Subhash Projects and Marketing Ltd. (SPML) is an Infrastructure Development company with over 25 years experience in the public as well as private sector. SPML was incorporated in 1981 and listed as a public limited company in August 1983. It has offices in Kolkata, Delhi, Mumbai, Bangalore, Chennai, Jaipur, Patna and Guwahati. SPML is a single source solution provider for various multi disciplinary engineering and infrastructure services from conceptualization to maintenance in Water, Power, Environment and Infrastructure projects. SPML has business capabilities in the Water, Energy, Environment and Infrastructure domain, on a Public Private Partnership (PPP) & Build-Own-Operate-Transfer (BOOT) basis.
Mr. Anil Sethi, Chairman of Subhash Projects & Marketing Ltd., has over 27 years of experience in the Engineering and Infrastructure industry. He pioneered turnkey concepts in renewable energy projects and in many integrated water supply initiatives. Sethi diversified the company?s operation to infrastructure verticals such as Ports, SEZ?s and Urban Infrastructure. Sethi has been the recipient of several national accolades for his strides and accomplishments in the industry. He is a recipient of The Pride of India Gold Star Award, India quality Gold Star Award and The Vikas Jyothi Award, amongst others.
Replying to Yash Ved of India Infoline, Anil Sethi says: "A world-class infrastructure will be needed in India to provide the platform for faster, consistent growth and for India to become a major world economic power."
How has the global economic downturn affected your company?s operations? What particular measures did you take to cope with the same?In a developing country like India, infrastructure sector will continue to grow for the overall benefit of the nation. This provides an opportunity for companies like ours.The Government has taken few pro-active steps to support the Indian industry, in the background of the economic slowdown in America and Europe. In the current global scenario, from an infrastructure development standpoint, India should continue to focus on Public-Private-Partnership (PPP) model, which will help standardise the pattern. SPML?s business growth graph is healthy and perhaps the economic slowdown will help us introspect, optimize and emerge stronger.
What is your outlook for the construction industry, especially in the wake of the election outcome and the Government?s pledge to improve infrastructure?Infrastructure is an issue of critical importance in India today. A world-class infrastructure will be needed in India to provide the platform for faster, consistent growth and for India to become a major world economic power. Opportunities in water and environmental engineering are immense. Investment of Rs. 2.3 trillion (US$55bn) is proposed for water resource management in the Eleventh Five Year Plan. India's water market is approximately one-third of the total estimated value dedicated for water provisioning, one-third for municipal water treatment and one-third for industrial water treatment. The overall annual growth rate is 15% to 20%, with the drinking-water and industrial segments growing even more rapidly. India?s urban water demand is expected to double, and its industrial demand to triple, by 2025.
The PPP model will be crucial to accelerate growth and increase output and efficiencies in this sector. We also need more foreign collaborations so that we can replicate models that have worked elsewhere in the world after suitable customisation to India conditions. Also, integrated solutions are the need of the hour. We need to ensure the clients engage with one single partner for construction and operation and maintenance and management to ensure ownership. Important steps to accelerate infrastructure growth in our country are initiatives such as public-private-partnership, a long term contractual partnership between private and public sector agencies specifically financing, designing, implementing, and operating infrastructure facilities.
Which sectors are going to be the main growth drivers for your company over the next 2-3 years? Are you planning to foray into any new segments like roads, bridges and highways?We would be focusing on water projects apart from our other areas of operation like infrastructure, power and environmental engineering. We are also looking forward to executing more high value projects in roads, bridges and state highways.
Brief us about your ongoing and future projects? We have secured Rs5.26bn worth underground sewerage system (including Operations & Maintenance cost for 5 years after commissioning) from Mira Bhayandar Municipal Corporation, Maharashtra. The Scope of Work includes underground sewerage facilities in the 24 sq. km area of this fast developing city within the next 30 months. The project would comprise providing, laying and commissioning 107 kilometres of sewer lines; design, construction and commissioning of 10 Pumping stations and 10 Sewage Treatment Plants (STP) with capacities ranging from 7 MLD to 17 MLD. It will also provide for the necessary pressurized ring mains for distribution and disposal of recycled water.
The company also secured another contract worth Rs5.86bn from the Irrigation and CAD Department, Government of Andhra Pradesh. The scope of the work includes investigation, design and execution of water conveyor system consisting of lined gravity canal of Tipparam - Chityal Canal Reach-I with carrying capacity of 44.20 Cumecs taking off from Thipparam Reservoir to Kandukur Vagu crossing near Mulkala palli(v) of M Turkapalli Mandal of Nalgonda District with CM & CD works including distributory network for an area of 55,000 Acres, including O&M.
