Growing a small family company into one that is renowned as India’s second-largest listed construction company might seem a daunting career trajectory to most, but for NCC Limited’s CEO and Managing Director A Ranga Raju it has been the perfect challenge.
The charismatic leader has been with the company, now a listed enterprise, in a variety of roles for 40 years and in this time has seen it develop from a building construction firm to one that is a trusted name in infrastructure – including roads, railways, power and water. A company that is committed to, and successfully delivering, on its promise of contributing to a brighter world as India’s nation builder.
NCC is growing at a steady pace due to plans by the Indian government to develop physical infrastructure in many areas across the country. Now, with the support of many banks with whom they’ve been working for 25 years, the company is perfectly positioned to capture those opportunities.
The banks have helped us to build trust and grow because we’re a good customer.
“Back in 2000, the finance available to NCC was hardly 100 crores [US$13 million]. It has now grown to a level of about 13,200 crores [US$1.7 billion], capitalising on approximately 10,000 crores [US$1.3 billion] of bank guarantees, 1,000 crores [US$128 million] of LC limits, and 2,200 crores [US$282 million] of fund-based limits,” A Ranga Raju explains. “The banks have helped us to build trust and grow because we’re a good customer with no defaults, irregularities or payment delays.
“We are at a sweet spot in terms of growth, now that the pandemic is behind us. This year, we are likely to report a top line growth of more than 40 per cent subject to audit and the board approval,” he adds. “The Indian economy is growing at nine per cent to 9.5 per cent, so making delivery of growth of more than 40 per cent is an achievement for us.
We are at a sweet spot in terms of growth, now that the pandemic is behind us.
Slow and steady
A Ranga Raju explains that NCC has capitalised well, and despite some challenges with the availability of bank guarantees, this has been sorted out largely due to the Finance Ministry and various government agencies.
“Going forward, we plan to grow at a steady 10 to 15 per cent year on year. We already have a strong order book that is bound to grow in the future, mainly due to the trust placed in us by the government in terms of developing the physical infrastructure,” he says. “Because of the pandemic, the performance guarantee, which is usually 10 per cent of the project cost, can now be pro-rated to the promise of the project. So, in the last 18 months or so, we have been able to raise the bank guarantee limits available for new projects.”
There’s no doubt that construction in India is a tough business but NCC takes a certain pride in being comparatively conservative to the rest of the industry. It does not build aggressively or sacrifice margins just fill a big order book in order to please the market, or to please investors. This is an approach that has helped it ride out highs and lows in the market.
“Conservative bidding is one of the hallmarks of NCC compared to other construction companies,” A Ranga Raju says. “We have very strong teams which are focused on execution and delivering on time – it is in our DNA. If we want to make a profit on a project, then we need to complete it on time or ahead of time.”
This focus has led to NCC being awarded bonuses on many of the big projects it has completed. These bonuses make for further project successes as they allow NCC to scale up its operations, bringing in more manpower, material, machinery and mechanisation. In turn, this leads to speedier execution times.
The company also places a strong focus on building powerful relationships with suppliers, particularly steel companies. This creates greater understanding between them as well as opportunities for prices to be negotiated. It also means products are available in high quantities and quality, and on time which is especially important now in a time when supply chains are being tested.
We have very strong teams which are focused on execution and delivering on time – it is in our DNA.
The Managing Director also asserts that subcontractors are a vital part of the construction business. “We need to develop our subcontractors by supporting them, by providing them with some manpower, or by giving them other facilities. This will come back to benefit the company now and into the future,” he says. “This will also result in strengthening the hands of subcontractors.”
Alongside strong partnerships, A Ranga credits a variety of factors with NCC’s successful positioning. One of these is its diversified portfolio across multiple segments, namely buildings and housing, roads, electrical, water and environment, irrigation, railways, power and metals and mining.
“We have a strong organisation with a very focused leadership,” A Ranga says. “The promoters and the directors are highly involved in the business. They work hands on with the team.
“All these measures are helping us are to sustain our growth and, fortunately for us, the external environment is also providing tremendous opportunities.”