Construction companies could see improvement in their order inflows in the coming months. The Tamil Nadu Government, on an infrastructure development drive, approved the project structure of the Madurai-Tuticorin industrial corridor. This project envisages a spend of Rs 1.83 lakh crore covering 29 different projects.
Apart from manufacturing and industrial hubs, the project also includes a thermal power plant and a greenfield port, which bodes well for the order book of several construction and infrastructure players.
CCCL, RPP Infraprojects, NCC, IVRCL, Simplex Infra, and Simplex Projects, all undertake industrial and building projects. Those such as CCCL and RPP Infra also have already executed projects in the southern region. Besides, companies such as GMR Infra are moving in on the scope offered through industrial corridors to plump up their order book.
Of course, funding is the key factor, with most of these companies already operating on wafer-thin interest cover ratio of less than two times. To address the funding problem, a Tamil Nadu infrastructure fund management company will be established, which can roll out investment vehicles such as infrastructure development funds.
Water projects
This industrial corridor apart, two water desalination projects are planned on a design-build-operate basis in Perur and Nemmeli, which can benefit those such as Va Tech Wabag. Its global parentage and experience in handling a few ongoing desalination projects abroad will come in handy. Besides, it has already successfully executed one desal project in Nemmeli, and is involved with the O&M of the project currently.
IVRCL is another potential beneficiary for desal plants; it has set up and operated desalination plant, though the project is on the sale block to improve IVRCL’s cash flows.
Stocks of construction companies are, however, down by 1 to 3 per cent in trade so far. VA Tech Wabag is the sole gainer, up 2.1 per cent.