Hyderabad: Low equity and high profits are the characteristic feature of engineering, procurement and construction (EPC) mode of contracts which have become the norm for politicians, who can influence governments and bag them. Like Telugu Desam MP C.M. Ramesh, a close aide of AP Chief Minister N. Chandrababu Naidu, who found a gold mine in this mode and bagged Rs 7,748 crore worth of projects.
The projects are being executed by his flagship company Rithwik Projects Private Ltd. Mr Ramesh has been a cynosure of all eyes in TD as Mr Naidu apparently even sidelined former Union minister Y.S. Chowdary sometimes, to bestow favours on him, a TD leader said.
He started his career with the family liquor business and rose to be the most trusted person. Ms Y.S. Vijayalakshmi, wife of late Chief Minister Dr Y.S. Rajashekhar Reddy, in her affidavit filed before the High Court of Andhra Pradesh in 2009, had asked how could Mr Ramesh, a subcontractor, with Rs 61 crore revenue in 2003 notch up Rs 488 crore by 2009. She demanded a CBI inquiry into it but the petition was dismissed as politically motivated. Costs to government, but profits to private developers is the crux of EPC contracts that made defunct companies of politicians do roaring business.
A total of 100 tippers, 16 hydraulic excavators, scaffolding equipment of 1 lakh sqft, single digit crushers and JCB loaders is all that the company boasts of as its assets.
The company partners with Zarubezhvodstroy Public Limited Company, Russia, Continental Engineering Corporation, Taiwan, Atlantia S.P.A, Italy, Galfar Engineering and Contracting SAOG, Oman, Ratna Infrastructure Projects Pvt. Ltd, IL&FS, SEW Infra Limited, NCC Ltd, HES Infra, Patel, Backbone projects.
The company’s major clients include the irrigation department of the Government of Andhra Pradesh, Konkan Railway, NTPC, SAIL and all public sector units.
“For the last five years, Mr Ramesh owned companies but did not bid for any projects that required equity... whatever he bid for was EPC,” a top infrastructure developer said.
He said that with the new RBI norms in place and with the general reluctance of banks to lend to the infrastructure sector, developers will turn EPC contractors, while all the capital expenditure will be done by the government.
“No private player will put any more money into the infrastructure sector, all will be done on EPC basis, while the government will have to fund the projects as it has high targets to achieve,” he added.
