates, highway projects
corridors with a total length of 9,000 km. worth Rs 1lakh crore would be taken up on public-
Identification of project stretches under various private partnership (PPP) under Bharatmala. Will
components of Bharatmala has been done based on private companies be interested?

INDIAN CONSTRUCTION 38 August 2018

When we took over in 2014, no infrastructure finances available to come forward for BOT. We’ve
company was willing to invest. We had stuck done enough to revive the sector and the results are
projects worth more than Rs 3 lakh crore. No visible. Also, we are not relying on private
company was in a position to do BOT (build operate investment. Through bonds, toll operate transfer
transfer) projects. But as we’ve awarded more model, and toll collections, we can easily get almost
projects under engineering procurement and Rs 3 lakh crore. We’ll be getting gross budgetary
construction (EPC) model, the situation has support and money through central road fund as
gradually improved. Under the hybrid annuity well. I can assure that there’s no dearth of money
model, which is also a PPP model, we have awarded and the funding model that was announced on
projects worth Rs 1 lakh crore in the last two years. Tuesday is very much realistic.
So, by executing these projects successfully,
companies would have enough confidence and Source: Economic Times, 26-10-2017

Mid-sized construction firms race ahead in road sector

Timely execution of projects in road sector has enabled healthy profit margins and cash flows that are
reflected in a decent interest cover for mid-size construction firms

While it’s true that behemoths such as Larsen and overruns due to project delays, these have clocked
Toubro Ltd are symbolic of infrastructure stable revenue growth of 15-20% over the last couple
development in the country, ironically 2017 has been of years. Timely execution of projects, therefore, has
a year when mid-sized firms rose to the spotlight. enabled healthy profit margins and cash flows that
Indeed, they ticked all the boxes on revenue growth, are reflected in a decent interest cover for these firms.
profits and order flows. Their stock prices have
accordingly rallied to outperform the returns of Of course, performance in the recent quarters was
benchmark indices and infrastructure giants. impacted by macroeconomic developments such as
demonetisation and the goods and services tax.
To name a few, Sadbhav Engineering Ltd’s shares
returned 37% in a year, while the shares of PNC A Nomura Securities report says that the
Infratech Ltd and KNR Constructions Ltd returned government is set to award 50,000km of road projects
82% and 63%, respectively. valued at Rs5 trillion in the next two years. “NHAI
has awarded more than 55% of the projects under
What is driving this investor frenzy? Primarily, it is HAM, 35% under EPC and 10% under BOT toll in
the government’s thrust on infrastructure, mainly FY2017,” adds the report.
roads, bridges, railways and waterways, with the
highest allocation being to roads. Of course, these Further, that the government is sorting out land
firms are the newer lot that learnt from the mistakes acquisition and environment clearance issues prior
of the older ones. So did the authorities and to the awards is reassuring for developers, banks and
regulators in the sector who faltered on clearances financiers, and investors.
and procedures in the early years before they got
their act together.

The recent awards in the road sector have been
smooth sailing, especially with the shift from the BOT
(build-operate-transfer) to EPC (engineering,
procurement and construction) framework and to
HAM (Hybrid Annuity Model) by the National
Highways Authority of India (NHAI).

Firms such as PNC Infratech, KNR Constructions,
Ashoka Buildcon Ltd and NCC Ltd (formerly
Nagarjuna Construction Co. Ltd) have order books
that should drive revenue growth for the next two-
three years. While earlier firms got stuck with cost

INDIAN CONSTRUCTION 39 August 2018

Meanwhile, the offer to roll out a TOT (toll-operate- into a debt trap about a decade ago. Besides, even in
transfer) model for maintenance of existing the TOT model, returns could be erratic if the toll
highways is another carrot for developers. A report traffic intensity reduces due to unforeseen factors.
by Crisil Research forecasts a reasonable 12-13%
internal rate of return for participants in TOT projects That apart, competition in the EPC segment is now
based on NHAI’s estimated “concession value” for rising, with scores of mid-sized companies willing
the first bundle of nine projects offered. to seize the opportunity in the country’s
infrastructure development. This could again spiral
That said, improved prospects are limited only to into a trend of unviable bids seen a decade ago.
firms that are predominantly road developers. There
is little hope in other infrastructure segments like Meanwhile, some firms such as Simplex
power that is still reeling with overcapacity. Infrastructures Ltd with exposure to affordable
Irrigation and railways too are yet to gain housing, building construction and urban
momentum. infrastructure are betting on the government’s push
in these areas too. The caveat here could be the
However, the road segment also has its share of outcome of the next general election that is not too
problems. Funding, be it debt or equity, is tough for far away.
new projects given that many financial institutions
burnt their fingers when road developers got sucked Source: Mint, 15-12-2017

