National Buildings Construction Corporation Ltd (NBCC) has bagged a mega order of ₹2,149 crore from the Indian Trade Promotion Organisation (ITPO) for the redevelopment of exhibition venue Pragati Maidan in New Delhi. Bloomberg TV caught up with Anoop Kumar Mittal, CMD, NBCC, to get a perspective of the construction sector amid a real estate slowdown.
You have got a fairly large order from ITPO. What is the time frame you are looking at to complete this project?
This project will take around three years from today. Six months for designing and preparation of concept of the project and local approval, and two-and-a-half years for the completion of the project. So the total value is about ₹2,200 crore and I feel from the third quarter of next financial year we start booking the revenue.
Right now the order book size is about ₹38,000 crore approximately. It may close with ₹40,000 crore by the end of the financial year. So we are getting a lot of orders on the project management consultancy (PMC) side as well as on the redevelopment side. There is no question of slowing down as the government is spending. And particularly, this ITPO project is totally a Government of India funded project. So I am seeing a lot of growth in them.
What about your costs? Have they come down because the commodity prices are down; and is your margin looking better going forward?
Of course. Particularly steel prices have gone down substantially and construction cost has also fairly gone down. At least we can say that there is no escalation in comparison to the last three years’ cost.
How do you see the next year panning out for NBCC? What are your own targets in terms of growth and numbers?
We have set a target of at least 25 per cent CAGR for five years. This target was fixed six months back or, you can say, at the start of the financial year. But after seeing the order book size and the kind of orders we are getting we are in the process of reviewing that. I can only say that the next five years will be NBCC’s time in the redevelopment, PMC and infrastructure sectors.
What are the new markets you are looking at? Most of your work has been around the NCR and the North.
It is not like that. We are equally spreading it. But of course considering the capital of the country and the concentration of the government infrastructure, particularly government residential colonies and offices, in Delhi, we are equally spreading it. But our focus is now on redevelopment projects, not only in NCR but elsewhere also. We are working with the Rajasthan government and we have made a joint venture company with them. We are also working in the redevelopment sector with the Odisha government and now we are looking for some projects from the Railway Ministry.
Are you getting your payments on time?
In most of the redevelopment projects payment is not an issue because we have to generate funds from the projects only. It is a self-financing kind of thing.