Major impact of lockdown in the revenue and the profitability has been witnessed in the first quarter of the FY21. Q1FY21 numbers are likely to be substantially lower. The company is focusing on cost control measure to minimise the impact of the crisis on the profitability.
“In December 2019, the company monetized land parcel amounting Rs170cr through Ajanta Enterprise, 50% Joint Venture of the company, Net Cash flow to Vascon is Rs52.5cr. Our Consortium Banks have extended Covid loan up to 10% of our fund based Working Capital limits. In accordance that, we have received the sanction of AD-HOC credit facility under Covid-19 Emergency Credit Line (CECL) from State Bank of India (SBI) amounting Rs6.30cr for a period of 24 months and loan from Union Bank expected upto1 crores. Disbursement of the same is still awaited.
This disbursement will strengthen the company’s financial position. Further, The Ministry of Finance has also advised the Government Departments to release the Bank Guarantees to the extent of work done,” company said.
With the announcement of the nation-wide lockdown due to Covid-19 which came into force on March 24, 2020 the operations at all company’s project sites were impacted. With the Government of India relaxing the lockdown conditions for construction sector on April 20, 2020, the company recommenced the construction activities gradually at all our project sites wherever the clients permitted the resumption of the same while ensuring that all safety measures set out by the government are being adhered to.
The company's Order Book which stood at around Rs2,100cr (as on March 31, 2020) is comfortable and is expected to help the company in carrying on its operations smoothly.
“Presently, company has 30% of construction work force at its sites and operations have resumed at partial capacity. Based on the government directives we plan to scale the construction at normalized level in a phased manner. Furthermore, movement of migrant workers had created a short-term hindrance, the situation is likely to improve gradually. Wherever found necessary the company will source the Labour from nearby areas,” company said.
The company expects construction to reach normal levels in 3-6 months post lifting of lockdown as migrants labourers resume work gradually. It is carrying out the construction activity in majority of the project sites wherever the work has been permitted. Also, the company will continue to bid for new order.
Vascon Engineers Ltd is currently trading at Rs8.25 up by Rs0.01 or 0.12% from its previous closing of Rs8.24 on the BSE.