Business India ×
Corporate Report

Published on: Oct. 19, 2020, 10:57 a.m.
The Parliament project pushes Tata Projects higher
  • Prized contract: new triangular Parliament next to the old circular one

By Sarosh Bana. Executive Editor, Business India

It was a triumph for the Tata Group when its company, Tata Projects Limited (TPL), edged past six other contenders in securing the contract to construct a new Parliament building in New Delhi at a cost of Rs861.90 crore. The Mumbai-based company won the L1 (lowest bidder wins) tender by quoting just about Rs3 crore less than the engineering, procurement and construction (EPC) giant, Larsen & Toubro Ltd (L&T), which had submitted a bid for Rs865 crore.

Incorporated in 1979, TPL claims expertise in executing large and complex urban and industrial infrastructure projects, and in implementing complete mining and metal purification systems. While the company is now in the spotlight for winning the Parliament project, it has transformed remarkably over the years, emerging as one of India’s leading infrastructure companies.

Its closing order book is worth Rs53,000 crore as of end-March, on account of a strong inflow of Rs13,300 crore of new orders last year, and its turnover has spiralled almost four and a half times in four years – from Rs3,110 crore in 2014-15 to Rs13,290 crore in 2018-19. Last year, however, saw its bottomline depressed, with a turnaround elusive this year on account of the pandemic-induced industrial shutdown. 

Vinayak K. Deshpande, who has been Managing Director, Tata Projects, since 2011, says his company’s trajectory has been as per a 10-year horizon strategy that envisages an accelerated growth phase of about four years, followed by a two-  or three-year consolidation phase that leads to leadership in presence and practice of another four years.

While TPL’s long-term credit rating has been affirmed at IND AA (Stable), it had last year raised Rs1,000 crore from the debt capital market by issuing listed unsecured non-convertible debentures in its first listed issuance. Last year, the company also shifted its banking relationship to Mumbai from Hyderabad, with the relocation of its corporate office to Mumbai.

Business hit hard by virus 

Deshpande acknowledges that the business of his company has been ‘extensively hit’ by the Covid-19-induced lockdown that led to the shutdown of its project sites across India and abroad. “In view of the financial stress on the company arising out of the macroeconomic state of the economy and the ongoing global lockdown situation, resulting in severe disruption of cash flows, the Board of Directors recommended not to pay dividend on equity share capital for 2019-20. The previous year, it had chosen to pay Rs100 per share (100 per cent),” he observes.

Tata Projects’ finances in the last fiscal were already in decline, with total income sagging from Rs13,230 crore the year before to Rs10,514 crore, operating profit, from Rs775 crore to Rs749 crore, and PBT, from Rs389.70 crore to Rs204.56 crore. “We grew aggressively at a CAGR of 30-40 per cent from 2014-15 till about 2018-19, and our 10-year strategy drawn up in 2013 prescribes consolidation for the next two years, because sustained rapid growth does not necessarily improve many internal factors,” maintains 62-year-old Deshpande. “Last year was hence actually planned as a year of consolidation where we halt growth, but set right our balance sheet and other parameters.” What is important is that the company has quality orders at this point of time, which will help balance both its balance sheet and profit over the next two to three years, he adds.

  • Deshpande: pursuing our strategy for growth

    Deshpande: pursuing our strategy for growth

He envisions the contract for the new Parliament – a triangular structure to be built close to the existing circular one – as an opportunity for TPL to serve the country by executing a prestigious nationally important project. “We have started work on the project, which is complex, but are confident of delivering the iconic building within the tight timeframe of 21 months,” he mentions. “This is much more than a contract, as the project is motivating and inspirational, and evokes national pride and a sense of duty and dedication in me and my team.” Tata Projects has about 5,000 employees, with an average age of 35.

Some of the more noteworthy projects the company has executed in recent times are India’s largest blast furnace, for National Mineral Development Corporation, in Chhattisgarh; Rourkela Steel Plant’s Blast Furnace-5 ‘Durga’; a 320 km stretch of the Western Dedicated Freight Corridor; Sri Damodaram Sanjeevaiah Thermal Power Station (3x800 MW) in Andhra Pradesh; Dravyavati River Rejuvenation Project in Jaipur; and sections of the Delhi, Lucknow and Mumbai metro rail systems.

