We are aiming for a Rs 6-billion standalone turnover this year

Starting from a meagre turnover of Rs 2 million in 1997, this company had a Rs 3.4-billion turnover in 2019! With a diversified portfolio in the construction of buildings and infrastructure, including industrial projects, hospitals, educational institutes and EPC projects like bridges and airports, Harsh Constructions has now made its foray into road construction. What’s more, the company is looking at opportunities in the metro-rail segment and is already participating in a bid with Bangalore Metro. Having already completed 60 projects, with a dominant presence in Maharashtra, Karnataka, Goa, Madhya Pradesh, Gujarat and Daman at present, the firm aims to have a pan-India presence soon. Vilas K Birari, Chairman & Managing Director, speaks on the company’s ambitions, equipment strength and more, in conversation with SERAPHINA D’SOUZA. From your diversified segments of operation, which contributes maximum to the company’s business? Institutional, airports and hospitals have been major contributors to our business to date. Hospital construction comprises over 60 per cent of our total turnover, while airports is about 25-30 per cent. We have already built terminals for two airports—Nashik and Belgaum—while Mangalore International Airport and additional terminal buildings in Kolhapur and Shirdi airports are in progress. Please tell us more about your foray into the roads segment. Considering India’s current poor road infrastructure scenario and the requirement, it would be wrong for us to not enter this segment at the right time. So, we made our foray into roads two years ago in a JV. We have taken up an EPC road contract in Maharashtra at about Rs 4 billion in JV and three projects of the Maharashtra Government on HAM mode at about Rs 5 billion in Nashik. We are doing one project in JV with Patel Engineering and another with Pawar Patkar Constructions. Our aim is to have our roads portfolio cross our building construction portfolio in a year or two, and have an equal contribution to our turnover. Having said that, we have already built major bridges during the last Kumbh Mela in Nashik; one challenging project was a 230-m bridge over Godavari river that we constructed in a record of less than four months. What innovations have helped in faster execution of your projects? In the past 10 years, we have been investing on a big scale in new technologies such as concrete production and placing, shuttering, formwork or scaffolding and shuttering, concrete pumps and concrete plants of higher capacity, tower cranes, etc. These have has helped facilitate faster completion. We invested about Rs 30-40 million in Doka formwork for the Rs 2.5-billion Baramati Government Medical College and Hospital project, which gave us a fast return. For concrete production, while we used to use reversible type of mixers earlier, we have now installed a concrete batching plant of 150 cu m per hour capacity. We also make use of sensor pavers and large-capacity stone crushers for concrete road construction. We have procured road concrete sensor pavers from Writgen; crushers from Puzzolana; and concrete batching plants from Schwing Stetter and Putzmeister. What are your planned annual investments towards sourcing equipment? And how much of your fixed assets pertains to plant and machinery? We have procurement policies and a dedicated procurement department with individual heads for cement, steel, and plant and machinery. Our procurement processes pertain to vendor collection, vendor registration and vendor credibility mapping process. About 10 per cent of our annual turnover is kept aside to buy equipment and technology. We have recently invested in ERP from Microsoft, and will further invest about Rs 10-15 million to implement the new ERP. About 95 per cent of our equipment is owned. (See table on ‘Equipment Fleet’.) The annual plan of Harsh Constructions is Rs 100 million standalone and Rs 250 million consolidated. All the machinery is sourced from foreign MNCs. Our standalone gross assets base is Rs 310 million, of which plant and machinery is Rs 260 million. We have a consolidated plant and machinery base of Rs 650 million and gross asset base of Rs 710 million. For upcoming and ongoing projects, what are your requirements in terms of materials, technologies and equipment? We recently bagged a Rs 1.76-billion government colony project in Mumbai, where we are constructing 2,000 houses for employees of the Maharashtra government, for which we require aluminium formwork. Similarly, we are doing another project in Indore for the Madhya Pradesh government, where we are constructing high court and district buildings. Notably, it is the biggest government building in Madhya Pradesh. Besides, for a court building in Indore, we have installed batching plant of 60 cu m capacity, tower cranes and concrete pumps; we are planning to buy formwork. We are also working on four police housing projects for the Maharashtra government—one in Mumbai and three in Nagpur. We are looking at buying new formwork for these projects too. Does the company ensure the use of eco-friendly materials in its projects? We use eco-friendly materials such as AAC blocks or fly-ash bricks. These help in pre-construction and are environment-friendly. With AAC blocks, the requirement of sand is eliminated in the construction of walls. Further, in our airport projects, we have used dry wall construction and various other materials for the ceiling that provide for longevity of systems. What about safety and training? What is the annual investment made by the company in this direction? About Rs 20-25 million is invested annually for safety and training. As a government contractor, we have an added focus on environment, health and safety. We have engaged outside consultants to train our people and have a team of safety officers. We also conduct regular seminars on health and safety at sites. Having said that, getting skilled manpower is a big challenge. While we have heavily invested in sophisticated, high-end and costly equipment, we are facing a huge problem of skilled operators and resource management. Availability of funds from banks is another challenge as banks are conservative nowadays. How did the company perform financially last fiscal? And what are your growth prospects this year? We stood at Rs 3.8 billion in the year ended on March 31, 2019; of this, Rs 3.4 billion is Harsh Constructions standalone and Rs 400 million is from JVs. We are aiming for a turnover of Rs 6 billion standalone and Rs 7.5 billion in consolidation for this year. Our order book is about Rs 13.5 billion standalone and Rs 9 billion in JV, as on April 1, 2019. About 50 per cent of our order book comprises government or public-sector projects. In terms of geography, our aim is to have a pan-India presence in the near future. Equipment fleet   Sr No Plant and machinery Qty 1 Puzzolana crushers 2 2 Ready-mix concrete plants 33 3 Hot mix asphalt plants 2 4 Wirtgen India/Vogele concrete pavers 4 5 Hydra cranes 3 6 Soil compactors and tandem rollers 12 7 Vibrators and rollers 60 8 Transit mixers 8 9 Excavators (JCB/TEREX) 16 10 Concrete pumps, mixers 14 11 Potain tower cranes 20 12 Asphalt milling machine 1 13 Concrete lifts 13 14 Tractors and trollies 15 15 Sand screening and washing machines 8 16 Tough riders 8 17 Bar cutting and bending machines 14 18 Blower machines 4 19 Breaker machines 39 20 Cutting machines 35 21 Generators 16 22 Electronic equipment 21 23 Needle and vibrators 80 24 Spartan multifunction hoist 1 25 Welding machines 11 26 Manual sweeper machines 5 Total 445 Fact sheet Year of establishment: 1997 Top management: Vilas Kedu Birari, Chairman & Managing Director; Avishkar Vilas Birari, Jayavant Kedu Birari, Alka Vilas Birari, Whole-Time Directors; Nilesh Bhaskar Yole, Anil Abhiman Birari, Directors; Deepak Jagannath Patil, Moreshwar Behere, Technical Directors; Ranjan Kumar Mohapatra, CFO. Segments of operations: Airport terminal buildings, hospitals, medical colleges, police housing, district courts, educational buildings, industrial projects, corporate centres Regions of operation: Maharashtra, Karnataka, Madhya Pradesh, Goa, Gujarat, and a humble entry into Delhi! No. of employees: 375 No. of completed projects: 60 No. of ongoing projects: 16 No. of upcoming projects: 11  Turnover: Estimated at Rs 3.4 billion standalone (FY2018-19) Order book: Rs 16.22 billion