Coronavirus Effect: Construction contracts plunge 43 pc in FY20, says report

Infrastructure sector activity witnessed a decline of 43 per cent in FY20, following financial troubles at the national road builder NHAI and the massive contraction in March due to the lockdown, according to a report.

Follow latest updates on the COVID-19 pandemic here

The problem was more pronounced in the final quarter of the year, as the government contracts came to an almost full standstill as it cut spending to maintain fiscal numbers under check, and the final week saw the entire nation coming to a halt due to the lockdown.

The overall contract awarding activity fell 26 per cent year-on-year in March.

The power distribution contracts plummeted 77 per cent on an annualised basis; real estate awards fell 35 per cent; infrastructure contracts slipped 43 per cent; irrigation awards nose-dived 66 per cent and water supply awards dipped 29 per cent, show the numbers collated by the brokerage Emkay Global.

The only saving grace during the month was power equipment, which rose 65 per cent year-on-year, and pipelines segment that remained at the same level as power equipment awards.

The road segment saw a paltry Rs 340 crore of orders bagged by L&T in March.

Also Read: Coronavirus India update: State-wise total number of confirmed cases, deaths

As a result, the total value of tenders published in March was down 48 per cent on an annualised basis and a full 17 per cent month-on-month.

Steep plunges in awards on an annualised basis were seen in roadways (82 per cent), irrigation (82 per cent), Railways (57 per cent), real estate (41 per cent) and fresh hospital contracts were down a full 41 per cent.

However, community services rose 25 per cent on an annulaised basis, water supply saw 83 per cent more contracts being awarded over the past year, power distribution saw 28 per cent growth and water treatment awards grew almost three times, clipping at a full 283 per cent year-on-year.

Major orders finalised in the month include three hybrid annuity mode contracts under Bharatmala Pariyojana of the National Highways Authority of India.

They are the Rs 2,100-crore contract won by PNC Infratech for four-laning of the Aligarh-Kanpur section of NH-91 in Uttar Pradesh; the Rs 1,500-crore contract by Adani Enterprises-Navayuga Engineering JV for six-laning of the Vijaywada bypass from Gollapudi to Chinnakakani in the Vijayawada- Gundugolanu section of NH-16 in Andhra; and the Rs 1,500-core contract won by PNC Infratech for four-laning of the Jagdishpur-Faizabad section of NH-330A in UP.

"With the fiscal situation of both the Centre and states already worsening and further pressure likely due to the Covid-19 impact, we are now increasingly cautious on FY21 order inflows," warns the report.