PPP step to resolve disputes worth Rs 500cr: Ashoka Buildcon

The hefty allotment of Rs 97000 crore in the Union Budget for the road sector has cheered infrastructure companies as they expect a big boost in highway construction.

In an interview with CNBC-TV18, Satish Parekh, MD of Ashoka Buildcon said that he expects the company’s orderbook to grow 20-30 percent over FY17.

He further said that the renegotiation of public-private partnership (PPP) is a positive step by the government and these guidelines will help Ashoka resolve pending disputes amounting to Rs 500 crore.Below is the verbatim transcript of Satish Parakh’s interview with Nigel D’Souza on CNBC-TV18. Q: Do you believe that the Budget allocation of around Rs 55,000 crore approximately, that has been allocated to the ministry of road and highways, is that enough, it is 20 percent higher in comparison to the previous year? A: The total allocation is Rs 97,000 crore out of which Rs 55,000 crore is for national highways and another Rs 15,000 crore of bonds which NHAI is raising, that also will be invested for building of roads. So, total allocation is quite large compared to last two years. So, this definitely will be a big boost for highway sector. Q: What exactly is your total order book currently and do you believe this kind of allocation can help it? What do you see your total order book growing to in the next couple of years? A: Our total balance order book is Rs 4,600 crore out of which roads is around Rs 3,900 crore. This definitely will grow because a lot of bidding will happen in coming one or two years. Already there is an intention of 10,000 kilometers to be bid out in this year. Q: So you are expected to grow by more than 20 percent, the allocation has been more than 20 percent so do you think that your order book can grow at least by more than 20 percent? A: We definitely would target to grow between 20 and 30 percent. Q: A public utility resolution of disputes bill that is likely to be introduced in the coming financial year. There have been a lot of disputes between NHAI players, etc, how much of a positive is that and also there is going to be renegotiation of public private partnerships (PPPs) that as well is another step. What is your comment on both those two steps? A: These two are very positive. This has been a real pain for the highway builders. So, solving of negotiation dispute will release a lot of funds to the existing contractors and renegotiation of PPP project is a very positive step by the government which will help in taking the stuck projects ahead. Q: Do you have any pending disputes? A: Yes, we have some pending disputes on some of the contracts and these guidelines will definitely help. Instead of going through a long arbitration process, this will definitely help in solving the problems. Q: With those disputes what is the total amount that is being disputed in those cases? A: Around NHAI itself we have around Rs 500 crore of disputes. Q: You hope that that will be resolved then? A: Yes, definitely. Q: Are you availing any kind of benefits under 80IA? The street was hoping that it will be extended beyond 2017? There is still scope, maybe in the next year they go ahead and they increase it but what is you take on it? Are you availing any kind of benefits under 80IA? A: Yes, all my PPP projects attract 80IA benefits. If these are withdrawn then definitely it goes into a claim. So, this money anyways is claimable. Q: But in the event of it not being extended then what happens? A: If it is not being extended, it has to be compensated in cash or in timeframe. Q: So even if it is not extended then in the next Budget you don’t see any kind of big negative impact to you? A: We don’t see any negative impact. Q: How does it work then, if you are availing a benefit currently and if it does not continue then it should be a bit of a hit isn't it? A: Definitely but this hit government is suppose to pay as per concession as agreement. Any statutory remuneration is pass-through.(Copy edited by Sidhartha Shukla, interview transcribed by Priyanka Deshpande)