Monday, September 28, 2009

Less rains make water contractors smile -

Less rains make water contractors smile -
Mumbai: Construction companies see a chunk of water contracts coming their way as they feel that state governments would be aggressive on such works due to inadequate rainfall this year.
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E Sudhir Reddy, chairman & managing director of Hyderabad-based IVRCL Infrastructure & Projects, believes that the Andhra Pradesh government will go full tilt in speeding up the existing water contracts, in addition to awarding new ones.

"Bad rains do not mean the end of our lives. This is a warning to the governments that if they don't act fast they will be kicked out," Reddy, who is hopeful of bagging quite a few water projects this year, said.

IVRCL is one of the biggest players in the water space with nearly 65% of its Rs 15,000 crore order-book in water contracts spread across 21 states.

K Jalandhar Reddy, executive director of KNR Constructions, agrees with Reddy. "There will definitely be more contracts awarded. States that received very little rainfall will be just active as their counterparts that had better monsoon," he said.

KNR has just executed two urban water development projects in Bangalore. Urban water contracts are awarded by municipal bodies and funded by Jawaharlal Nehru National Urban Renewal Mission (JNNURM), for which allocation was increased 87% in this year's Union Budget.

A senior official from Kolkata-based Subhash Projects, requesting anonymity, said expediting water projects is on the top of the mind of governments. "With states like Maharashtra not receiving good rainfall, their governments will definitely ensure a speedy completion of projects," he said.

Andhra Pradesh is probably the most aggressive state when it comes to irrigation and water contracts. It is estimated to have awarded projects worth Rs 1,00,000 crore in the last 4-5 years and contracts worth Rs 10,000 crore in the last six months.

At the same time, it's close to declaring a drought this year, with a rainfall deficit of 56%. The meteorological department has reduced the estimate of rains for this year from 93% to 87%. The north-west region is the worst affected with an average deficit of 42%.

Water contracts primarily involve water treatment, supply and distribution, among others.

Sandeep Reddy, MD, Gayatri Projects, said the bad monsoon also emphasises the need to have areas that receive meagre rainfall well-irrigated so that in subsequent years there is water supply through the year.

Nearly half of the Gayatri's order-book of Rs 6,000 crore is in irrigation contracts.

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