Projects execution is back to near normal: PK Gupta, CMD, NBCC

By Nivedita Mukherjee

Public-sector construction major NBCC has lost little time since the lockdown to restart its various projects. The Navratna enterprise, which saw a sharp drop in both revenue and profits in Q1FY21, is hoping that its robust order book and an increased focus on overseas projects will aid a revival over the short to medium term. PK Gupta, CMD, speaks about how the NBCC projects are being run post the pandemic and the implications for the company from the Supreme Court directives to complete stalled real estate projects of the Amrapali Group in the private sector and the resolution plan for Jaypee Infratech, in an interview with FE’s Nivedita Mukherjee.

The slippage in NBCC’s financial performance in the June quarter can be partly attributed to the lockdown. But is the company in a position to engineer a turnaround?
We reported total revenue of Rs 730 crore during April-June quarter this year, down 62% year-on-year; the quarter also saw an 87.9% slump in consolidated net profit, at Rs 5.92 crore. Obviously, the Covid-19 pandemic and the subsequent lockdown have impacted our operations during the quarter, owing to shortage of workforce and supply chain disruptions. The Q1 results are therefore not an indication of the company’s overall financial health and operational efficiency.

Due to the outbreak of Covid 19 pandemic there was stoppage of work in projects pan-India. However, things are turning to normal as labourers have returned. Work execution has picked up which would surely result in improved performance in coming quarters.

How does your present order book look?
NBCC presently has an order book worth around Rs 71,000 crore and these include PMC/EPC works. Then there are works related to Pradhan Mantri Gram Sarak Yojana in Tripura, West Bengal, Bihar and Odisha. We are also carrying out Ghosikhurd irrigation works in Nagpur as well as various re-development works. Balance value of contracts under execution is about Rs 18,000 crore.

NBCC has already awarded works worth Rs 6,167 crore during 2020-21. In addition, tenders for works of `3,072 crore have already been floated. This will improve the turnover in the coming months.

What is the current status against the deadline for completion of Amrapali projects? What has been the financial impact of the Supreme Court directive on the company?
The Supreme Court in 2019, assigned the job of completion of Amrapali stalled housing projects to NBCC and the company has been executing these projects as PMC. Out of 24 stalled projects comprising 46,500 houses, the company completed and handed over 2 projects in late 2019, comprising 618 units.

Of the remaining 22 projects, contract for 18 projects have already been awarded by NBCC and are presently under various stages of execution and mobilisation. These projects comprise 39,017 housing units and the construction cost is Rs 6,060 crore, including fees of NBCC. Two tenders of Leisure Valley-Verona Height having 4,964 housing units are under progress with a construction cost of Rs 1,227 crore. Remaining projects are under approval of a representative of the Supreme Court.

The total cost of completion of all these Amrapali stalled projects is `8,300 crore and these would be completed and handed over by August 2023. Further, NBCC is executing these projects as PMC and would get 8% PMC fees.

Main source of fund is the pending dues/receivable from homebuyers of sold residential units to the tune of Rs 3,870 crore and receivables from unsold residential units to the tune of Rs 2,220 crore. SBI Cap is also funding Rs 650 crore for six Amrapali projects to bridge the temporary liquidity gap. Balance amount will accrue from the sold and unsold commercial units, sale of FAR, surrender/attached flats and sale/ auction of attached properties of the Amrapali Group.

So, the total receivables are about Rs 10,244 crore, against the likely construction cost of Rs 8,300 crore.

Are you looking at a stronger international presence?
Yes, the company is now vigorously focusing on enhancing its international footprint. In Seychelles, NBCC has recently secured a few projects. We are presently executing overseas projects worth $202 million which are in Dubai, Maldives, Mauritius and Seychelles.

Besides these, NBCC has other upcoming projects in Mauritius which we expect to start soon. The company is also under discussion with various governments and is exploring possibilities of securing further projects overseas.

What is the progress on the takeover of Jaypee Infratech?
The NCLAT Principal Bench, Delhi, by its judgement dated 3 March, 2020, approved the resolution plan of NBCC with modifications. After review of the judgement, it appeared that there were few key issues regarding which the NCLT changed the resolution plan proposed by NBCC. These changes had financial implication on the implementation of the resolution plan by NBCC. So, NBCC had filed an appeal before NCLAT.

Other stakeholders like ICICI Bank, EIDA, IDBI Bank, among others, have also filed petition in NCLAT. The Supreme Court has transferred all the appeals to itself on 6 August, 2020 and is now regularly hearing the case to settle it out. We hope that the issues shall be resolved soon and NBCC will go ahead with the implementation of its resolution plan.