Order release from govt has fallen

Written by Shubhra Tandon | Updated: Mar 19 2014, 09:02am hrs
Hindustan Construction Company (HCC) has seen through tough times in the last two years. Depleting flow of fresh orders, delay in payment of dues from clients, execution bottlenecks and rising interest cost dented the company's profitability, eventually pushing it into corporate debt restructuring (CDR) in 2012. Now, with the moratorium period under CDR getting over in January 2014, HCC says it has started making payments on schedule. The order inflow has also imporved for HCC in the last two quarters. However, Praveen Sood, group chief financial officer, HCC, tells Shubhra

Tandon that stalled projects still haunt the infrastructure sector in India. Edited excerpts:

After a long lull, HCC seems to have seen a revival of the order stream, of late. What has changed

There will be some months when few orders get awarded, but the size of order release from government has substantially fallen, and we do not see substantial order book happening. In the road sector, for example, nothing has come in the last six months and nothing is going to come in the near future. NHPC has not released any order for the last year or so. There is a complete lull in order announcement.

How different is the policy environment now compared to six months back

After a change of guard in the environment ministry some projects have been pushed. But then again no big project has been pushed through. We have not seen any great change. What has happened is that the projects that were stuck for long periods and needed immediate clearance and which were sensitive, have been released. But nothing much has happened on the ground.

What is the status of the 441 projects worth R10 lakh crore that have been stalled over environment clearance

Most of them are still stuck. We have not heard much about these projects. A few large projects announcements keep coming up. But not many.

HCC's last AGM mentioned that the infrastructure industry has around R1.4 lakh crore of unpaid claims to be settled by the Indian government. Where does this figure stand now

Nothing has moved there also, because they (government entities) are still holding the same line that only when the third party decides, we will pay up. So, as the situation stands, these projects keep moving from dispute resolution to arbitration, from arbitration to court, then in court from single bench to double bench,and ultimately to Supreme Court, where the matter is argued.

What is the recourse private companies are taking to come out of this situation

We are simply fighting these in the courts, having exhausted all other ways. Government had come out with a suggestion to have committees formed to look at individual cases, and clearing of dues further, but nothing happened there. Only one or two cases were referred to those committees, thats all.