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HINDUSTAN
CONSTRUCTI
ON
COMPANYA FINANCIALANALYSIS U113045
U113046
U113052
U113054
U113117
U113019
GRO
PWC FINAL PRESENTATION
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COMPANY OVERVIEW
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.
HCC's businesses span the sectors of Engineering & Construction, Real Estate, Infrastructure, Urba
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.
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INFRASTRUCTURE SECTOR TRENDS
0
50
100
150
200
Spending (US
167
659
FY 08
Electricty Railways
One of the worlds fastest growing economies and growth expected to
continue at 7-7.5% despite the global downturn
Public private partnerships (PPPs) are gaining in importance, and are benefiting
from government supporttargeted PPP participation is US$150 billion.
Few restrictions on foreign direct investment (FDI) for infrastructure projects
Tax holidays for developers of most types of infrastructure projects, some of
which are of limited duration
FDIRoutes
Approval Route
Permission require
Automatic Route
Freely permissibl(100%)
Hurdles1. Major infrastructure projects are governed by the concession agreements
signed between public authorities and private entities. Tariff
determination and the setting of performance standards vary somewhat
by sector.
2. As is the case in many countries, there is no single regulator which
formulates the policy for all infrastructure projects.
3. There is also no standardisation in the concession agreements across the
different infrastructure sectors.
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REAL ESTATE
Real estate contributed about 6.3 per cent to India's
gross domestic product (GDP) in 2013.
The market size of the sector is expected to increase at
a compound annual growth rate (CAGR) of 11.2 per
cent during FY 2008-2020 to touch US$ 180 billion by
2020.
TRENDS
1. Demand for Residential space to grow sharply
2. Metros driving Demand for Commercial Space
3. Retail Space likely to see strong growth
4. Hospitality market to witness large incremental
capacity
PORTERS 5 FORCES
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CapitalExpenditureFixed assets increased from2010 till 2012 due purchases
After 2012 the fixed assetshave been decreasing due
depreciation and with nosignificant CapEx
Capital Work-In-Progresshas been in the decreasingtrend over the past 5 years
1650
1700
1750
1800
1850
1900
1950
2000
2050
2100
2010 2011 2012 2013 2014
Gross Block
Gross
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014
Capital WIP
Capita
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Return from assets have decreased over the past 5 yearsand more or less stabilized around 20%
0
10
20
30
40
50
60
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Return on Assets Excluding Revaluations
Return on Assets Excluding
Revaluations
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Liquidity and SolvencyRatios
The current ratio has declined slightly over the 5 years, but the Quick ratio hasincreased, suggesting high cash and cash equivalents, leading to high liquidity.
However the Debt-equity ratio has increased using high leverage and weakerequity position
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Current RatioQuick Ratio
Debt Equity Ratio
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Interest cover have decreased over the years, but increasedlast year suggesting lower debt interest burden
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Interest Cover
Interest Cover
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The productivity of HCC has declined for three years, but last year it picked up again. This suggest significant utilization of fixed assets.
1.75
1.8
1.85
1.9
1.95
2
2.05
2.1
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio
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The ROCE have increased over the past 5 years suggesting higher profitabilifrom the available capital pool
0
2
4
6
8
10
12
14
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Return On Capital Employed(%)
Return On Capital
Employed(%)
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Earning per share has also been declining between 2010-12, but haveincreased in the last 2 years showing a positive value
-4
-3
-2
-1
0
1
2
3
4
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Earnings Per Share
Earnings Per Share
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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
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FINANCIAL RATIOA COMPARISON FROM 2010 - 2014
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PROFITABILITY
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PROFITABILITY
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PROFITABILITY
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LIQUIDITY
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LEVERAGE
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COMPETITOR PERFORMANCE
Profit & Loss account -- in Rs. Cr. --
HCC Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 CAGR
Income
Sales Turnover 3,629.21
4,095.7
5
3,996.0
8
3,832.2
9
4,042.5
2 2%
Total Income 3,646.97
4,134.7
7
3,929.9
0
3,967.7
8
4,256.1
1 3%
Expenditure
Raw Materials 0 0 0 79.6 72.08
Employee Cost 394.35 467.64 439.24 402.03 388.46 0%
Other Manufacturing
Expenses
2,631.1
8
2,875.1
5
2,937.8
1
2,870.1
8
2,819.3
0 1%
Miscellaneous Expenses 19.37 37.71 46.88 116.48 132.77 47%
Total Expenses
3,171.0
8
3,548.8
2
3,543.2
1
3,468.2
9
3,412.6
1 1%
Operating Profit 458.13 541.85 445.02 364 629.91 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%
Reported Net Profit 81.44 71 -222.25 -137.64 80.64 0%
Profit & Loss account -- in
UNITECH Mar '10 Mar '11 M
Income
Sales Turnover 1,849.49
1,340.4
1
1,
Total Income 2,214.55
2,171.4
2
1,
Expenditure
Raw Materials 53.71 7.97
Employee Cost 93.18 115.41 1
Other Manufacturing
Expenses 920.51 884.14 8
Miscellaneous Expenses 24.68 50.26 7
Total Expenses
1,146.2
5
1,107.3
6
1,
Operating Profit 698.5 237.1 2
PBDIT
1,068.3
0
1,064.0
6 74
Interest 346.7 329.21 2
Profit Before Tax 715.65 728.17 4
Reported Net Profit 544.3 510.08 3
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Mar-10 Mar-11 Mar-12 Mar-13 Mar
Debtors Conversion Period 22.85 12.62 31.33 29.32 25.
Days of Inventory 471.2 383.33 314.55 264.88 222
Days Accounts Payable 228.1 141.8 99.94 84.42 80.
Net Operating Cycle 265.95 254.12 245.94 209.78 168
CASH CONVERSION CYCLE
The companys order book is geared towards hydel projects that are typi
gestation.
HCC has ventured into real estate and BOT segments, both of which enta
investments with returns generally taking a long time to materialize.
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THE ENDTHANK YOU FOR YOUR TIME