CEO Roundtable discusses creation of quality indian infrastructure

Some of the best brains of the industry discuss themes that ruled the
Mumbai Infrastructure Global Solution Summit 2019

Arvind Mishra: I am working on a hydroelectric project of 720 megawatt in Bhutan called Mangdecchu Electric Project, which is funded by the government of India and is nearing completion. The cost of the project is about Rs 5,000 crore. Incidentally, unlike the traditional history of our country, this project was initiated by me and I am the one completing it as well. We are commissioning this project by the end of this year, perhaps by December end. The point which I was just looking at is about the infrastructure part, developmental parts; most of us are discussing the impediments, whatever difficulties and how to solve them. Apart from this, what I can say with my own experience is that there are some technical issues also involved, whether it is about metro, or elevated metro or any underground structure construction. My suggestion is that we have to do a lot of innovation in designing and execution also. Recently, I was trying to propagate whether in the engineering faculty regarding the role of reliability in a structure designs. Now the people around the world have gone up. If you look at structure designs, they were done in our own country mostly based on guidelines. We have not introduced in our own country the reliability analysis. Reliability is basically capturing the randomness into various variables. For example, for civil engineers like me, if you design a beam having concentrated load in the centre, that is a theoretical concept of understanding the mechanics. In real situations, this does not happen. All loads and any framed structure will come in a random manner that is No. 1. The location will be different than what you analysed. Besides, No. 2, the properties of the material, the reinforcing stage which you are consulting theoretically the values of modules will vary because of various reasons. So what I am trying to say is that this randomness needs to be captured. Once you capture this randomness, through reliability analysis you will find that the real factor of safety comes down. The structure which you are thinking as safe may not actually be safe. Now the emphasis is going on that we want to have structures that are more thin, hydrate concrete, you have to be a little more alert.  Precisely this is happening in the case of underground structures also. For instance, we are working on the construction of an underground powerhouse. We have constructed a 13.5km long tunnel which will get water from the dam to the powerhouse along with a shaft which is 32 metres deep, 13.5 metre in diameter and a concrete dam that is roughly 114 metre high. This is my experience that we are not able to handle properly even an open cut slope which is more than 10 metre deep. We have not been able to handle properly the issues of seepages. If you are pondering about it somewhere, you are not sure that you will not have seepage. When we were working on the construction of the dam, we went below the riverbed about 60 metres, the water level was flowing 60 metres away. The dam pit bottom rock was exposed at 60 metre below the river bed level. In normal conditions the way we work in our country, we will be having a lot of seepage issues; the first lift of the concrete will not be good. So what I did was I decided that the seepage has to be rested and for that we placed a concrete cut of wall upstream by introducing a technology in India by the German a company, Bauer. Some specific machines were called in and we created a quite deep trench and plastic concrete was placed at the bottom, a metre away from the fresh rock. I am telling you, in my project there is zero seepage. We have saved Rs 15 crore on the arrangements, zero seepage and good quality of work. That is just one small example. Second, under the powerhouse, we had major shear zones on both the walls. A shear zone is a crushed material which is not very reliable running across the caver, posing a threat of formations. The consultant wanted us to shift by another 40 metres, however, we did not do that. We went for numerical modelling that is Series modelling and came to this conclusion that by instrumentation of the cavern that the deformations can be controlled on crowns and walls within the theoretically projected formations. We can do the cavern within that cost within that area safely. This is a proven fact and has been done earlier as well. So I just wanted to share with the engineer fraternity that deep cuts as you see in the national highways there are lot of slides. Many slopes are unsafe, sometimes they are suddenly falling down, sliding down, creating fatal accidents, injuries and deaths. The sensitivity has still not come in our mind while cutting a deep slope which is more than 10-20 metres wide and more than 100 metre deep with proper cable anchors. So these methods which are now slowly and slowly becoming quite popular in our country and I would like to share some of my experiments with them so that we can introduce these methods effectively to solve those problems which are till date not done efficiently. Whether it is a cost or time factor, we are struggling with it. However, now I can say with confidence that there is a proper way to analyse, a proper numerical modelling is possible, after which the implementation part is possible. Third, how to do it in an optimum manner is also possible. I would like to share this knowledge because these are quite common problems which everybody is facing. For example, in a city like Delhi if there is an hour of heavy intensity rainfall, you will find a lot of water-logging. However, such a scenario doesn't occur in cities of countries like Japan or Hong Kong for that matter despite lot of rainfalls. Their strategy is that they have constructed deep underground reservoirs and at a centre to centre locations deep shafts. So if there is a heavy rainfall in that area the water runs off immediately getting absorbed drained off through those shafts to those underground reservoirs. Whenever they find an appropriate time, the water is pumped out to the nearby area. You will not find any water-logging there. We can have deep seated sewers and it is now becoming very common especially in countries like Japan and Europe where they are proposing to go for deep sewers and it has become very popular. In Delhi, I have seen that vehicles are submerged within an hour of heavy rainfall. There are certain points where even elevated metros are jammed; slopes have never been taken care of. When we are talking of smart city, the first that comes to my mind is we must develop a drainage plan. There is a natural topography in an area, there is a highest point and there is a lowest point and we must see where we can interconnect various underground deep sewers so that whatever rainfall comes in, it is getting down to the ground and then pumped out to the nearby area connected to the river or maybe a pond, at a suit level interval whenever you find time you can pump it out. These are the things now becoming common. Initially people used to think that it is costly and not implementable but look at the inconvenience it leads to. In Delhi for hours people stalled in jams. So these are my views of looking at the things. I would like to request if you would like to say something.

