Mumbai, as a city, has been driven by the suburban train system (which we call local). That has been designed in a longitudinal manner, providing only North-South connectivity. This ‘local’ system currently carries over 80 lakh (8mn) people, with a travelling density of more than 12 people per sq. mt. This is the situation that we intend to change – to provide a much more convenient and humane form of public transport.
The entire Metro Masterplan has been built as per the recommendations of a Comprehensive Transportation Study (CTS) conducted in 2008. The report, and its future versions, have focussed on creating a roadmap for 2031, and based on its latest version, we have built the roadmap for 2041. The plan focusses on providing more horizontal connectivity throughout the city – something that we do through line 1, 2B, and 6.
We also try to connect the far-flung suburbs to the main city and the CBD; we intend to achieve that through lines 2A, 4, 7, 9, 10, and 12. Lastly, we have also focussed on providing multi-modal transport across the city by providing interconnectivity across locals, metros, and buses. Many of our metro stations will have inter-change with the local-train network and also with various metro lines. Line 6 will intersect with Lines 2A, 7, 3 and 4; Line 2B will have connections with lines 2A, 3 and 4 – similarly most lines have interconnectivity with many other lines.
This metro network – with the extended plan now going up to 337km – will add almost the same capacity as the current carrying capacity of the local train network. The objective is not just to decongest the local trains, but also the roads; incentivize more people to shun private transport and take-up public transport.
Line 2A and line 7 should become operational next year – we are actively working towards that. After this, we should be able to begin stage-wise operations for over 170km by 2023 – by then, we should have almost 200km of metro network under operations.
In fact, right now, we have over 150km of metro network under construction. I was discussing this with my colleagues – that we should perhaps try to get into the Guinness Book of World Records for the highest level of construction activity in metros anywhere ever in the world. Now your research also boosts my confidence. This sort of thing could be good marketing for the projects that we are undertaking.
We are looking at three lines:
• Line 8 – which will connect the city’s currently operational international airport with the under-construction Navi Mumbai airport.
• Line 13, which will connect Kanjurmarg and Badlapur. This will be the longest single line of Mumbai’s metro, and we expect it to have maximum ridership when it is complete.
• Line 14, which is planned between Mira Road and Virar.
All these lines are currently at the DPR stage and should see some activity next year.
Arranging parking for cars will be difficult in Mumbai because of paucity of land. However, we are designing stations with many other features such as shared taxi/auto bays, cycle stands, and other forms of transport. We have also designed the network in such a way that no major place is more than 1km away from a metro station. So in that way, last-mile connectivity should not be a big problem.
The thing is that the mind-set and culture needs to change. For people to switch from private transport to public transport, we need a large network to be operational, which we expect by 2023. The drive from Marine Drive to BKC today takes at least an hour. But a metro journey will take a maximum 30-40 minutes, that too at a much lower cost and higher convenience. Once that mindset starts developing, the metro can be successful, even without parking facilities.
MMRDA has a lot of land bank, which we intend to monetize, to fund our roads and metro works. You would have read that we recently sold a land parcel in BKC to Sumitomo Corporation for almost Rs 22bn. These kinds of transactions are what we are looking for. Currently, we have a landbank worth almost Rs 750bn; so that should stand us in good stead for the near to medium term. However, we intend to monetize the landbank in a systematic manner.
And no, the state government does not provide any financial support; it may act as a guarantor in an overseas deal, but MMRDA has to arrange the entire financing itself.
The debt servicing of the loan is also MMRDA’s responsibility and we are hopeful that once the metro network becomes operational, fare collection would also lend support. Currently, the Metro Line 1 is generating over Rs 1bn EBITDA. With over 200km operational, we hope to generate much more than that.
We are also planning to develop Line 13 (Kanjurmarg to Badlapur) on a PPP basis. We expect maximum ridership on this route, which should attract private developers. If required, we can also provide VGF to make it more attractive.
Though there has not been any formal decision, we believe the fares will in the form of Rs 10-20-30-40. I don’t think we will have fares that are more than Rs 50-60, but there hasn’t been any decision on that yet.
Monorail is one project where, I believe, we made a mistake by choosing Scomi as the supplier for the rolling stock – which meant that we had put all our eggs in one basket. Now we are not able to get enough rakes or servicing from them. We are not even able to procure spare parts for it.
Initially, Scomi had supplied 8 rakes, out of which two burned in separate incidents. Earlier, we were operating with two rakes; now we have 5, keeping the rest for spare parts. But we are looking at various options now, including changing the vendor. This might not be easy, as the new vendor will have to fit the design specification of the monorail already constructed, but it will be a long-term solution.
I believe that in the next 1-2 years, we should be able to resolve the problem. By the time Line 4 becomes operational, I believe, we should be able to run the monorail at maximum capacity and peak frequency. After all, though it wasn’t designed to be so, the monorail is now an integral part of the metro masterplan, and is the one of the key lines connecting the various areas of South Mumbai like Parel and Mahalaxmi.
