NBCC (India) has strengthened its revenue model in recent years. It is one of the chief gainers from the government’s focus on value creation through monetisation of idle land parcels and other properties owned by the sovereign. The state-run project management consultant firm also has a much larger focus now on real estate development, both in India and abroad. It expects to capitalise on the expertise gained from management of stalled ‘Amrapali’ projects. Chairman and managing director KP Mahadevaswamy speaks about the company’s medium-term plans with KG Narendranath.
How are your revenues from operations doing? What are the short-to-medium term plans to boost revenues and profitability?
Our revenues have been on an upward trajectory, and we expect to generate a year-on-year growth of around 15% in FY24, compared to Rs 8,962 crore in FY23. Revenue has got a big boost from redevelopment and real estate segments. With a robust order book of Rs 55,000 crore, sustained revenue flows are ensured. We have set a target to achieve annual revenues of Rs 25,000 crore in the next five years, with expected bottom line of around Rs 2,000 crore. We “break even” at the revenue point of around Rs 5,500 crore, and beyond this, the profitability ratio rises dramatically.
We have widened our service offerings beyond project management consultancy (PMC) to include infrastructure development, EPC projects, and real estate development, all with focus on large-value contracts and cost optimisation. This will help improve margins, mitigate risk and open up new growth avenues.
The government’s infrastructure push has created significant opportunities for NBCC. We are embracing digital technologies for project planning and execution. New technologies like pre-fab and pre-cast are helping us to project execution on the fast-track.
We produced 20 million person days of employment in the last fiscal. Skilled manpower is a major driver for revenue with increased employability and productivity; we have imparted skills to 6,300 workers in the last three years. PAT in H1FY24 was Rs 159.31 crore on consolidated basis, a jump of 71.5% y-o-y; Q3 results are expected to be brighter because of the recent real estate and redevelopment orders, with good profit margins. In this fiscal year, we are targeting total revenue of Rs 10,000 crore, and for FY25, we are aiming for a growth of 20% (CAGR).
PMC still accounts for the bulk of your revenue…
PMC accounts for close to 90% of the total revenues. We will capitalise on our established expertise in government projects by actively participating for new redevelopment projects. Sale of commercial properties developed at Nauroji Nagar, Sarojini Nagar will be completed on high priority. Over 82% of the World Trade Centre at Nauroji Nagar at a value of over Rs 9,600 crore has already been sold . Amrapali projects are a case study, with a PSU completing stalled private sector projects of a delinquent promoter under the Supreme Court directive. Further, we are actively pursuing opportunities in sectors like healthcare, education, and renewable energy, where PMC services are increasingly in demand. We are developing idling PSU land parcels and expects to generate substantial revenue via this route.
NBCC is one of the pioneers in “redevelopment projects”, a model that can transform the face of cities, localities and societies. With the execution of Amrapali projects, we are confident of taking over other stressed projects.
How many home units have been completed so far in the stalled Amrapali projects? What is the gap between the recovery from home-buyers and the cost of completion of these projects?
We have completed around 15,000 flats of the 38,000 units under the scope of the mandate from the apex court. Nearly 5,400 units have been handed over to home-buyers, and the remaining will be completed by March 2025. NBCC is offering to undertake maintenance after completion at competitive market prices.
The estimated cost of Amrapali projects is around Rs 8,200 crore. Of this, work has been completed of Rs 5,900 crore, and close to Rs 2,200 crore has been raised from existing home buyers. In a step towards resolution, we have completed the sale of 5,000 flats to generate Rs 2,900 crore. With this, over 80% of the inventory available is sold. Around Rs 1,800 crore is still to be received from the sale of units, while Rs 600 crore is expected to be realised from the unsold inventory. NBCC is mandated to sell unsold Amrapali inventory and development of unused FAR. We have also started selling attached properties. Likely approval for additional FAR at Amrapali would result in extra revenue of Rs 8,000 crore.