Two key factors contributed to this trend. Unlike build, operate, and transfer (BOT) projects, which are capital intensive, hybrid annuity construction projects are light, as 40% of the project cost is borne by the government. For this reason, banks financed construction projects of unlisted companies. The second factor is flexible pre-qualification standards to secure projects.
These factors have intensified competition in the sector. The number of bidders for construction projects increased to 15 in the current fiscal year, from 5 to 10 in fiscal 2020.
In the coming quarters, if unlisted players are unable to seek financial close for their projects, the NHAI may tighten pre-qualification standards. This will help companies such as KNR Constructions, PNC Infratech, Dilip Buildcon and Ashoka Buildcon to gain market share given their good financial statements and balance sheet.