State-owned construction company NBCC has total receivables worth Rs 10,244 crore in the case of Amrapali projects, against the likely construction cost of Rs 8,210 crore and SBI Cap is to fund Rs 650 crore for six projects. In an interview with Moneycontrol, NBCC Chairman and Managing Director PK Gupta said that in the Jaypee Infratech matter, it is hoped that issues shall be resolved soon and the government’s construction arm will be able to go ahead with the implementation of its resolution plan.
Q: What is the total value of NBCC’s order book? To what extent have projects been impacted by COVID-19?
The present order book of NBCC is worth around Rs 71,000 crore. These include project management contracts (PMC) and engineering, procurement, and construction (EPC) works. Some of these projects include the International Exhibition-cum-Convention Centre, ITPO, Pragati Maidan, New Delhi; Amrapali stalled projects in Noida and Greater Noida; IIT, Bhubaneshwar; IIT, Mandi (HP); AIIMS, Bilaspur (HP); AIIMS, Deoghar among others.
The balance value of contracts under execution is Rs 18,000 crore approximately.
The COVID-19 pandemic has impacted project execution as well as revenue, not only for NBCC but the construction sector as a whole. As we know, construction is a labour-intensive sector and most of the projects deploy workers who are mostly migrant labourers coming from across the states. Reverse migration of labour, supply chain disruption, challenges of workforce retention and increased contractual obligations have slowed down the pace of work execution.
However, the situation has normalised to a large extent.
Having said that, the financial performance of NBCC in the June quarter of 2020 has dipped on account of COVID-19. Major procurement or long-lead items were stuck at various locations. Labour shortage at work-sites added to the crisis. With labourers returning to the construction sites, things are gradually returning to normal. With this, one is confident of improved performance in the coming quarters.
Please give us an update on the Amrapali projects.
The Supreme Court in 2019 had assigned the job of completion of stalled Amrapali projects to NBCC. The company is a project management consultant for Amrapali projects. Out of 24 stalled projects comprising 46,500 houses, the company completed and handed over two projects in late 2019, comprising 618 units.
Of the remaining 22 projects, contracts for 18 projects have already been awarded by NBCC. These are under various stages of execution and mobilisation.
These comprise 39,017 housing units and the construction cost is Rs 6,060 crore including fees due to NBCC. Tendering of two projects - Leisure Valley and Verona Heights comprising 4,964 housing units is under progress and the construction cost is Rs. 1227.21 crore. The remaining projects are currently under the approval of the court receiver.
The total cost of completing all stuck projects by Amrapali Group is approximately Rs 8,300 crore and these would be completed and handed over by August 2023. NBCC is executing these projects as PMC and would get 8 percent as fees. It is not utilising any fund of its own. The Court Receiver appointed by the Supreme Court is facilitating funds for project completion.
The main source of funds includes pending dues/receivables from homebuyers of sold residential units to the tune of Rs 3,870 crore approximately and receivables from unsold residential units worth Rs 2,220 crore approximately. The remaining amount will accrue from the sold and unsold commercial units, sale of FAR, surrender/attached flats and sale/ auction of attached properties of Amrapali Group.
The receivables amount to Rs 10,244 crore approximately against the likely construction cost of Rs 8,210 crore. SBI Cap is also funding Rs 650 crore for six Amrapali Projects to bridge the temporary liquidity gap.
When is work on Jaypee Infratech Ltd projects likely to begin?
The NCLT Principal Bench, Delhi in its judgment dated March 3, 2020, approved the resolution plan of NBCC with modifications. After a review of the judgment, it appeared that there were few key issues regarding which the NCLT had amended the resolution plan proposed by NBCC. These changes had financial implications on the implementation of the resolution plan by NBCC. The company, therefore, filed an appeal before NCLAT. Other stakeholders like ICICI Bank, EIDA, IDBI Bank have also filed petitions in NCLAT.
The Supreme Court has since transferred all the appeals to themselves on August 6, 2020, and is now regularly hearing the case. We hope that the issues shall be resolved soon and NBCC will go ahead with the implementation of its resolution plan.
NBCC has also been appointed as Land Management Agency by the government. What will be NBCC's role in the government’s Land Bank Policy?
NBCC is working as Land Management Agency (LMA) for 17 PSUs. It is responsible for disposal of their land and immoveable assets. These include HCL, HMT Bearings, HMT Watches, Instrumentation Ltd. (IL), IDPL, HVOC, HAL among others.
All these together have 77 properties and a total land bank of approximately 4,315 acres. Besides, five CPSEs under the Ministry of Textiles namely HHEC, BIC, BJEL, NJMC and NTC have engaged NBCC for pre-LMA activities like verification and assessment of their land assets against fees.