Ashoka Buildcon Ltd, a highway concessionaire and EPC company, is also involved in the power transmission and distribution sector. In times when both roads and power sectors are plagued with issues of execution delays, lack of funds and clearance hurdles, Ashoka Buildcon is gloating about new contracts and projects that are up and running. Satish Parakh, managing director, Ashoka Buildcon, recently had an email interaction with FE?s Shubhra Tandon about the company?s projects. Excerpts:
What is the company?s outlook for the roads sector for FY14?
The investor response to project bids has been disappointing. The roads sector has been under stress. Reasons for the bids failing are the lack of equity?in the absence of which even banks do not lend- and the overall poor sentiment amidst the economic slowdown. We hope that things will pick from now.
Does the secondary road assets market interest you, in the light of the slowdown in awarding road projects by the NHAI?
In our BOT portfolio, we have 18 road projects under the operation phase and one more project is expected to get the commercial operations date (COD) by February 2014. So there is no such plan to buy assets in the secondary market for roads.
After the recent reforms announced for the road sector, are you seeing any change in the business, approvals and clearances scenario?
The basic requirement of 100% land possession is needed to be fulfilled before the start of a project, along with the necessary clearances such as environmental, forest, mining clearances, which have to be in place before the appointed date. The reforms currently announced are not going to give 100% relief to the developers in regard to delayed land acquisition, and clearances from the ministry of environment and forests.
What is the progress on the EPC power projects?
The company has been keen on the projects invited by Maharashtra State Electricity Distribution Co. Ltd under Infra Plan-II, having aggregate cost of R5,500 crore divided into four phases. In the first phase, 21 bids were invited for different zones in Maharashtra, with an aggregate cost of R2,000 crore. Out of the 21 bids, the company quoted for five bids and emerged as the lowest bidder for four, with an aggregate cost R495 crore. We have received letters of award for all the four contracts, which constitute around 25% of the total cost of bids invited in the first phase.
The company was also looking to bid for projects in Bihar and Tamil Nadu in the transmission space. What is the update?
In Tamil Nadu, Ashoka has emerged as the lowest bidder for works under the ?Re-structured Accelerated Power Development and Reforms Programme (R-APDRP) Part-8? in Chennai north and south regions of Tamil Nadu Generation and Distribution Co. Ltd. aggregating R609.62 crore. In Bihar likely bids are under the power distribution sector with an aggregate cost of R2,300 crore.
What is the update on BOT projects of Power Finance Corporation and Rural Electrification Corporation?
The company is qualified for the second stage of bidding for PFC and REC under the BOOM (build, own, operate and maintain) model in five projects in Rajasthan, Punjab, Bihar and Uttar Pradesh, having an aggregate cost of R2,000 crore. The bidding is due in the next couple of months.
What is the FY14 target for transmission and distribution projects?
As mentioned above we would be bidding for the transmission projects of PFC & REC, and distribution sector projects in various states like Tamil Nadu, Maharashtra, Rajasthan, Punjab and Bihar.