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By : Bijal N. Shah
Roll no: 88 L.J.Institute Of Management Studies
Construction Industry
The construction industry has grown to be a very important sector in India because of the infrastructure development it needs. Over the past five years, the construction sector has grown faster than overall GDP. While the GDP growth rate has been in the range of 6 to 7 per cent, the construction industry has been growing at a rate between 10% and 15 % annually. The sector is also second biggest in terms of employment opportunities. It employs almost 14% of the total employable population of India. Further, the construction industry creates a multiplier effect on core industries such as steel, cement, aluminum and petroleum etc.
Contract
1. 2. 3. Contract is considered the most important document in this industry. The execution of the project is defined by the contract. The flow of working capital largely depends on the type of contract that the company has entered into. The following are the types of contract seen in this industry: Lump sum contract Item rate (Normal, basic rate, formula) Fixed price contract The contractor had to follow the BOQs, if given in the contract purchasing materials, and execution of other work.
Founded in 1982 as a construction company, JMC has successfully defined its objectives & positioned itself as one of the leading organizations in the construction industry. Today, JMC has well equipped autonomous offices at strategic locations to effectively & efficiently serve it's customers spread across the nation. JMC got listed on NSE/BSE in 1994.KALPTARU POWER TRANSMISSION LTD. TOOK 51% stake of JMC in feb05.
Infrastructure
Roads I Highways
Buildings
Commercial Complex
Power
Thermal Power Plant Gas based Power Plant Coal &Material Handling Plant Captive Power Plant
Institutional Building ITPark Hospitals & Health Centre Research &Development Centre Hotel & Hostel Housing
RGA Software
EI Dupont BHEL Prestige Estate Nirma Wipro Welspun
Alstom
Tata Telecom
Zydus Cadila
Financial Performance
1400 1200 1000 800 600 400 200 0 2004-05 2005-06 2006-07 2007-08 237 261 502 921
Turnover(Rs. In crore)
1319
2008-09
Financial Performance
250 200 150 100 50 0 2004-05 2005-06 2006-07 2007-08 2008-09 36 37 124
202
Accounts Payable
Cash
Flow Of Money
Tender (Earnest Money Deposit) Letter Of Intent/ Work Order Mobilization Advance Performance Guarantee Running Account Bills (Bill Of Quantity) Retention Money Liquidity Damages Defect Liability Period Final Completion
Conclusion
The strength of the company is good reputation with finance providers and customer focus approach. It has order backlog of Rs. 25000 mn, thus there will be healthy growth next year. This industry has complicated tax structure, but introduction of GST will solve the problem to an extent. Problems of high volatility in steel & cement prices & Shortage of manpower. It has to compete with giants like L & T , HCC, B.L.Kashyap & simplex.
JMC can increase their debt-equity ratio is 0.97 indicating strong capital structure. JMC interest coverage ratio declined from 6.12 to 3.52 which critical for the company, so its ability to meet interest expense is questionable. Fixed assets turnover ratio is continuously increasing reflecting new investments Importance is given to the infrastructure industry in the current union budget thus, an opportunity.