IRD's heady ride in India has hit some bumps

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International Road Dynamics Inc., a global leader in helping highway traffic run smoother, has been enjoying a heady ride on India’s highway building boom – but not without hitting some bumps.

IRD South Asia Private Ltd., a wholly owned subsidiary of Saskatoon-based IRD, which trades on the Toronto Stock Exchange, specializes in toll collection through manual services, semi-automatic operations (using smart cards) and fully automatic installations that use transponders mounted at tollgates to recognize, categorize and allow in vehicles through radio-tagged systems and stickers.

In India, its gear is at work in 65 toll plazas, of which 10 are directly maintained by IRD. Apart from being a partner or sub-contractor for private-sector road operators, IRD also serves as a partner of the state-run National Highways Authority of India (NHAI) through data-collection services that help the agency plan new highways or run its directly managed ones through an efficient toll-collection system.

Among its significant deals in India, it recently won a contract to supply the toll-collection system for the Bandra-Worli Sea Link Project, which will cut heavy commuter time in Mumbai, India’s financial capital.

IRD South Asia boasts a 54-per-cent share of India’s toll business. Its current head count is 160, with offices in several cities. Revenues for this year will hit an estimated 400 million rupees (about $9-million), up from 250 million rupees in 2010 – though growth can be uneven, depending on the flow of deals.

Yet, the journey that began in 2000 has not been without some challenges, said Saurabh Khanna, regional director of the South Asian unit that also covers neighbouring places such as Sri Lanka and Bangladesh.

“The concessionaires are not aware of what they want,” he said. “They are driven solely by costs.”

To compete on price alone is not the thing for IRD, which has proprietary “weighing motion” technology that automatically calculates the size and weight of an approaching truck or car to help speed up traffic. The firm is, in effect, an information technology systems integrator employing 50 software engineers to customize it for clients.

“It becomes very difficult to compete with local players,” Mr. Khanna said.

However, the company won the Bandra-Worli link deal in a switch the client did after recognizing IRD’s better-quality service, he said.

IRD’s work costs more, he said, but can help a client curb future road-damage and revenue losses because its systems automatically generate revenue requests that can be matched to cash collections.

It has also faced delayed-payment problems, Mr. Khanna said, and it has had to chase after some clients.

The company's competitors tend to outsource technology work to third parties while IRD is an original-equipment manufacturer that takes full ownership, Mr. Khanna said.

“Our chairman [Arthur Bergan]wants to focus on quality. But for this, awareness of concessionaires is a must,” he said.

Even though the Indian government is building only a fraction of the intended 20 kilometres of highway construction a day, there is still frenetic activity and plenty of opportunity.

“We have hardly hit 2 per cent of the market,” Mr. Khanna said. “Next year, there will be 5,000 toll lanes opening up.”

Special to the Globe and Mail

Narayanan Madhavan is associate editor of the business news pages of Hindustan Times, a leading Indian daily newspaper. He has previously worked for Reuters, the international news agency, as well as The Economic Times and Business Standard, India's leading business dailies. Though focused mainly on business and economic journalism with a strong focus on information technology and the Internet, he has also covered or written about issues including politics, diplomacy, cinema, culture, cricket and social issues. He has an honours degree in economics and a master's degree in political science from the University of Delhi.

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