Tata Group and the private equity investor Actis are coming together to form a joint venture that is intending to spend $2bn on Indian highways over the next five years. The government’s relaxed norms for both Indian and overseas investors is attracting many players.

Tata Group has set up Tata Realty & Infrastructure to take care of the group’s activities in the sector. While 65% of the joint venture will be owned by Tata, the rest will be controlled by Actis. The joint venture will be known as TRIL Roads Pvt Ltd.

Actis will invest $77.5mn in the joint venture to buy stake. Actis partner Michael Till said that the equity investor is planning to invest at least 30% of the $750mn infrastructure fund it is currently managing, over the next three years.

Tata Realty MD & CEO Sanjay Ubale said that the company will invest $122.5mn in the JV from internal accruals. Atlantia, the Italian toll operator and technical partner of Tata Realty will invest $200mn for its stake in the special purpose vehicles to be manufactured especially for the projects.

The $400mn investment by the three companies in the JV will help them garner $300mn more from the government as viability gap funding. Viability gap funding is given by the government to narrow the gap between infrastructure cost and the money available with the investor. The rest of $1.3bn for the JV will be borrowed from financial institutions.

TRIL Roads Pvt Ltd is planning to build at least five highway projects, all of them above 500km in length.

In its race to become the world’s fastest growing economy, the country finds itself lagging behind in infrastructure. To overcome this shortfall, Indian government has signed 44 contracts to build 3,843kms of road with an investment of Rs. 40,600cr in the last two years. It is planning to award 86 more projects in the current fiscal.

A survey conducted by the country’s top brokerage house ICICI Securities, said that Indians are mostly interested in buying houses worth Rs 20-50 lakh. The survey was conducted in eight Indian cities Mumbai, Delhi/NCR, Bengaluru, Chennai, Kolkata, Ahmedabad, Hyderabad and Pune. Housing demand in the National Capital Region comprising of Delhi and adjoining cities like Noida, Gurgaon and Greater Noida is much lesser compared to cities like Hyderabad, Bengaluru and Mumbai. But these regions have a higher percentage of under-construction houses than any other region.

According to the survey, Indian home buyers prefer mid-income houses ranging from Rs.20 to 50 lakhs. While 50 per cent of prospective buyers are interested in houses worth Rs 20-50 lakh, 35 per cent want a price lower than Rs 20 lakh. In Delhi, most of the recent project launches are targeted at high-end home buyers who prefer flats worth Rs 1 crore or more. Unfortunately less than three per cent buyers want houses worth more than Rs one crore and 12 per cent are interested in a price tag of Rs 50 lakh to Rs one crore. To tap into the mid-income housing market, projects between Rs.20 to Rs.50 lakh should be launched to cater to the needs of the home buyers.

Infrastructure is a major driver for India’s economic growth. The industry’s growth is deterred by poor project management practices leading to time delays, resource shortages and cost overruns. According to a study conducted by KPMG and Project Management Institute, “Of the 1,035 infrastructure sector projects completed during April 1992-March 2009, 41 per cent faced cost overruns and 82 per cent witnessed time overruns.”

Over 850 infrastructure projects faced delays due to time and cost overruns out of a 1,035 during the period between 1992 and 2009. Some of the reasons for such delays are regulatory hurdles, delay in land acquisition, inadequate design and planning and increase in material costs. The study was conducted among 100 top management personnel from leading infrastructure firms. 83 percent of the respondents said frequent design change results in these cost overruns and about 75 percent cited that delays in regulatory approvals and land acquisition for project delays. Government also agreed that about half of 951 projects were delayed due to cost overrun of over Rs. 40,000 crore.

Disinvestment is showing good signs and the disinvestment department has announced that in the year 2010-2011, it will raise around Rs. 40000 crore from this process. The department is optimistic that it will be able to meet the target set by the Finance Ministry of India.

Sumit Bose, the disinvestment secretary, said, “Those Rs 40,000 crore are estimates and we will certainly meet them.” He was talking to journalists and gave theses estimates in response to a question about the possibility of the accomplishment of the target set by the government in this issue.

Finance Minister Pranab Mukherjee has increased the target of income to be raised from disinvestment in CPSUs by Rs. 15,000 crore for the year ending on 31st March, 2011.

According to Sumit Bose, the department will be reviewing its situation. They plan to take each of the disinvestment case individually. When inquired about the roadmap of the department in the next 12 months, he said, “Can we have a roadmap for the entire year? No. And why should the government comment about something 12 months ahead?”

In the last fiscal year, the department has done disinvestment of companies like Oil India and NHPC. The disinvestment of Rural Electrification Corporation and NTPS was completed in February 2010. The follow-on issue on NDMC is opening on 10th March, 2010. There were plans for the disinvestment of Satluj Jal Vidyut Nigam in this fiscal year, but it has now been postponed till next fiscal year. There are also plans for the disinvestment of Engineers India which has got the approval from the Cabinet.

The Cabinet has decided that all public sector units which are listed and profitable should have a public holding of a minimum of 10% and all the unlisted CPSUs shall be listed in the coming years. This decision has brought about 60 government-owned units under the criteria of disinvestment.

Few days ago, Sunil Mitra who is presently the revenue secretary and ex-disinvestment secretary, said that CPSUs such as BSNL, SAIL and Coal India are expected to be disinvested in the coming year.