Ahluwalia lines up big RMC play, investments

Will set up a plant in Kolkata by middle of FY09

MUMBAI: Delhi-based civil construction and turnkey services company Ahluwalia Contracts India Ltd (ACIL) has big plans in the ready mix concrete (RMC) segment.

A source close to the development said the company has procured land to start a plant in Kolkata by mid-FY09.

Further details were not available. However, the company is learnt to be planning to invest around Rs 30 crore in the next two years to set up 10-12 more RMC divisions.

It operates three plants in Bangalore and three in the National Capital Region now.

The company’s RMC business functions under the name Ahlcon Ready Mix Concrete. It has a capacity of producing 210 cubic metres per hour, which is expected to touch 300 cubic metres per hour in three years.

RMC usage in the country is limited due to the 10% additional cost involved in transportation. The business contributed Rs 81.4 crore last fiscal (12% of revenues), with an earnings before interest depreciation taxes and amortisation (Ebidta) margin of 4.8%.

S K Sachdeva, executive director-finance, Ahluwalia Contracts told DNA Money, “I don’t want to comment anything on our RMC business and investment plans, strategy at this stage. Whenever the company takes the final call, it will inform the exchanges.”

He, however, said expansion was an ongoing process and business was growing at a robust pace.

The company plans to spend Rs 110 crore for timely execution of large projects next fiscal. Funds for the capital expenditure would be raised through debt and internal accruals.

Prakash Rao of SBICAP Securities said in a recent research report that revenues from the RMC division were expected to grow 10-12%.

ACIL earns about 78% of its revenues from the northern region, while the South accounts for about 14% of its order book and East and West about 4% each.

The company’s order book has swelled from Rs 780 crore in FY05 to about Rs 3,140 crore today (over 40 million sq ft of space) where the average execution period is about two years.

The current order book is spread across residential (44%), retail (24%) and commercial space (18%), with the remaining accounting for hotels, hospitals and BOT projects.

The company has signed MoUs with clients in the northern and eastern parts of the country, under which it would be the contractor for any real estate project awarded to these companies over the next two years.

ACIL offers construction services and specialises in executing turnkey projects including civil construction, electrical works, plumbing and electromechanical works. The company has executed more than 50 projects in the last five years, valued in excess of Rs 1,900 crore.

Set up by Bikramjit Ahluwalia in 1979, ACIL is an engineering, procurement and construction company with interests in construction of buildings including retail malls, multi-storeyed residential complexes, corporate offices, luxury hotels, IT parks and hospitals.

r_mithun@dnaindia.net