See strong order book pipeline for FY16: NBCC

The government is likely to offload 15% stake in NBCC, however Anoop Kumar Mittal, chairman of the company said they haven’t heard anything officially from the government yet.Talking about the outlook going forward he said the company has already signed an agreement with Delhi Development Authority (DDA) for the Karkardooma redevelopment project and there is another project in Delhi of size of Rs 1500 crore in the pipeline. The company is in close negotiations with Odisha government and also with UP, West Bengal governments for other redevelopment projects, said Mittal. So, the order book pipeline looks quite strong for FY16 he added.The current order book till March 2015 was Rs 20,000 cr till March 2015, excluding the DDA project, said Mittal.

Below is the transcript of Anoop Kumar Mittal’s interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.Sumaira: We spoke with the divestment secretary a few days back. She did not indicate who would be the candidates for divestment but is there anything that you might have heard on when the NBCC divestment itself could come up?A: Not exactly, we have not been told by Ministry of Disinvestment. This maybe in the later part of this financial year  but officially we have not heard anything. Sumaira: But likely in FY16?A: That might be but officially since we have not heard, I cannot tell you.Reema:The stock has clearly been one of the big movers. For NBCC the market expectation is that perhaps the biggest opportunity could be in redevelopment of old government properties. Can you walk us through an update? How many redevelopment projects will the company undertake in the FY16?A: We have already signed an agreement with the Delhi government for their Delhi development authority (DDA) project in Karkardooma. They are probably allotting another work in Delhi, another project of sale size of Rs 1,500 crore so, that will be part two of DDA. Then we are in close discussion with government of Odisha and they have already indicated their willingness to allot the work to NBCC. However, formal agreement is yet to be signed and then I can disclose the other details of the project. We have already entered in an agreement with the Rajasthan government and formally, work will start in second part of this financial year. Also other governments like West Bengal’s government, Uttar Pradesh (UP) are coming up. So there is huge opportunity and lot of work will come in this financial year.Reema: So, in the pipeline is this second project with DDA which is Rs 1,500 crore as well as one with the Odisha government as well and your are in talks with West Bengal and UP governments?A: Yes.Sumaira: The earlier agreement that you had with DDA was that you earn a project management fee of around 10 percent of the cost? Will these other projects also work similarly?A: Yes, definitely, it will be on similar lines. In first project we will get 10 percent agency charges for our services then we will get additional one percent charge on sale of the property. So, suppose the property sale is Rs 20,000 crore, NBCC will get one percent and ten percent on construction cost.Reema: Can you give us a sense what the current order book of the company stands at?A: Current order book is about Rs 20,000 crore. This is without DDA project which we have recently signed. This order book is till 2015 March. So, we have not taken DDA project in this.We have secured some more projects in this financial year that is in last 10-15 days. We will inform the total of these projects by end of this month.Reema: So your order book has gone up because in December 2014, you had indicated an order book of Rs 18,000 crore. Now, it as gone up by nearly Rs 2,000 crore in this quarter?A: That is right.Sumaira: What is the update on your MOU with Air India?A: With Air India we have identified few properties. Our team is preparing a detailed project report (DPR), and once it is ready, we will discuss matter with Air India authorities and then we will finalise the commercial terms of the projects because in the agreement we had set two-three options to dispose of their property. So, finally that will be decided once we prepare the DPR.Sumaira: But is there any likelihood that you might take on any equity stake in the projects?A: Definitely, there are chances. There are chances that we may develop that project on Kidwai Nagar lines or DDA lines or a small equity we may also invest. It all depends on the commercial outcome of that DPR.Reema: So given such a strong pipeline, could you give us a sense whether the company could exceed? What would the revenues look like in FY15 end as well in FY16? The expectation was that perhaps you would do revenues of close to about Rs 6,000 crore in FY16. Are you likely to exceed that estimate?A: You are talking in FY16?Reema: FY16, yes.A: Yes, we are targeting that; of course our MOU signed with the government is about Rs 4,600-4,800 crore. But definitely we are trying to cross the figure you mentioned.