Road project deals moved in the slow lane, may pick up pace in 2018

According to ICRA, as many as 35 projects with an equity investment of Rs 4,000-4,500 crore are on
the block; the total value of these projects is around Rs 13,000-14,000 crore. (Reuters)

prefer to wait for more TOT projects or if they will
engage in discussions with promoters for various toll
roads,” he explained.

Deals in the roads sector remained in the slow lane According to ICRA, as many as 35 projects with an
in 2017 with private equity investors mostly keeping equity investment of Rs 4,000-4,500 crore are on the
an eye on projects coming up for bidding under the block; the total value of these projects is around Rs
toll-operate-transfer (TOT) model. There were only 13,000-14,000 crore. Of these, 12 are under
six deals of note during the year, against eight in construction while 23 have been generating revenue
2016, and most were residual stake transactions. But, for a three to five-year period. Jain said some of these
there were two big transactions: Brookfield’s projects are struggling to service debt obligations
purchase of two toll expressway projects for Rs 1,900 owing to significant traffic under-performance.
crore and the purchase of Dilip Buildcon’s 24 road However, he added, “There is sufficient tail period
projects by first-timer Shrem Group for Rs 1,600 available which can be unlocked post stake sale with
crore. Industry watchers are also a bit circumspect a stronger promoter coming in.” Nonetheless, the
about a significant pick-up in deals in the coming few deals that took place in 2017 saw improved
months. Shubham Jain, vice-president at research valuations from a year ago. For instance, IL&FS
and ratings agency ICRA, said deals may still not Transportation Networks (ITNL) sold a residual 10%
conclude in the immediate future, although stake in its Gujarat Roads and Infrastructure toll
valuations have improved in 2017, on account of project in October to Oriental Toll Roads for Rs 84
strong traffic growth and reducing interest rates. crore. In the same project, it had sold a 15% stake in
“Some buyers (especially pension funds) are also May 2016 to Macquarie for Rs 110 crore. The sale
interested in the TOT model. They are planning to this year reflects a 14.6% increase in the valuation of
acquire a few assets through this route. Their success the project over the Macquarie sale. Arvind
in the first round will determine whether they would Tembhurne, vice-president at Sirocco Partners, said
global PE firms are looking for yields in the range of
10-12% in annuity projects and of around 14-16% in
toll road projects.

INDIAN CONSTRUCTION 40 August 2018

“Firms like IDFC Alternatives, Cube Highways and independently verified). AMP Capital was similarly
Infrastructure, I Squared Capital and Xander expect trapped in Gayatri Infra Ventures with a 29.41% stake
1-2% more yield if it is a structured transaction. and exited the investment in 2015 for just Rs 43.4
However, if one can hold until the company makes crore after investing Rs 200 crore in the road
a public offer, the returns can be multifold as we saw construction firm in two tranches in 2008. Mahesh
in the case of Banyan Tree, which earned more than Singhi, founder and MD, Singhi Advisors, said
thrice their investment in four years when Dilip developers monetised about 20 road assets worth Rs
Buildcon made a public offering in 2016. Norwest 12,000 crore between 2015 and the first half of 2017
Venture Partners India is again a twice lucky PE fund in which the return to developers was negative in
that has made successful exits in IRB Infrastructure about 30% of the transactions. “Developers with a
Developers and ITNL when the companies went weak credit profile are the ones who disposed of their
public in 2008 and 2010, respectively,” he said. assets at a loss as liquidity took precedence over
However, history is replete with a number of loss- profit-making for them,” Singhi told Fe. While
making deals, among the most notable being interest in the roads sector is definitely higher than
Blackstone’s part-exit from NCC in August 2016. a year ago, whether 2018 will be better is tough to
call. Most industry players, however, are willing to
According to industry insiders, the PE firm took a bet on the new year ending with a far better score.
haircut of almost 14% on its Rs 409-crore investment
even after averaging out transactions to reduce the Source: Financial Express, 26-12-2017
investment cost (this information could not be

