NCC’s execution level will reach to the pre-COVID level by end of September: YD Murthy, Executive Vice-President

YD Murthy, Executive Vice-President (Finance), NCC, talks about Q1FY21 results, the impact of COVID-19 pandemic, order book, Payment cycle and pending dues, Atmanirbhar Bharat scheme and opportunities related to it during an exclusive interview with Pooja Tripathi, Zee Business. Edited Excerpts:

Q: We saw a significant hit on your revenue and profit in Q1FY21 amid lockdown and COVID-19 pandemic. What is the current situation? Execution has been picking in recent months. So, how long it will take to get back to the normal to the pre-COVID levels in terms of execution?

A: Rightly said, we faced a lot of problems in the first quarter due to the COVID but now things are improving slowly. Our topline has gone down by about 31% in the first quarter but in the second quarter already in June and July, we have seen substantial improvement in our execution. We have reached the level of about 60-65 per cent in execution. The major constraint, we have is the availability of labour, it has improved but further improvement is also expected. When we will reach a level of 90 per cent execution that is the pre-COVID level by the end of September or early October. So as far as the future is concerned, the major turnover and execution are likely to happen in the third and fourth quarter of FY21.

Q: NCC has won some big orders in the last two months. Where the order book does stands at present? You have earlier given guidance of around Rs 10,000 orders. Do you think that it is achievable?

A: We have given guidance of Rs 10,000 crore for FY21. And, in the first quarter, we have already received about Rs 2,600 crore of orders. So, the order award and order receipt are lying with our expectations and some more orders are expected in August. Definitely, we will achieve the targeted order accretion for FY21. At the beginning of the year, we started the year with an order book of Rs 26,000 crore and at the end of the first quarter it has gone up to around Rs 27,000 crore. So, we have a comfortable order book. What is important is how to convert these orders into turnovers. The supply chains have been restored and the raw material availability at the project sites has increased but what is required is related to labour availability, which is slowly improving

Q: What about the payment cycle and have you seen any improvement there? Are pending dues getting cleared now, especially from Andhra Government?

A: Payment cycle has improved a bit in the first quarter despite COVID. The finance ministry has also directed various central government agencies like National Highway Authority of India and Airport Authority of India among others to make payments faster and quicker. This is also helping a contractor like us. As far as central government agencies are concerned, they all are AA rated companies and their payments are coming on-time more or less. And with the direction from the Finance Ministry, some improvement is also there. So, we can maintain a comfortable liquidity position.

When it comes to state government’s there are some delays and as you rightly said in Andhra Pradesh there were some delays and we have suffered a lot in the past. But in March the government of Andhra Pradesh has paid us about Rs 100 crore under the affordable segment. So, the payment cycle there is also expected to improve and works are going on as per schedule in Andhra Pradesh and other states also. The Maharashtra State Road Development Corporation (MSRDC) project that we are doing in Maharashtra of Nagpur-Mumbai Expressway, there are also payments are coming on time. That is a big project of nearly Rs 2,850 crore and SPV has achieved financial closure and all the payments are coming more or less on time.

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Q: The government is talking of creating an Atmanirbhar Bharat and it is also announcing many projects for infrastructure and highways. So, let us know about the space where you are focusing?

A: Actually, the economy has slowed down and the government is also aware of that. And, to bring the economic activity/ to kick start the economy, physical infrastructure development is a key component and the government is working on that. Already some projects are being announced like the Bullet Train project, where the big package is there and tenders are being called. There are central government projects in Delhi like the New Parliament building, which is about Rs 20,000-crore project. Likewise, various initiatives are being taken by the government particularly to implement the NIP, i.e. National Infrastructure Pipeline and once that starts, we expect a lot of opportunities for our company.