We are optimistic that we shall witness a healthy and sustainable growth.

Nalin Gupta, Managing Director, J Kumar Infraprojects Ltd

J. Kumar Infraprojects Limited have developed a niche in construction of urban infra projects including metros, flyover, bridges etc. JKIL's careful project selection criteria, strong bidding and estimation capabilities, efficient project planning and management coupled with asset ownership have made it a major player in the EPC sapce. “With the sustained order inflow and our expertise in executing and delivering projects on time JKIL remains optimistic of the long-term prospects of our business,” states Nalin Gupta, Managing Director, J Kumar Infraprojects Ltd. Excerpts from the interview…

What is your assessment on opportunities for company like J Kumar Infra from the massive modernization drive of the Indian Railway and construction of metros?

We believe J Kumar Infra is well positioned to reap the massive modernization drive including Metro construction in India. Over the years, we have invested in technologies, trained our people, and enhancedour capabilities alongside strengthening our financial position. Today we are amongst the few construction companies in metro segment who can bid for large projects on a standalone basis.

It would be difficult to put a number to the opportunity in this sector, however, we believe that the infrastructure development is the need of hour and the current government resolve towards the same is visible in terms of increased number of project bidding and awards. We believe this scenario will continue in the foreseeable future considering the multiplier effect which the sector has on the overall economic growth. For Atmanirbhar Bharat to be successful, we would require a world class infrastructure to attract investment in a meaningful way. We are at the beginning of interesting times, I must say.

Could you throw some light on the current rail / metro based projects under construction by your firm? 

The Company has developed expertise in both underground and elevated Metro projects. Metro projects accounts for nearly 57% of the Company's order book. Key Metro projects under execution are as under:

What are the key continuing challenges which you foresee impacting the Infrastructure Sector, specifically rail and metros and Roads & Highways post easing out of lockdown in stages?

The major constraints faced by the sector are availability of funds for financing large projects, environmental concerns, time and cost overruns due to delays in project implementation, lengthy processes in land acquisition and payment of compensation, procedural delays and lesser traffic growth than expected increasing the riskiness of the projects resulting in stalled or languishing projects and shortfall in funds for maintenance.

This is a vicious circle. Owing to the bottlenecks, the balance sheet of quite a few companies in infrastructure segment has been negatively impacted, leading to concerns on funds availability and costing. Continued slowdown in new order awarding, persistent delay in land acquisition and elongated liquidity constraints has cascading effect on the overall growth of the infra companies and their ability to execute projects.

Companies who have been financially disciplined and were able to maintain strong balance sheets and healthy working capital cycle, coupled with execution track record would be key drivers for infrastructure expansion as we believe that they are better placed in terms of credit availability and servicing. 

Has the unlocking had a positive impact on your company's order book?

Economy today needs the infrastructure segment to lead the revival story. The government will have to devise comprehensive plan touching upon each segment. To answer your specific question, we are seeing increased level of activity across infrastructure segment. Our balance sheet strength and healthy qualifications, allow us to take a big leap in order booking across our areas of expertise.

What are major challenges in this space and as a leading player how do address these issues?

Financial discipline is something which traditionally have been given less priority. Time and again, the fact has been established that only financially disciplined companies have been able to sustain a negative cycle and Covid 19 like uncertainties. As a leading player, we have always advocated the need for being financially disciplined. Even during the pandemic, we have been able to reduce our debt levels. We have reached a net debt level of 0.05x as on September 30, 2020 as compared to 0.10x as at March 31, 2020, which itself is a validation of our efforts towards financial discipline.

How do you envision the transformation of design / construction processes and supply chain management, especially with the advent of disruptive technologies? 

This pandemic has made people realise the need of going for more mechanised methods of construction which are less labour oriented like pre-casting technology and use of more and more machinery oriented methods. The supply chain is very much back to normalcy. J. Kumar has been using mechanised and pre-casting method since last couple of years already and we have further tried to optimise it.

What is your outlook for next couple of years and what are the expected challenges, and how geared up is your company?

Efficient and sustainable urban transport systems and mobility are critical for the smooth functioning of India's cities. Public transportation infrastructure in India needs high levels of investment and massive upgrading to spur a modal shift from private vehicles. It is estimated that over 50% of Indians will be living in urban areas by 2050. The government is taking various steps to reduce traffic congestion, pollution and implement eco-friendly transport policies in major cities. The focus is on economic viability rather than financial viability. Metro rail has emerged as a major tool to address the poor urban transport planning issues in major Indian cities since other modes of transport like buses, BRTS etc are unlikely to work in India due to huge population and space constraints. 

Our agile and responsive business model gives us the confidence to emerge stronger. For us, the situation presents an avid opportunity to further build on our efficiencies. We continue to remain optimistic of the long-term prospects of our business for a number of reasons.

- Robust order backlog from large and liquid clients resulting in strong revenue visibility and also improved liquidity position.

- The expertise and qualification amassed over the years will help us qualify for larger projects on a standalone basis.

- Further consolidation of our position in major states namely Maharashtra, Delhi, Gujarat, Rajasthan and Uttar Pradesh which we believe are currently undertaking major urban infrastructure development.

- We have successfully completed complex structures with innovative techniques and are a preferred urban infrastructure company

- We have a large fleet of owned machinery and equipment providing us with the requisite flexibility and efficiency to execute projects with ease.

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