Man of mettle
BY JAYASHREE MENDES
Jagdishkumar Gupta filled in his first tender for a contract worth Rs15,000 in 1980. The officer accepting the tender looked at him sceptically and brusquely said that the job required to be completed in three months’ time. Finally, the contract was executed in 16 days. For a man employed for `100 per month, this contract had given Gupta his first princely amount of `2,200. And, thus, Jagdishkumar Gupta created J. Kumar Infraprojects.
From a young boy who came to Mumbai looking for work and always sought an opportunity to start his own business, Gupta has come a long way. Having executed one contract successfully gave him the confidence to seek out more work. Today, as chairman and managing director of J. Kumar Infraprojects, Gupta is executing contracts worth `5,000 crore and has another `15,000 crore in the pipeline. He recalls the time when the officer at the tendering department would question his capabilities every time he went in to submit a tender, immaterial of the size of the project.
When I met him in his office in Mumbai, Gupta was composed and did not appear as a man who had just bagged a major contract. With little fuss, the CMD of J. Kumar Infraprojects has been working quietly and steadily and constructed large infrastructure projects of immense scale, providing construction jobs for more than 17,000 labourers at any given time. However, he says that his USP is to ensure that all activities are executed in-house. Right from machinery to design and manpower, Gupta has always believed that it always adds to revenue when processes are in-house.
Having the ready manpower has buoyed the company to take on projects that it once considered outside its ambit.
Gupta says, “We never thought that we would execute large critical infrastructure projects for Mumbai Metropolitan Region Development Authority (MMRDA) and those that require indepth engineering.”
To achieve this, J. Kumar Infraprojects has had to create and work by some stringent principles. It has steadfastly refused to work on build-operate-transfer (BOT) projects and for private parties.
“We have constantly strived to secure government projects as it assures timely payments,” he explains. “Moreover, the state government will soon float tenders worth `32,000 crore over the next one year. Even bagging a few contracts means huge work.”
With much to accomplish, it is a temptation for anyone to get swayed and grab every opportunity that comes along the way. But Gupta is in no hurry. The large number of EPC contractors coupled with the numerous projects proves that there is room for everyone, he says. “We are an EPC contractor and want to do our best with the manpower we have in-house.
We have proved our capability that goes beyond plain contracting, and makes us distinct. We are building our reputation in the EPC arena and that is where we intend to build our business further.”
Buying the machinery was a decision that the company had to make. The company purchased its first hydraulic power machine for `4.75 crore way back in the 90s, something that was not a common thing to do. At a time when one could hire machines for `4-5 lakh, buying outright was an impetuous act. “As our roots are of humble origin, we were wary of jumping into the big league all at once. But our prudence to buy our own machines was a good decision. Today, we have machinery of over `500 crore and we take it across all project sites, thus offering us an advantage.”
Another decision was to retain its loyal employees as long as possible. Gupta takes pride that his inner circle of employees has been with him for 20 years and more. What is a company without its people? Yearly bonuses and incentives have ensured that this circle of people run the company for him smoothly. The loyalty also allows the company to venture into new types of projects. Gupta says, “Monorail, metro rail, new technologies for underground are some of the projects that have helped us become a full range service provider to infrastructure.
We are also constructing a high-speed jetty from Malad to Nariman Point in Mumbai as the state government is planning to start waterways for commute.”
J. Kumar as a group is very professionally structured. “Although we work on numerous projects across the country, we have to satisfy our lenders and vendors. Some of our contracts may be single source but, otherwise, usually they are through competitive bidding. While we have proved ourselves with various state governments in terms of execution of projects, we prefer to compete with others in the market,” he adds.
So does J. Kumar see an opportunity in sectors outside infrastructure? Gupta is quick to reply, “We have established ourselves as an infrastructure player. We may have grabbed some opportunities in real estate and even executed some for private developers but that is not what we envision. Our competitive edge comes from our engineering and infrastructure and there’s not much that we can add from engineering to road projects. This rule also applies to certain infrastructure projects that we have studiously refrained from. But if we see an opportunity, then we will consider it.”
For instance, when MMRDA was looking at constructing a bridge connecting Bandra and Mahim over running water, the company unanimously decided to bid for the project. Gupta says, “I understand that large contractors like L&T and HCC too were in the fray. We quoted 37% more than the other contractors. However, there were some stipulations that MMRDA was unhappy about and it went into three more rounds of bidding.
Finally, when we put in a bid for the third time, we had quoted 167% more than the first round. And we won it.”
This gave J. Kumar the experience to venture into newer territory such as the Eastern Freeway. Now in its Phase II, the company will soon begin work on taking the freeway from Chembur to Ghatkopar. The engineering marvel is that the bridge will have a height of 83 feet. It will mean transporting 12-15,000 bags of cement per day and 300 tonnes of steel.
Working on such large projects also pushed the company to venture into manufacturing ready-mix concrete (RMC). This eliminated the need to wait for manufacturers to supply RMC at their own time and stipulated quantity. Bitumen and quarrying are also taken up by the company in-house. It has quarry sites at Mumbai, Pune and Ahmedabad and transports 400 trucks per day to different locations.
So, at a time when most projects are languishing and getting delayed because of land acquisition issues or limited availability of credit, how does Gupta complete his projects on time?
“Yes, it’s not easy doing business,” he says. “But India is at that critical stage where it cannot function anymore without putting infrastructure in place.
Everyone says the system must change. But I think that we need to change our thinking pattern.”
Gupta quotes instances of times when the promoter had given J. Kumar the go-ahead for the execution of projects when its detailed project report (DPR) was incomplete.
Planning is essential to an infrastructure project. But more so is transparency in the processes that gets one through the request for pre-qualification, tendering process and execution.
After a long time, J. Kumar Infraprojects has taken up a project for a private developer which, on completion, will bring in toll of `1 crore per day to the developer. The EPC contractor hopes to complete the project 100 days in advance, thus allowing the developer to make `100 crore on toll. Speed and quality of work, insists Gupta, is what gives J. Kumar its reputation and then, of course, there’s bonus.
At a time when other countries have successfully leveraged infrastructure development to improve economy, India lags far behind. Gupta says that the Indian construction industry is not known to execute a neat job. For instance, when building a subway, the company had to relocate a religious place that was obstructing construction. Finally, the developer built one under the very flyover.
“One does not see this in developed countries. Most of the time, the developer would have done a beautification drive thus enhancing the look of the very construction,” he adds.
Gupta takes pride in the fact that in the last 34 years he has not paid any penalty to any promoter. Usually, penalties are paid by contractors when projects are delayed due to various reasons.
So how about PPP projects? That does not look too good, he says shaking his head. While he prefers not to comment on the state of PPPs, for him personally it’s a matter of business interest. Gupta thinks that there’s too much stress on PPP. It’s not easy for contracting parties to shift to PPP as the cash requirements and the facilities that are needed are strenuous and time-consuming. A proper demarcation of allocation of risk must be noticeable for EPC companies to enter into such contracts.
Gupta has huge hopes for the infrastructure sector. He says, “Construction and infrastructure are looked askance in India. Moreover, there’s little encouragement to grow, although the scope is vast. The government should offer more scope to the industry and mainly the labour force. It’s for this reason that only a handful are able to break into the industry in other countries.”
However, Gupta has successfully turned the tide in his favour by leveraging government contracts, goodwill and making the most of available opportunities.