NHAI cleared to raise Rs. 70,000 cr via capital market instruments: Gadkari

Will offer higher interest to investors

National Highways Authority of India (NHAI) has Monday, he explained his Ministry was keen on
secured permission to raise upto ¹ 70,000 crore by tapping salaried class, senior citizens and other
way of stock market instruments, according to Nitin middle class people in NHAI’s fund raising through
Gadkari, Union Minister for Road Transport & bonds and other instruments in order to fund the
Highways, Shipping and Water Resources, River highway expansion projects. They will benefit from
Development & Ganga Rejuvenation. higher interest rates as compared with banks which
give about 6 per cent.
Interacting with the Hindu Group of journalists on

INDIAN CONSTRUCTION 41 August 2018

“We want to give close to eight per cent interest for while the balance 60 per cent is arranged by the
those who invest in our instruments. Instead of contractor, he said.
taking money from big investors, we are now
interested taking money from salaried class and Sagarmala project
giving them a good return,” he said.
In Sagarmala, the government is expecting
NHAI is AAA-rated by global agencies. Its toll investments to the tune of ¹ 14 lakh crore. Of which
income is ¹ 10,000 crore and it is in the process of 4 lakh crore will be spent on improving port-road
monetising projects worth ¹ 125,000 crore.,” he connectivity through modernisation of ports. In this
added. ¹ 2.8 lakh crore worth of projects have already been
commenced.
The monetisation of operational road assets will
reduce dependence on borrowings. “In Tamil Nadu, we are expecting investments to
the tune of ¹ 250,000 crore under Sagarmala
Gadkari also stated that with transparent programme,” he said.
mechanism, better co-operation from states for land
acquisitions, quicker environment clearances, the Gadkari also said the government had taken up
government is confident of increasing the road 24,500 km of roads for development in phase 1 of
construction of 28 km per day now to 40 km a day Bharatmala programme and the capital cost for the
during next year. same has been estimated at ¹ 7.50 lakh crore. “We
hope to start the work for about 40 per cent of the
Gadkari also expressed happiness over gaining phase 1 project. Land acquisition is in progress,” he
momentum for the Hybrid Annuity Model in the added.
road sector. There is full transparency in this model.
NHAI releases 40 per cent of the total project cost, Source: Business Line, 27-2-2018

Road sector: How new contract model fuelled
growth in highways

In addition to this, improved construction activity and a decline in the number of stalled projects
clearly indicate that the government has got its act together on roads. What’s more, the roads
ministry clearly reserved the best for last.

The show really hit the road in 2017, as the of Rs 7,50,000 crore, targeting construction of 83,677
government kicked into high gear on building of km of road network, subsuming the existing
highways across the country. The roads sector stayed National Highways Development Plan (NHDP)
the course with 18% year-on-year growth in the launched by the Atal Bihari Vajpayee government
number of kilometres constructed per day, at 26 km in 1998, under which roughly 20,000 km has been
against 22 km per day in 2016. The swelling order constructed over the past two decades. The
books of a dozen road developers also bears Bharatmala programme aims to construct more than
testimony to the healthy pipeline. double this length in one-third the time, by FY2022.

While from January to August 2017 only 1,200 km The size of the opportunity and the new model of
of projects had been awarded, against 2,600 km in contracts has drawn several new players to the sector
the same period of 2016, the awarding of projects in the year gone by. Little known and mid-sized
has gained pace in the past three months and there companies have started building a presence, either
is an expectation that the year will end with a big on their own or through joint ventures with foreign
tally. In addition to this, improved construction companies, who are looking to get in on the action.
activity and a decline in the number of stalled Dilip Buildcon, Sadbhav Infrastructure and MEP
projects clearly indicate that the government has got Infrastructure bid and won at least five projects or
its act together on roads. What’s more, the roads more each, under a new developer-friendly hybrid
ministry clearly reserved the best for last. On October annuity model (HAM) that gradually picked up
25, the central government announced the
Bharatmala programme, with an ambitious outlay (Contd. on pg. no. 45....)

