A concentration on road projects, where the flow of fresh bids awarded dried up and sector-wide troubles of delayed execution on prolonged monsoons weighed on construction player C&C Constructions. After five years of continuous strong growth, the company faltered in the December 2010 and March 2011 quarters. The company's stock has had a punishing run for the past year as a result.

Trouble for C&C brewed on quite a few fronts. It suffered a revenue shortfall of Rs 75 crore in the December 2010 quarter due to design issues in its Mohali development project. Unseasonal rains halted construction in Bihar for a time, though it has since picked up. Hiccups in railway projects hampered progress; this segment and airports continue to be slow moving. C&C also battled labour problems for a short while, which resulted in increased manpower costs.

Consolidated revenues for the nine months ended March posted tepid growth of 2.6 per cent on a year-on-year basis while profits tanked 42.2 per cent on high interest costs. Therefore, while operating margins held at 20 per cent for the period, net margins dipped to two per cent from four per cent in FY10.

The company, however, still has an edge over others in its ability to execute complex projects in tough terrain. It has also effected a successful diversification away from road projects into a variety of sectors such as urban infrastructure and real estate.

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