Infrastructure companies likely missed FY20 sales, order target due to Covid-19

Mumbai: Indian infrastructure companies are likely to miss order inflow and revenue targets in FY20 as the Covid-19 pandemic disrupted the already muted growth for the just concluded fiscal year, the chief executive of RPG Enterprises’ KEC International told ET.

KEC has an order book worth around Rs 20,000 crore, primarily in the power transmission and distribution sector, which gives it revenue visibility for the coming quarters, and the company believes that if work resumes by mid-April, it can make up for lost time, said Vimal Kejriwal, also managing director of the company.

Most infrastructure companies make the bulk of their annual sales and new orders in the fourth quarter of a fiscal year. The pandemic and the subsequent nationwide lockdown in the country further added to the woes of these companies that have already been facing growth challenges.

“There is no doubt that most infrastructure companies will not meet their FY20 order inflow and sales. Nothing happened in the last 15 days of the year, which generally sees a lot of activity. Anyway, the orders had slowed down and companies were under pressure; this has only made it worse,” Kejriwal said.

KEC International has stopped work at all its factories and project sites in India, while work on some international projects is still on as the local authorities have allowed it.

“We are keeping everything ready in India. We are clear that if there is a lockdown even for one month, there will be no adjustment in the budgets. We will make up for it by employing more people and equipment, if needed. But if the lockdown is three months, then it will be tough to catch up on the construction work,” he said.

The silver lining for the company is that government agencies in India, its biggest clients, are ensuring regular payments.

“Government agencies are making an extra effort to pay us on time; so, we are able to pay our vendors and workers and the supply chain is not hurt,” Kejriwal said.

KPMG said in a report on the impact of Covid-19 pandemic on India that the infrastructure sector, which was already facing stress points, is likely to come under immense pressure with stoppage of toll collections, payment to gencos and challenges that airport operators are witnessing at present. A sharp, anticipated decline in demand will further compound the impact.

“We hope that the government will step up investment on infrastructure. But we will have to wait and watch,” Kejriwal said.

He also said that the lockdown might foster cost efficiencies in some areas, with work moving online, minimizing the requirement of physical presence.

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