IL&FS Transportation Networks Ltd (ITNL), through its Singapore-based subsidiary ITNL International Pte Ltd (IIPL), has signed an agreement with three Chinese firms to set up a joint venture (JV) firm to expand its services to overseas projects in Southeast Asia, Africa, South America and China, as per a stock market disclosure.
The JV will be formed under Chinese laws and named as Chongqing Heng Yi Project Maintenance and Technology Consultancy Ltd.
IIPL, which has signed the agreement with three firms—Chongqing Expressway Group Company Ltd (engaged in operation and construction of toll roads), Jiangsu Transportation Institute (an engineering technology research centre) and China Railway 13th Bureau Group Co Ltd—will hold 28 per cent stake in the JV.
"The partners of the JV agreement believe that there is a huge market for testing and inspection of roads, tunnels and bridges and other services related to operation and maintenance of expressways in China and other countries. Hence they wish to work together through a strategic alliance for providing specialised services in this field. The alliance aims at using the experience of ELSAMEX SA, a wholly owned subsidiary of ITNL in Spain which has been operating expressways across Europe for 25 years," the filing stated.
The joint venture will undertake and provide services, including consultancy for testing and inspection of roads, tunnels and bridges; design of special maintenance work; introduction of new technology on maintenance management; set up maintenance management systems; training; expansion of service to overseas projects; and expansion into other related maintenance businesses.
IL&FS Transportation, a subsidiary of IL&FS that develops and manages toll roads, was listed at Rs 258 in March 2010. The firm reported a 18.5 per cent growth in net sales to Rs 6,645 crore with a 4.6 per cent increase in net profit to Rs 520 crore in FY13. For Q1FY14, it reported a 8.1 per cent fall in net sales to Rs 1451 crore with profit after tax slipping 2.4 per cent to Rs 130.6 crore compared with Q1FY13.
Early this month, Goldman Sachs fully exited its investment in the firm.
Other private equity investors of IL&FS Transportation include Standard Chartered IL&FS Asia Infrastructure Growth Fund (3.15 per cent) and Bessemer Venture Partners (2.13 per cent). Trinity Capital was also a shareholder but exited during the IPO.
(Edited by Joby Puthuparampil Johnson)