Growth will be steady and upwards at KRN Construction
What is your view on Infrastructure development in India? How do you assess the governments’ efforts in the last three years to bring infrastructure sector’s glory back on the track in general and roads sector in particular?
The Government’s push on Infrastructure sector continues as they plan to invest Rs.3 trillion ($44.73 billion) for developing 35,000 km of roads across the country, of which 21,000 km will be economic corridors and 14,000 km will be feeder routes, which is expected to improve freight movement, ease traffic bottlenecks and improve inter-city connectivity in the country. The government plans to develop a total of 66,117 km of roads under different programmes such as National Highways Development Project (NHDP), Special Accelerated Road Development Programme in North East (SARDP-NE) and Left Wing Extremism (LWE). Further, the government has identified development of 2,000 km of coastal roads to improve the connectivity between ports and remote villages.
On the award front also, the target has been kept at last year’s level of 25,000 km. Last fiscal, a record of 16,271 km of national highways were awarded. The ministry has also been addressing the issue of land acquisitions by implementing expeditious resolution of issues like forest clearances.
Under PMGSY, a record 47,350 kms were constructed during 2016-17. This is the highest construction of PMGSY roads in a single year, in the last 7 years. While, 25,316 kms of PMGSY roads were constructed in 2013-14, road construction in 2014-15 was 36,337 kms and in 2015-16, it was 36,449 kms, 133 km roads per day in 2016-17 were constructed as against a 2011-14 average of 73-km per day under PMGSY.
The policy shift towards awarding more highway projects under hybrid annuity model (HAM) and engineering, procurement and construction (EPC) model from the earlier build operate and transfer (BOT) route have helped lot of medium-sized infrastructure firms to significantly improve their operating margins and credit profile over the last three years.
To step up roads construction from the current 22 km/day to 40 km/day, do you think that we have enough expertise and workforce strength to make this daunting task a reality?
Yes, we have enough expertise and workforce.
How do you see the government’s focus on construction of concrete roads?
Out of the total projects only 30 to 40% is planned concrete roads.
Tell us about your order book and major projects in hand.
Our order book as on 31st March 2017 is Rs.3,769 crores consisting of road 85% and irrigation 15% which is mainly from NHAI (54%), state projects 39%, International order 6%.
To improve our execution outlook further we continue to bid for projects and expect to win projects worth Rs.1,500-2,000 crores in the next 7-9 months.
How do you manage to keep your debt at a low level?
As on 31st March, 2017 the net debt on standalone basis is Rs.144.06 crores including promoter loan of Rs.121 cr and the net working capital days is 41 days. On the consolidated basis, the net debt is Rs.690 crores.
Low debt level is possible because:
- execution of work at all project sites is being carried out as planned
- realization of work bills within 45 – 50 days.
- funds are deployed in only men, material, machinery of the projects.
KNRCL has secured an irrigation project of its share of value of Rs.690 crores in Palamurru lift irrigation scheme and the progress is satisfactory as 5 bills have been turned out and our share amounted to Rs.100 crores.
What is your equipment bank strength?
Gross block of machinery of KNRCL is Rs.589 crores. During 2016-17 we have added machinery of value Rs.150 crores. In NHAI works machinery specification is stipulated. In the last 15 years the construction industry has deployed sophisticated machinery. It is expected to grow.
How do you keep your workforce up-to-date with best construction practices and retain quality workforce?
By Inducting training program, we keep our workforce up-to-date with best construction practices in all areas. Beside this, we also have adequate welfare schemes for them.
Where do you see KNR five years from now? Any plan for diversification?
Growth will be steady and upwards. We’re aiming to reach above Rs.2500 crores. In the existing areas specialization will be attempted.
NBM&CW July 2017
