Post-IPO, NBCC draws up big expansion plans

The government-owned National Buildings Constr-uction Corporation (NBCC), after a recently concluded Initial Public Offer that was 4.93 times subscribed, is ready to kick off expansion plans for the next two years.

The diversified company is looking at project opportunities abroad as well. The company is planning to invest about Rs 500 crore for buying land in financial year 2012-13. With three project management consultancy projects in the Maldives, NBCC is exploring power projects in several other areas around the world.

“Discussions are on and we hope to get good power projects in Senegal, Ghana and west Asia,” said Vishnu P Das, chairman and managing director.

The company is not too gung ho with opportunities in the Indian power sector. “The competition is intense in the sector in India, due to the presence of heavyweights. So, we are unable to get high margin projects,” said Das. Director (finance) A K Garg pointed that power makes sense for captive companies which have coal or gas linkage.

In the Maldives, it is working on a police academy, renovation of the Indira Gandhi Memorial Hospital and another hospital in Male, part of project management consultancy projects. The company has given the construction contract to RPP Selvam, a Chennai-based construction company for the Maldives projects.

With an estimated land bank of 125.2 acres as on January 31, 2012, across the country, it has saleable and leasable area of about 10.7 million sq ft. It is, at present, constructing seven residential-cum-commercial projects. It is also open to developing land available with central and state government agencies and other private developers, if required, through the joint venture route.

At a time when real estate players are down with heavy debt burdens, debt free-NBCC boasts of income from operations rising from Rs 1,442 crore in FY07 to Rs 3,126 crore in FY11.

The shares of NBCC would be listed on the Bombay Stock Exchange and National Stock Exchange on April 12.

Besides, it is eyeing ‘build operate transfer’ and ‘build own operate transfer’ projects in India. “If we get a joint venture partner, we will pursue it. We are looking in that direction,” Das told Business Standard.

The company, with a negative working capital, has its core strength in project management consultancy (PMC), as it has 141 ongoing projects worth Rs 16,767 crore. There are 78 forthcoming projects in the PMC segment worth Rs 3,040 crore. Besides, it has Rs 1,350 crore cash in its books, of which Rs 300- 350 crore can be termed surplus cash.

“We have steady cash flows from our existing operations which provide us with sufficient resources to fund our real estate development projects,” das added.

The issue of land acquisition does not bother the company as it does not acquire land, but buys it from the government through the auction route or through private players in joint venture with individuals. “Secondly, we do not hold the land for long, we launch projects within a year of buying,” Das said.

Labour shortage is also not a hurdle for the company as it has outsourced all the construction work to third parties. “You name a construction company, and they are working with us,” he said.

Although NBCC has projects in low, middle and high income categories, the company seems more inclined towards mid and high income projects.