Ashoka Buildcon to bring highways under new company

Nashik-based road project developer Ashoka Buildcon, one of the top road project players in the country, will bundle all the current projects awarded by it to the National Highway Authority of India (NHAI) under a new holding company it plans to set up soon, Satish Parakh, managing director, told DNA Money.

Any future NHAI projects will also be part of this new entity, he said, adding, the company is also looking at private equity participation. “Private equity will be infused in this new holding company once a true valuation is received,” said Parakh.

He refused to divulge the amount sought from private equity players and the timeframe for forming the holding company.

But sources said Ashoka is talking to many foreign private equity firms and some of them are, in fact, carrying out due diligence.
Parakh confirmed that due diligence was on and said Ashoka will proceed with the firm that accords the maximum valuation to the proposed new entity.

The valuation exercise will be influenced by the fact that one of the seven NHAI projects is operational already.

According to analysts, Ashoka has an order book of over `5,000 crore and has achieved financial closure of all but the recently bagged Cuttack-Angul project.

In fact, four major NHAI projects worth a total Rs5,156 crore are expected to drive the company’s revenues.

Parakh denied the company is raising money due to a cash crunch.

“I want to make it clear that the company is look-
ing to deploy the PE money only in future projects. Ashoka has no problem in funding the existing projects,” he said.
Ashoka’s portfolio comprises 28 projects, including 20 that are operational and seven that are at various stages of implementation. Work on a recently bagged project is imminent.

The company has completed 11 highway and six non-highway projects on build-operate-transfer (BOT) basis.

Three BOT projects were handed back to state governments after completing the works.

In a recent report, analysts Shailesh Kanani and Nitin Arora of Angel Broking said the company’s EPC revenue is expected to grow 26.6% and 10.5% over the current fiscal and the next to Rs1,298 crore and Rs1,434 crore, respectively. Earnings, however, are likely to be more subdued at 13.6% over FY11-13 due to higher interest cost, said the analysts.

Last fiscal, Ashoka had recorded a jump of 189.3% in its order book on the back of three project wins from NHAI.