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HCC feels that its FY10 revenues would have gone up by Rs200 crore, if it would have been allowed to work on its projects in AP normally
Hindustan Construction Co Ltd (HCC), which has considerable concentration of its order backlog in Andhra Pradesh (AP), says that its FY10 revenues would have gone up by around Rs200 crore, if the company would have been allowed to operate normally in the state.
“If we had no such constraints and if we would have had to do this (the projects) at a full pace, we would have had at least Rs200 crore more turnover for the entire FY10,” said an official from HCC.
HCC’s order backlog in AP, a state that has been embroiled in political trauma which started with the death of its chief minister YS Rajasekhara Reddy, is about 30% of its total orders. HCC has not stopped work on its projects in the state, but the progress is slow, said the HCC official.
HCC had an order book of Rs15,703 crore as on 31 December 2009 and expects it to reach about Rs21,000 crore by March this year. The power sector accounted for 40% of the revenues for HCC while roads and irrigation segments contributes 28% and 32%, respectively.
Ajit Gulabchand, chairman and managing director, HCC said, “The (AP) state first had elections, then it faced turmoil with YSR Reddy’s death and further by the Telangana issue. I think it should substantially correct itself from our point of view by March. I think with the new financial year open, they will have lot more funds at their disposal to clear that (the receivables).”
Depending on the progress of its projects, HCC said that the AP government owes it around Rs600 crore, out of which Rs260 crore are from the past three months alone. HCC feels that the state government would start clearing its dues from February onwards.
Similarly, HCC has also lost revenues on its power projects, especially on its Lohari-Nagpala hydel power project in Uttarakhand due to local issues like the Ganga Bachao Aandolan.
“About 50% of our order backlog is from power projects and most of our projects are running on schedule. The work on Lohari-Nagpala project has been temporarily suspended sometime in June-July 2009. There is a suspension of this project, but not termination. We would have lost about Rs35 crore-Rs40 crore in the past five–six months due to this suspension,” said Vinayak Deshpande, president and chief operating officer (COO) for EPC & construction, HCC.
The company, however, is positive over its road projects and sees better margins in the future. Mr Gulabchand said that the company expects a more steady flow of infrastructure projects in the next financial year.
“I think the order backlog that is going to come forth would definitely have better margins, because we will now be taking more value-added projects. In addition, the size of the road projects that the government is coming out (with) will also be bigger. This will require bigger companies to participate. I think we are going to go forward with slightly increased margins on an average,” he said.
For the third quarter to end-December, HCC reported a net profit of Rs14.80 crore and total revenues of Rs945 crore.
IndiaPay, the country’s ambitious domestic card payment system—similar to Visa and MasterCard— may take another three years to roll out its operations
Bankers in the country were eagerly waiting for the indigenous card payment system ‘IndiaPay’, that would have reduced transaction charges substantially. However, the IndiaPay card may take another three years to materialise, said a senior official from National Payment Corp of India (NPCI).
“It (the IndiaPay card) will not materialise in the immediate future because we have started our business. As per the plan, our focus at the moment is on ATM switches, then we will launch the cheque-truncation system at Chennai followed by a unique identification (UID) based financial inclusion payments and UA-switching or point-of-sales switching. The IndiaPay card is not (forthcoming) for the next three years,” the NPCI official said.
According to media reports, Nandan Nilekani, chairman of the Unique Identification Authority of India (UIDAI), had said that by February 2011, the Authority will start issuing its UIDs and later that year, when the NPCI is ready, the interbank switch will come into being.
Following the Reserve Bank of India (RBI) proposal to set up an umbrella institution for all the retail payment systems in the country, NPCI was promoted by the Indian Banks Association (IBA). NCPI is building a robust and state-of-the-art national level retail electronic payment system infrastructure in the country.
The idea of a domestic card-payment system is meant to compete with Visa and MasterCard, who have a virtual duopoly in card transactions worldwide and charge Indian banks a hefty fee for associating with them. Domestic card companies, till date, do not have any other option but to affiliate or tie up with foreign card companies, especially the two mentioned above, so as to enable them to spread their services globally.
India is following China in creating its own national payments systems. China’s UnionPay card was introduced in 2002, and gives access to over 85,000 ATM counters of 14 major and minor banks across the world.
In December 2009, NPCI took over the National Financial Switch (NFS) from the Institute for Development and Research in Banking Technology (IDBRT), in a bid to create more resources for it to facilitate retail payments. NFS covers 37 member banks with about 51,518 ATMs. The daily average volume at NFS was around 1.6 million with a peak volume of 2.6 million. In December, it recorded total volumes of 5.4 crore transactions.
NFS, which facilitates routing of ATM transactions through interconnectivity between bank switches, is also the largest network of shared ATMs in the country. NPCI, on the other hand, does only the processing for ATM switching. It still has to enter the post-switch business. But even on this front it is proving beneficial for Indian banks with its lower charges. For ATM switching, NPCI charges just Re1 per transaction while Visa and MasterCard charge about Rs3 to Rs4 per transaction. According to media reports, last year, Indian banks paid close to Rs400 crore to Visa and MasterCard as fees for processing ATM and credit-card transactions.
“Their (Visa and MasterCard) charge structure is different. Theirs is (a) volume-based (model). Higher the volume, lower the price. But ours is (a) flat-based (model),” the NPCI official said.
Consumers in India spend around Rs4,000 on an average every month using credit cards, compared with at least three times as much the amount spent by their counterparts in Asian countries like Singapore and Japan.
Industry sources are very optimistic about the domestic card payment system and its ability; many believe that the transaction process would become much faster.