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Unity InfraProject - High rise opportunity

By Prasanna Bidkar | 9/12/2011 5:42 PM Monday

While most infrastructure companies are in the news for not being able to keep their topline growth intact, Unity Infraprojects is one company which is in the news for exactly the opposite reason. The company, very recently, set a sales target of Rs 5000 crore by FY14, from the present level of Rs 1700 crore. In a scenario where most players are worried on the business front due to spiraling interest rates, slower rolling out of infra projects due to delay in government approvals and, of course, drying up of long-term money for infra projects, has made topline growth hard to come by. In this backdrop, Unity plans to roughly triple its turnover in the next three years, and hence calls for a closer look. We caught up with the Managing Director and the CFO at their central Mumbai office, and had a detailed discussion on the company’s future strategy, to understand where the company is headed.

Changing DNA
In order to grab a larger pie of infra projects, Unity has changed its business focus. The company has mainly been concentrating on ‘Building’ as its main vertical for the last 30 years. It has now restructured its business to drive revenues, dividing it into three verticals: ‘Building’, ‘Water’ and ‘Transport’. “This is the first year of the reorganisation, and in the next one year, we intend to convert these verticals into SBUs, where they would have their profit and loss account and balance sheets”, reveals Abhijit Avarsekar, VC, MD and CEO of Unity. This is no mean task for the company, as this restructuring has been done when the industry is passing through tough times, with the order book position of many players growing at a slower pace. In fact, Unity Infra’s order book has hardly grown in the last one year or so.

As of March 2010, it was at Rs 3477 crore and in March 2011, it stood at Rs 3500 crore. In August 2011, this was at Rs 3854 crore. The company claims to have a good pipeline of orders, and hopes to close the year with a fig-ure of Rs 5000 crore, of which Rs 3000 crore would be accounted for by the ‘Building’ vertical, and the balance would be spread equally over the two new verticals. According to the management, the company presently has L1 status of Rs 1500 crore in the ‘Building’ segment (which means that the company has quoted the lowest amount for the project in its bid, and hence there is a bright possibility of bagging the contract), L1 of Rs 450 crore in the ‘Water’ vertical and a Rs 400 crore L1 plus order book in the ‘Transport’ vertical.

The company has a daunting task in terms of achieving the targeted turnover. Its order book position has to improve smartly, and needs to touch Rs 5000 crore by the end of the year, as it takes 24-30 months for orders to get executed. The faster the company is able to add figures to its order book, the brighter are the chances that investors will believe it can achieve Rs 5000 crore turnover by 2014.

Positive News On Real Estate Assets
Unity also has four subsidiaries, viz. Unity Realty And Developers, Unity Infrastructure, Unity Telecom Infrastructure and Unity Middle East. Of these, only Unity Telecom, which is into telecom towers, is generating revenues (Rs 59 crore in FY11). In the real estate business, the company has a land bank of 22 acres (2.54 million sq. ft. of saleable area) in Bangalore, 25 acres (three million sq. ft.) in Kolkata, 2.60 million sq. ft. in Nagpur and a 7.5 lakh sq. Ft. IT Park in Goa. Its total investments till date are to the tune of Rs 150 core. However, due to a lull in the realty sector, the projects have not been yielding returns for the company.

 

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