Canindia News

Infra takes big hit from lockdown, tendering down 48 pc in March

New Delhi, April 15 (IANS) Project tendering and awarding activity in the infrastructure sector has almost come to a grinding halt due to the nationwide lockdown to check the spread of coronavirus.

In March, the value of tenders fell sharply by 48 per cent compared with the same month in 2019.

During the period, the contract awarding activity also slowed down, registering a year-on-year (yoy) fall of 27 per cent, as per a research report by Emkay Global Financial Services.

The worst hit sectors due to the slowdown in tendering and award of contracts has been engineering and capital goods segment. As both cater to a wide-ranging infrastructure activities, lack of avenues for investors due to the lockdown has affected their operations.

Only roadways sector witnessed some project awarding but the work on even those is yet to commence. Major orders finalized in the sector during March include a contract of Rs 2,100 crore won by PNC Infratech for the four-laning of the Aligarh-Kanpur section of NH-91 in Uttar Pradesh on Hybrid Annuity Mode (HAM); a contract of Rs 1,500 crore won by Adani Enterprises in JV with Navayuga Engineering Co. for the six-laning of Vijaywada bypass; a contract of Rs 1,500 crore won by PNC Infratech for the four-laning of Jagdishpur-Faizabad section of NH-330A in Uttar Pradesh on HAM under Bharatmala Yojana.

In March, the total value of tenders published was down 48% yoy and 17% month-on-month. Major declines were reported in Roadways (down 82% yoy), Irrigation (down 82% yoy), Railways (down 57% yoy), Real Estate (down 41% yoy) and Hospitals (down 41% yoy, while Community Services (up 25% yoy), Water Supply (up 83% yoy), Power Distribution (up 28% yoy) and Water Treatment (up 283% yoy) were the segments that reported growth.

The awarding activity also fell 26% yoy in March 2020, with sharp declines in Power Distribution (down 77% yoy), Real Estate (down 35% yoy), Infrastructure (down 43% yoy), Irrigation (down 66% yoy) and Water Supply (down 29% yoy).

For FY20 as a whole, the tendering/awarding activity was extremely weak across segments and was down 42% to 43%. With the fiscal position of both the Centre and the state governments already worsening and further pressure likely due to the Covid-19 impact, we are now increasingly cautious on FY21 order inflows for our coverage stocks, Emkay said in its report.




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