Major Players: Products, projects and order book status of key companies0

Products, projects and order book status of key companies0

Over the past few years, the government has been making concerted efforts for expanding irrigation and ensuring efficient management of water resources in the country. It has launched several flagship initiatives such as the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), the Interlinking of Rivers Programme and the Atal Bhujal Yojana. However, it is equally imperative to encourage private sector investment and participation in the development and management of irrigation schemes in order to create an effective irrigation infrastructure in the country.

The non-availability of government funds is the key reason to push for private investment in the segment. Given the government’s target of achieving 0.5 million hectares per annum coverage under micro-irrigation with a budget of Rs 10 billion under the PMKSY, it will be

nearly impossible to reach the overall micro-irrigation potential of the country. Hence, private investment in the irrigation sector is essential. Although private contractors have been continuously involved in the manufacturing of irrigation equipment and other related facilities,

their investment in the irrigation sector has been quite low. Hence, it is imperative for the government to explore alternative models to augment private participation in the sector.

Indian Infrastructure takes a look at key players in the irrigation space…

Larsen & Toubro Limited

Larsen & Toubro Limited’s (L&T) water and effluent treatment business offers design, detailed engineering, procurement, project execution, commissioning, and operations and maintenance (O&M) for lift irrigation and canal relining projects. The company has expertise in earthwork, levelling and dredging. It deploys

hydraulic excavators for the excavation of earth in irrigation projects. Some of the ongoing projects by L&T are the Bansujara dam in Madhya Pradesh, the integrated Kaleshwaram irrigation project in Telangana, the Subarnarekha multipurpose project in Jharkhand, and the Maa Ratangarh (Seondha) multipurpose irrigation project in Madhya Pradesh.

In January 2020, L&T was awarded the Parwati micro-irrigation project, Phases III and IV, worth Rs 39,060 million. This project envisages provision of water for micro-irrigation to 100,000 hectares of cultivable command area in the Sehore and Shajapur districts of Madhya Pradesh by lifting 32.04 cumecs of water from the Indira Sagar project reservoir. The Nashik water supply project in Maharashtra, water storage reservoir in the Visakhapatnam steel plant, the Bansujara irrigation scheme in Madhya Pradesh, the Sardar Sarovar Narmada Nigam Limited, and Saurashtra branch canal Phases IV and V are some of L&T’s recently completed irrigation projects. Meanwhile, L&T’s consolidated earnings before interest, taxes, depreciation and amortisation (EBIDTA) stood at Rs 51 billion in the fourth quarter of 2019-20 and consolidated profit after tax (PAT) was around Rs 32 billion.

Jain Irrigation Systems Limited

Jain Irrigation Systems Limited is the second largest micro-irrigation company across the globe, with 33 manufacturing bases spread over four continents. Having a turnover of more than $1 billion, Jain Irrigation Systems provides services ranging from soil survey, to engineering design to agronomic support. The company has experience in executing large-scale integrated micro-irrigation projects, both domestically and overseas. Some of the key projects executed by the company are the Balh valley medium irrigation project in Himachal Pradesh (6,250 acres), Shiggaon integrated sprinkler irrigation project in Karnataka (25,000 acres), Indira Gandhi Nahar Pariyojana in Rajasthan (37,500 acres) and Purna medium irrigation project in Maharashtra (25,000 acres). In 2018, Jain Irrigation bagged the contract for the world’s largest integrated micro-irrigation project, the Ramthal-Marol project, in Karnataka, worth Rs 3,857 million. The scope of work includes survey, investigation, planning, designing, supply and implementation of the distribution system using a pipeline network.

It also involves the installation of a fully automated micro-irrigation system in the 30,381 acre command area, benefiting more than 7,000 farmers of Bagalkot district, Karnataka. In 2019, the company’s consolidated revenue decreased by 5.99 per cent to Rs 25,831 million in the fourth quarter of 2018-19 on a year-on-year basis. The consolidated EBIDTA increased by 1.16 per cent to reach Rs 4,364 million in the fourth quarter of 2018-19 and the consolidated PAT decreased by 40 per cent for the same quarter.

