With revenue from AP drying up, NCC awaits govt decision on housing projects

V Rishi Kumar Hyderabad | Updated on November 26, 2019 Published on November 26, 2019

Expects to hit ₹10,000 cr topline in FY 2020

Construction company, NCC Limited, is pinning its hopes on the Andhra Pradesh government reviving the public sector housing projects taken up in the State.

While there has been no official word on cancellation of the housing contract thus far, NCC along with couple of other leading infrastructure developers are awaiting the Government’s decision as it has been reviewing a number of projects inked during the previous regime under the TDP.

The company could not secure revenues from AP projects after the government change. This resulted in nil turnover from the State projects, where it has an exposure of over ₹12,000 crore.

At an investors conference recently, YD Murthy, Executive Vice-President, NCC Limited, said, “We started the financial year with an order book of ₹41,197 crore. But based on the order issued by the Chief Secretary, Andhra Pradesh, that about ₹6,100 crore were likely to be cancelled, the company has proactively removed orders worth ₹6,076 crore from its order book.”

The EPC major started the year with an order book of ₹35,121 crore. As of today there is no clarity on projects worth ₹11,000 crore in AP.

Murthy explained that NCC has about ₹4,350 crore orders in the affordable housing segment and about ₹6,600 crore orders in the capital city of Amaravati and in addition there are projects that are funded by the ADB and under Amrut.

While the ADB and Amrut projects are going on as per schedule and payments received. Three contractors including L&T, Shapoorji Pallonji and NCC had a detailed discussions with the government. The government appears to be keen on taking up these projects. NCC also wanted them to give an assurance towards payments of outstanding bills.

“The company had guided for revenue of ₹10,000 crore and in first half achieved over ₹4,000 crore topline. We will have to execute ₹1,000 crore worth business in the remaining six months. We are confident of achieving the number,” he explained.

NCC has receivables of about ₹800 crore in AP. It had mobilised advance from these projects of ₹500 crore. For the six months the building division accounted for 43 per cent at ₹1,766 crore; roads ₹506 crore (12 per cent); water and environment ₹898 crore (22 per cent); irrigation ₹141 crore (11 per cent); mining and other segments contributed a small portion.

Murthy said “the profit margins are very important for us and that has been the DNA of this company. We do not bid aggressively but we got fresh orders worth ₹25,000 crore in FY 2019. We expect execution to pick up in second half.”

NCC shares hit a 52 week high of ₹119.15 and closed at ₹59.25 at BSE on Tuesday.

Published on November 26, 2019
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