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• With project execution hitting repeated hurdles due to a variety of procedural reasons, infrastructure major IVRCL’s efforts to translate its order book into actual work are turning uncertain.After a dismal December quarter, the company sees the uncertainty over its financial performance continuing for another two to three quarters.“Our worry is execution. There are a lot of environment issues coming in the way. There are also some legal issues. Permissions are stalled at many points. The projects in the private sector, too, are facing problems. Villagers are stopping the work at some sites. So there are many operational difficulties,” E Sudhir Reddy, IVRCL’s chairman, said.
• The company had reported an 83% fall in its third-quarter net profit at Rs6.78 crore as against Rs42.29 crore reported in the same period of the previous fiscal.Net revenues, too, dropped 15% to Rs1,202.53 crore as against Rs1,417.49 crore a year ago.“There is no problem in order inflow. As against total orders worth Rs8,500 crore during the last full year, we had about Rs10,000 crore orders by January 2012. We are L1 (lowest bidder) in works worth Rs2,000-3,000 crore,” he said.The company’s order book currently stands at about Rs25,000 crore, though the pace of execution is turning uncertain.
• To a question on slow pace of order execution, Reddy said, “Almost all of them will go slow. In fact, it would be easy for me to tell you which one of them would move fast.”IVRCL, a specialist in water related works, would continue with the specialisation, though it sees a boom of sorts in the transportation-related projects.“When we say transportation, it includes roads, tunnels, metro rail projects and railways. About 10 cities are coming up with metro (rail) projects. We are also looking at dedicated freight corridor projects. Tunnelling is yet another major area for IVRCL,” he said.
• Buildings, including government ones, is yet another major area for the company.“The size of each of the building projects now is at about Rs800-1,000 crore. Several old government buildings are being replaced with new ones. There is also a growing opportunity in the low-cost housing sector,” he said.However, despite having a strong order book, translating the execution of the projects on hand is becoming an issue.“Currently, we are handling 350 projects. Most of them have issues,” he said.
• The company’s margins, too, have taken a beating due to the execution related issues as the third-quarter Ebidta stood at about 8.3% as against 16% a year ago.In fact, the company is also uncertain about providing a guidance on revenues by the year-end.“It has become tough to predict due to the issues related to permissions and clearances. Though we have an internal estimate of 15-20% year-on-year growth, it itself is proving to be challenging,” he said.According to him, the company was not likely to reach the previous year’s topline numbers by the end of the current financial year.
• On the positive side, Reddy said the company’s efforts to put the existing build-operate-transfer (BOT) road projects on the block are progressing and the sale of one road project is at an advanced stage.“We have already received some money for one project and we will be able to give the details only after getting the balance amount. For the other road projects, due diligence is going on,” he said.IVRCL Assets and Holdings Ltd, a group company handling BOT projects, recorded 97.6% in revenue atRs378.51 crore for the third quarter as against Rs191.55 crore in the corresponding period of the previous year. However, its net losses widened more than fourfold to Rs62.40 crore as against Rs11.43 crore loss a year ago.

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