Megha Engineering & Infrastructures Limited

Megha Engineering & Infrastructures Limited (MEIL) is a major infrastructure company headquartered in Hyderabad. It is engaged in developing infrastructure projects across the country. MEIL’s competence in the irrigation sector includes investigation, design, engineering and development of dams, spillways, reservoirs, canals including distribution systems. Further, the company has expertise in design, engineering and execution of micro-irrigation projects, piped irrigation canal systems, hydraulic tunnels and underground pump houses for major irrigation projects. The ongoing projects of MEIL include the Pula Subbaiah Veligonda irrigation project in Andhra Pradesh, Chintalapudi lift irrigation scheme in Andhra Pradesh, Sauni Yojana project in Gujarat, Indira Sagar LIS (3 out of 7 phases) in Telangana, and Kaleshwaram LIS in Telangana. In the past five years, MEIL’s total revenue has almost quadrupled, from Rs 52 billion in 2013-14 to Rs 203 billion in 2018-19.

Other key players

Hindustan Construction Company Limited (HCC Limited) has been instrumental in the implementation of large-scale irrigation projects such as dams, barrages and networks of major and minor canals, and lift irrigation projects. The company is specialised in executing integrated multidisciplinary engineering, procurement and construction projects, including design and engineering, construction, commissioning, and O&M works. Currently, it is executing the Bistan LIS in Madhya Pradesh as well as the Parwan multipurpose irrigation project in Rajasthan. Some of the key projects that it has completed are the JCR Devadula LIS Phases I and II in Telangana, Polavaram right main canal in Andhra Pradesh, and Naraj barrage in Odisha.

IL&FS Engineering and Construction Company Limited is one of India’s leading infrastructure development, construction and project management companies, with expertise in the execution of irrigation canals and dams around the country. Some of the ongoing projects of IL&FS are the Tadipudi LIS in Andhra Pradesh, Udaya Samudram LIS in Telangana, Indira Sagar project left main canal, Package III, in Andhra Pradesh, and Chitravathi reservoir right canal in Andhra Pradesh. The consolidated loss (after deducting tax) for the quarter ended December 31, 2020 stood at Rs 131.7 million.

Nagarjuna Construction Company Limited (NCC) has expertise in irrigation projects such as dams and reservoirs, canals, irrigation tunnels, barrages, spillways and aqueducts. The key projects completed by NCC are the Gandak canal project, Bihar (Rs 5.43 billion), Sardar Sarovar Narmada Nigam project, Gujarat (Rs 4.54 billion), as well as projects for the Water Resources Department, Birpur, Bihar (Rs 1.53 billion). The company is currently executing the Palamuru-Rangareddy LIS, Telangana (Rs 13.78 billion), Rajolibanda diversion scheme, Andhra Pradesh (Rs 8.84 billion), Baswapur reservoir project, Telangana (Rs 5.92 billion), and Packages 43 and 44 of the Mid Pennar South Canal modernisation project (Rs 4.41 billion) (Gujarat). As of March 31, 2020, NCC’s order book stood at Rs 265.72 billion. Of this, irrigation projects accounted for a share of 8 per cent – Rs 20.54 billion. Other key players in the sector are Indian Hume Pipe Company Limited, KEC International Limited and Amrutha Constructions Private Limited.

The road ahead

Construction companies have witnessed a decline in revenue and operating profit owing to the Covid-19 pandemic. The order books of most construction companies have taken a hit due to lower order inflows. The irrigation sector is known for long delays in the implementation of projects, leading to huge cost and time overruns. Irrigation projects are expected to face further delays due to a shortage of labour, raw material and equipment, higher input costs, a financial crunch, etc. While the Covid-19 outbreak has hampered the progress of several ongoing irrigation projects, it has also paved the way for the adoption of efficient irrigation practices, smart solutions and advanced technologies. The Task Force on National Infrastructure Pipeline has also paved the way for Rs 8.94 trillion of investments in the irrigation sector for the period 2019-20 to 2024-25.