Actively bidding for EPC, BOT NHAI projs: Ashoka Buildcon

In an interview to CNBC-TV18, Satish Parakh, MD, Ashoka Buildcon from the sidelines of The Ambit India Access Conference spoke about the order book outlook for the company.He said the current order book for the company including that of power, T&D and roads stand at Rs 3100 crore.According to him the NHAI project awards have picked up momentum in 2015 and that the company is actively participating in bids both for EPC and BOT projects.Parakh said the company is L1 in two of is annuity based Karnataka projects.Below is the transcript of Satish Parakh's interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.Sumaira: National Highway Authority of India's (NHAI) orders have picked up considerable momentum in FY16, could you tell us if Ashoka Buildcon has won any or some of the orders in the first tranche of ordering?A: NHAI activity has picked up in last two quarters and lot of bidding is being done in engineering, procurement and construction (EPC) as well as build operate and transfer (BOT). We have been participating in most of the bids but we were just L2 or L3 in some of the bids. We could not win anything.Reema: Traditionally you have been stronger in the BOT division but you indicated that the company has been bidding for both BOT as well as EPC awards and also if you could give us the heads up on whether the company is bidding for projects on PAN India basis?A: Presently, Ashoka Buildcon is working in seven states and EPC wise we have worked in around more than 12 states, so you can say PAN India we are participating. We had been participating in Bihar, we had been participating in Assam, we had been participating from North, South, East, West so already we are working in West Bengal, Tamil Nadu, Karnataka. Recently we are L1 in two of the Karnataka projects, which are annuity based and we hope to participate in almost all these states.Sumaira: The last update we have is that your order book stands at about Rs 3,000 crore, is the figure correct? Could you give us a sense of what your consolidated book looks like?A: Yes, current balance order book is Rs 3,100 crore which includes power T&D and roads.Reema: You have 17 projects in all of which two annuity projects are still under construction, could you give us an update by when can we expect the commissioning of these projects?A: Chennai Outer Ring Road, which is annuity project of the state of Tamil Nadu -- we hope to complete by March 2016 and Mudhol Nipani which is in the state of Karnataka this also we hope to complete by March 2016, both will be ahead of schedule.Sumaira: What will be the equity requirement for your upcoming projects?A: Our existing portfolio is almost fully funded. Only Rs 25 crore is balance funding for Mudhol Nipani otherwise our entire portfolio is fully funded. Also the capital raised through qualified institutional placement (QIP) would be used for future growth.Reema: We have noticed a secular trend of a pick up in traffic growth over the last two quarters especially in Western India region, what is your sense on this, can we expect a double digit pick up in traffic momentum?A: We have seen a mix trend, we have seen double digit growth in some of our highways, while other highways are showing 4-6 percent growth.Sumaira: How is the overall bidding intensity for road projects eased at all, are bidders now being more conscious of the internal rate of return (IRR) which they will earn on a particular project?A: Number of serious players for bidding are very selective and quite a few. We have around 5-7 numbers participating in each of the bids but initially, we are still seeing a lot of aggression from the participants.Reema: What are the triggers in the business over the course of next two years?A: As we see government is very ambitious and positive about developing highway sector and there are bids coming up. In another one-two years of time we see large number of bids. States are very focused on developing their infrastructure and since Ashoka Buildcon is a focused highway player, for another 5-10 years we definitely have good chance of growing.