Ashoka Buildcon Share price and Fundamental Analysis

Company History

Ashoka Buildcon Ltd. was incorporated in the year May 13th, 1993. The Company is engaged in the business of construction of infrastructure facilities on Engineering, Procurement and Construction Basis (EPC) and Built, Operate and Transfer (BOT) Basis and Sale of Ready Mix Concrete. The company has promoted Special Purpose Vehicles (SPVs) for some of its projects, wherein 'Toll Collection Rights' are received in exchange of the construction cost. For this, the SPVs significantly engage the services of the company for contract related activities due to inherent execution capabilities/expertise and experience of the company.

The company is organized in four divisions, namely, the BOT division, the engineering, procurement and construction (EPC) division, the RMC and bitumen division and the toll collection contract division. Their head office is in Nashik, Maharashtra.

In EPC Division, the company primarily engineers and designs, procures the raw material and equipment for and constructs roads and bridges for their BOT division and third parties. They also maintain and repair existing roads for our BOT division, constructs and modernizes power distribution networks, comprising distribution transformers and electricity substations, for third parties and constructs commercial, industrial and institutional buildings for third parties. They also own a large fleet of construction equipment.

The RMC and Bitumen Division sell ready-mix concrete and bitumen and supports the EPC division by ensuring that they have an adequate and timely supply of high-quality RMC and bitumen. They have 14 RMC plants with a total production capacity of 650 cubic metres per hour and 86 concrete transit trucks and 19 concrete pumps. This division also sells and processes bitumen to a higher grade for use in road projects and supports their EPC division by supplying with bitumen. They have one plant in Pune for the processing of bitumen with a capacity of 60 metric tonnes per day.

The company set up their toll collection contract division to leverage their experience of collecting tolls on their BOT projects and their proprietary computerized toll revenue auditing system.

The company began their operations as a civil construction firm, Ashoka Constructions in November 5, 1983 as a partnership between Ashok M Katariya, Ramanal B Parakh, Sushil R Parakh, Narendra R Shakadwipi and Vimlabai R Shakadwipi. The company was reorganized as a private limited company namely, Ashoka Buildcon Pvt Ltd in the year 1993. Thus, Ashoka Buildcon Ltd was formally incorporated in the year 1993 and was engaged in the business of civil construction. During the year 1995-96, they completed their first major industrial project for Nilkamal Plastics Ltd, Sinnar.

Prior to fiscal 1997, the company was engaged solely in the engineering and construction of residential, commercial, industrial and institutional buildings. In the year 1997, they entered into the business of developing toll roads and toll bridges on a BOT basis. They were awarded their first BOT project, the Dhule bypass in Maharashtra and completed the construction of the road in the same fiscal year.

During the year 1997-98, the company completed the construction of one of the first few flyovers in Pune, the Kothrud flyover. They were awarded the ISO 9001:2000 certification for quality management systems. Also, they were awarded the National Award for 'Most Outstanding Bridge-Excellent Aesthetic Matching Environment' for Kothrud flyover, Pune and Shivna Bridge from Indian Institute of Bridge Engineers. The company established the Ashoka Training Institute for promoting excellence in civil construction education and research.

In the year 2000, the company began manufacturing RMC solely for use by their EPC division. They were awarded their first project aggregating approximately Rs 1,000 million on NH-4. In the year 2002, they completed the construction of East Coast road between Chennai and Pudducherry which was declared to be a model road by Government of India. Also, the company was awarded the 'NIMA Excellence Award' by the Nashik Industries and Manufacturer's Association.

In the year 2002, the company began to manufacture RMC to sell to third parties as well as for use by their EPC division. In April 22, 2002, the company became a public limited company and the name of the company was changed from Ashoka Buildcon Pvt Ltd to Ashoka Buildcon Ltd.

