Delhi projects to begin giving revenues in FY17-18 for NBCC

A: This is a redevelopment of seven government colonies in Delhi, Sarojini Nagar, Nauroji Nagar, Netaji Nagar and there are four more colonies Sriniwaspuri, Thyagaraj Nagar, Kasturba Nagar and Mohammadpur. So, total volume of about Rs 32,000 crore constructions has to be done in all seven colonies in next five years. The revenue required for construction will be generated out of the sale of the part of the property. This responsibility has been given to NBCC.

So, NBCC will construct Rs 25,000 crore of total project and remaining Rs 6,000-7,000 will go to Central Public Works Department (CPWD). So, NBCC’s job is to construct Rs 25,000 crore work for which we will get 8 percent project management consultancy (PMC) charges. And then we will sell Rs 32,000 crore property in market to generate revenue. On that we will get 1 percent marketing charges. Whatever initial seed money is required to be put in this project that NBCC will put and on that we will get 12 percent simple interest. So, these are broad parameters and total five years time has been given by government.

Another thing is that the government this time has decided to go for latest technology construction so the time required in construction should be reduced to substantial extent maybe 40 percent or 50 percent. I hope that we will be able to complete these projects before five years. Anuj: In terms of your overall revenues from this redevelopment, if you could give us some numbers in terms of what kind of numbers will flow into your profit & loss (P&L)? It looks like simple arithmetic at this point in time?

A: Numbers are very simple, revenue will be Rs 25,000 crore plus 10 percent, so around Rs 27,500 crore. As far as NBCC margins are concerned, this will be simply Rs 2,500 crore in next five years and that will be profit or you can say the revenue come to NBCC.

Sonia: That is over the next five years, but if you can break that up for us in FY17 what kind of revenue growth and margin growth are you looking at? You are sitting on about Rs 6,000 crore of revenues for FY16, what does the growth look like?

A: These projects government has approved in month of July. All formalities will take another one month’s time and simultaneously we will start planning the construction activities. It will take nine months time, in my anticipation, to start the work at ground. So, I hope that the revenue booking will start from '17-18 financial years.

However, in this financial year I am expecting that a part of the property, we will be able to sell in market so 1 percent marketing charges, I am hoping, will come to NBCC in this financial year, not entire but part of that. So, that will be small amount as far as revenue booking is concerned but as a profit this will be huge jump in our profit margin.

Anuj: What next, of course this is still work in progress but anything more that we can hear in terms of redevelopment going forward?

A: Lot of things, just wait for another couple of week’s time. A lot of good news will come on not only redevelopment side, some other mega projects are also almost finalised. Therefore, give us some more time. By the end of July or by August 15th you will see similar kind of good news.