SN Roy: First, my question is to the panel. While we have been hearing about a lot of ideas; however where is the cash flow for their implementation? We have lots of innovative designs and ideas, but implementation requires money. Secondly, we have an over thickening population on the infrastructure. Whatever countries we are comparing with are not as thickly populated as India. So I urge the engineers to look into the economics part of it also. Not just in theory but in practicality as well. I will would like to cite a small example. All of us drive vehicles, the petrol prices have been increasing, it is pinching us, everyone is aware of that. We make a good amount of noise whether it is the consumer or the NGO or whatever it is. But somewhere, the physical deficit instead of giving subsidy has to be brought back and put into the system for infrastructure.  Secondly, the last time when the prices of petrol or diesel were increased, how many people stopped using a car for a particular period of time? Despite the price rise in fuel, every day people continue to using a car. That means it is not pinching your pocket, you are still using it. If someone is there who is because of petrol or diesel can he raise the hand amongst us or there that you have stopped using the car at a very different level or you are thinking I am not going to use the car because petrol and diesel prices are going high? None I see none of you raising any hands. So my take is all these things we are used to in our system of working we are used to subsidy. So if someone subsidises something it is very good. But as what has been suggested my suggestion is that we should work towards better infrastructure and put that money into infrastructure. If the question is that any one of you can answer as to all these good ideas to be implemented requires money and where will the money come from? Anyone can answer.

Satyanarayana Kasinadhuni: For the contracting fraternity, the first thing I would like to say is that let us set in our own house right; let's not go for cut-throat competition. Let's put the right price for the right job, which definitely should ease the pressure that we are all suffering out of cash flows today. So let the discipline come from the house, our own house. This is point No. 1. Second, I also expect the customers to give us better payment terms, more stringent commercial conditions in the contracts that we are all taking. For example, the Central Vigilance Commission (CVC) guidelines say that no mobilisation advance can be given without charging the interest on it. While I appreciate it, but what about the retention considering it is our money? But it doesn't get any interest. The retention gets held for years and years and the projects get delayed for a long time, besides our money actually remains stuck. If the forum can influence the government to change the commercial conditions and ease the contractual conditions, they would have done great service to the contracting fraternity. The government has formed the NITI Aayog, which has been set up to revive the construction industry. While the idea is fantastic, even there also I have a question? How much are the guidelines of NITI Aayog put into implementation in the desired timelines that were envisaged before forming the NITI Aayog. Despite having the money, at times the Central government tends to act arbitrarily and keeps deferring for some inane reason, while the infrastructure companies continue to struggle. The other point that I think may be again coming back to our own house, we normally have our money held up in inventories that we maintain. Some people think that let me buy steel now, prices are going up, so cash is blocked. So some discipline in the contracting companies can definitely ease but as you have rightly pointed out, cash flow is a tremendous issue. It is all thanks to the banking industry, which is now tightening their hold more and more giving bank guarantees and OD limits. All these are becoming more and more challenging. So the solution should predominantly lie in the timely construction of projects with safety, quality and better payment terms. Let's be choosy in taking the right projects and we will go back to a customer in easing commercial conditions because if you want me to perform, you have to enable me to perform. It cannot be a one-sided contract. The contract has to be two sided. For our Indian contracts, some good customers do slightly modify. The typical Indian contractual conditions something buying out from the bid, some reasonability is there in some contracts. However, most of the government contracts are still living with the age-old payment terms such as 10% retention, 10% contract performance bank guarantee (CPBG) and 10% advance with interest. However, I remain unsure when I will get my retention back and when the projects would really get handed over. A customer may be benefiting from the project but your money still remains stuck for some inane reason. Therefore, it is imperative for all of us to get together and influence the government.

