The last four years have seen Synefra Engineering & Construction Ltd. (Synefra) establish three special economic zones (SEZ) in Coimbatore, Mangalore and Vadodra. The Tanti Group company, which was established in 1998 was previously known as Suzlon Infrastructure Ltd and in the first nine years of its existence, focused solely on in-house projects, specifically for Suzlon Energy Ltd. However, the last four years have seen Synefra emerge from its parent group’s shadows and accept external projects. In this period, it has successfully grown its three verticals of project management, engineering procurement and construction (EPC), and creation of SEZs. “Previously, the ratio of in-house projects to outside projects was close to 60:40 but today, it is closer to 10: 90,” says J.R. Tanti, managing director, Synefra. Tanti attributes this shift to two factors: Suzlon Energy has developed a ready base of offices, windfarm infrastructure and industrial buildings, and is now fully equipped to address its business plans for the next few years. Simultaneously, Synefra has strengthened its skill base for more institutional and large industrial projects, and its current business focus is to acquire diverse projects in its portfolio.
“You cannot have a single policy for both these type of SEZs and if industrial development SEZs can help grow the economy of smaller towns and semi-urban areas, the government should encourage us.”
While Tanti acknowledges this conscious shift in axis, he does not discount the experience gained in the initial years. “Through our multi-format infrastructure projects for Suzlon Energy, we got to develop our own expertise by dealing with policies, processes and methods of different countries,” he adds. Synefra has worked on industrial projects in Europe, U.S. and China, and this allowed it to assimilate best practices to implement in its Indian operations.
The right choice
Syenfra’s SEZ projects are self-funded and each of the three locations was chosen with regards to the availability of human resources for industries and logistics convenience. “The availability of human resources and access to roadways and ports makes the zones viable for industries,” says Tanti, while adding that before the SEZ projects commenced, the company invested in building a rapport with locals to help sustain business in the region. It did face development related challenges at these three locations at varying degrees. “For instance, at our Mangalore SEZ, we had to get past the physical challenge of building on 30 metre contours,” says Tanti.
Apart from its technical expertise, one of the aspects that sets Synefra apart from the rest is the focus on ‘green infrastructure’ or infrastructure that looks to preserve the ecosystem of a region. The company has adhered to sustainable practices in close coordination with the client’s consent. “We are strengthening our knowledge to incorporate the latest technology and tools to provide solutions that are not only cost effective and efficient, but provide tangible returns for the environment in which they operate,” Tanti adds.
Synefra Engineering & Construction
Tanti Group holding
Managing Director: J.R. Tanti
Strength: 120 people
USP: Technical expertise in executing industrial infrastructure in accordance to international standards
In the way
If there is one challenge that Tanti and his team of close to 120 people find insurmountable, it is getting past the fickle nature of the government and its attitude towards policy changes. This fiscal’s Budget withdrew the income tax exemptions previously granted to SEZs and Tanti says that this has hampered the perception of India as a safe place to invest amongst foreigners. “Once a policy has been implemented, it must stay in place for a minimum of 10 years otherwise it just exhibits our collective lack of maturity to other nations,” he says. In his own experience, close to eight international companies which approached him prior to the policy change have retracted and this is a clear indicator of global scepticism. “In fact, even Indian companies are hardly sending in any enquiries,” says Tanti. He also finds the clubbing of service-related SEZs (IT and ITES) and industrial development SEZs under one category is unfair. “You cannot have a single policy for both these type of SEZs and if industrial development SEZs can help grow the economy of smaller towns and semi-urban areas, the government should encourage us,” opines Tanti.
Roadmap to the future
Tanti wants to devote the next three years to developing Synefra’s existing SEZs which will take them closer to maxium utilisation. At present, these SEZs are only being utilised to 50 per cent. He is not looking at creating any more SEZs till he is satisfied with progress at the current locations. For the next fiscal, Tanti expects the SEZ division to generate revenues of about Rs. 160 crore.
Looking to the future, Tanti has a clear plan to grow each of Synefra’s business verticals. Apart from commencing construction on an integrated manufacturing facility in Brazil for Suzlon Energy, the company recently completed a project for auto giant Mercedes Benz and has received a repeat order for another project. “The Suzlon One Earth project (the group’s global management headquarters located in Pune) showed that we could complete a large-scale corporate infrastructure project at a competitive price and this is helping us receive a good response from other corporates,” says Tanti. And in the EPC division, the company just bagged an order to construct a super specialty hospital in Dharwad. In fiscal 2012, Tanti expects the project management division to contribute Rs. 15 crore and the EPC division to contribute Rs. 75 crore – Rs. 85 crore to the company’s top-line. Aside from this growth plan, Tanti is eyeing the space of public infrastructure.
While operating in the infrastructure sector presents its own set of challenges, Tanti is unperturbed about money and funding. “We are currently funded by IDFC (Infrastructure Development Finance Company) and we maintain a debt to equity ratio of 40: 60,” shares Tanti. And an initial public offering is the last thought on his mind. “In the next five years, I want us to mature as a company and while we might consider suitable, knowledge-based acquisitions at an appropriate time, I do not see the need for us to accept public funds,” says Tanti, on a concluding note.