So the problem here is multiplicity of authorities. Ideally, the municipal body should take care of the internal roads and flyovers, but when they don’t, we have to plan, design, and construct it. So that takes a bit of time and causes delays. But I agree that we need to be more proactive in our efforts to decongest roads.
Theoretically, all intra-city roads and flyovers come under the jurisdiction of the local municipal body in any city. So ideally these flyovers and roads should be constructed by them. But then, it is argued that infrastructure such as the Western Express Highway provides connectivity to other cities and Mumbai suburbs, so it falls in our jurisdiction. A lot of flyovers on WEH and EEH have been built by MMRDA. The eastern freeway, SCLR, all these roads – we have built. We are building the Trans-Harbour Link. On the other hand, the municipal body is making the coastal road and MSRDC is building the Sea-Link.
Recently, we have taken charge of the entire WEH and EEH from PWD, and we will be maintaining it from here. In fact, we have also invited a consultant to make WEH completely signal free, by providing various flyovers and connecting roads at key junctions. SCLR is also a part of that effort. So things should happen on that more quickly now.
We are trying to do a lot of things here at MMRDA with a staff of only 800 employees. Building one of the largest metro networks of the country along with various roads and flyovers is a big ask. But we are trying it – for the benefit of the residents of the city.
Ans: The last five years were a consolidation period for us. We focussed on profitable growth, got out of loss making projects, induced discipline in bidding and execution. From being concentrated on the private segment (over 80% of the orderbook) we now have a 20:80 mix of private: public clients. This has helped us mitigate client risk better. We have focussed on timely execution and profitable growth, and that has led us to where we are today.
Many lessons have been learnt. I world say the most important of them has been not to lose focus of the basic fundamentals and principles of your business, and your values. Second is not to chase one business parameter, while neglecting another. And lastly, try to create a business model that can sustain macro and micro economic shocks – because we operate in a highly volatile industry, dependent on multiple external variables.
With the same government coming into power with such a decisive mandate, a sense of continuity should prevail and I feel that infrastructure growth is only going to increase. I believe there is going to be more activity as far as social infrastructure is concerned, as far as affordable housing is concerned and there is going to be growth in areas where not only are we present geographically, it is going to spread to other areas also, but we still need to wait and watch.
Post general elections, we are seeing a general economic slowdown. Orders awards are being deferred, payments are delayed, and there appears to be an overall lethargy in the system. Few of our projects have faced execution delays, due to delay in approvals and clearances.
I would like to hope that this is a temporary transient issue – of a new government taking charge. In that case, we should witness momentum pickup in a few months. But if it doesn’t, then it might be symptomatic of some bigger challenges that the economy is facing.
The construction industry has typically been made up of local contractors, which have superior knowledge of specific regions, and hence cost advantage. Even most of the large pan-India companies have a specific catchment area, where they get large share of their orders from. L&T has been the only company to be able to make a formidable pan-India presence. But then you must also understand that L&T OR NCC have diversified portfolio and project mix. One should look at construction industry segment wise.
As a company we do not believe in chasing growth at the expense of profitability. We always want to chase profitable growth. If you see our order inflow trends as well, we always wait out periods of aggressive bidding, and take projects only when we get them in our desired range of margins. Thankfully we have a strong balance sheet – so we do not mind growing at a steady pace – as long as we maintain profitability at desired levels.
We focus on quality of clients, and on timely execution of projects – so that we received payments on time, and create value for our shareholders. We intend to maintain the steady growth 20- 25% per annum given the economic condition of the country allow.
The key challenge that the industry has been facing is working capital. Though we have one of best working capital cycles in the industry, payments from govt bodies often get delayed, due to various factors. Since the entire industry operates on thin margins (10-15%), any delay in payments impacts the profitability of not just one, but multiple projects.
Another challenge is dealing with multiple layers of govt authorities. And ofcourse, for our segment, the slowdown in real estate sector, is also impacting the growth.
Real estate sector is going through a structural downturn, for almost a decade now. While earlier part of the cycle was due to excessive supply and tepid demand, recent regulatory steps like RERA, demonitization and GST have impacted the sector significantly.
While these steps have enhanced transparency of the sector, they have also made it difficult for small and marginalized developers to run business. But I feel the govt needs to take some steps to revive the sector, for the simple reason that it is one of biggest employment generator, and has a multiplier effect on the economy of the country.
Not on the residential side, but in the commercial space is concerned, yes there is a pickup. We are continuously getting increase in our existing orders from the clients with whom we are working. And adding some new one but again we are care full whom we do business with.
We continue to focus on our strength areas – north and east. We have also bagged few project in the western part of the country. South remains a relatively uncharted territory for us, but that doesn’t mean we are not open to doing project in south. We will be selective and opportunistic, when it comes to the geographies.
Segment wise, we have forayed into airports, railway and metro stations as on EPC basis to and we continue to explore are business where we can leverage our strength and open new vistas in EPC.
Subscribe to enjoy uninterrupted access
