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Satish Parakh, MD, Ashoka Buildcon, a BSE-listed infrastructure company is bullish on the future developments in the infrastructure sector. In the annual Budget 2015, Finance Minister Arun Jaitley has announced Rs 70,000 crore boost along with significant infrastructure rollout commitments, including 100,000 km of road, irrigation infrastructure, housing for all and national fibre optic rollout. With a total revenue of Rs 1,795 crore for FY14, Ashoka Buildcon is one of the largest players in highway developers in India with 28 PPP projects.
In an interview with Hrishikesh Joshi, Parakh talks about the recent budget announcement on infrastructure, PE interest in the sector and the need for Land acquisition Act. Edited excerps:
The annual budget has earmarked Rs 70,000 cr for infrastructure sector. Comment.
The finance minister increased the allocations to the roads and railways sectors by Rs 14,031 crore and Rs 10,050 crore, respectively. The government's intention is to push the infrastructure sector. All funding-related announcements are in that direction. However, it remains to be seen how these Trusts will function and whether they will help in releasing equity pressures on the infrastructure players.
Ashoka Buildcon has been a key player in the BOT space, what is the size of your current order book?
We are a road infrastructure company, and operate one of the highest number of toll-based BOT projects in India. In addition to BOT project, we design and procure raw materials and equipment for and construct roads and bridges. Currently, we have an order book of Rs 3,200 crore for developing various highways and roads in India. We have developed around 7,000 km of roads on BOT and EPC basis. We have projects in states like Madhya Pradesh, Karnataka, Tamil Nadu, Andhra Pradesh, Rajasthan, and Telengana. We are growing at 30 per cent every year with annual turnover of Rs 1,900 crore.
In terms of funding these projects, are you funded well and are you looking at tapping the PEs?
We are well funded. We had raised Rs 110 crore from the third tranche of PE Investment from Macquarie-SBI Infrastructure Fund (MSIF), a joint venture infrastructure fund of State Bank of India (SBI) and Australia's Macquarie, in 2013.
Macquarie-SBI had also invested $150 million (around Rs 800 crore) in Ashoka Concessions Ltd (ACL) in the year 2012. The total equity investment by Macquarie-SBI in ACL comes around Rs 490 crore and balance would be received as per equity requirements of projects under construction. Funds are not an issue for us. Rather we think due to enough availability of funds in the market, the finance cost will go down. Going ahead, we are ready to take challenges and will grab the best opportunities.
What is your take on the controversy over Land Acquisition Act?
Land acquisition is the biggest hurdle in developing roads or highways. The main change proposed in the Land Acquisition Act by the ordinance passed in December 2014 includes removal of the mandatory 80 per cent consent clause for land acquisition for five priority sectors - industrial corridors, public-private partnership projects, rural infrastructure, affordable housing and defence.
Other than this, 13 existing legislations have been proposed to be brought within the purview of Land Acquisition Act where there was no uniform central policy of rehabilitation and resettlement. All these changes will result in ease in land acquisition for large-scale projects especially in priority sectors like infrastructure.
