HCC shifting to EPC projects biz from civil contracts

Praveen Sood, CFO of Hindustan Construction Company (HCC) informed that they have received a part of their Rs 157 crore claim of the Bandra-Worli Sea-link project. He said that their company’s shift is towards EPC (engineering, procurement, construction) contracts instead of the earlier civil contracts. He sees larger contracts coming in, henceforth.

Excerpts from an exclusive interview with Praveen Sood:
  

Q: Please update us on the claim that you have now got approval from the state cabinet, how much will it be for the Bandra-Worli sea-link and how soon will it come to you?

A: The claim that we have got for Bandra-Worli is Rs 157 crore as of December ’03 and we should be getting it over a period of time; maybe next one year or so - a part of it has already been received by us and balance will be received soon.

Q: Specifically on the construction side of business, are you seeing any delay in execution?

A: There is no delay in execution and all the undergoing projects are happening on time. On the roads sector there have been some issues of the land acquisition but I think by far most of the pools are happening on time and there is not a major deterioration on the execution side.

Q: What is the call for the coming few quarters in terms of the kind of order book you see coming in from the power sector and from the construction segment?

A: More than the call on the amount of order, I would rather like to focus on the kinds of orders that are coming in.

There is a major shift from the order, which were received earlier and the order to be received in future. In the power sector, it is going to be the private player having large orders - basically the EPC kind of contracts that we used to get earlier. We used to get small specific civil contract works which were small in nature but now I think most of the government sector contractors as well as the private sector players are thinking in terms of turnkey kind of a job which requires a little bit more experience and the skills from the contractors. There would be major shift, the order size will be large as compared to the previous ones and it would be both in the private as well as the public sector.

As far as roads are concerned I think we will find more of a PPP (Public Private Partnerships) kind of a structures now, BOTs (Build, operate and transfer) annuity would be more as against the cash contracts, which earlier were given by the government.

Q: The news reports talk about the Maharashtra Government extending the Bandra-Worli sea-link project to Haji Ali, are you looking at that project if and when bids open?

A: Yes, since we have done its earlier part, we would like to be linked with the other part also.

Q: Give us one final word on what is happening on the power side of your business and how much you see that starting to contribute both to margins and to your topline growth?

A: If you talk about my existing order book position, the power constitutes a large part. The hydro-power project which we have, constitutes close to about 45% of my order book and most of the projects are in the region of Jammu and Kashmir and recently we have received one more order from a private company.