From small contractor to building top EPC cos: How PP Reddy became 6th richest person of Hyd

The firm's revenues have nearly quadrupled in the past five years from Rs5,200 crore in FY14 to Rs20,300 crore in FY19. In the same period, its net profit jumped nearly six times to around Rs2,800 crore in FY19 from around Rs500 crore in FY14. This makes MEIL India's largest construction and engineering company after Larsen & Toubro (L&T)

PP Reddy, Founder and Chairman of Hyderabad-based infrastructure major Megha Engineering & Infrastructure Limited (MEIL), with a fortune of $1.5 billion (nearly Rs11,300 crore) is the sixth richest person of Hyderabad. He is also ranked at 134 in India and at 2,383 globally.

MEIL in August 2020 bagged Rs4,509.5 crore tunnelling contract for the prestigious Zojila project in Jammu & Kashmir (J&K). It is now keen to expedite the project execution. The company, which has completed over 10 per cent of the works, is aiming to complete the project by 2025, ahead of the 2026 target.

In recent times it has also become one of the fastest growing and most successful infrastructure and engineering, procurement, and construction (EPC) companies in the country.

The firm's revenues have nearly quadrupled in the past five years from Rs5,200 crore in FY14 to Rs20,300 crore in FY19. In the same period, its net profit jumped nearly six times to around Rs2,800 crore in FY19 from around Rs500 crore in FY14.

This makes MEIL India's largest construction and engineering company after Larsen & Toubro (L&T). L&T's infrastructure division reported revenues of around Rs73,000 crore in FY19 and profit before interest & taxes (PBIT) of around Rs5,400 crore.

L&T Infrastructure division revenues doubled between FY14 and FY19, against four times rise in MEIL's during the period. MEIL is, however, growing at a much faster clip due to its lower base.

Slow but steady growth

Reddy, the fifth of six children of a farmer in the southern state of Andhra Pradesh, started Megha Engineering Enterprises (MEE) in 1989. While working at a small pipe manufacturing company, one of his clients encouraged him to venture out on his own. With Rs1,00,000 from his family, MEE was born, and in 1991 his nephew PV Krishna Reddy joined him after graduating with a degree in commerce. Krishna now runs the company as Managing Director, while Reddy is Chairman.

In mid 90s - MEE, in the role of a contractor, started taking up small projects in irrigation and drinking water sectors. Between 2000-2006 the company started to venture into other States of India such as Rajasthan and Karnataka.

It was in 2006 that MEE evolved into Megha Engineering & Infrastructure Limited (MEIL). It took more than two decades for the company to cross a turnover of Rs1,000 crore. By 2010, though, MEIL was winning projects across the country and abroad. Today, it is active in Jordan, Kuwait, Tanzania and Zambia andit is one of India's best-managed engineering, procurement and construction companies.

The disruptor

River-linking has often drawn flak for its environmental and socio-economic implications. But MEIl entered the Limca Book of Records for the fastest completion of a river-linking project at Pattiseema in Andhra Pradesh. The company took only a year to link Krishna and Godavari rivers for a lift irrigation project and commissioned the first pump in 173 days.

In Telangana, MEIL built India's largest lift irrigation project by value. The $14 billion Kaleshwaram Lift Irrigation Project will supply about 57 million cubic meters of water a day from the Godavri river - the country's second-longest river - to all the corners of drought-plagued Telangana. The project is a showcase for the Telangana government.

Moving further, it is now also in the space of power, irrigation, drinking water, roads and hydrocarbons. It has Rs4,358 crore worth of contracts in the Rs55,548crore Polavaram multipurpose project.

The company won headworks and the hydropower station contract in a reverse bidding after the Andhra Pradesh government cancelled the earlier contract. MEIL took up the project for Rs4,358 crore, which was 12.6 per cent lower than earlier bid.

MEIL was the sole bidder in the second round. The Polavaram project will supply water for irrigation to 720,000 acre.It will also help generate 960 MW hydropower and lift 80TMC of water to the Prakasam Barrage on the Krishna river.

Another project, which it completed in 2017, was of the Western UP Power Transmission Corporation (WUPPTCL), involving the construction of seven substations and transmission lines for a total length of 1,116 circuit km.

The project was executed on a build-own-operate-transfer (BOOT) basis with a maintenance period of 35 years. WUPPTCL's project was completed in 2017 at a cost of Rs 4,150 crore. Andhra Pradesh and Telangana account for around 59.6 per cent of its unexecuted order book. In terms of sectors, irrigation-based orders along with drinking water orders accounted for nearly two-thirds of its order book.

Today, the company has diversified into oil and gas as well as power sectors. The company has also made acquisitions to foray into the defence sector and plans to set up a thermal power plant.

In a message to company's stakeholder, MEIL Chairman PP Reddy says: "I started this journey with a handful of people. Back then we received a small order for erection of some 10 hp motors. We racked our brains a lot to come up with solutions for the erection of those motors. On a personal level, that was a great achievement for me. I had never imagined back then that we will be able to execute such mega-scale pump houses, lift irrigation schemes, and drinking water schemes. By executing such schemes, MEIL is making great leaps forward and we are also taking our nation forward towards development. I am confident that we will execute bigger schemes in the future."

"There is a lot of scope for improvement in the Indian infra sector. What we have achieved so far is insignificant. There are immense opportunities in areas like water, electricity, roads, building, etc. So let us continue our good work and achieve loftier goals in the coming years," the 64-year-old tycoon adds.