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NBCC's perception will change once execution picks up: CMD

In this freewheeling conversation, NBCC’s Chairman & Managing Director, Dr Anoop Kumar Mittal, speaks to PSU Watch and dwells on the infrastructure and real estate major’s order book, its aspirations, future plans and where does he intend to take the company in the time to come.

Q: It has almost been 5 years with NBCC, in hindsight, how has the journey been so far? When you started the shares of NBCC were at around Rs 8 per share, then it went to Rs 137 and now it is at around Rs 53.
 
A: Very exciting, very exciting, and I will not say challenging because we did not face any difficulty. We got all the support from all the stakeholders, particularly the government. So, it was a fantastic journey. The best part is that I have really enjoyed working so far. Certainly, I have managed to build Rome faster. When you are doing something in which you are getting results, then you feel good and get motivated as well. So, a very good journey so far.
 
Q: There are two ways to see where NBCC is today. One is the swelled-up order book and the second is the execution. One looks quite fine but if you look at the latter, there is a mismatch. No?
 
A: Definitely, on the face, it looks different. You have an Rs 80,000-crore order book, you are generating Rs 7,000 to 8,000 crore revenue. Ideally, the order book should be in the range of Rs 15,000 crores. But the reason why we are not able to do that is that this order book that we have generated is a very recent development. It was in the last 1-2 years that this order book has jumped from Rs 15,000 crores to Rs 80,000 crores. And in construction and particularly in large-value real estate and redevelopment projects in Delhi, you need a lot of time for the preparation of design, drawing, in getting premises vacated, seeking approval from the government, land permissions, financial approval — all of it takes time. These big projects also attract a lot of environment-related issues, traffic issues. But stakeholders, shareholders or the public expects that if the order has come today, it should mature in 6-8 months which is general practice.

“People’s perception is such because they compare NBCC with Larsen & Toubro (L&T). While L&T is not a Project Management Consultancy (PMC) or project developer, they are contractors.”

In reality, such projects don’t mature this early. Also, the time we are taking in the execution of projects is very unusual, considering the government’s standards. You see the Kidwai Nagar project is standing tall and ready. Had this been the usual government business, it would have taken 20 years. Look at Pragati Maidan, the project was pending for 20 years but as soon as NBCC was engaged, the project got approval, its design got finalised and in 18 months, the project was moving towards completion. So, people will have to have patience. Once the cycle of execution and delivery will pick up, new orders too will follow and more revenue will be added.

Q: So, is it just people’s perception?

A: People’s perception is such because they compare NBCC with Larsen & Toubro (L&T). While L&T is not a Project Management Consultancy (PMC) or project developer, they are contractors. They get the project once it is approved and finalised from all the requisite authorities. Then all there is left to do is execution. On the other hand, NBCC is responsible right from conceiving to the final delivery of a product, and has a bigger role to play. Consider Shapoorji Pallonji, for example, who were given Pragati Maidan’s construction work. The day they got work, it appeared in their order book, within a month work started, and in the next 2-3 years, it will be closed and revenue will be shown in the books. But the 5-10 years that were spent in conceiving and approval of the work will not reflect on Shapoorji Pallonji’s record. In the case of NBCC, it is different. That is the reason you see this mismatch.

Q: As we see the inflow of orders has been wonderful in the past one year. But looking at the mismatch between the order book and the delivery, do you think you will be able to maintain the momentum in the current financial year as well?

A: Definitely, order inflow, as is my assessment, will increase over the year because we have set up a self-revenue generation model or a redevelopment model. The work we are doing in Kidwai Nagar and other redevelopment projects are attracting all the government departments and PSUs and other government entities. So, there are a lot of queries, a lot of expressions of interest from all corners. I am expecting much more order flow in this financial year and the coming financial years.

Q: Smart city projects have been one of the key areas of focus in this government’s policy framework. Is a blueprint ready because NBCC is considered to be part of it?

A: You see since the beginning when this scheme was launched by the government, we were involved. Coincidently, the scheme was launched by our ministry — Ministry of Housing and Urban Affairs. All these projects are actually being developed by local bodies, not by the Central government. The Centre is only responsible for funding. The implementation is being done by municipalities and city local governance. Now the problem is that they are not equipped enough to start it on time and that’s why you don’t see much movement on the ground. We are in discussion with several city governments and state governments, as partners for re-development of their projects, because the money required cannot be funded by the Centre 100 percent.

“I dream of HSCC taking up mega projects such as Ayushman Bharat, construction of big hospitals, manufacturing of hospital-equipments and even making and running hospitals on PPP model with Fortis, Medanta-like healthcare companies.”

Some of it has to be generated by the city government also, but the question is how would they do it? They can’t add more taxes because there are too many already. Suppose Ghaziabad has to be redeveloped as a smart city and Rs 20,000 crores is required. Now the options that the Ghaziabad administration is left with is to either levy more taxes, but that can’t happen. Or they could go for the finance option. But then where would they get interest from? So, the best option is that they make use of the existing real estate, redevelop it and monetise it. That’s where comes the role of NBCC, we are in talks with many state and city governments for similar redevelopment projects, like Kidwai Nagar, Netaji Nagar, Sarojini Nagar etc.

Q: What is the objective behind the acquisition of HSCC? Where do you dream to take it?

A: As you know this company is doing almost everything from road construction to buildings, hospitals, affordable housing, rural roads, border fencing and so on and so forth. In the health sector, where we construct hospitals and in India, I can claim that no other single company has built a greater number of hospitals than NBCC has. HSCC, under the Ministry of Health and Family Welfare, does almost the same thing. When we heard it’s on sale, we thought of acquiring it, given the same nature of business.

The objective is to put all health-related projects in the basket of one company and turn HSCC into a mega health company. I dream of HSCC taking up mega projects such as Ayushman Bharat, construction of big hospitals, manufacturing of hospital-equipments and even making and running hospitals on PPP model with Fortis, Medanta-like healthcare companies.

Q: So, we see this Miniratna, HSCC, soon featuring in the Navratna list?

A: Naturally, since now it’s part of NBCC. We also aim to bring about IPO of HSCC as it’s a profit-making company with good business volume and net worth. Another point that I must mention here is that HSCC is working on foreign projects too. They are making hospital and cancer institutes in Mauritius. So, with the acquisition of HSCC, we have good scope in terms of expansion of business to foreign countries as well.

“I must say the easiest of all (tasks) was to be able to sell whatever we have built so far.”

Q: Talking about past the past five years with NBCC again, which project do you think was the most difficult to handle and what came as a cakewalk?

A: None were difficult as such but once you grow in business and size, you become more visible to people and society in general. As a result, in the past six months only, we had to face cases related to NGT and others. But then this too is part of business and we have to be ready for it. To add more, we got tremendous support from the government during the thick and thin. If I talk about what has been the easiest, then I must say the easiest of all was to be able to sell whatever we have built so far.

Q: How has the sale of redeveloped projects been so far?

A: So far, we have delivered 2 redeveloped projects; Kidwai Nagar and New Moti Bagh, both were sold within no time of putting them up. The third project was Nauroji Nagar, which is partly sold but I am sure that by the time we finish the construction, no inventories will be left unsold with us.

Q: What is the update on the Dharavi project?

A: It is all talks so far and I will not be able to give you any concrete answer on that. But what I can assure you is that NBCC is definitely going to take it up.