HINDUSTAN

CONSTRUCTI
ON
COMPANY
A FINANCIAL
ANALYSIS

PWC FINAL PRESENTATION

GROUP 5
U113045
U113046
U113052

Shatajupa Mishra
Shriram Misra
Subhabrata Sharma

U113054
U113117
U113019

Sudipta Soumyadarshan
Sweta Rath
Harsh Mohapatra

COMPANY OVERVIEW
HCC's businesses span the sectors of Engineering & Construction, Real Estate, Infrastructure, Urban development &
Management.
The HCC group of companies comprises HCC Ltd., and its subsidiaries:
HCC Real Estate Ltd
HCC Infrastructure Co. Ltd
Lavasa Corporation Ltd
Steiner AG in Switzerland
Highbar Technologies Ltd.
1. HCC Ltd. executes large-scale civil engineering and infrastructure projects
such as hydel power plants, nuclear power plants, expressways and
highways, tunnels and bridges.
2. HCC currently serves the infrastructure sectors of transportation, power and
water.

3. HCC was the first construction company in India to be certified for ISO 9001,
ISO 14001 and OHSAS 18001 for its quality, environmental and occupational
health and safety management systems.

INFRASTRUCTURE SECTOR TRENDS

One of the worlds fastest growing economies and growth expected to

continue at 7-7.5% despite the global downturn

FY 08 - 14
167

200
150

Public private partnerships (PPPs) are gaining in importance, and are benefiting
from government support targeted PPP participation is US$150 billion.

Few restrictions on foreign direct investment (FDI) for infrastructure projects

Tax holidays for developers of most types of infrastructure projects, some of

which are of limited duration

65

100

92
22

50

0
Spending (USD Billion)
Electricty

Railways

Roads

Ports

Airports

Existing Airports beyond

74%

Hurdles
1.

2.

3.

Major infrastructure projects are governed by the concession agreements

signed between public authorities and private entities. Tariff
determination and the setting of performance standards vary somewhat
by sector.
As is the case in many countries, there is no single regulator which
formulates the policy for all infrastructure projects.
There is also no standardisation in the concession agreements across the
different infrastructure sectors.

Approval Route
Permission required

Atomic Minerals
In case of joint venture or
technology
collaboration agreement in
the same field

FDI Routes
Greenfield airports

Automatic Route
Freely permissible
(100%)

Construction &
maintenance of
infrastructure

like ports, harbors, roads

and highways
Townships, housing, builtup infrastructure and
construction-development
projects

REAL ESTATE
PORTERS 5 FORCES ANALYSIS
Real estate contributed about 6.3 per cent to India's
gross domestic product (GDP) in 2013.
The market size of the sector is expected to increase at
a compound annual growth rate (CAGR) of 11.2 per
cent during FY 2008-2020 to touch US$ 180 billion by
2020.

TRENDS

1.
2.
3.
4.

Demand for Residential space to grow sharply

Metros driving Demand for Commercial Space
Retail Space likely to see strong growth
Hospitality market to witness large incremental
capacity

Gross Block
2100
2050
2000
1950

Capital
Expenditure
Fixed assets increased from
2010 till 2012 due purchases

After 2012 the fixed assets

have been decreasing due
depreciation and with no
significant CapEx

1900
Gross Block

1850
1800
1750
1700
1650
2010

2011

2012

2013

2014

Capital WIP
40
35
30
25

Capital Work-In-Progress
has been in the decreasing
trend over the past 5 years

20

Capital WIP

15
10
5

0
2010

2011

2012

2013

2014

Return on Assets Excluding Revaluations

60

50

40

30

Return on Assets Excluding

Revaluations

20

10

0
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Return from assets have decreased over the past 5 years

and more or less stabilized around 20%

4.5
4
3.5
3
2.5

Current Ratio
Quick Ratio

Debt Equity Ratio

1.5
1
0.5

0
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Liquidity and Solvency

Ratios
The current ratio has declined slightly over the 5 years, but the Quick ratio has
increased, suggesting high cash and cash equivalents, leading to high liquidity.
However the Debt-equity ratio has increased using high leverage and weaker
equity position

Interest Cover
1.8
1.6
1.4
1.2
1
Interest Cover

0.8
0.6
0.4
0.2
0
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Interest cover have decreased over the years, but increased

last year suggesting lower debt interest burden

Fixed Assets Turnover Ratio

2.1

2.05

1.95
Fixed Assets Turnover Ratio
1.9

1.85

1.8

1.75
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

The productivity of HCC has declined for three years, but last year it has
picked up again. This suggest significant utilization of fixed assets.

