Ashoka Buildcon, an integrated roads build-operate-transfer (BOT) player with strong engineering, procurement and construction (EPC) business, eyes projects worth Rs 4,000 crore during the current financial year. The company, which recently raised Rs 500 crore through qualified institutional placement, is open to mobilising further funds to finance projects costing around Rs 5,000 crore. The company’s managing director Satish Parakh explains the firm’s strategy to Sanjay Jog.

The company started bidding for contracts for toll roads and toll bridges on a BOT basis from 1997. Over the next decade, it incrementally built input capacities for its EPC division, and started bidding for larger NHAI (National Highways Authority of India) contracts. Ashoka Concessions has eight BOT projects with concession period of 20-30 years, while Ashoka Buildcon is undertaking EPC projects.

The government has taken a number of initiatives to spur growth in the roads and highways sector and one of them is projects to be developed under the hybrid annuity model. The Centre has identified 25 projects with an investment of Rs 35,000 crore under this model. The bidding process is expected to begin for the first project next month and other projects in the subsequent six months. The company is well poised to bid for these projects.

Besides, NHAI and the Union ministry of road transport and highways have also identified Rs 70,000 crore worth of projects to be bid under the EPC model. The company will also participate bidding for these projects.

During 2015-16, the company has so far bagged projects worth Rs 800 crore and aspires to win projects of another Rs 4,000 crore by the end of March next year.

There are nine states, including Gujarat, Rajasthan, Punjab, Tamil Nadu, and Madhya Pradesh which are in the midst of inviting bids for EPC projects and those on annuity model. These projects envisage a total investment of Rs 1 lakh crore. These projects, too, are under the company’s radar.

The company recently raised Rs 500 crore through qualified institutional placement and the proceeds will fund growth plans that have brightened with the strong projects pipeline combined with improving economic environment in India. The company is well funded and thanks to strong cash flows is in a position to fund projects up to Rs 5,000 crore. The company might go in for fund-raising to fund projects costing more than Rs 5,000 crore.

NHAI is adhering to its commitment in terms of having 80 per cent of the land and requisite clearances in hand before awarding a project. Besides, the compensation of four times the ready reckoner rates is offered.

Apart from land acquisition, the pace of awarding various clearances has been stepped. These are all positives for the speedy development of projects.

Yes, it is true that funding is less of a concern, given NHAI’s ability to shore up finances. Lenders are looking at the quality of concessionaire and the ability to service the equity. This apart, there is ease of achieving financial closure for projects under the hybrid annuity model. The company is well placed to finance 30 per cent equity in hybrid annuity road projects. The company will, therefore, have a mix of BOT, EPC and hybrid annuity projects.

The company is not keen to go in for brownfield investment, but will pursue greenfield projects mainly due to access to a large quantum of investible funds.