Projects in progress include a segment of India’s longest sea-bridge, Mumbai’s Trans-Harbour Link, in a joint venture with South Korea’s Daewoo E&C, redevelopment of the BDD (Bombay Development Department) chawl in south-central Mumbai, in a consortium with Mumbai’s Capacit’e Infraprojects and China’s CITIC Group, and the Trisonic Wind Tunnel at ISRO’s Vikram Sarabhai Space Centre in Kerala, on turnkey basis and in a tie-up with Canada’s Aiolos Engineering Corporation for knowhow and technology.

Contract is a boon for the company

The Parliament building contract comes as a boon for TPL, which its last annual report acknowledges is in deep financial stress, as most other Indian corporates, on account of the Covid-induced lockdown. The building will form part of the government’s ambitious Rs20,000 crore Central Vista Redevelopment Project.

This project has been widely perceived as a vanity one that is unneeded and profligate, especially at a time the country has slid into a recessionary phase with its economy collapsed by 23.9 per cent. The Delhi Development Authority lost no time in approving change in land use so as to fast track the project, which includes construction of 10 new government office buildings that will replace existing ones that have been earmarked for demolition.

The imposing and symmetrical South and North Blocks will become museums, the former currently housing the Prime Minister’s Office, and the ministries of Defence and External Affairs, while the latter has offices of the Home and Finance ministries.

The Prime Minister will be shifting out of his official residence at 7, Lok Kalyan Marg to a grander setting – a new palatial house and principal workplace for himself – as part of his personal initiative to redesign the present majestic Parliament Vista. To justify the need for the new Parliament building, the authorities have assessed the present colonnaded Parliament House, or Sansad Bhavan, as dilapidated and seismically and structurally unstable, and yet have planned its conversion into a public museum.

This monumental structure is one of the world’s most magnificent legislatures, designed by British architects Sir Edwin Lutyens and Sir Herbert Baker in 1912-13 as part of their wider mandate to create a new capital precinct for British India. There is an unconfirmed belief that the 174-metre diameter rotunda was inspired by the 11th century Chausath Yogini temple in Madhya Pradesh’s Morena district, its circumference embedded by 64 chambers.

  • Going underground: Lucknow Metro Phase 1A

    Going underground: Lucknow Metro Phase 1A

Tata Projects will be working along the overall design prepared by Ahmedabad-based HCP Design, Planning and Management Pvt. Ltd that has been the architectural and engineering planner of the Central Vista project. Founded by Hasmukh C. Patel in 1960, HCP has been the architecture firm favoured by Narendra Modi since he was the chief minister of Gujarat. HCP had given shape to Modi’s concept of Swarnim Sankul in 2011, an office complex flanking the Central Vista of the legislative assembly building in Gandhinagar that will find reflection in New Delhi’s Central Vista project.

Patel’s 58-year-old son Bimal Patel is director at HCP and had executed Modi’s other dream project, the 11.25 km Sabarmati Riverfront Development Project, which became the centre-piece of Modi’s Gujarat Model when he was chief minister.

On the new Parliament building, Bimal Patel notes: “What we do with our Parliament building will powerfully signify who we are, how we view our past and where we see ourselves going.” HCP was also marshalled by Modi for constructing the Kashi Vishwanath Corridor in his Parliamentary constituency of Varanasi, a revamp of the eastern seafront of the Mumbai Port Trust, and restoration of Ahmedabad’s 32-acre Sabarmati Ashram.

Tata Projects’ Chief Strategy Officer Himanshu Chaturvedi notes that his company will deploy the most sophisticated methods for the Parliament construction, like 3D modelling, which is a computer graphics technique for producing three-dimensional digital representation of any object or surface, and Lean Construction (LC) that aims at reducing costs, materials, time and effort to essentially “minimise the bad and maximise the good”. “These techniques will enable us to do everything in this project in a ‘First Time Right’ way,” remarks Chaturvedi.

