Ashoka Buildcon Ltd Management Discussions.


The report may contain forward looking statements, which describe companys objectives, projections, estimates, expectations or predictions within the applicable Securities, Laws and Regulations. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.


India is one of the fastest growing emerging economies and infrastructure is a foremost pillar to impetus the growth. India aspires to become $5 trillion economy by 2025, for faster growth to meet the target, more supply-side reforms are needed. Creating new and upgrading existing infrastructure will be key to raising Indias competitiveness. It is estimated that India needs to spend $ 4.5 trillion on infrastructure by 2030 to realize the vision of a $5 trillion economy by 2025, and to continue an escalated trajectory until 2030.

Over the years, the Governments thrust through various policies and support has ensured to build a proficient infrastructure in India. To give further impetus to the sector the Government of India has introduced ‘National Infrastructure Pipeline (NIP), an investment plan of Rs.111 lakh Crore for enhancing infrastructure in identified sectors for a period of five years from 2020-25. During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (18%), Urban (17%), and Railways (12%) amount to around 70% of the projected capital expenditure in infrastructure in India.

Sector-wise break of the National Infrastructure Pipeline

sector FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 No Phasing % of Total
Energy 2.3 4.4 4.4 4.7 5.0 4.7 1.4 24%
Road 3.3 3.8 3.6 2.5 2.4 3.3 1.3 18%
Railways 1.3 2.6 3.1 2.7 2.2 1.7 0.0 12%
Ports 0.1 0.2 0.2 0.2 0.1 0.1 0.4 1%
Airports 0.2 0.2 0.2 0.2 0.3 0.1 0.3 1%
Urban Infra 3.0 4.6 4.0 2.3 2.2 1.6 1.4 17%
Irrigation 1.1 2.0 1.8 1.4 1.2 0.7 0.8 8%
Rural Infra 1.4 1.8 2.1 1.1 1.1 0.3 0.0 7%
Digital Infra 0.8 0.6 0.5 0.4 0.4 0.4 0.0 3%
Agriculture & Food Processing 0.0 0.0 0.0 0.0 0.0 0.0 1.5 2%
Social Infra 0.6 0.8 0.9 0.6 0.5 0.3 0.5 4%
Industrial Infra 0.2 0.4 0.4 0.4 0.2 0.1 1.4 3%
Total 14.4 21.5 21.3 16.5 15.4 13.2 9.0 100%
% of Total 13% 19% 19% 15% 14% 12% 8% 111.30

Source: Nip taskforce Report

India has the second-largest road network globally, consisting of National Highways, Expressways, State Highways, Major District Roads, Other District Roads and Village Roads. The total road network in India is at 5.9 million km; National Highways account for 2% of the total road network and carries over 40% of total traffic.

Over the years, Government has made incessant efforts to boost the growth in road sector for which it has identified issues that impacts the sector and addressed the bottlenecks through appropriate policy interventions. The NIP outlines ~1,820 projects (with the length of 89,304 km) to be implemented in 2020-25, in Road Sector, which include Projects like construction of new expressways such as Delhi-Mumbai Expressway, Bengaluru-Chennai Expressway, etc. The total capital outlay by State and Center estimated to be at around Rs.20.30 Lakh Crore which would be made between FY2020 to FY2025.

The Government of India is looking to expand the national highways network to over 200,000 kilometers under its ‘Bharatmala Pariyojana plan, which aims to build 66,100 km of economic corridors, border and coastal roads, and expressways to boost the highway network. Under phase-I of Bharatmala, development of around 24,800 kms are being considered. In addition, Bharatmala Pariyojana Phase-I also includes 10,000 kms of balance road works under NHDP, taking the total to 34,800 kms at an estimated cost of Rs.5.35 tn. Bharatmala Phase-I is to be implemented over a five years period of i.e. 2017-18 to 2021-22. As on January 2020, total project of 12,178 km has been awarded, out of the 34,800 km length to be covered under the Phase-I, with completion target of 2021-22. However, to achieve the ambitious target of Bharatmala Pariyojana Phase-I, project award is expected to gather momentum.

Source: Rajya Sabha Document

During financial year 2019-20, construction of highways was at 10,237 kilometers, which is ~28 Km per day. The rate of construction of national highways has more than doubled since FY 2015. In FY 2019-20, National Highway Authority of India (NHAI) has achieved 3,979 Km of highway construction, representing ~18% growth over the last year, when 3,380 Km were constructed. This is the highest ever highway construction achieved by NHAI in a financial year. For FY 2020-21, Government has targeted construction of 11,000 km which is same as FY 2019-20.

