NBCC teams up with Russian co for smart city, rail projects

NBCC (India) signed a memorandum of understanding (MoU) with Russia's Rosinformexport LLC to jointly participate in the smart city projects in India.

In an interview with CNBC-TV18, Anoop Kumar Mittal, Chairman of NBCC said that the partnership with the Russian company will fetch some smart city and railway projects.

There is synergy between NBCC and Rosinformexport as it is also a state-owned company, Mittal said.

On NBCC's project management consultancy (PMC) orders he said that the company usually gets 7-10 percent margins and some of the pending milestone payments were released for PMC business in the last quarter.Below is the verbatim transcript of Anoop Kumar Mittal’s interview to Prashant Nair and Ekta Batra on CNBC-TV18.Prashant: Yesterday's release mentioned partnering with ITI, VSNL, could you talk to us a little bit about the size of projects, the size of these works that we are talking about?A: We have signed an agreement or memorandum of understanding (MoU) with a Russian company Rostec when BRICS summit was there in Goa in presence of honourable Prime Minister and President of Russia. The purpose of signing this MoU is to redevelop some of the railway stations and smart cities as per the government policy. Since this company Rostec is also a Government of Russia company, there is synergy between NBCC and Rostec and I hope that this partnership will definitely fetch project in smart city as well as railway stations.Regarding your question about ITI and VSNL and redevelopment, we have signed an agreement with ITI for developing their land in Bangalore and the size of the land is about 30 acre land, which is having IT land use at present and both of us will jointly redevelop or develop that project and the land will be equity of ITI and NBCC will develop on project management consultancy (PMC) basis and do marketing, charge their agency charges and as far as VSNL land is concerned of course there was discussion at government level with NBCC but yet we have not received any firm communication from the government.Ekta: Your PMC margins in the previous quarter went up to historic highs of around 100 percent odd, much higher than what you generally do. Can you give us a sense because we do understand that there were some one offs which led to that and what might be a sustainable run rate?A: As you know that PMC segment we get fixed agency charges which does not vary but in last quarter there were some old payment which was linked to milestones those were released that is why you saw sudden increase in profit margin otherwise revenue growth was 25 percent, accordingly profit will also increase in same manner and the increase was because of release of some amount on account of release of milestone payments.Prashant: The point about 25 percent compound annual growth rate (CAGR) growth in PMC business that you said you will do does it factor in execution delays or do you believe that it could be higher than 25 percent given your order book is quite sizeable?A: Definitely in my opinion this is conservative figure, 25 percent considering the size of the order book. We have order of about Rs 71,000 crore and definitely it should be much more than that. It is today's commitment, definitely it should be much more than this.