After having a positive impact of the rights issue on the company financials in the first two quarters, the Hyderabad-based construction and infrastructure company NCC Limited is looking to maintain the momentum on profit front by using the asset sale proceeds to reduce the debt. The company also wants to scale up the operations in the second half of this year.
While the topline is expected to be flat or a little lower under the base effect, the company's management was expecting to achieve a full year net profit in the range of Rs 180 crore-Rs 190 crore as compared with Rs 111 crore in the previous year.
"We were able to save Rs 40 crore on finance costs in the first six months due to reduced debt and also due to better terms offered by the lenders on the back of the improved credit rating. We will use the asset sale proceeds that we expect to get in the second half to improve the bottom line during the period," Y D Murthy, executive vice president of NCC Limited told Business Standard.
The company's total debt had come down to Rs 1,995 crore in the year 2014-15 from Rs 2,474 crore in the previous year.
In October last year it had raised Rs 598.70 crore by way of rights issue and used most of this money to reduce the debt.
The company had so far received about Rs 100 crore out of the total consideration of Rs 572 crore from Sembcorp Industries of Singapore towards its stake sale in the joint venture NCC Power Project (NCC PP ), which has been implementing the1,320-Mw Krishnapatnam Power Project.
Following the exit of NCC Limited, the Singapore company holds 45 per cent equity in NCC Power Project while Gayatri Projects holds the remaining 65 per cent stake in this SPV.
The company would receive the balance Rs 470 crore from Sembcorp by the end of March, 2016, according to Murthy.
Murthy said the sale of the two road projects would also be concluded by the end of this year. That would put at least another Rs 200 crore in the company's hands, according to him.
Earlier this year the company said that it was making efforts to divest the stake held in the two road projects SPVs, namely Western UP Tollway Limited and Bangalore Elevated Tollway Limited to bring down the debt level.
The company would use these proceeds to reduce the debt levels and also utilise a part of it to fund the execution of the new EPC projects. Going forward, however, the company is likely to maintain the debt levels at Rs 2,000 crore as it needs more funds to expand its operations, according to him.
The company had achieved Rs 8,296.3 crore in total revenues from operations last year, on a stand alone basis. According to a recent report by Anand Rathi, the company revenues in the current year are expected to remain flat while they are estimated to grow by a little over 16 per cent to touch Rs 9,600 crore level in the next fiscal.