During the year 2003-04, the company completed the construction of the Indore-Edalabad road, which was one of the longest roads to be constructed on a BOT basis. In February 11, 2004, Ashoka Info Pvt Ltd, Ashoka Infra Pvt Ltd, Ashoka Vastu Pvt Ltd, Ashoka Vastu Shilp Pvt Ltd, Ashoka Shilp Vikas Pvt Ltd and Ashoka Construction Engineers Pvt Ltd were amalgamated with the company.

In the year 2005, the company began processing bitumen to a higher grade at their facility in Pune for use in road projects. They developed systems and procedures for collecting tolls on their BOT projects and they were awarded their first contract to collect the tolls on a road owned and constructed by a third party. In August 2006, IDFC PE II acquired 1,019,617 equity shares in the company which made IDFC the single largest shareholder with 18.18% equity stake in the company.

In the year 2007, the company received the Certificate of Registration regarding compliance with requirements of ISO 9001: 2008 (Quality Assured Company), ISO 14001:2004 (Environmental Management System) and OHSAS 18001:2007 (Safety Assured Company). In September 2008, they entered into agreements for constructing and developing two shopping malls on a BOT basis.

In the year 2009, the company began undertaking EPC work in the power sector and received a contract from Maharashtra State Electricity Distribution Company Ltd for the construction and commissioning of sub-transmission lines, distribution lines, power transformers and new sub-stations. In September 2009, they began manufacturing pre-cast concrete poles.

In February 2010, the company received an ISO 14064 for having their greenhouse gas emissions independently monitored and reviewed on a regular basis. In March 2010, they received a CIDC Vishwakarma Award 2010 in the category of 'Best Professionally Managed Company' with an annual turnover more than Rs. 5,000 million. In April 2010, the Government of Maharashtra issued a letter of allotment for developing a 1,500 KW per hour hydro electric power plant in Waghur, Maharashtra on a build, own, operate and transfer (BOOT) basis. The company intends to bid for more power plant projects to be developed on a BOOT basis.

As at May 31, 2010, in the EPC Division, the company, their subsidiaries and their predecessor entities had constructed 44 roads and bridges and built over 5.4 million square feet of commercial, industrial and institutional projects. As at May 31, 2010, their Order Book, which comprises the unfinished and uncertified portion of projects that we have been awarded, was Rs. 16,153.64 million.

In June 2010, the company bagged an order worth Rs 9.09 billion for the construction of four lane road from 0.00 km to 88.00 km on NH 6 between Sambalpur-Baragarh on the Orissa-Chattisgarh border in the state of Orissa to be executed as BOT (Toll) project on DBFO pattern under NHDP Phase III project. The other contract comprise an order worth INR 4.80 billion for a stretch of 79.36 kilometers for six lane road on Belgaum-Dharwad section of NH-4 from 433.000 km to 515.000 km on DBFOT basis.

In September 2010, the company secured two different BOT projects collectively worth Rs 13,890 million from National Highway Authority of India (NHAI) for construction of six-lane and four-lane roads on DBFOT (Design, Build, Finance, Operate and Transfer) basis in the state of Karnataka and on Orissa-Chhattisgarh border respectively. The first project worth Rs 9,090 million is for the construction of four-lane road from 0.00 km to 88.00 km on NH 6 between Sambalpur and Baragarh on the Orissa-Chattisgarh border in the state of Orissa to be executed as BOT (Toll) project on DBFOT pattern under NHDP Phase III project. The other project comprises an order worth Rs 4,800 million for a stretch of 79.36 km for six-lane road on Belgaum-Dharwad section of NH-4 on DBFOT basis.

During the year financial year ended 31 March 2014, Ashoka Buildcon signed the Concession Agreement for the project alongwith GVR Infra Projects Ltd. as Consortium Member, for the Project viz. Development of Chennai Outer Ring Road Phase II from Nemilicheri in NH 205 To Minjur in Thiruvottiyur - Ponneri - Panchetti (TPP) Road on Design, Build, Finance, Operate and Transfer (DBFOT) Annuity basis at Chennai, in the State of Tamil Nadu.