According to him, TPL also uses building information modelling systems, IoT (Internet of Things) based online and remote project monitoring systems for tracking progress, as well Last Planner System to deliver projects on time. “Building, design and construction have three aspects, namely, civil construction, Mechanical, Electrical and Plumbing (MEP) and Heating, Ventilation and Air-Conditioning (HVAC), and architectural work and finishes, he explains.

Several Tata firms in infrastructure

While TPL will undertake all civil, mechanical and electrical construction for the Parliament building, technology elements like smart lighting, acoustics, HVAC and security systems need to be sourced from suppliers approved by its client and nodal agency for the project, the Central Public Works Department (CPWD). Similarly, the architectural finishes are also state-of-the-art and will need to be obtained from specialised companies.

Tata Projects and L&T are again among 43 prospective bidders for the redevelopment of the Central Railways’ Chhatrapati Shivaji Maharaj Terminus (CSMT), a UNESCO World Heritage site that has served rail commuters and passengers in Mumbai since 1888. The Rs1,642 crore make-over is to be completed within four years of the award of the tender.

Significantly, TPL has not been the contractor of choice for the Tata Group itself, which has a multiplicity of infrastructure and engineering companies within its fold. Historically, the 153-year-old Tata Group had largely favoured the 155-year-old engineering and construction giant, the Shapoorji Pallonji (SP) Group, the Mistry family that owns the SP Group, having been the largest shareholders – with 18.4 per cent shares – in Tata Sons and having had good relations with the Tata family. 

  • Landscape park: Dravyavati River Rejuvenation Project, Jaipur

    Landscape park: Dravyavati River Rejuvenation Project, Jaipur

The two groups, however, fell apart following the ouster in 2016 of SP Group’s Cyrus Mistry as charman of the Tata Group. The SP Group recently stated, “It is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups”, bringing the time-tested relationship to a bitter end.

The SP Group is now also contesting the award of the Parliament building contract to TPL, communicating to the CPWD about what it charged was the Tata company’s ‘serious misconduct’ during the bidding process. In 2016 too, an SP Group company, Afcons Infrastructure Ltd, had won a case against a joint venture of TPL and China’s Guangdong Yuantian Engineering Co. (GYT) for a metro rail project in Nagpur. Nagpur Metro had rejected TPL-GYT’s bid for not meeting the technical eligibility requirement. Subsequently, Afcons emerged as the lowest bidder, but the Bombay High Court dismissed Nagpur Metro’s decision, prompting Afcons to approach the Supreme Court, which upheld its appeal.

The Tata Group headquarters, the four-storey colonial structure called Bombay House, had been designed 96 years ago by Scottish architect George Wittet who designed over 40 buildings for the group that led to his appointment as head of Tata Engineering Co, now Tata Motors.

In 1962, the Tatas incorporated Tata Consulting Engineers Ltd (TCE) as an integrated engineering consultant. However, like TPL, TCE too provides concept to commissioning services in infrastructure, mining and metallurgy, hydrocarbons and chemicals, and in thermal, hydro, nuclear and renewable power, as well as transmission and distribution.

Another Tata company, Voltas Ltd, set up in 1954 as a pioneer in air-conditioning and cooling technologies, also had a mining and construction equipment division (M&CE) from the outset. Voltas M&CE was amongst India’s first engineering product and service companies to introduce earthmoving and infrastructure machinery post-Independence.

There were reports a year ago of the Tatas’ considering a merger of Voltas’ project business, Voltas Projects, with Tata Projects to improve operating efficiencies across verticals and cut costs, with Voltas being re-categorised under the consumer vertical. Voltas Projects’ business involved turnkey projects in the domestic and international MEP market. More than half its revenue reportedly accrued from overseas, while TPL was more focused on the domestic EPC market.

