Uttarakhand  tunnel collapse: All eyes on Hyderabad-based Navayuga Engineering

The collapse of a tunnel in Uttarakhand that is part of the Char Dham project has raised questions around Navayuga Engineering Construction Limited (NECL), the company responsible for its construction. Just what is Navayuga all about and what projects has it worked on?

Last April, ratings agency CareEdge revised the unlisted NECL’s long-term bank facilities to CARE A rating from Care A- (minus). The short-term facility was also rerated. “The revision in the ratings assigned to the bank facilities of NECL take into account significant improvement in the financial position with fructification of debt reduction initiatives undertaken by the company,” the report said. There has been no credit rating report on NCEL for at least 18 months.

NCEL is a part of the Navayuga group, promoted by C.V. Rao. In existence for over three decades, the Hyderabad-headquartered group has a diversified portfolio, with presence in civil construction, infrastructure development, information technology and spatial technology. “Construction and infrastructure development is the core business activity of the group with NECL being the flagship company. NECL has been majorly engaged in undertaking specialised construction work viz. piling works, marine structure, port works, etc,” says CareEdge’s report. Over time, it has built up equipment base and engineering capabilities “to cater to the specialized and technically complex projects” being undertaken by it. With a large equipment base, NECL can execute projects on its own with less dependence on subcontracting. The company is described as a player in infrastructure and civil engineering construction. Engaged in execution of civil construction contracts on EPC basis, it also has presence in the infrastructure development segment on a Public Private Partnership (PPP) basis.”

In terms of order book, as on December 31, 2021, stood at Rs.22,651.58 crore (Rs.25,706.09 crore as on February 28, 2021), which translates to 6.28x of gross billing level of FY21 indicating long term revenue visibility. “The order book is spread across 8 states; Andhra Pradesh constitutes around 25% of the total order book followed by Maharashtra and Telangana at around 21 per cent each. The orders in Andhra Pradesh majorly pertain to defence projects/projects for private entities,” says CareEdge’s report. It adds that the order book is well diversified with major segments comprising roads, bridges and tunnels at 45 per cent, with irrigation at 31 per cent and defence projects at 24 per cent. Total operating income for FY21 stood at Rs 3,967 crore with a net profit of Rs 184 crore.

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