During the year under review, Ashoka Cuttack Angul Tollway Limited, the subsidiary of the company had given a notice of termination of the Concession Agreement in respect of four laning of Cuttack-Angul section of NHAI Road Project for the reasons beyond the control of the subsidiary viz. Environment clearance, forest clearance, land acquisition etc.

The company received the LOA alongwith GVR Infra Projects Ltd. as consortium Member for the project 'Improvement Project - II (KSHIP-II), Bangalore for - Design, Build, Finance, Operate, Maintain and Transfer (DBFOMT) the Existing State Highway (SHI 8) from Mudhol to Maharashtra Border (Approx length 107.937 Kms) in the State of Karnataka on DBFOMT Annuity Basis. The project will be implemented by a Special Purpose Vehicle (SPV) viz. Ashoka GVR Mudhol Nipani Road Limited, wherein the company holds 51% share and GVR holds balance 49% share.

During the year under review, Ashoka Buildcon substantially completed the construction of the Belgaum Dharwad Project and its JV project viz. Pimpalgaon - Nasik - Gonde Road Project. During the year under review, the company completed Power Transmission and Distribution projects worth Rs. 122 crore.

During the year under review, Macquarie SBI Infrastructure Investments Pte. Limited (MSIIPL) and SBI Macquarie Infrastructure Trust (SMIT) invested in company's subsidiary viz. Ashoka Concessions Limited to the tune of Rs 623 crore.

During the year under review, the company sub-divided its equity shares from Face Value of Rs. 10/- to Rs.5/- and issued one equity share of Rs. 5/- each fully paid as bonus share for every two equity shares ofRs. 5/- each held by the shareholders.

During the financial year ended 31 March 2015, Ashoka Buildcon successfully achieved financial closure for the Project viz. PROJECTS NO. WAP - 2: - Design, Build, Finance, Operate, Maintain and Transfer (DBFOMT) the Existing State Highway (SH18) from Mudhol to Maharashtra Border (Approx. length 107.937 Kms) in the State of Karnataka being executed along with GVR Infra Projects Ltd. (Consortium). The Consortium has incorporated a Special Purpose Vehicle (SPV) viz. Ashoka GVR Mudhol Nipani Roads Ltd. in which the company and GVR Infra Projects Ltd. have invested in equity of the SPV in 51:49 ratio.

During the year under review, Ashoka Buildcon achieved considerable progress in construction of various Road and Power Projects. The company substantially completed the construction of the Dhankuni Kharagpur Road Project and Sambalpur Baragarh Road Project and these projects were capitalized during the year. During the year under review, toll collection started on Sambalpur Baragarh Project in the State of Odisha.

In the year under review, Ashoka Buildcon brought down finance cost in its BOT projects viz. Bhandara Road Project and Jaora Road Project. The company also got approval for premium deferment for its BOT Belgaum Dharwad Road Project.

Macquarie SBI Infrastructure Investments Pte. Limited (MSIIPL) and SBI Macquarie Infrastructure Trust (SMIT) invested Rs. 384 Crore during the year in Ashoka Buildcon's subsidiary viz. Ashoka Concessions Limited, thereby investing in aggregate Rs. 784 Crore against Rs. 800 Crore committed by them.

During the financial year ended 31 March 2016, Ashoka Buildcon was awarded its First international Project in Maldives by Housing Development Corporation Republic of Maldives viz. Development of Road Network for Hulhumale, Phase 2, Stage 1 at a Project Cost of USD 38.11 Million. During the year under review, Ashoka Buildcon won road related orders to the tune of Rs 2800 crore out of which certain projects could not start construction due to site handover issues from the employer which the company expects to be sorted out shortly. Otherwise the good progress was achieved on the other Roads and especially better in the Power Projects during the financial year. During the year under review, the company executed Road Projects worth Rs. 954.96 crore and Power Transmission and Distribution Projects worth Rs. 819.13 crore.

