September 2016 | Indrani Banerjee
'Our journey to the top 3 has been phenomenal'
Credited with the transformation of Tata Projects, managing director Vinayak Deshpande has much to cheer about. From being a lesser-known entity, the company has emerged as one of the top three companies in Indian infrastructure industry, giving the market leaders a tough fight for critical projects, and wresting a large share of the market.
In this interview with tata.com, Mr Deshpande speaks about the company’s rapid growth and transformation, the challenges that came along and some of its marquee projects in urban infrastructure, transportation and social infrastructure.
How has Tata Projects transformed from an industrial projects company to a diversified entity? What has been the impact of this change on business outcomes?
In the last 2-3 years, Tata Projects has become a very relevant and prominent player in the Indian urban infrastructure industry, while retaining its strong presence in core industrial markets.
The story was very different in the preceding years, when industrial infrastructure remained our core focus and the company concentrated on setting up power plants, steel making and blast furnaces.
As industrial demand started to diminish, the company began feeling the pinch. That’s when we decided to relook at our business strategy and chart a new course for the future. We diversified into urban infrastructure, which included metros, airports, high-rise buildings, social infrastructure, waste water management and the like.
The journey of change was challenging, but the outcomes have been rewarding. Last year we grew at a rate of 35 percent four quarters on the trot. This year, we grew at a rate of 45 percent in the first quarter and believe that we will sustain the momentum through the year.
How is the business structured now, and what is your standing in the market today?
We have six business units now. On the projects side, we have five and the sixth business unit is focused on providing only services.
The first one is the Engineering, Procurement & Construction (EPC) unit. Transportation is our second vertical focused on rail and road systems. The third unit concentrates on power transmission and distribution, while the fourth, the construction and environment unit, caters to general construction, waste water management and so on. Our fifth unit is urban infrastructure.
I am happy to share that our order backlog, through these five business units, has swollen now and each business unit has about Rs5,000 crore (Rs50 billion) worth of order backlog. The total figure is roughly around Rs25,000 crore (Rs250 billion), which makes us the fastest-growing infrastructure company in terms of winning business.
The sixth business focuses on providing engineers for third-party projects for Testing, Inspection and Certification services and is worth about Rs150 crore (Rs1.5 billion) on the top line.
Diversifying and then delivering some of our recent projects has provided a huge impetus to Tata Projects’ market standing. In almost every urban infra job today, we compete with the global best, and we win as much as 50 percent share of projects. The Dedicated Freight Corridor (both eastern and western), a very large project by the Indian Railways, is a recent example. To sum up, from being a little-known entity to taking the ‘top three’ spot in the industry, we’ve come a long way in a short time.
Tata Projects has been named among the top three ‘best infrastructure brands’ in the country by The Economic Times. This recognition comes our way because of our “business winning” performance last year, our leadership abilities and digital activities that kept us in the news. This is the first time ever that Tata Projects has featured on the list.
How have you managed to address this burst of growth?
Growth has been extremely fast-paced, which brought with it new challenges. When we got into urban infrastructure for the first time, we had to scout for the right partners and acquire new skills and talent to effectively deliver these prestigious projects. While the Tata brand helped us get the best of partners, we faced challenges on the HR front. We had a lot of lateral hires who came on board from diverse organisations and did not necessarily relate with the values of the Tata group. We needed the intervention of senior HR teams from the group and focused HR programmes to help people shed their baggage and start living the Tata culture.
The other challenges we faced were on the systems and processes front, which needed rapid upgrades to keep pace with business growth. We got Tata Consultancy Services on board to ensure that our digital agenda adds efficiency to our overall business.
On a higher level, we needed to create a unified aspiration across the organisation towards building a great company, rather than settling for the kind of spurt in growth we are seeing now.
What kind of work is Tata Projects doing in the ‘smart cities’ space?
A smart city is made up of different modules that span power, water, urban waste, transportation, security, and so on. Currently we take up projects related to transportation, lighting and security systems, waste water management, drinking water distribution and social infrastructure. Tata Projects stands differentiated as a master systems integrator, which means we are able to provide integrated solutions for multiple needs that a city administration might have. Our end-to-end solutions help minimise turnaround times and improve efficiencies.
Can you please walk us through the river rejuvenation project in Rajasthan, which is a social infrastructure project?
Rajasthan occupies a special place in the Tata group’s overall development agenda. In alignment with this development philosophy, we got into a very special social infrastructure project to rejuvenate the Dravyawati River that runs centrally through the capital city,Jaipur. Over the years, the river has been reduced to a nallah (drain) that has black stinking water running through it.
The entire stretch of the river, which is about a 47 km run, has to be rejuvenated. This ambitious project, which is the vision of the state’s chief minister, will include large-scale waste water treatment. We will also need to channelise the river path, create gardens around it, create social infrastructure, and set up lighting and pathways. In short, we will need to transform the river environs into a picturesque backdrop. We are fascinated by this path-breaking project, one which will create something wonderful for the people of the state.
On the transportation side, you have a large share of the Dedicated Freight Corridor project. You also have some metro projects. Please elaborate.
We are doing some truly noteworthy transportation projects. We have almost a 40percent component of the Dedicated Freight Corridor project, where we are laying roughly 2,200 km of the track using mechanised track-laying machines. We have invested about Rs600 crore (Rs6 billion) to buy this equipment. We expect to deliver this project fairly on time and to the satisfaction of the customer.
We have three major metro projects – we are building the elevated corridor for the Delhi Metro Corporation; we are involved in the construction of the Lucknow metro; and we have one of the packages for the underground metro system in Mumbai.
There are many such noteworthy projects coming our way, not just in transportation, but in other areas too. We are at a very interesting juncture and these are very exciting times for Tata Projects.