Greetings from C&C Constructions Ltd.
The financial year 2015-16 was a tough year for C&C mainly because of the volatileand unfavorable macroeconomic factors.
After suffering lost momentum over several years the infra especially the road sectorhad a hope of revival as several new initiatives were launched and policy was revamped.However the situation remains challenging as there are many longstanding issues. Quite afew projects remain stalled; awards have been slow and construction continues to crawl.Road developers continue to struggle with stressed balance sheets.
Order intake remains sluggish since many of the stalled projects are yet to bekick-started. Projects already awarded are generally progressing slowly due to variouscontinuing problems on ground which remain unresolved over the years leading to costescalations which remain unpaid. All these factors combined have led to a vicious cycleculminating in a pile up of debt or Corporate Debt Restructuring (CDR) and highconsequential costs for the construction industry.
The financing scenario in the road sector continued to look grim in the past year. Thesector has been increasing number of nonperforming assets (NPAs) and an asset liabilitymismatch has emerged over the years. Lenders have lost their appetite as a result of hostof NPAs with banks. Funding is difficult to access and expensive. The rate cuts have nottransmitted through the system to this sector yet and banks have hit their lending limits.
For companies already in corporate debt restructuring a turnaround in this situationis extremely challenging and calls for an urgent re-look of the relevant rules relating toCDR in the interest of stakeholders.
Projects financing patterns have clearly changed with developers reluctant to acceptthe risks of PPP. Most of recent contracts have been awarded on EPC basis and there areefforts to popularize the hybrid annuity model.
Another key concerns for the companies in infra sector are the delay in sorting out thecases pending for claims. We hope that the Government shall definitely come out withsubstantive change to the dispute resolution mechanism on time bound basis seekingpayment of awarded amounts on completion of an arbitration and appealing against the sameonly in exceptional circumstances rather than as a rule.
On the positive side of the ledger the government of India builds a new road map interms of the current Five Year plan it is increasingly evident that spending in theinfrastructure sector is going to hit a new high in terms of GDP allocation. Further theMinistry of Road Transport and Highways has been empowered with more approval power of theprojects and it is also striving for greater inter-ministry coordination to speed upclearances.
Year under review
The period under review is 9 months period commencing on 1st July 2015 and ending on31st March 2016. During the period your Companys turnover on a standalone basisstood at Rs 767.33 crore for the 9 months ended on 31st March 2016 as compared to theTurnover of Rs 1013.43 crore for the previous year of 12 months. The Company posted a NetLoss of Rs 19.29 crore for the period under review as against a Net Loss of Rs 189.95crore for the previous year. The order book in hand of the Company as on March 31 2016 isRs 2798 crore.
The situation during the year has no doubt been exceptional but has reinforced ourdetermination to come out of the same by accelerating change during these turbulent times.We are streamlining our business processes reinforcing our project management skillstrimming our structure costs disposing our non-core assets improving our operationalefficiencies and working capital cycle.
Efforts of the Company will be towards capacity building of various stakeholdersincluding employees and contractors for effective delivery. Going forward we want to be avery lean and thin organization and want to utilize our resources in an optimum manner.
I personally believe that this government has pointed the compass in the rightdirection and we should see some bold reforms coupled with strong implementation comingout in due course that would revive the slowed activity in construction sector.
Developers will surely respond if the long-standing problems are tackled and projectsare structured with due regard to known issues.
I place on record my appreciation for undaunted trust and unfathomable support of ouremployees customers shareholders vendors and especially the bankers/lenders showntowards the company. I would like to thank all of you for your constant and esteemedpresence and garnered interest in the Company.
Gurjeet Singh Johar