Greetings from C&C Constructions Ltd.
The financial year 2015-16 was a tough year for C&C mainly because of the volatile and unfavorable macroeconomic factors.
After suffering lost momentum over several years, the infra especially the road sector had a hope of revival as several new initiatives were launched and policy was revamped. However the situation remains challenging as there are many longstanding issues. Quite a few projects remain stalled; awards have been slow and construction continues to crawl. Road developers continue to struggle with stressed balance sheets.
Order intake remains sluggish, since many of the stalled projects are yet to be kick-started. Projects already awarded are generally progressing slowly due to various continuing problems on ground, which remain unresolved over the years leading to cost escalations which remain unpaid. All these factors combined, have led to a vicious cycle culminating in a pile up of debt or Corporate Debt Restructuring (CDR) and high consequential costs for the construction industry.
The financing scenario in the road sector continued to look grim in the past year. The sector has been increasing number of nonperforming assets (NPAs) and an asset liability mismatch has emerged over the years. Lenders have lost their appetite as a result of host of NPAs with banks. Funding is difficult to access, and expensive. The rate cuts have not transmitted through the system to this sector yet and banks have hit their lending limits.
For companies already in corporate debt restructuring, a turnaround in this situation is extremely challenging and calls for an urgent re-look of the relevant rules relating to CDR in the interest of stakeholders.
Projects financing patterns have clearly changed with developers reluctant to accept the risks of PPP. Most of recent contracts have been awarded on EPC basis and there are efforts to popularize the hybrid annuity model.
Another key concerns for the companies in infra sector are the delay in sorting out the cases pending for claims. We hope that the Government shall definitely come out with substantive change to the dispute resolution mechanism on time bound basis, seeking payment of awarded amounts on completion of an arbitration and appealing against the same only in exceptional circumstances rather than as a rule.
On the positive side of the ledger, the government of India builds a new road map in terms of the current Five Year plan, it is increasingly evident that spending in the infrastructure sector is going to hit a new high in terms of GDP allocation. Further the Ministry of Road Transport and Highways has been empowered with more approval power of the projects and it is also striving for greater inter-ministry coordination to speed up clearances.
Year under review
The period under review is 9 months period commencing on 1st July 2015 and ending on 31st March, 2016. During the period, your Company’s turnover on a standalone basis stood atRs,767.33 crore for the 9 months ended on 31st March, 2016 as compared to the Turnover ofRs,1013.43 crore for the previous year of 12 months. The Company posted a Net Loss ofRs,19.29 crore for the period under review as against a Net Loss ofRs,189.95 crore for the previous year. The order book in hand of the Company as on March 31, 2016 isRs,2798 crore.
The situation during the year has no doubt been exceptional, but has reinforced our determination to come out of the same by accelerating change during these turbulent times. We are streamlining our business processes, reinforcing our project management skills, trimming our structure costs, disposing our non-core assets, improving our operational efficiencies and working capital cycle.
Efforts of the Company will be towards capacity building of various stakeholders including employees and contractors for effective delivery. Going forward, we want to be a very lean and thin organization and want to utilize our resources in an optimum manner.
I personally believe that this government has pointed the compass in the right direction and we should see some bold reforms coupled with strong implementation coming out in due course that would revive the slowed activity in construction sector.
Developers will surely respond if the long-standing problems are tackled and projects are structured with due regard to known issues.
I place on record my appreciation for undaunted trust and unfathomable support of our employees, customers, shareholders, vendors and especially the bankers/lenders shown towards the company. I would like to thank all of you for your constant and esteemed presence and garnered interest in the Company.
Gurjeet Singh Johar