During the year, Ashoka Buildcon through its subsidiaries and SBI Macquarie consolidated 100% economic interest in the Jaora Nayagaon Road Project and now fully controls and operates the said project. During the year, Ashoka Concessions' associate company viz. PNG Tollway Limited has given Notice of Termination for its BOT Concession Agreement with NHAI due to Event of Default of NHAI. Ashoka Concessions Limited holds 26% and L&T group holds 74% stake in PNG Tollway Limited. The affairs of PNG Tollway Limited are managed by L&T group. The SPV awaits the award of Termination and other claims on NHAI.

Macquarie SBI Infrastructure Investments Pte. Limited (MSIIPL) and SBI Macquarie Infrastructure Trust (SMIT) invested balance Rs. 16 crore during the year in Ashoka Buildcon's subsidiary viz. Ashoka Concessions Limited, thereby completing the investment of Rs. 800 crore as per the Shareholders Agreement.

Ashoka Buildcon raised Rs. 500 crore through its maiden QIP Issue during the financial year by allotment 28,441,411 Equity Shares of Rs. 5/- each at a premium of Rs. 170.80 and has ensured that funds are available to meet operational and strategic needs like capital investments and has tried to arbitrage on interest costs by accessing funds across various products and maturity profiles.

During the financial year ended 31 March 2017, Ashoka Buildcon won Road Projects worth Rs. 3,273.10 crore and Power Projects worth Rs. 1,306.86 crore. The Roads and Highways sector order inflow of Rs. 3,273.10 crore was the highest ever order inflow in any year for the company. In the year under review, the company registered highest revenue also. During the year under review, the company achieved Commercial Operation Date (COD) for its BOT Road project at Sambalpur. The company also achieved a landmark in its electrification project of Munger district in Bihar where the project was completed well in advance and was entitled to earn bonus on the same. The company also commenced execution in road projects like JNPT, Eastern Peripheral Expressway and Kharar Ludhiana in the year under review. During the year under review, the company won its first Hybrid Annuity Model (HAM) Projects viz. Kharar Ludhiana and Ranastalam Anandapuram in its BOT arm viz. Ashoka Concessions Limited.

Due to the Demonetisation event in the month of November 2016, there was a setback for a few days in execution of EPC works. Also toll revenue got impacted for 23 days, as under government instructions, BOT projects were not allowed to charge toll.

During the year under review, the company successfully achieved financial closure for its 2 Karnataka Annuity projects and also its first HAM project Kharar Ludhiana. Ashoka Sambalpur Baragarh Tollway Limited, a Special Purpose Vehicles (SPV) commenced toll collection for entire stretch of 88.20 KMs for the Project viz. Four Laning of Sambalpur-Baragarh-Orissa/Chattisgarh Border Section of NH-6 on DBFOT pattern under NHDP Phase III with effect from 24 June 2016. During the year under review, one project viz. Indore-Sanawad-Khandwa-Burhanpur -Edlabad Road Project SH-27 in the State of Madhya Pradesh on Build -Operate and Transfer (BOT Basis) with Toll Rights which has been operated by one of the wholly owned subsidiaries viz. Viva Highways Limited (VHL) was handed over to Madhya Pradesh Road Development Corporation, Bhopal, after the expiry of the concession period as per the Concession Agreement with the said Authority. VHL had submitted claims for extension of toll period which are at arbitration stage.

During the year under review, Ashoka Buildcon's shareholding in Ashoka GVR Mudhol Nipani Roads Limited increased from 51% to 71%.

During the year under review, Ashoka Buildcon entered into related party transactions with Ashoka Kharar Ludhiana Road Limited, a step down subsidiary of the company, for rendering services on EPC basis worth Rs. 1,275 crore. Ashoka Buildcon entered into related party transaction with Ashoka Highways (Durg) Limited, a step-down subsidiary of the company, for rendering services on EPC basis worth Rs. 54.73 crore.