INDIAN CONSTRUCTION 42 August 2018

[Unauthorised Occupation - MCGM must follow principles of natural justices and
due process of law for eviction] without authenty of law.
2017 (2) Mah. L.J.-601
IN THE HIGH COURT OF JUDICATURE, AT The Ld. Judges after hearing the
MUMBAI respective counsels observed that
though clause 33 of the license
Before Justice Ranjit More & Smt. Anuja agreement provides that on
Prabhudesai J.J. revocation of licence, the licensor
is entitled to enter the shops and the licence shall
Balwant C. Thakker & Others …..Petitioners handover the possession of the shops, the MCGM
has not revoked the licence which is valid till 2011
v/s only. Even after the expiry of the licence the
petitioners are allowed to continue and conduct
Commissioner, Municipal Corporation their business in the shops on accepting additional
50% compensation charges.
of GR Mumbai - (MCGM) …..Respondents
The corporation has sought to evict the petitioners
In the year 1998 MCGM called for the tenders for without taking recourse to the remedy available
allotment of shops situated in the Subway at CST under the statute and without following the due
Railway Station and at Churchgate Railway process of law. The action of the corporation, a
Station, Mumbai. The petitioners being the statutory body, is not in consonance with the
successful bidden each one of them was allotted a procedure prescribed by the statute. The action of
shop upon execution of leave and license the corporation being arbitrary, in violation of the
agreement the tenure of which was 10 years and principles of natural justices and contrary to the
each subsequent block period was of 5 years. statutory provisions, the petitioners were justified
in invoking the writ jurisdiction of the court.
The petitioners were put in possession of the
respectives shop and they have been conducting Under the circumstances, the petitions are
their business in the said shops. The corporation allowed. The impugned notices are quashed and
had extended the initial period of licence till the set aside, however, the corporation is not
years 2011. Though there was no renewal of the precluded from evicting the petitioners by
agreement for the subsequent period the following the due process of law.
petitioners continued to be in possession of their
shops on payment of compensation from time to [Maharashtra Employees of Private Schools
time. (conditions of service)]
2017 (2) ALL M.R.-177
The Asstt. Municipal Commissioner (Market) IN THE HIGH COURT OF JUDICATURE, AT
issued notices to the petitioners intimating them MUMBAI
that MCGM purposes to use the space inter alia
for benefits of general public/pedestrians and Before Justice Smt. VasantiNaik& Mrs. Swapna
therefore, directing them to pay the averse of Joshi J.J. Nagpur Bench
compensation changes and handover the vacant
and peaceful possession of their respective shops Late GajananWankhede …..Petitioners
written thirty days from the date of receipt of the
notice, it is these which are challenged by the v/s
petitioners by filling Writ Petitions in the Hon'ble
High Court, at Mumbai and for quailing and State of Maharashtra &Ors. …..Respondents
setting aside the same.
The petitioner has filed the present Writ Petition
On behalf of the petitioners it was contended seeking declaration that the action on the part of
interlaid that MCGM has no powers to evict the respondents in recovering the excess amount, after
petitioners without following the due process of her retirement, which amount was mistakenly paid
law as contemplated under the provisions of law to the petitioner is grossly illegal and liable to be
under MMC Act and therefore, the impugned
notices an arbitrary and in violation of the

