SME EPC road contractors face shrinking margins as input costs spike

Road contractors from the small and medium enterprises (SME) segment undertaking projects via the engineering, procurement and construction (EPC) mode are expected to see continued growth momentum in 2022-23 (FY23) on higher award of national highway contracts and sustained state spending. Steps under Aatmanirbhar Bharat to ease liquidity will also support revenue growth.

However, national highway projects are typically executed by large contractors, with only a small proportion sub-contracted to SMEs. Still, higher spending by state governments will ensure revenue increase of 10-15 per cent year on year for SME contractors, as it accounts for 60-65 per cent of’