Plagued by execution delays, rising interest costs and prolonged working capital cycles, construction company Consolidated Construction Consortium Ltd (CCCL) ended FY11 with a whimper. Revenues rose just 11 per cent while net profits recorded a sharp decline of 49 per cent.

Already feeling the heat from these woes, the stock of CCCL also found itself on the receiving end of the market's collective punishing of all construction stocks.

Prolonged monsoons in the second half of FY11 led to slower execution in key projects while lengthening working capital cycles for CCCL. The March quarter saw flat revenues over the year-ago period even as the June 2010 quarter was healthy at a 23 per cent growth in revenues.

Higher funding taken on for working capital resulted in increased interest costs. For FY11, interest outgo rose 51 per cent. Cost overruns in some projects, rising material costs and high manpower costs further weighed on the already erratic profit margins. Operating profit margins in FY11 dropped to 6.8 per cent from the 9.4 per cent the year before. Similarly, net profit margins slipped to 2.4 per cent against the 4.8 per cent in FY10.

Growth in order book in FY11 was also moderate. However, with a revival in building and factory orders and its delayed Chennai airport project likely to be completed this year, CCCL may see its fortunes revive.

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