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Jun 08, 2012, 02.11 PM IST
UR Associates has come out with its report on infrastructure sector. Currently, financing costs and rupee depreciation, among other factors, have led to a record number of projects moving into the freeze mode, resulting in reduction in capital expenditure of companies.
UR Associates has come out with its report on infrastructure sector.
Construction firms pin hope on roads and railways sectors to improve order books When L&T declared its annual results earlier this month, it gave a bright outlook for the current financial year, saying it expected order inflow to grow 15-20%. Thermax Ltd, too, projects a similar outlook. L&T expects the orders deferred in the fourth quarter of the last financial year to come in this year, boosting the company’s order book. It hopes to get Rs 100-150 bn of deferred orders in the coming quarters. Though Thermax did not give details of the expected orders, M S Unnikrishnan, MD, said the company was in talks for a couple of projects. He said the second half of the current financial year could turn for the better if the macro-economic situation improved.
Currently, financing costs and rupee depreciation, among other factors, have led to a record number of projects moving into the freeze mode, resulting in reduction in capital expenditure of companies. The railway and road sectors, however, are expected to keep the boat afloat this year. Construction companies dependent on the power sector are the worstaffected. For instance, Reliance Infrastructure Ltd, which depends mostly on internal projects, is positive about its construction business margins at 8%, with an order book of Rs 173 bn. Besides, power companies such as GMR, GVK Power, Adani Power Ltd and Tata Power Ltd said they had frozen new projects for now, owing to coal supply issues among others.
Companies banking on orders from the power sector are still in a gloom. Capital goods companies are still talking about slowdown, and power sector orders are still in problem. But it’s still not completely gloomy. With the National Highways Authority of India hoping to bid out road projects of around 8,500 km this year, the road sector might be a saviour. Road projects have been offering steady orders in the last few years. In the last financial year, NHAI awarded projects worth ~Rs 570 bn, and gave away Rs 23 bn projects in January 2012 alone. It had set a minimum achievement target of 7,300 km for 2011-12, up by 43.6% from last year’s 5,083 km. Since last year, NHAI has set up month-wise targets in awarding projects to ensure a continuous flow of projects.
The railway sector has also started looking up with the Dedicated Freight Corridor Corporation planning to award projects worth Rs 100 bn this year.
GMR Infra claims TNEB owes dues of Rs 8.5 bn
More trouble for Lanco as Crisil downgrades Rs 82 bn worth of loans
BHEL bags Rs 11.43 bn worth of contract from NTPC
BHEL has bagged an Rs 11.43 bn contract from country’s largest power generation utility NTPC for setting up a 500 MW power generating unit at its Vindhyachal Super Thermal Power Station in Madhya Pradesh. “NTPC has placed a major order to the company for supply and installation of the main plant package (boilers, turbines and generators) for a power project in Madhya Pradesh involving one generating unit of 500 MW,” BHEL said in a statement. “Valued at Rs 11.43 bn, the contract envisages setting up a 1×500 MW thermal power generating unit at NTPC’s Vindhyachal Super Thermal Power Station (STPS), in Madhya Pradesh,” the statement said. On commissioning of the unit, 12 million units of electricity will be added to the grid, every day, BHEL said.
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