We have also bagged order worth Rs770mn from Delhi Jal Board. The Scope of Work includes construction of 25 MGD (million gallons per day) Effluent Pumping Station (EPS) at Rithala STP, including twin transmission mains for carrying 33.34 MGD treated effluent from EPS at Rithala to PPCL (Pragati Power Corporation Limited) plant at Bawana, on Design, Build and Operate (DBO) basis with a completion timeline of 11 months. SPML will also undertake Operation & Maintenance for a period of 5 years post completion. The DJB project win re-iterates SPML?s strength in the Industrial Waste Management domain. It is also notable that throughout the years SPML has proved its efficiency to establish itself as one of the preferred companies to work on specialized segments
We have also won consolidated order worth Rs693.7mn from the Karnataka Urban Water Supply and Drainage Board. The scope of work includes Providing, laying, jointing, testing and commissioning of 1168mm dia M.S. Rising Main from Jack well at Saundatti to Water Treatment Plant at Amminabhavi and Design, construction, supply, installation, testing, commissioning, trial run and maintenance of 68 MLD capacity Water Treatment Plant for a period of 12 months (includes all civil, mechanical, electrical and allied works at Amminabhavi)
How many of your projects are BOT based? Are you looking to increase this component in the total order book? It is in the region of 75:25 - EPC: PPP/BOOT. We are consolidating our EPC prowess while exploring value generating PPP models.
What is the investment required for the same? Are you sufficiently capitalised to execute all the projects in hand? Do you see any need for raising long-term funds?We bid for projects based on well planned investments. Prudent cash management helps us to operate smoothly through all our projects. Every project is funded by the right channels and institutions, projects are then managed optimally, resources used efficiently and effectively and most important, projects need to be delivered on time. These fundamentals will ensure the profitability of the initiatives and the financial health of an organization. Raising mid-term or long-term funds is an ongoing process for any infrastructure development company, and so is it for us.
What about the overseas markets? Are you interested in expanding your footprint abroad? If yes, which geographies will you look at?At present our efforts are to consolidate our position in India, while we keep our eyes open for opportunities outside as well.
What is the debt-equity ratio? Any plan to reduce the same?The Debt-Equity ratio as of FY-08 was 0.71. Our approach towards debt financing is purely driven by the market dynamics. I don?t think it makes much business sense to reduce the debt component.
Brief us about your financials for FY09? Also tell us about topline and bottomline target for FY10?In 2007-08, our turnover was Rs11671mn with operating profit of Rs878mn. In FY-09 we expect to replicate the good performances. The infrastructure sector is already showing signs of recovery and we believe that our organization is well positioned to benefit from this upturn driving our topline figures to further heights. In FY-10, we are expecting the growth in bottom line figures to be even better due to various measures the organization has taken in the recent past to improve its operational efficiencies.
What is the status of your JV with US-based Insituform Technologies Inc.? Have you managed to bag any project since the launch in October?Our JV with Insituform Technologies Inc is ongoing and continuing to win and execute projects in sewer pipeline rehabilitation through trenchless technology. Presently the JV is executing projects for Delhi Jal Board (DJB) and New Delhi Municipal Corporation (NDMC) at West Delhi Sewer, Jail Road Sewer, Kalkaji Sewer and Mansingh Sewer.
What is your current order book and by when do you expect to execute the same? What kind of incremental orders do you expect this fiscal (FY10)? Wouldn?t you like to broaden your order book?Our current order book position is over Rs36bn. We are bidding for various projects in our areas of operation. So, it will not be possible to state beforehand what kind of incremental orders might come our way.
Yes, we are consistently working all the time to broaden our order book. Any company aims to maximise profits. In our case, the more orders we execute, the more our profitability rises but our primary priority has always been to complete orders undertaken efficiently and effectively
Could you provide us with a break up of your order book in terms of various sectors (water, power, urban infra, etc.)? In balanced between water, power- with water taking a slight lead as compared to the other domain. Infrastructure is about 20%.
Tell us about your shareholding pattern? Our Promoters holding is 58.5 % and remaining is taken by Public that is 41.5%
What is your dividend policy?Our dividend policy strives to obtain a balance between shareholder wealth creation and shareholder income generation by ploughing back part of the profits generated into profitable projects and distributing the rest to our shareholders as dividends.
What is your message to the shareholders? We would like to thank our shareholders and stakeholders for their persistent support to the organisation which has helped us grow into a nationally acclaimed infrastructure development conglomerate. With their continued support, SPML will be able to fulfill its vision of bringing world class infrastructure to the nation, setting benchmarks for the infrastructure industry in India.