Greetings from C&C Constructions Ltd.
Over the last few years the infrastructure sector has been passing through a veryunstable phase inter to bad phase of economy where problems from all aspects havemultiplied and our Company is no exception.
The Banks were very conservative and cautious while extending financing facilities. Forcompanies already in debt stress a turnaround or improvement in this situation isextremely challenging and calls for an urgent re-look of current scenario in the interestof stakeholders.
Project progress remains tardy. Major projects are hit due to liquidity issues. Thishas shaken the confidence of the industry players.
Due to all this and primarily due to constrained banking facilities currently we areworking at around 60% of our expected execution capacity.
Your Company is currently focused on and concentrating its efforts to control andreduce the elongated working capital cycle and bring about the profitable growth on theback of the robust order book and encouraging the potentials of the Indian economy and theinfrastructure sector.
The Indian economy has demonstrated a high order of resilience and remains an island ofstability amidst global volatility. Meanwhile setting its sights on the future theGovernment has initiated a number of structural reforms whose positive outcomes should betangible in long term growth.
The global scenario is being colored by protectionist policies in various hues adoptedby a few developed countries. While such populist measures tend to impede trade anddiscourage revival of the investment cycle it is up to international industry to addressthese challenges by reconfiguring its offerings and recasting its operations.
I believe that the medium to long term prospects in India are favorable and that thestructural reform process will continue over the next few years culminating in an uptickin the investment momentum.
The Government's increased emphasis on infrastructure development through a number offlagship programmes has been widely welcomed. Infrastructure spends have a multipliereffect enabling pan-industry growth while contributing to an enhanced quality of life.Your Company
is uniquely positioned to respond to these initiatives of the Government. Ourcapabilities in turnkey execution of large scale infrastructure are virtually unmatchedand we look forward to the speedy transition of these publicly- announced proposals intoimplementation mode.
India has the second largest road network across the world at 5.4 million km. This roadnetwork transports more than 60 per cent of all goods in the country and 85 per cent ofIndia's total passenger traffic. Road transportation has gradually increased over theyears with the improvement in connectivity between cities towns and villages in thecountry.
The construction of highways reached 122432 km during FY2017-18 which was constructedat an average of 28 km per day. Total length of roads constructed under Prime Minister'sGram Sadak Yojana (PMGSY) was 47447 km in 2017-18. The Government of India is targetingconstruction of highways at an average of 40 km. per day offering a great opportunity forthe industry.
One of the major strength of your Company is its unflinching focus on timely andquality execution of projects. Having executed many projects in India and overseas overthe years it has established a reputation of a dependable contractor of top choice amongits growing list of customers. The Company cautiously bids for the new projects with agreater focus on projects with shorter duration client credentials funding andprofitability leveraging its versatility and diverse multisector skills and expertise ithas created a strong business model of diversified projects in multiple sectorsinsulating itself from down cycle in any one sector or location.
At C & C we recruit the bright young minds from across the Country and theirknowledge and skills are refined by imparting practical training as well as on job and onsite training. In addition the Company has extensively trained the unskilled labor andenhanced their skills and earnings. The Company accords utmost importance to R & D tofacilitate innovation in development of products and processes for enhanced operationalefficiencies in construction which immensely benefits the Company its clients and thesociety at large.
The Government is focusing on speeding up the Country's infrastructure development byraising public investment in areas such as roads railways ports mass and affordablehousing urban infrastructure rural electrification and infrastructure water &sewerage and power transmission. The Government of India has recognised the need to fillthe gap in urban housing. With announcements of various housing schemes like housingfor all by 2020 Pradhan Mantri Awas Yojana housing industry of India is one of thefastest growing sectors. With so much in store the sector is on threshold of seeingtremendous opportunities for the years to come in foreseeable future.
Year under review
Your Company's turnover on a standalone basis stood at INR 943.29 crore for thefinancial year ended on 31st March 2018 as compared to the turnover of INR 948.62 crorefor the previous financial year ended on 31st March 2017. The Company posted aNet Profit of INR 41.50 for the period under review as against the Net Profit of INR 36.21crore for the previous year. The order book in hand of the Company as on March 312018 wasINR.3235 crore.
Further on the request of the Company to address banking overdues issues the StateBank of India (SBI) vide its letter no. SAMB/CL IV/373 dated 14th June 2018has agreed towards full and final settlement of all the dues of the Company to the Bankfor a total sum of INR .280.00 Crores payable in stages over next one year.
As a process of de-risking the Company we continue to focus on international market aswell whereby 40% of the current order book is from overseas business. Going forward theCompany also intends to work on similar lines only.
The government through a series of initiatives is working on policies to attractsignificant investor interest. The Indian government plans to develop a total of 66117 kmof roads under different programmes such as National Highways Development Project (NHDP)Special Accelerated Road Development Programme in North East (SARDP-NE) and Left WingExtremism (LWE). The government has identified development of 2000 km of coastal roads toimprove the connectivity between ports and remote villages.
The National Highways Authority of India (NHAI) plans to build 50000 km of roads worthUS$ 250 billion by 2022 as part of a long-term goal of doubling the length of the nationalhighway network to 200000 km.
The Government of India will spend around INR 1 lakh crore (US$ 15.26 billion) duringFY 18-20 to build roads in the country under Pradhan Mantri Gram Sadak Yojana (PMGSY).
The Government of India has decided to invest INR 7 trillion (US$ 107.82 billion) forconstruction of new roads and highways over the next five years.
The Government is committed to introducing structural reforms to revive the investmentcycle boosting tax revenues through widening of the tax base strengthening indigenousmanufacturing and bringing about infrastructure development in rural and urban areas.Implementation of GST is expected to have far reaching effects by inducting large parts ofthe informal economy into the formal system. Ultimately leading to increased tax revenues.Introduction of GST is considered progressive and a step in the right direction. YourCompany does not see any adverse impact due to GST implementation.
The domestic economy is expected to steadily improve in the current year on the back ofstructural reforms and supportive monetary policy. The Government has reiterated itsemphasis on infrastructure build-out in the areas of transportation augmentation of waterresources power affordable housing and smart cities. Increased private sectorparticipation in the Defence business affords strong business opportunities for yourCompany. Various upcoming projects provide the Company with a broad perspective of theopportunity basket opening.
The Government has kick-started major road projects and has committed significantbudgetary allocations for roads and highways development. The Company expects this impetusto gain aided by increased investments in specialized bridges and tunnels.
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.
Before I conclude I would like to acknowledge the contributions made by team C & Cand thank our customers vendors and other stakeholders who made it possible for theCompany to maintain its growth momentum and improve financial performance. I also takethis opportunity to thank steadfast support and the confidence they have reposed in ourpursuit of delivering high quality sustainable growth.
Gurjeet Singh Johar