Tuesday, January 19, 2021

Company Profile -IMAP INC

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SUDHANSHU KARANDIKAR, MANAGING DIRECTOR, IMAP INC offered SHRIKANT RAO his personal views from Barcelona on how Indian construction sector firms could emulate the feats of Spanish EPC conquistadors.  



Indian infrastructure companies are growing  in their strengths and capabilities in leaps in bounds. The growing domestic investment in the sector has given them a boost and a revival of the infrastructure projects post election would help them grow even further. Lack of sufficient financing and high interest rates have hurt the sector – apart from slowing down of the projects and support like making land available for the projects among others.


European companies have been on the forefront for infrastructure projects internationally. Spain is a curious case in point – the reconstruction of the Spanish economy started in the 80´s. With the domestic market offering great opportunities, the Spanish companies grew in strength and expertise and expanded internationally. Not just Latin America – which could be the natural geography but also in mature markets like the US, France and UK.  The key strength of Spanish companies in the infrastructure is their ability to “manage” and “execute”. They can boast of teams made up of some of the most seasoned professionals- not just engineers but also finance and project managers. 


Some companies like Abertis concentrate on concessions – though they have EPC capabilities. ACS, Sacyr, FCC, OHL, Ferrovial, Isolux can be some of the big companies but smaller companies like Constructora San Jose and Assignia have an international presence and some of them have businesses in India. Isolux might be the biggest player with more than 2 billion euros of projects including one of the biggest NHAI projects.  The major challenge for most of the foreign players entering India has been finding a partner with strong EPC capabilities.  The foreign companies look for local EPC partners – though some build these capabilities themselves. 


This can offer a great chance to learn the best-practices and processes of international standard – which can help these companies get ready for international projects - as most of them are regional players and need strong project management capabilities of a global standard. 


References for bidding and the ability to raise finance are the challenges to overcome for Indian companies going overseas. Indian companies can emulate the Spanish example – in spite of the fear of being more “expensive” should they become sophisticated – the rewards can be immense. Not just in India but also overseas.


 The immediate geographies where Indian EPC companies have an advantage and opportunity would be South Asia, Afghanistan, Middle East and Africa.  The Indian economic conditions should improve should India have a strong government post the elections. This would mean re-starting the projects and investment in infrastructure and Indian companies would have a great domestic market again.  Having said that, it is time for the Indian companies to strengthen their capabilities and start exploring matured markets like the US and Europe – which could mean a huge leap in terms of technology and management skills. The bigger companies are already in international markets – though not yet in the matured markets. To compete internationally, one needs a professional organisation with strong skill sets including project management and execution, finance, control, modern construction technology and machinery. Efficiency across the value chain is fundamental to winning and executing projects. Within Europe, the sector has been undergoing consolidation and many companies are downsizing, looking for investors, selling out or closing business. 


This can mean interesting valuations for M&A. A weak rupee is an impediment and in general big-ticket Indian M&A has been on the wane in the recent years. The European/Spanish interest in the Indian market has gone down since 2008. One can think about several reasons behind it – lack of new projects, delay in support – making land available for example, political uncertainty and lack of transparency can be some. The economic turn-down has put serious pressures on many of these players – who prefer going to safer markets like US instead.


 A strong government, confidence measures, transparency and support from the government – weeding out bureaucracy and corruption would be a key to getting international players back into India.


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