Sudhir Rao: We all know about the capacity constraints regarding traffic in a city like Mumbai; we are living with it regularly. Overnight we cannot build service roads or elevated highways, for everything you need money. So, No. 1 it is about discipline. Similarly, No. 2, often a driver's license is issued without considering the literacy level on an individual. However, in countries such as the US, driving is a part of study there. As you do the schooling, you are taught about it. An individual requires passing a test, which has 50 questions and you are required to score a minimum 45. On the other hand in India, a licence can be easily procured by paying someone. You will get the license delivered at your doorstep. Most of the people prefer to self drive their vehicle in India. So, if it is made mandatory for every driver to observe road discipline, people would act responsibly and drive in a right manner. They would diligently follow the queue, while respecting the rights of pedestrians. Jaywalking in India is a major concern. Every point on the road is used as a crossing point, except the zebra crossing.

Another issue is about people not observing lane discipline even on highways. For instance, in the fast moving lane you would often find slow moving vehicles and this scenario can be observed all across India, including the expressways.

Now, I would like to talk about the issue of funding. India was the biggest country in terms of Build-Operate-Transfer (BOT) projects. It is not that we were the first country, but a lot of BOT projects were undertaken and were also quite successful initially. However, over the time, the competition went bad. When the competition went bad, the bidding process started randomly. There were so many contractors who got into trouble. However, it is not the mistake of the government alone. If the projects were completed on timely basis, BOT would have been successful like anything. However, the concept can be made successful even today provided the individual is able to take the project and compete if fully and not leave it incomplete midway. So BOT is one of the answers.

We have the public-private partnership (PPP model) and can work very successfully. Of course, the model has put a lot of banks in trouble. Now you are likely to say that it is possible that a certain project was bad or the bankers did not undertake due diligence while disbursing loans. However, it a sort of a chain reaction, for instance, if the lending goes wrong, the projects goes wrong resulting in the entire system getting into trouble and now we are working on how to take these individuals out of these financial troubles. In this regard, we are working on various methods. Of course, I feel that the PPP model still is a hit. We can still get lot of projects constructed under the PPP model. It allows you to think about how the modelling would be there, how the cash flow would be there, what cash could be generated from tickets and other modes or real estate is also doing dips so you cannot talk about that. But you can try many methods by which the project becomes viable and then you do the projects successfully.

Arvind Kumar Mishra: A recent research in our country conducted a comparative analysis in terms of the government approach adopted in China and India. It stated that the government approach in China is that if the project is undertaken by a contractor or a public sector company or a private company and it is not giving proper returns resulting subsequently losses for the company, the government takes a call to wind up the company and auction all assets in the market to recover the money. The end result is that China continues to grow that is if there are genuine losses despite perfect government regulations and stipend, the government pumps in money so the development remains unaffected. That is the Chinese model. Because they believe that risk is to be taken care of by the individual who is strong enough to take care of  it. In our own country, where we have started experimenting that if a company is making losses in a particular project, the company is referred to National Company Law Tribunal (NCLT). The quasi-judicial body then takes a call to put the assets for auctioning or bidding. So this is how you will look at it. This is a very precise question as everyone is asking from where the money will come. Either you follow the Chinese concept that whenever there are genuine losses, the government takes care of it. In cases where money has been siphoned off, we can refer and wind up the company. So it is a question of how you perceive things.

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