During the year under review, Ashoka Buildcon ventured into City Gas Distribution segment with its first project at Ratnagiri District with a total project outlay of approx. Rs. 150 crore in the next five years.

During the financial year ended 31 March 2018, Ashoka Buildcon won Road Projects worth of Rs.7,011.31 crore and Power Projects worth of Rs.344.67 crore. The company witnessed significant order intake since Q4 March 2018. The company witnessed strong execution on its EPC projects, which recorded a robust revenue growth of around 22% Year-on-Year in the Financial Year 2017-18. In road EPC Projects, the company received an aggregated inflow of Rs.448 crore towards upgradation of Jalgaon-Bhadgaon Road and Bhadgaon-Jalgaon Road (NH-753) in State of Maharashtra. During the year under review, the company achieved financial closure of its Ranastalam HAM Project. The company received an Arbitration Award for its Pune Shirur Road Project in State of Maharashtra in Ashoka Infrastructure Limited (SPV) of Rs.383.8 Crore and another Arbitration Award for Dewas Bypass Road Project in the State of Madhya Pradesh in Ashoka Infraways Limited (SPV) which awarded 1,384 additional toll days and cash claim of Rs.38.43 Crore.

The company received Completion Certificates for both the Annuity Projects viz. Chennai Outer Ring Road Project in the State of Tamil Nadu and MudholNipani Road Project in the State of Karnataka. The company received Completion Certificate for first of its International Project at Maldives. The company received Completion Certificate for Eastern Peripheral Expressway (EPE) Project, which the company completed in record time.

During the year under review, 74% stake in the equity share capital of Tech Berater Private Limited was acquired by Viva Infrastructure Limited, a Wholly Owned Subsidiary of Ashoka Buildcon to make it a Step Down subsidiary of Ashoka Buildcon. Ashoka Aerospace Private Limited was incorporated as a Wholly Owned Subsidiary of Ashoka Buildcon.

During the year under review, Ashoka Ranastalam Anandapuram Road Limited was incorporated as a Wholly Owned Subsidiary of AshokaConcessions Limited, a subsidiary of Ashoka Buildcon for execution of Ranastalam-Anandapuram Road Project in the State of Andhra Pradesh. Ashoka Ranastalam Anandapuram Road Limited is a step down subsidiary of Ashoka Buildcon. During the year under review, Ashoka Buildcon entered into related party transactions with Ashoka Ranastalam Anandapuram Road Limited for rendering services on EPC basis worth Rs.1,170 crore.

The Company allotted 93574406 equity shares as bonus shares to the shareholders of the Company in the ratio 1:2 by capitalizing Rs.46.78 Crore in FY 2019.

The Company entered into a Shareholders' Agreement and Share Subscription Agreement with North Haven India Infrastructure Fund (North Haven) and Unison Enviro Private Limited (UEPL). The Company was allotted 36418586 equity shares in UEPL. The Company's stake in UEPL (earlier a wholly owned subsidiary) decreased from 100% to 51% due to allotment of 35000014 equity shares (49% stake) to North Haven India Infrastructure Fund in UEPL in FY 2019.

In FY 2019, the Company acquired 100% stake in Ratnagiri Natural Gas Private Limited making it a wholly owned subsidiary of the Company.

The Company won 5 projects on Hybrid Annuity Mode Basis through its Subsidiary viz. Ashoka Concessions Limited (ACL) during the year 2019 and as per NHAI guidelines, ACL has set up the following subsidiaries as Special Purpose Vehicles for execution of the Projects namely, 1. Ashoka Ankleshwar Manubar Expressway Private Limited 2. Ashoka Belgaum Khanapur Road Private Limited 3. Ashoka Karadi Banwara Road Private Limited 4. Ashoka Mallasandra Karadi Road Private Limited and 5. Ashoka Khairatunda Barwa Adda Road Limited.

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