CRISIL has assigned its ‘AA-/Stable/P1+’ ratings to National Buildings Construction Corporation Ltd’s (NBCC’s) bank facilities. The ratings reflect NBCC’s debt-free status, efficient working capital management, strong liquidity, and robust order book. These rating strengths are partially offset by NBCC’s exposure to risks related to saleability of real estate projects, and by the low margins in its core business, project management consultancy.

Outlook: Stable
CRISIL believes that NBCC will continue to benefit from its strong order book, and the Government of India’s (GoI’s) focus on urban development projects, over the medium term. The outlook may be revised to ’Positive’ if NBCC diversifies its operations, and increases its profitability. Conversely, the outlook may be revised to ‘Negative’ if the company faces pressure on operating margin, or if the saleability of its real estate projects is adversely affected.

About the Company
Incorporated in 1960, NBCC is a wholly owned GoI enterprise under the Ministry of Urban Development. NBCC was set up to undertake projects as a project management consultant for central and state governments. Under this arrangement, the projects are awarded on an allocation basis to NBCC. The company, in turn, assigns the projects to third-party contractors. NBCC, thus, acts as an implementation agency, and is engaged in civil and industrial infrastructure construction - roads, bridges, railway projects, including underground and elevated metro tracks and stations, airports, water and effluent treatment plants, disaster management systems, border fencing jobs, power projects, reinforced cement concrete chimneys, cooling towers, television towers, transmission lines, and marine structures. NBCC also secures job on competitive tendering from various government and public sector clients, and undertakes commercial and residential real estate projects as a developer.

NBCC reported a profit after tax (PAT) of Rs.1.59 billion on net sales of Rs.20.38 billion for 2008-09 (refers to financial year, April 1 to March 31), against a PAT of Rs.2.80 billion on net sales of Rs.19.67 billion for 2007-08.