INDIAN CONSTRUCTION 43 August 2018

sit aside. petitioner towards the salary and other benefits,
while the petitioner was in service, after her
On behalf of the petitioner it was contended that retirement.
the respondents are not justified in seeking the
recovery of the amount of Rs. 3,04,475/- was Rule made absolute in above terms, with no order
wrongly paid to the petitioner white service, after as to costs.
the petitioner is voluntarily retired from the
service and also cited a judgement reported in Ordered accordingly.
AIR-2015 S.C. 696 in the case of Punjab and Others
v/s RafiqMasih. Maharashtra Co-Op. Socities Act | Contract Act.
2013 (3) Mah. L.J – 178
The Ld. Judges after hearing both the sides and IN THE HIGH COURT OF JUDICATURE, AT
on perusal of the Judgement cited observed that MUMBAI
in that case all the employees were given monetary Before Justice Mrs. Roshan Dalvi J.J.
benefits, which were the excess of their
entitlement. These benefits flowed to them, Gurudev Developers Plaintiff
consequent upon a mistake committed by the
concerned competent authority, in determining the v/s
emoluments payable to them. All the private
respondents were beneficiaries of a mistake Kurla Konkan Niwas CHS Ltd Defendant
committed by the employer and a account of the
said unintentional mistake, the employees were in The plaintiff was appointed as a builder/
receipt of benefits, beyond their due. Contractor to construct the buildings of the
defendant society under the agreement dated 18-
The payment of higher dues to the employees, in 01-1985. The plaintiff put up certain plinth work
al those cases, was not on account of any and also certain pillars. Thereafter, no construction
misrepresentation make by them, nor was it on was put up by the plaintiff and therefore, the
account of any fraud committed by them. The issue society terminated the contract and entrusted the
before the Hon'ble Apex Court was, whether all construction work to another contractor who
the private respondents, against whom an order completed the construction of the buildings of the
of recovery (of the excess amount) has been made, defendant society.
should be exempted in law, from the
reimbursement of the same to the employer. It was Being aggrieved by the termination, the plaintiff
held by the Hon'ble Supreme Court that the filed a suit for specific performance of the
around paid to the employee in excess by mistake, agreement dated 18-01-1985 between the plaintiff
while in service and without his this and the defendant society and for declaration that
representation, cannot be recovered from the the termination of the agreement dated 21-01-1992
employee, after his retirement. is illegal. The plaintiff has also sued for damages
of Rs. 1, 83,07,410/= in the alternative to the relief
It is clear from the above said case law that an of specific performance.
amount mistakenly paid to an employee in excess,
while in service and without his The defendant society resisted the suit contending
misrepresentation, cannot be recovered from the that another contractor was appointed and that he
said employee after misrepresentation, cannot be has completed the construction of the buildings
recovered from the said employee after his and therefore, specific performance of the
retirement. In view of the law laid down by the agreement cannot be grated. After termination on
Hon'ble Apex Court, the respondentswould not be 21-01-1992, seven years passed then too there was
entitled to recover the excess amount paid to the no progress in the construction work. The
petitioner towards salary and other benefits, while defendant also denied the construction work other
the petitioner was in service, after his retirement. than the plinth work and construction of 27 pillars
only. The defendant also denied the damages
In view of the aforesaid circumstances, it is hereby claimed by the plaintiff.
declared that the respondents would not be
entitled to recover the excess amount paid to the

INDIAN CONSTRUCTION 44 August 2018

The ld. Single Judge after hearing the counsels for incurred to the extent of the damages claimed. The
the parties and after perusing the documentary plaintiff’s case for damages on account of delay
and oral evidence led by the parties observed that by the society and for building material for further
the plaintiff has not be able to show construction construction cannot be entertained as there is no
of plinth work and 27 pillars only even seven years evidence in this regard. The plaintiff would
after the contract, and now he has challenged the therefore, be entitled to further amount of Rs. 4
termination as illegal which cannot be accepted. lacs apart from Rs. 6.08 lacs already received for
The plaintiff would not be entitled to get the suit the work reasonably done and the expenses
contract specifically performed in a suit filed seven reasonably incurred by the plaintiff.
years after the execution of the contract when the
contract has been given to another party and the The plaintiff’s suit for specific performance is
buildings have been constructed. dismissed and for declaration that termination
notice invalid is also dismissed.
The plaintiff has failed to prove the expenses
No order as to costs.

(....Contd. from pg. no. 42)

