Mumbai: Construction contractor Ahluwalia Contracts (India) Ltd expects order inflows of Rs 2,600 crore, leading to a 20% rise in revenues in FY12, despite a difficult industry environment, a top official said on Monday.
The New Delhi-based firm, which had order inflows of Rs 2,100 crore last fiscal, expects orders from real estate, power and urban infrastructure, executive director (finance) Sunil Kumar Sachdeva told Reuters in an interview.
He expects order book to rise to Rs 7,000 crore by March 2012 from Rs 5,800 crore at the end of last fiscal.
Sachdeva admitted there were problems in the real estate, construction and infrastructure sectors affecting the overall growth in the industry.
“It’s not that bad, but the present environment is not so encouraging.”
In May, Reserve Bank of India raised key interest rates by 50 basis points to battle stubbornly high inflation, its ninth rate hike since March 2010. Analysts see a further hike at RBI’s mid-quarter review on 16 June.
Real estate developers are reeling under higher interest burden for their projects, while customers are also postponing buying real estate owing to the same reasons.
“For one or other cumulative reasons, the environment has not improved,” Sachdeva said.
The BSE real estate sectoral index fell 36% since 19 March, 2010, the day when India’s RBI started tightening key interest rates in a series of similar hikes to be followed till date. However, BSE benchmark gained close to 4% during the same period.
Ahluwalia, which is executing construction of 55 million square feet for real estate developers, is very selective in taking up new projects in the sector, Sachdeva said.
“Residential projects for affordable housing and mid-income groups are coming up...We see whether the cash flow (of a project) is ensured, then only we touch that project. Either it should be pre-sold project or institutionally funded project,” for us to take up, he added.
The firm intends to foray in newer areas of construction and is exploring projects in various segments of urban infrastructure.
“It would de-risk (the business) a little,” Sachdeva said.
The firm is exploring partnerships in urban infrastructure space such as metro railway, water and sewage treatment, multi level car parking, water pipelines and sewage pipelines, he added.
The firm, which announced a 20% fall in net profit for FY11 at Rs 72.06 crore, has a gross debt of Rs 165 crore and net debt of Rs 10-15 crore, he said.
Starmine SmartEstimates has projected a net revenue of 19,904 million rupees for Ahluwalia in FY12 and Rs 2337.4 crore in FY13.
Shares in the firm, which is valued by the market at $167 million, are down about 20% year-to-date compared to the BSE benchmark that is down close to 11%.
On Monday shares of Ahluwalia Constacts closed 1.47% up at Rs 120.95 in a relatively unchanged Mumbai market.