With the Union government planning to bid out 25,000-km road projects this year, Ashoka Buildcon is eying both hybrid annuity and engineering, procurement, and construction (EPC) mode projects but says it would be selective with bidding.
With 32 projects in its kitty, the Nashik-based company is among the league of small companies that are making it big in the highway sector, which has seen a high number of toll-based build-operate-transfer projects in the past. Of the 32 public-private projects with the company, 16 are operational, nine have been completed and handed over to the tendering authority and seven are under construction.
“We feel we have good opportunity going ahead and will be bidding for National Highways Authority of India’s hybrid annuity and EPC mode projects. We will be as selective in bidding, as in the past, and will focus on viable projects for bidding without compromising on bottom line,” Satish Parakh, managing director, Ashoka Buildcon, told Business Standard in an interview.
Parakh said the company experienced average traffic growth of 5 per cent across its 16 operational projects. “Demonetisation affected the traffic revenues to some extent in the quarter ended December 2016."
The company has developed around 7,000-km of roads on BOT and EPC basis with projects in states such as Madhya Pradesh, Karnataka, Tamil Nadu, Andhra Pradesh, Rajasthan and Telangana.
SBI Macquarie had invested Rs 800 crore in the company’s subsidiary Ashoka Concessions Ltd (ACL), which has bagged two hybrid annuity projects. This was one of the largest investments in the highway sector. “Macquarie is an experienced investor in infra projects the world over and we have had good learning experience in the past five years. The relationship continues to be mutually beneficial,” said Parakh.
Ashoka Buildcon has an order book of Rs 7,000 crore and is targeting an additional order intake of Rs 5,000 crore in FY18. “As infrastructure development is one of the main agendas of the government, there are huge opportunities in the sector for the next 5-10 years across the country, and we are very well funded with an experienced team in place to bag these opportunities,” he said. The company’s standalone debt is Rs 153 crore for 2017 and consolidated gross debt is Rs 4,447 crore.
ACL was formed as the holding company for seven projects with six projects on NH-6 passing through mineral-rich states. Of the two national highway projects on hybrid annuity, two packages of Kharar-Ludhiana section of NH-95 (new NH-05) in Punjab with Rs 1,600-crore bid value has achieved financial closure. The other project is NH-16 from Ranastalam-Anandpuram (Visakhapatnam) costing Rs 1,187 crore.
“We have achieved the financial closure for the Kharar-Ludhiana project well before the stipulated time frame. The financial closure for Ranastalam-Anandpuram project is under progress and will be achieved within the given time frame.”
The company is also active in power transmission and distribution sector with various power projects in Maharashtra, Chattisgarh, Tamil Nadu and Bihar. Recently, Ashoka Buildcon bagged a Rs 282.73-crore project from Jharkhand Bijli Vitran Nigam Ltd for urban electrification works in Jharkhand.