steam. A clear manifestation of this are the two joint from Gammon Infrastructure Projects for Rs 2,935
ventures of MEP Infra, with Spain’s San Jose and crore. The deal marked the end to a year of a steady
with Chinese state-owned firm Longjian Road & flow of single asset deals with increasing numbers
Bridge Company. The new model seems to have of private equity funds interested in owning road
done the trick, with projects awarded under HAM assets in India. The industry continues to be
forming about 50% of the total projects awarded this challenged by the usual issues of land acquisition
year. And this trend will likely continue. but the equally important problem of procuring
finance for such projects seem to have been resolved,
Brimming with confidence, smaller, pure-play at least for now. The numbers bear this out, as road
engineering, procurement and construction (EPC) developers with good execution track records and
companies, too, are moving up the value chain, strong balance sheets continue to win projects as well
increasingly bidding for HAM road projects. For as secure financing for them under HAM. Based on
instance, Sunil Hitech Engineers is one such the much-improved performance in 2017, the
company that has bid and won one HAM project so industry is in for even better times in 2018. However,
far. Its director, C Venkataramana, says this new Shubham Jain, vice-president at ratings and research
model will attract companies that are serious about agency ICRA, advises caution.
the business, unlike in the past. He adds, “The
returns are commensurate with the low-risk profile He says the government may be constrained by its
of the model but it is a good way to build up the own fiscal deficit target, especially considering the
order book with most of the bigger companies increase in compensation under the Land
staying away from these projects. We will selectively Acquisition, Resettlement and Rehabilitation Bill
bid for more HAM projects in future.” As (LARR) 2013, which provides for compensation of
construction picked up pace, the surge in order four times the value of the land being acquired in
inflow added to the momentum, with companies rural areas. Jain told Fe,”Considering the private
reporting a doubling in the order-book-to-revenue sector’s involvement is going to be limited to about
ratio to 2.5-3 times, a level that has not been seen in 15-20%, the government’s asset recycling
over five years. programme under the toll, operate, transfer (TOT)
model is going to be critical for them to raise the
Dilip Buildcon announced at the end of August that funds required.”
it had signed a Rs 1,600 crore deal to sell its entire
stake in 24 of its road projects. That was the first big- This might play a spoiler, but all else seems in place
ticket road asset sale in two years since Canadian for speeding ahead in 2018.
asset manager Brookfield purchased six road projects
Source: Financial Express, 21-12-2017

INDIAN CONSTRUCTION 45 August 2018

Announcing. . . .

National Conference on GST vis-à-vis
Building and Construction Industry

‘The Big 5 Construct India’, International ¾ Reversal of ITC on receipt of OC on first
Exhibition and Conference for Building, occupancy”
Construction and Infrastructure Community in India
will be held between 5th to 7th September, 2018 at CA Sandesh Mundra (Chairman-GST
the Bombay Exhibition Centre, Western Express Committee, BAI) on Impact of GST on
Highway, Goregaon (East), Mumbai. Running in its Construction and Infrastructure Sector:
6th year, the exhibition brings together entire
portfolio of innovative building and construction ¾ Issues of contractors (Rate of tax in case of
products and solutions under one roof. Over 150 various schemes)
manufacturers, suppliers and service providers from
more than 15 countries showcase their products to ¾ Retention money
thousands of buyers attending every year. ‘The Big
5 Construct India 2018’ is supported by BAI. ¾ Developers paying construction charges by
way of allotment of certain area / flats
Concurrent to ‘The Big 5 Construct India 2018’, BAI exemptions in case of government projects
is organizing ‘National Conference on GST vis-à-
vis Building and Construction Industry’ on ¾ Rate of tax to be charged by the contractors
Wednesday 5th September, 2018, in the Conference
Room of ‘The Big 5 Construct India’. ¾ Affordable housing, PMAY and other
concessional schemes”
The conference will be inaugurated by Mr. S. K.
Vimalanathan, Commissioner GST, who will also Panel discussion by CA Rajkamal Shah
deliver the keynote address. (Member, GST Committee-BAI), CA S. S.
Gupta, CA Ravikumar Yanamandra and CA
Speaker and topic(s) Sandesh Mundra

CA S.S Gupta (Noted Author in Indirect Taxation) For registering to the conference please go to :
on Impact of GST amendments on Construction https://www.meraevents.com/event/
Sector & Real Estate Sector and Controversies national-conference-on-gst-vis-a-vis-building-
surrounding valuation, ITC blockages, branch and-construction-industry
transfers (Inputs, Capital goods & Services) and
Transitional issues (Transitional Credits, The tentative programme for Wednesday 5th
Cancellations, Refunds) September, 2018 will be as follows :

CA Ravikumar Yanamandra (Director, Indirect ¾ Inauguration of ‘Big 5 Construct India’ at
Taxes - Infrastructure, Industrial & Consumer, E & 10.00 a.m.
Y LLP) on Impact of GST on Housing Sector :
¾ Visit to ‘Big 5 Construct India’ at 10.30 a.m.
¾ Re-development including housing society,
landlord and tenants ¾ ‘National Conference on GST vis-à-vis
Building and Construction Industry’ at 11.30
a.m.

¾ Taxability of development rights, time of ¾ Fellowship Dinner at 07.00 p.m.
supply, value and ITC

For any clarification please contact, email:

[email protected] / [email protected]
Mobiles 9820517064 / 9076337294.

INDIAN CONSTRUCTION 46 August 2018