Billionaire Virendra Mhaiskar said his IRB Infrastructure Developers Ltd. plans to build $1 billion of roads each year as India accelerates investment in highways, ports and power plants.
The company has bid to build 25,000 kilometers (15,537 miles) of roads, Mhaiskar said in an interview in Mumbai today. IRB will fund the projects using its profit, he said. The company has contracts to build 100 billion rupees ($2.25 billion) of roads, Mhaiskar said.
IRB, backed by Blackstone Group LP, wants part of the $1 trillion that India will need to spend on building roads, ports and power plants between 2012 and 2017. At least half the investment should come from companies, according to the Planning Commission. India, which has the highest density of highways in the world, ranks below war-ravaged Ivory Coast for the quality of infrastructure.
“The need for India in infrastructure is as good as the need for bread and butter,” said Vinod Nair, analyst at Pioneer Investcorp Ltd., who has a “hold” recommendation for the stock. “If a fund wants to invest in Indian stocks, infrastructure will definitely figure in its portfolio and will include IRB.”
IRB’s shares have risen 7.8 percent this year, underperforming the benchmark Sensitive Index, which has advanced 16.5 percent. IRB added 0.2 percent to 264.55 rupees at 12:36 p.m. in Mumbai.
India’s Road Transport and Highways Minister Kamal Nath has set a target of building 20 kilometers of highways a day through 2015 as the government tries to ease congestion and accelerate economic growth. Of this, the government is building 13 kilometers a day as of now, he said on Oct. 6.
The delay in building roads and the inadequacy of the nation’s utilities and transport network shaves 2 percentage points from growth, the Finance Ministry estimates. The economy has expanded an average 8.5 percent in the last five years.
Prime Minister Manmohan Singh last month allowed overseas investors to buy $5 billion more of obligations sold by infrastructure companies.
Mhaiskar is ranked India’s 55th richest man with assets of $1.17 billion, according to Forbes magazine.