Govt has no plans of divesting beyond 15% in NBCC: Chairman

As a part of its divestment drive the government announced on Wednesday that it will sell 15 percent of its stake in construction company NBCC.

In an interview with CNBC-TV18, Anoop Kumar Mittal, Chairman of NBCC said that the company's current orderbook stands at Rs 73,000 crore which will be executed over the next 5 years.

NBCC has the responsibility to develop 10 railway stations which will be a part of the redevelopment projects.

On the divestment front he said that the government is not planning to sell more than 15 percent as of now.Below is the verbatim transcript of Anoop Kumar Mittal’s interview to Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Sonia: Apart from this 15 percent divestment that government is doing is there any more divestment that is planned from the government’s end say over the next 6-12 months? A: There is no such plan and I have not heard and I don’t think immediately there is any plan to divest more than 15 percent. Latha: What is the sense of business itself, what is your order book looking like? We understand that now one of those smart railway stations are also coming your way? A: Two days back Minister of railway and Minister of urban development has signed an agreement by which the railway station development will be part of smart city – redevelopment. As you know that NBCC has been given responsibility to do 10 railways stations in the country right from Banaras to Lucknow and Goa, Tirupati, Jaipur etc Latha: What is the order book looking like therefore at the moment? A: You see ex all these things which is not quantified yet, the order book is Rs 73,000 crore. Sonia: What do you think the revenue potential could be from these 10 railway stations that you have to execute? A: It is very difficult to tell you the numbers because two days back only this has been announced by government, so we have to prepare the DTR then only we can be in position to tell you that what is the quantum of work. However, the 10 railway stations and most of them are big railway stations NBCC will do, so you can understand the volume. Latha: Rs 73,000 crore is a lot of orders, I think your annual revenues are about Rs 6,000 crore. How long will it take for you to execute Rs 73,000 crore of orders? A: First of all, out of this Rs 73,000 crore order almost Rs 50,000 crore value of orders has been received only three to four months back. It will take around one year’s time to get these order matured and put them on ground to start the work. Otherwise every order has time period right from three years to five years, so this entire order book of Rs 73,000 has to be finished in five years time. Sonia: Over the next one year can you give us a guidance on what the growth for the company could be on the topline because you have said in the past that there is a 30 percent topline growth expectation over the next four to five years, but in the slightly immediate term what are you expecting? A: As you know that we are on the way of offer of sale (OFS) I will restrict myself to tell you any forward thing. However, we have said earlier definitely that is achievable and will maintain that. Latha: You will have to raise some money for the capital expansion because that is a huge order book you are talking about? You will be raising capital? A: Not at all, all these orders are either re-development project or PMC project and ultimately re-development projects also has self revenue generation model. So, there is no such plan and we will not raise any money from market. Latha: What is your interest out go anyway and your total debt? A: Total debt is nil, I mean there is no debt on the company. Rather we have positive net worth. Sonia: The other big concern is the fact that despite having a very healthy order book the margin has still remained very low. Even in the quarter gone by quarter one your margins was just about 3.6 percent what could be the reason for that and when can you expect to scale up to high single digit margin? A: The major reason in past few quarters and may be presently also is the real estate property we could not sell in market. That is the only reason and I hope in future we will be in position to sell our inventory. So, our margins will increase by that. Sonia: Have you heard from the government on the VSNL land development? A: Government is talking to us, but nothing concrete has been finalised yet.However, definitely we are discussing the matter. Hopefully, very soon you will hear something. Latha: What is the average execution time for a project and you don’t even have to borrow working capital? A: No, in most of the cases working capital has to be provided by client as an advanced mobilisation funds or initial money. Every execution cycle is two to five years time. Except re-development project where we had to get property vacated all other projects we finish in two years time.