Govt infra push will revive sector: ICRA

Effective implementation of measures announced in the Budget and the Kelkar Committee recommendations will pave the way for revival of infrastructure, rating agency ICRA said today.
It said a major push from the government on roads and urban infrastructure segments have helped construction companies improve their order book positions.
"... Latest study on construction companies witnessed improvement in order inflows with a major push coming from segments like roads and urban infrastructure," ICRA said.
This has helped improve the order book position of most construction companies and they stood at around three times of their last reported annual revenues, it said.

However, execution is yet to gain traction for many companies because of weak liquidity, limited resources and presence of slow moving or stalled projects in their order books, it added.
Rohit Inamdar, Senior Vice-President, ICRA, said "With increased public sector spending towards infrastructure projects, huge opportunities lie ahead for construction companies."

He added that the ability to capitalise on this opportunity will be dependent on getting the balance sheet in order and improving liquidity. Companies with healthy balance sheet and liquidity are better off to benefit from these opportunities.
ICRA said that the stalled projects remain sizeable with several projects delayed due to unfavourable market conditions, funding constraints, absence of raw-material linkages etc.

It said that given the huge funding requirement for the infrastructure sector, public sector funding alone will not be sufficient, and partnership with private sector holds the key to faster development.
Besides meeting the funding requirement, the private sector is also expected to bring efficiency and better technology, it added.