IVRCL bags order worth Rs 351 crores; stock zooms 9 per cent

Infrastructure company IVRCL’s irrigation and water division received an order worth Rs 324.67 crores from Cauvery Neeravari Nigama; and another order worth Rs 26.29 crores from Karnataka Urban Water Supply & Drainage, in Karnataka. The project is to be completed in 24 months.

Reacting to the news shares of IVRCL gained nearly 9 per cent intraday to hit a high of Rs 10.17.

IVRCL’s water division recently won two more orders worth Rs 233.09 crore. First order of Rs 137.49 crore from BHEL; and another worth Rs 95.60 crores for a rural water supply scheme in Maharashtra.

On the financial front the company has been under pressure. IVRCL reported a revenue increase of 4.82 per cent in Q2FY15 from Rs 611.50 crore compared with Rs 641 crore in the corresponding quarter in the previous fiscal. However, during the quarter the expenditure rose by 19 per cent to Rs 815.67 crore, from Rs 685.11 crore in the previous year, way above its revenues. Company also reported a steep rise in its net losses of Rs 305.46 crore for the quarter ended September 2015 as compared with a net loss of Rs 187.6 crore in the corresponding quarter previous year.

As on 30 September, IVRCL had debt of  Rs.3800-4000 crore. The company has been trying to sell certain assets to generate liquidity, but has been mostly unsuccessful in finding buyers due to valuation concerns.

Apart from project delays, what's adding to IVRCL's liquidity crisis is the overall decline in funding by banks to infrastructure companies. For IVRCL cash flows have been a huge problem. But according to the management of the company, clients will not stay for long if IVRCL fails to execute the  projects it has won, in the adequate timeframe. IVRCL has a total order book of more than Rs 18500 crores.

Lately, IVRCL Ltd., has been in news as it informed the stock exchange that the Board of Directors of the company approved splitting of its business into two different entities: Engineering procurement and Construction (EPC) company; and assets-land/Build-operate-transfer (BOT) company. Company’s board also approved conversion of a part of its debt into equity, pursuant to invocation of strategic debt restructuring (SDR) by joint lenders forum.

IVRCL Limited is engaged in the business of development and execution of Engineering Procurement Construction and Commissioning (EPCC) and lump sum turnkey (LSTK) facilities. The company's segments include Engineering & Construction; Real Estate and Manufacturing. Company’s water and irrigation division is engaged in water distribution systems; desalination projects; and environmental projects, etc.