E&C firms report sizable growth in FY18 order book
After a lull of nearly six years, the executable order book of engineering and construction (E&C) companies reported meaningful increase in FY18. The total E&C order backlog grew by 12 per cent year-on-year after adjusting for the impact of the Goods and Services Tax (GST). The reported order backlog of the companies was suppressed in FY18 since it excluded excise and other tax elements after the implementation of GST. In the previous year, these taxes were a part of the order value.
Total order backlog of the E&C companies was Rs 8.1 lakh crore at the end of FY18. Of the total order backlog, nearly 62 per cent was contributed by the construction companies, followed by 24 per cent from capital goods companies catering to the power sector.
Road sector has emerged as significant contributor to the total order book in FY18 thanks to a record pace of orders from the National Highway Authority (NHAI) and Ministry of Road Transport and Highway. The orders of NHAI were two times higher than the order value in FY18 compared with the previous year. As a result, the order backlog of road construction companies including Sadbhav Engineering, Nagarjuna Construction, DilipBuildcon, and IRB grew by 72 per cent, 80 per cent, 36 per cent and 51 per cent, respectively, in FY18.