Return On Capital Employed(%)

14

12

10

8
Return On Capital
Employed(%)

0
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

The ROCE have increased over the past 5 years suggesting higher profitability
from the available capital pool

Earnings Per Share

4
3
2
1
0

Earnings Per Share

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

-1

-2
-3
-4

Earning per share has also been declining between 2010-12, but have
increased in the last 2 years showing a positive value

Recent Competitive Advantage

Sebi approval for Lavase IPO
HCC awarded Rs 278 Crore PWD New Delhi contract
Rs 634.79 crore, Transportation and Hydel Power segment projects

FINANCIAL RATIOS
A COMPARISON FROM 2010 - 2014

PROFITABILITY

PROFITABILITY

PROFITABILITY

LIQUIDITY

LEVERAGE

COMPETITOR PERFORMANCE
Profit & Loss account
HCC

-- in Rs. Cr. -Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 CAGR

Total Income

4,095.7 3,996.0 3,832.2 4,042.5

3,629.21
5
8
9
2
4,134.7 3,929.9 3,967.7 4,256.1
3,646.97
7
0
8
1

2%

Sales Turnover

3%

Total Income
Expenditure
Raw Materials
Employee Cost
Other Manufacturing
Expenses
Miscellaneous Expenses

Expenditure
Raw Materials

-- in Rs. Cr. -Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 CAGR

Income

Income
Sales Turnover

Profit & Loss account

UNITECH

79.6

72.08

Employee Cost
Other Manufacturing
Expenses

394.35 467.64 439.24 402.03 388.46

2,631.1 2,875.1 2,937.8 2,870.1 2,819.3
8
5
1
8
0

0%

Miscellaneous Expenses

47%

Total Expenses

19.37 37.71 46.88 116.48 132.77

3,171.0 3,548.8 3,543.2 3,468.2 3,412.6
8
2
1
9
1

Operating Profit

458.13 541.85 445.02

629.91

7%

PBDIT

475.89 585.95 386.69 499.49

843.5

12%

Interest

240.15 327.47 543.16 529.67 607.94

20%

Profit Before Tax

121.84 105.79 -318.57 -193.58 90.95

-6%

PBDIT
Interest
Profit Before Tax

Reported Net Profit

81.44

0%

Reported Net Profit

71

364

-222.25 -137.64 80.64

1%

1%

Total Expenses
Operating Profit

1,340.4 1,287.9 1,053.0 1,696.9

1,849.49
1
1
9
7
2,171.4 1,773.9 1,487.8 2,144.3
2,214.55
2
8
2
7

-2%
-1%

53.71 7.97
0
0
0
93.18 115.41 128.52 140.02 157.09 11%
1,478.9
920.51 884.14 828.7
0
8
10%
24.68 50.26 70.94 805.92 101.66 33%
1,146.2 1,107.3 1,028.1
1,737.7
5
6
6
945.94
3
9%
698.5 237.1 257.3 103.03 -48.95 -159%
1,068.3 1,064.0
0
6
745.82 541.88 406.64 -18%
346.7 329.21 279.94 304.39 274.22 -5%
715.65 728.17 459.1 231.89 125.86 -29%
544.3 510.08 326.71 151.98 78.87

-32%

CASH CONVERSION CYCLE

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Debtors Conversion Period

22.85

12.62

31.33

29.32

25.36

Days of Inventory

471.2

383.33

314.55

264.88

222.99

Days Accounts Payable

228.1

141.8

99.94

84.42

80.11

Net Operating Cycle

265.95

254.12

245.94

209.78

168.24

The companys order book is geared towards hydel projects that are typically long
gestation.
HCC has ventured into real estate and BOT segments, both of which entail upfront
investments with returns generally taking a long time to materialize.

THE END
THANK YOU FOR YOUR TIME