With three new EPC road projects worth Rs 36 billion, and more, the company plans to add to its equipment bank in coming months.
With the current order book at Rs 80 billion, PNC Infratech's consolidated turnover in 2016-17 was Rs 22.9 billion. And, Yogesh Jain, Managing Director, PNC Infratech, is confident of a better turnover this year. The company has displayed strong and sound financials over the years, and as such does not face any challenges in mobilising funds for both, working capital and infusing equity into its fund-based (investment) highway development projects. Other than the debt portion, maximum requirements of funds are met by internal accruals.
The company has recently bagged three large EPC road projects of an aggregate value of Rs 36 billion. (These EPC contracts are part of the three development projects of four-laning and six-laning of national highways in Madhya Pradesh, Uttar Pradesh and Karnataka secured as of March 2017 on the hybrid annuity mode (HAM), says Jain. In addition to these, another 12 EPC major road projects and two airport runway projects are under construction.
For the implementation of these projects, apart from cement, bitumen and steel, the company will continue to procure key construction materials, such as minor minerals including stone aggregate and fine aggregate (river sand, etc).
(In case of cement and steel, we procure directly from reputed manufacturers and in case of coarse aggregates, we set up our own state-of-the-art stone crushers at project locations for uninterrupted supply for construction, shares Jain. He adds that in case of any urgent need, the company will procure some of the construction materials from authorised vendors and retail suppliers to supplement the main sources. As for bitumen, high speed diesel, light diesel oil, etc, required for flexible pavements and running the equipment and vehicles, the company generally procures from Indian Oil.
PNC Infratech has a large fleet of modern construction equipment and transport vehicles in house. As Jain confirms, for the newly secured projects and to build a pipeline for the future, the company will be adding stone crushers, batch plants, wet-mix macadam plants, excavators, graders, loaders, tandem rollers, soil compactors, hydras, transit mixers, tippers, concrete pumps, boom placers, etc, to its equipment bank in coming months. (These will be procured from reputed manufacturers with a proven track record and prompt and reliable after-sales service. He adds that for typical highway construction projects, 45-50 per cent of the project cost is spent on the procurement and sourcing of construction materials. The depreciation on plant, machinery and vehicles is typically 3-4 per cent of the project cost.
Further, the company has end-to-end construction capabilities for the development of highways and bridges in-house. Nevertheless, for certain non-core items of work and installation of electro-mechanical equipment, such as highway lighting and toll management system, etc, it seeks the services of specialised agencies and vendors on subcontracting and turnkey basis.