© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
Tenders above Rs 2,500 crore, floated across all divisions in the engineering, procurement and construction (EPC) space, grew just at 2.2 per cent in the second quarter of FY24 to Rs 3,47,900 crore, signifying a slowdown in tendering activity by the central and state governments.
There were tenders worth Rs 3,40,400 crore in the same period a year ago and Rs 3,38,400 crore in the first quarter of FY24.
According to India Ratings and Research (Ind-Ra), with the general elections to be held during the first quarter of FY25, tender awards could slow down over Q4 of FY24 and Q1 of FY25. Tender announcements could see upward momentum in line with historical announcements starting Q2 of FY25.
India Ratings has come out with a report which captures the segment-wise and state-wise execution profile of the EPC companies in the short-medium term, basis the tenders floated and orders awarded across various segments and states.
“Awarding activity traditionally peaks in the last quarter of any fiscal year. Yet, overall awards in Q2 of FY24 have nearly equalled Q4 of FY23 awards, indicating a clear frontloading of awards in an election year. That being said, Ind-Ra expects the momentum to slow down materially from Q4 of FY24, “said Prashant Tarwadi, Director, Corporate Ratings, India Ratings.
Out of the overall tenders floated, water (including irrigation), roads and real estate segments (including hospitals, hotels etc) on a combined basis contributed around 77 per cent in Q2 of FY24 (Q2 of FY23: 74 per cent). Orders in the railways segment and other industrials (including oil & gas, telecom, chemicals) and real estate segment (includes generation and distribution) grew 114 per cent, 60 per cent and 56 per cent, respectively, in Q2 of FY24,
It said out of the overall order awarded in Q2 of FY24, 51 per cent of the orders are from power (including generation & distribution, 37 per cent) and 14 per cent from roadways. Awards in the power segment grew 329 per cent in Q2 of FY24 (Q2 of FY23: 11 per cent). The overall orders grew 123 per cent in Q2 of FY24 (Q2 of FY23: 28 per cent).
On an absolute basis, the orders awarded grew to Rs 223,800 crore in Q2 of FY24 (2QFY23: Rs 100,400 crore), majorly on account of the significant tenders announced during the second half of FY23 (Rs 766,100 crore). India Ratings, based on the incremental allocations in the FY24 Union Budget, believes that the thrust on the EPC sector would continue in FY24.