It was in 2018 that Tata Sons had announced the reorganisation of its Infrastructure and Realty businesses into the longer cycle Infrastructure Development and Concessions business, and the Realty business that encompasses commercial real estate and housing. This step was taken to ‘simplify structures, leverage synergies and scale business rapidly’. The Tatas’ Infrastructure and Urban Solutions division now comes under Tata Sons’ Infrastructure, Aerospace and Defence division, while Tata Realty and Infrastructure now oversees the operations of Tata Housing Development Co.

  • India’s largest blast furnace at Rourkela Steel Plant

    India’s largest blast furnace at Rourkela Steel Plant

Projecting company as a class apart

“The real estate and infrastructure businesses will both continue to grow, given the needs of India’s fast-growing economy, and the Tata group has the resources, skills and scale to make a significant impact,” said Tata Sons chairman N. Chandrasekaran. Tata Realty and Infrastructure (TRIL) is in the business of commercial real estate, and also houses the Infrastructure & Urban Solutions division, which is in the business of infrastructure concessions.

Foraying into new divisions such as oil & gas and metro projects where limited players are present, Tata Projects has emerged as a top highly diversified company,” points out Fitch credit rating agency India Ratings and Research, or Ind-Ra. The agency adds that though TPL’s customer concentration remains high, with the top 10 customers accounting for 50 to 55 per cent of the unexecuted order book at end-March, around 90 per cent of the order book is from government bodies where the default risk is minimal.

Noting that the Covid-19-led lockdown has rendered order execution by EPC companies uncertain, Ind-Ra has learnt from TPL that it is striving to improve its financial health through measures like assessing contractual rights and obligations, seeking extended timelines from customers, focusing on reducing fixed costs, streamlining the supply chain, and re-engineering its operations to achieve required efficiencies. Ind-Ra nevertheless indicates, “Any weakening of the linkages with the Tata Group could also result in a negative rating action.”

Chaturvedi is, however, encouraged by the fact that the government’s Atmanirbhar Bharat (self-reliant India) initiative has recognised infrastructure as one of the five pillars, in an acknowledgement of the sector’s key role in India’s development and large-scale employment generation. He adds: “The extension of up to six months to be given by government agencies is a welcome move, since many projects across the nation were affected due to the sudden disruption caused by the pandemic – much of this such as lockdown was beyond the control of contractors.”

Deshpande maintains, “India requires many strong construction companies, and our intent is to set Tata Projects as a class apart in being a smart engineering and construction company that is technology-driven, highly innovative, and one that pursues an altogether fresh way of doing business”.

Cover Feature

Modi's coalition challenge

A shrunk mandate for Modi means compromises and problems in governance

Corporate Report

RPEL undergoes a metamorphosis

RPEL focusses on innovation in high-value stainless-steel products for growth

Corporate Report

How SLMG became a force to reckon with

India’s largest independent Coca-Cola bottler SLMG Beverages plans for a future ready organisation

Special Report

PSU shares: Back on investors’ radar

With markets stabilising, PSU shares are again being favoured by investors

Coalition Challenge
Up, Up and Up
Indian Elections and Markets


Private Equity




Corporate Report


The introduction of black pepper as an inter-crop in the sopari and coconut orchards, has enabled farmers to cultivate crops simultaneously

Skill Development

In 2020-21, the programme reached over 112,482 girls in urban and rural locations across six states in India, including 10,000 across Delhi


The event brought together stakeholders and changemakers to participate in a series of conversations on global trends and recent developments


The programme will focus on educating children on oral health and building awareness around the dangers of tobacco use


German BioEnergy enters Indian market

Published on Aug. 17, 2023, 11:54 a.m.

BioEnergy will showcase its innovative biogas technology in India


Ather looks to double its market share

Published on Aug. 17, 2023, 11:26 a.m.

Ather aims to produce 20,000 units every month, soon

Green Hydrogen

‘Kerala Hydrogen ecosystem a model for all states’

Published on Aug. 17, 2023, 11:06 a.m.

German Development Agency, GIZ is working on a roadmap for a green hydrogen cluster in Kochi

Renewable Energy

Adani Green eyes 45GW RE

Published on Aug. 17, 2023, 10:45 a.m.

AGEL set to play a big role in India’s carbon neutrality target