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    NBCC rallies about 6%; navratna status is giving NBCC some confidence, says Anoop Kumar Mittal, CMD

    Synopsis

    "Navratna status is definitely giving us some kind of confidence and to our customers. This is also motivating NBCC to look abroad."

    ET Now
    NBCC rallied as much as 7.7 per cent in intraday trade on Thursday. The stock hit a low of Rs 845 and a high of Rs 896.95. For the year, the stock has rallied over 400 per cent till date.

    The stock ended the day at Rs 877.60; up 5.47 per cent.

    In a chat with ET Now, Anoop Kumar Mittal, CMD, NBCC, shares his business outlook. Excerpts:

    ET Now: First, talk about the broader and the big picture of NBCC. You got the Navratna status about a quarter ago and after that Navratna status, how has life changed for NBCC?

    Anoop Kumar Mittal: It is eactly not because of the Navratna status that things have changed, it is because of the work which we have done in the last two years that is giving some kind of results. The state of Navratna definitely is giving us some kind of confidence and to our customers also and that is also motivating NBCC to go abroad. We are in close discussion with a few companies in Turkey, Malaysia and Oman.

    ET Now: This morning you have signed an MoU with Air India for development of land parcels at various locations on a joint venture basis. Could you highlight revenue opportunity with this deal?

    Anoop Kumar Mittal: This agreement was in discussion since long and finally today we have signed an agreement with the Air India chairman in presence of both the honourable ministers, the Minister of Urban Development and the Minister of Civil Aviation.

    Silent features of this agreement is NBCC will redevelop or develop their greenfield land parcels where land will be their equity and construction and construction-related expertise will be NBCC’s contribution and profit will be shared according to that. One more thing we have decided in this meeting today is we will launch one project in this financial year, say, in next three to four months, and initially we will focus on a project which is in Chennai and another project will be at Vasant Kunj in Delhi.

    ET Now: Which are the land parcels you are planning to develop?

    Anoop Kumar Mittal: We will start with their land parcels in Chennai and Vasant Kunj in Delhi and after that we will have discussion with them and identify a few more projects. These things will be disclosed, say, after 15 to 20 days or a month.

    ET Now: I know you are not willing to put in a specific number there, but how much commitment has been made for how much land to be developed?

    Anoop Kumar Mittal: Honestly I am also not aware of the number of total land parcels. I have been told they have 70-80 land parcels, but these land parcels are in different cities and different models. Some are on lease, some are on ownership basis. So we have to do some kind of due diligence before giving you an exact number of land parcels and the area of land.

    ET Now: Can you give us a flavour of your order book and especially the order book which is coming from the infrastructure sector because currently 25-26% of your total order book is only from the infra space?

    Anoop Kumar Mittal: In this financial year we have secured around Rs 5000 crore works, and out of this almost Rs 2000 crore is from the infrastructure sector, like we have one contract from NTPC worth Rs 550 crore, then rural road project in West Bengal, then creation of new blocks in IIT Kanpur and there are similar kind of projects in other cities and ministries. We have won a contract of border road organization, valuing approximately 1800 crore, which will be taken off in the next financial year.

     
    ET Now: I also want to understand this deal that you entered with Air India. I know you would not be able to spell out many details, but would these projects, this development that you are going to be doing of land parcels with Air India come at higher margins?

    Anoop Kumar Mittal: Definitely because all the land parcels of Air India are situated in metro towns and that too in very prominent locations. So with this agreement, Air India will also be benefitted and they will be able to generate some money for their development plan.

    ET Now: Are there any big projects which could substantially boost your top line and bottom line in the next two quarters? Is there some huge project, the revenue recognition is still pending?

    Anoop Kumar Mittal: Projects are in progress. Those projects will only give top line increase or bottom line increase, and the orders which we are securing, whether from infrastructure companies or Air India, will take some time. We have started the building of NBCC in the last two years or one-and-a-half-years and you will see the exact results after one year or six months time.

    ET Now: I must say that your stock is very popular amongst some smart NHI investors and most of the NHI investors I have interacted with, who track your stock, are of the view that you will soon be a billion dollar company at top line. When I say a billion dollar company, that is about Rs 6,00,000 crore. So are NHI investors right in assessing that?

    Anoop Kumar Mittal: I cannot tell you. I am thankful to them if they are wishing so, and definitely that will encourage me to do much more work and we will try to achieve that target.

    ET Now: Okay, but you know another tie with the…

    Anoop Kumar Mittal: You see we have such a huge order book. If we do not perform, then this order will go away. So we have to perform and we are trying to do a lot of things. One is up-gradation of construction technology. So that construction time is reduced from 30 months to 18 months or 18 months to 15 months. So, all these things are on cards.

    ET Now: My understanding is that NBCC is also working to form joint ventures with about half-a-dozen sick PSUs and you are looking at monetising their land bank. Is that true and, if yes, which are the other small PSUs you currently are in negotiation with in order to monetise their land bank?

    Anoop Kumar Mittal: It is not like that. We have written to the Government of India and the Department of Restructuring Public Sector Enterprises that NBCC is interested to associate with the companies who are sick or in need of money. So we can monetise their land or develop their land and whatever they have deficit, we will try to cover up that. So that negotiation is going on.

    ET Now: I am just going to quote Nomura estimates, which have indicated that the MoU for the development of land with Air India would be a potential $1-billion opportunity revenue-wise for you.

    Anoop Kumar Mittal: I do not know how they have worked out this figure, but probably Air India was talking that they need in this financial year Rs 5,000 crore amount from monetisation of the land. So probably they had taken that figure, but as I said, please wait for some more time, give me some more time and we are having a few meetings in the next one or two weeks. Then I will let you know.
    The Economic Times

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