Third quarter profit falls at HCC
By Helen Wright24 January 2011
India's Hindustan Construction Company (HCC) reported net profit of INR 7.9 crore (US$ 1.7 million) for the three months ended 31 December, down -46% against net profit of INR 14.7 crore (US$ 3.2 million) during the same period in 2009.
HCC said its results were impacted by the combined effects of a INR 6.1 crore (US$ 1.3 million) foreign exchange loss, a general slowdown in infrastructure activity and delays on major projects.
HCC Chairman and managing director Ajit Gulabchand said during the three month period ended 31 December the company had seen the deferral of several project orders by government departments as well as private clients due to issues with clearances and delays in acquiring land.
"These deferments coupled with the growing reluctance of investors are some of the factors contributing towards the slowdown in core sector works," Mr Gulabchand said.
A significant delay occurred on a major hill city project undertaken by HCC subsidiary Lavasa Corporation near Pune, Maharashtra, where construction work was halted by the Indian Ministry of Environment & Forests (MoEF) in November last year.
The MoEF accused the developer of breaching environmental laws, but said on 18 January that it would consider allowing work to restart on the project if HCC set up an environment restoration fund and paid a penalty for the damage done.
But HCC's third quarter difficulties were not reflected in its nine-month figures, where net profit grew +26% to INR 48.4 crore (US$ 10.6 million).
HCC's order book at 31 December last year totaled INR 18505 crore (US$ 4 billion), compared to INR 15703 crore (US$ 3.4 billion) at the same point in 2009.
Revenues increased +8.7% during the third quarter to INR 1027 crore (US$ 225 million), and grew +5.9% in the nine months ended 31 December to INR 2934 crore (US$ 644 million).
"Given the slowdown in the business environment, our focus will be on judicious use of capital and improving recoveries. Our growth strategy focuses on opportunities offered by the private sector and aggressively evaluating strategic activities in the thermal and hydrocarbon sectors," Mr Gulabchand said.