Infra companies still find the going tough

V. Rishi Kumar Updated - November 16, 2017 at 04:14 PM.

Having faced margin pressure and subdued performance for a few quarters now, infrastructure firms feel they need a couple of more quarters to gather momentum.

Some companies say they are more confident with the Prime Minister, Dr Manmohan Singh, assuring them of a series of measures but feel there are worrisome issues.

Mr R. Balarami Reddy, Executive Director of Finance, IVRCL, told

Business Line that unless there is steady order flow and the necessary clearances are in place, infrastructure companies will be hard placed to generate adequate business.

While the Government and the RBI have announced some measures, interest rates still rule high and fixed expenses continue to drain funds, he said.

NOT OUT OF WOODS YET

Angel Broking in its results review of infrastructure companies mentioned that revenue growth has faltered, leading to subdued profitability. High interest cost has lead to muted earnings.

While road developers seem to have performed better, interest costs continue to pinch. Only a decent order book ensures a clear revenue outlook. The consistent hike in repo rates mainly to check inflation has added to the already high interest cost for the companies.

INFLATION

Mr Y.D. Murthy, Executive Vice-President, Finance, NCC, said most infra companies are passing through difficult times due to high inflation, high interest rates, delayed payments and hurdles in implementation leading to a direct impact on the top lines.

There is margin pressure. But the recent initiatives to bring down cost and accelerating the pace of clearances are positive developments.

However, interest rates are still high at 11 per cent against 7-8 per cent few years ago.

Any announcements will take about two-four quarters to bring about changes and impact the sector, he felt.

>vrishi@thehindu.co.in

Published on June 12, 2012 15:57