Construction majors like NCC are key stakeholders in building the nation.
This year my annual address on behalf of the board of directors of the company is at avery unusual time. Covid 19 has caused unforeseen damage to the lives of the people andthe economies of most of the countries. With per capita income contracting after thepandemic most countries are heading to an economic downturn in 2020. World Bank estimatein June 2020 points to a 7% contraction in advanced economies. That weakness is spillingover to the emerging markets and developing economies where growth is expected tocontract by 4-5% as they also cope with their own domestic outbreaks of the virus.
The economic impact of the COVID-19 in India has been substantial and broad-based. Allindicators point to a sharp decline in economic activity as reflected in the industrialproduction business sentiment consumer confidence and trade.
An analysis and data based prediction on the exact point of inflection for globaleconomic recovery will not be possible at this juncture since the spread of pandemic isnot showing any signs of flattening. Many economists envisage a V-shaped recovery from Q3of CY2020 with over $10 Trillion fiscal and monetary stimulus which is likely to increasefurther. However this expected recovery can be adversely impacted if further lockdownsare imposed.
India announced a Rs.20 Lakh crore stimulus package for overcoming the covid impact.The stimulus package predominantly is a set of financial packages for lowering the Covidimpact among businesses is a mix of fiscal and monetary support mostly routed throughbanks. This impetus to ease financial pressure on businesses and to sustain the liquidityposition is a strategically appropriate step.
The government initiative to infuse investments in infrastructure is going to play akey role in reviving the growth post lockdown. Honorable PM of India Shri Narendra Modihas already included Infrastructure as a crucial part of his '5i agenda for economicrevival'. From transportation logistics agriculture industry telecommunications tofinance healthcare manufacturing and education all sectors rely on a stronginfrastructure backbone.
While in the initial stages of revival infrastructure investments will help boostemployment generate income in the long run it is set to boost the growth of theancillary sectors allowing stronger revival.
FY2020 has been a subdued year for us with respect to topline and fresh inflow oforders. On Stand alone basis our revenue stands at Rs.8370 Crores - down 31% YoY primarilydue to general elections in the first quarter and the non performing orders in AndhraPradesh. Order inflow also remained tepid in FY20 falling 68% YoY.
OPPORTUNITIES AND RISKS
India is at the verge of a construction infrastructure boom. It is important to makethe infra growth go uninterrupted. Developments in the last decade are laudable as thecountry made progress in most of the sectors like roads buildings power railways andwater. However the pace at which the country is progressing falls short of the aspirationsof a developing Country. As per a study by CRISIL India's infrastructure investments as apercentage of GDP may fall to a 15-year low between fiscals 2018 and 2022. Overallinfrastructure spending over the past two fiscals amounted to 5.1% of GDP - the lowestsince fiscal 2002 - because of funding challenges for both private and public segmentsand a lower-than-expected pick-up in new PPP models. This makes the journey towards thegovernment's target of Rs.100 lakh crore (or 7-8% of GDP) infrastructure spending byfiscal 2024 more challenging.
We continue to be a country where much of the decision-making on developmental issuesare mired in petty politics discouraging redtapism and inter-ministerial issues. For thecountry's vision to be a reality our political leadership central and state governmentsshould rise to the occasion. Recent high-level meeting convened by The Union Minister forroad transport and highways with Railway Minister and Environment Minister to expeditepending infrastructure projects in the country particularly those stuck due tointerministerial approvals is indeed a welcome move.
Construction majors like NCC are key stakeholders in building the nation. During thesehard times - post Covid 19 outbreak many small and medium infrastructure and constructionplayers are facing liquidity crunch. At NCC Ltd we have a strong balance sheet and ourbusiness model is resilient.
We have experience prudent risk management systems and time tested executional skillsto put the company on the growth trajectory.
At NCC our Board or Directors and Senior Management is closely watching the currentscenario for evaluating and containing risks.
We have a consistent track record of paying dividends. The Board of Directors of theCompany at its meeting held on May 29 2020 have recommended payment of Equity Dividendof Rs.0.20 per equity share subject to shareholders' approval at the forthcoming AGM.
I take this opportunity to thank our employees clients shareholders suppliersbanks Central and State Government agencies for their continued support.
Hemant M Nerurkar