YD Murthy, Exec VP-Finance, Nagarjuna Construction (NCC) in an interview with CNBC-TV18 spoke about the performance of the company and the road ahead.
He said that last year in terms of sales had been a difficult year for the company and the entire construction sector. Citing the reason for the same he said, "The order accretions from clients were not robust. We had an extended monsoon in the second and third quarter. There are some client related issues in terms of payments not coming in time." However, the company is looking at topline growth of about 15% this year. "Last year was a bit too difficult for order accretion. But, we are confident that we will bounce back in the current year. We are targeting fresh order accretion of nearly Rs 14,000 crore in the current year." Below is the verbatim transcript of his interview with Latha Venkatesh and Anuj Singhal of CNBC-TV18. Also watch the accompanying video. Q: What cause this dip, both at the sales level, as well as at the profit level? A: At the sales level, last year has been a difficult year for all of us in the construction sphere including our company. The order accretions from the clients were not robust. We had an extended monsoon in the second and third quarter and that has impacted the toplines of all the construction companies. There are some client related issues in terms of payments not coming in time and because of this we had to face a slowdown in the work on certain projects. So, all these factors have combined in resulting into lower turnovers for various companies. We had a topline growth of only 6%. It is very important to note that in the 2009 when we had global crisis we grew at 18%. In the year 2010, we have grown at 22%, whereas in 2011, the growth is hardly a 6%. Though this is a difficult year for all of us and as far as the profits are concerned there again the problem was that the quantum of debt has gone up substantially during the year. The interest rates on the debt also have gone up because of various actions taken by the Reserve Bank. For example in the first quarter of last year we were borrowing at 7.5-8%, whereas in the fourth quarter of last year we were borrowing at 11.5-12%. This means about 400 basis points increase in the interest rates in one financial year. So, that has impacted our net profits very aggressively. Q: ItDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
