'Still optimistic about the long-term India growth story'

Ajit Gulabchand, chairman and managing director of Hindustan Construction Company, would like to forget the last three years. A legal fracas with the government led by Jairam Ramesh as environment minister, sagging orderbook and stock prices and of course revenues, has sapped the energy from the company. Before flying off to New York to attend a UN initiative on sustainable development, Gulabchand told Dev Chatterjee and Jitendra Gupta that he is still optimistic about the long-term India growth story though the near-term signs are not that good. Excerpts:

The infrastructure sector is facing a crisis with no new orders, lack of payments from the government for finished projects and  the general economic slowdown. What’s your experience in the past few quarters?

The worrying economic conditions today are basically due to various wrong decisions taken by this government in the last few years. The retrospective tax law destroyed foreign investors’ confidence in India, the laws of FDI (foreign direct investment) are still unclear and no major economic reforms have taken place in spite of valiant efforts by the finance minister.

Nobody talked about how and who will foot the bill for the food security law and the Comptroller and Auditor General is finding fault with every business transaction. Now that the country is moving into election mode, I do not see big ticket reforms or projects taking off in the next two years. The question is: How do we survive the next two years?

Foreign investors are watching all this and no one will invest in these volatile conditions. The steps taken by new RBI (Reserve Bank of India) governor are a step in the right direction.

But as a country, we dance on every small achievement and forget the long-term objectives. The government owes Rs 1.4 lakh crore (Rs 1.4 trillion) to the infrastructure companies. Of this, Rs 8,500 crore (Rs 85 billion) is due to us. This should be released to infrastructure companies as soon as possible as all the companies are bleeding.

Infrastructure companies like HCC require a lot of land to start any project. Do you think the land acquisition Bill has made the lives of infrastructure companies easier?

The intention of the land Bill is good, but I doubt implementing it will help Indian companies. While acquiring land, it has to pass through three panels and each time it can be challenged in a court of law. A company will require 80 per cent of land owners’ agreement to acquire the land and a company will have to value the land at a substantially high price.

Besides, the question is if the project does not take off due to any reason, the return of land after five years can be litigated.

All of us know about these problems, so what are your suggestions to improve the sentiment?

There are Rs 10 lakh crore worth of projects that are waiting for the government’s clearance. The projects should be cleared by the environment ministry not on a case-to-case basis, but via proper guidelines in place.

The environment ministry or the panels appointed by it should give reasons why it is stopping any project. The government’s procurement policy should be transparent and all impediments on stalled projects should be removed.

RBI should bring down the interest rates and control inflation and the government should cut its expenditure drastically.

The stock market seems to worry about piling dues and shrinking orders. How do you expect to address these issues in the current environment?

The dues have gone up in the past as a result of delays in payments from the government. This is an industry-wide phenomena. We, too, are facing these challenges. About Rs 3,500 crore (Rs 35 billion) of money is stuck with the government for which the work has already been done and the respective cost is already incurred. We are aggressively pursuing with the government agencies to get our money back.

We have already made some progress on this front and recovered some money in the last quarter. We hope to get more in the coming months. As far as new orders are concerned, there is certainly a slowdown.

There are no fresh orders coming. We could see this situation continuing for some more time because of the elections.

However, that does not mean that orders would stop coming. Some projects in some segments will be coming for awarding. Particularly, projects which got delayed will come up for bidding.

Can you update us on the Lavasa project?

We have got the clearances for the project and work has again started in full swing. A workforce of about 5,000 is already deployed at the site, and we are planning to take to 10,000 very soon. Sales of properties have also picked up.