Mumbai: India’s largest toll road operator, all of 11 years old, has an unlikely role model: the country’s largest telco, Bharti Airtel Ltd, itself a start-up that’s just a few years older.
Right track: IRB chairman and managing director Virendra D. Mhaiskar, who calls himself ‘a child of the Indian reforms’, says this is one of the best businesses to be in, as one has clarity on the revenues. Ashesh Shah / Mint
IRB Infrastructure Developers Ltd, an early believer in the government’s so-called public private partnership model of building roads, won four contracts to build roads, collect toll on them for a fixed period of time, and then transfer them to the government. That takes the total number of projects in the company’s portfolio to 16. And 11 of these are operational, says Virendra Mhaiskar, 38, IRB’s chairman and managing director.
Mhaiskar hasn’t met Bharti’s Sunil Bharti Mittal, but to him the similarities between his company and the telco are significant. “They (Bharti) had a similar story. They entered the telecom sector when it was nascent. They went in for an aggressive roll-out, and the rest is history.”
Mhaiskar is not doing too badly either. From his 11 projects, Mhaiskar earns a gross revenue of Rs2 crore daily, and the number is rising. In a few days time, the government is expected to issue a notification, which will enable his company to collect toll from Surat-Dahisar highway. That will also add to the 1,150km of highways that IRB currently manages.
Mhaiskar, who calls himself “a child of the Indian reforms”, joined his father in 1990 in a business which was set up in 1977 to construct roads for municipalities and make asphalt. “In 1995, we got the first breakthrough because of the privatization policy that allowed public-private partnership,” he said. In 1998, Mhaiskar incorporated IRB. As he built the portfolio, the family created a structure that would serve as a holding firm for all the special purpose vehicles that owned different toll road projects, after private equity investors asked for more transparency and clarity in business model. This was finally achieved in 2006 when Mhaiskar bought out the stake of all other promoters and made all the special purpose vehicles 100% subsidiaries of IRB.