Interest costs, low traffic growth bring down competition in NHAI's projects

ET Intelligence Group: As interest costs and low traffic growth hurt roads companies, the competition intensity has come down in projects awarded by National Highway Authority of India ( NHAI).

Given this, roads companies have shown high interest in construction orders rather than road developing orders. One of the chief reasons for this is the nature of construction works.

Construction works are less capital intensive than roads developing. Also after constructing works are done a company is paid by clients whereas in roads developing works involve dependence of traffic, which can be uncertain in economic slowdown.

Given this, there has been increasing orders by NHAI on construction side. NHAI has awarded projects amounting to Rs 34800 crore amounting to length of 2819 Km for the year to date period of FY16.

In this, NHAI awarded construction orders worth Rs 21200 crore amounting 1923 km. As regards, NHAI awarded roads developing orders worth Rs 10800 crore amounting to length of 803 km.