Source: Industry

Post peak ordering of 17,055 Km by NHAI in financial year 2017-18, there has been a slowdown in order awards in last two years, primarily due to lower government spending, liquidity constraints and delay in land acquisition by NHAI, as to avoid project delays, the projects which has achieved 80% land acquisition are only been awarded by NHAI. In FY 2019-20, all the awarding agencies has bid out road works for 8,912 Km, which is ~60% higher than the last financial year. The awarding activity started picking up in the second half of the financial year, but got impacted in the latter half of the March20 due to Global pandemic crisis Covid-19.

Impact of COVID-19

The unprecedented pandemic Covid-19 has impacted the construction sector in India. Due to Nationwide lockdown, ongoing construction activity has come to a grinding halt across the country; the toll-collection was been revoked during the lockdown which led to working capital pressure on the sector. Also, the disruption of supply chain and labor migration may pose the challenge in short-term. To combat the impact of global pandemic Covid-19 on the sector, Government has announced several measures as follow:

To ease working capital:

o Government has recommended releasing retention money to the proportion of work already executed in accordance to the contract specification and further retention money may not be deducted by the bill raised by the contractor from the period from 3 months upto 6 months. For HAM/BOT contracts, performance guarantee may be released on pro-rata basis of that as provided in the contract, if concessionaire is not in breach of contract

o Relaxation in Schedule H - Monthly payment to be provided to the Contractor for the work done and accepted as per specification of the contractor during the month under EPC/HAM Contract

• Extension of 3 to 6 months is provided to the contractor / concessionaire for meeting their obligations under contract

bot/tot concessionaire: Before Commercial Operation Date (CoD), the concession of BOT contract to be extended by 3 to 6 months. Further, for loss in collection of user fee, the concession period shall be extended by period in accordance with till the time daily collection is below 90% of the average daily fee

Force Majeure Clause: For all national tolling contracts, loss in collection of fee may be compensated in accordance with contract

moratorium of 6 months for term loans from all institutes

These measures are expected to provide urgent relief to the players in the infrastructure sector in the view of prevailing situation due to Covid-19. Also, with partial lifting of lockdown which enabled to resume construction activities threw green shoots towards revival. Presently, awarding activity has slowed-down due to lock-down and constrained spending on account of Covid-19, with the economic revival, the awarding activity will start to gain momentum.

BUDGET 2020-21

Road infrastructure has been a key government priority with the sector receiving strong budgetary support over the years. In Union Budget 2020-21, honorable Finance Minister provided impetus to further enable the development of infrastructure; the Government has announced National Infrastructure Pipeline (NIP), an infrastructure investment plan till FY25 which entails investment worth Rs102.5 lakh Crore with highest investment in roads, urban infrastructure, railways and power. NIP consists of more than 6,500 projects across sectors. Under the Union Budget 2020-21, budgetary support of Rs.1.70 lakh Crore is been provided for development of transport infrastructure in FY 2020-21.

To boost the liquidity of the sector, the Central Government has provided support of Rs.22,000 Crore in the form of equity infusion to Infrastructure Finance Companies such as NIIF and IIFCL. This support will enable the financial institutions to leverage and provide the financial support over Rs.1 lakh Crore to various upcoming projects. Also, Government plans to monetize at least twelve lots of highway bundles of over 6000 Km before 2024.

Additionally, to drive investment in priority sectors from sovereign wealth funds of foreign government, the Finance Ministry has proposed a grant of 100% tax exemption on interest, dividend and capital gains. This will help in faster asset monetization and support funding for future awards.

In Union Budget 2020-21, the Government has announced to undertake projects to accelerate the development of highways, which includes development of 2,500 Km access control highways, 9,000 Km of economic corridors, 2000 Km of coastal and land port roads and 2,000 Km of strategic highways.


During the financial year 2019-20 annual standalone revenue stood at Rs.4,082.36 Crore, with 3.71% growth over Rs.3,936.34 Crore recorded in financial year 2018-19.

FY 2019-20 had witnessed prolonged rain across the Country. At many project sites, historical rainfall was witnessed. Projects in Gujarat, Andhra Pradesh, Bihar and Uttar Pradesh were affected due to heavy rains and water logging. Unprecedented heavy flood at Narmada River had entirely disturbed the project execution work and Project was standstill. Rain was witnessed during the period June 2019 till December 2019. Further, at the end of the financial year, nationwide outbreak of COVID 19 had forced Government of India to put entire Country in Lockdown. These major events have affected execution, transportation and supply of material to various projects. Due to these reasons toll collection revenue was also reduced. All these situational events had impacted the revenue during the year.

During the year, your Company successfully received an Appointment Date for Three (3) Road HAM projects i.e. Belgaum-Khanapur Road HAM project, Mallasandra Karadi Road HAM project & Karadi Banwara Road HAM project in Karnataka.

Also, during the year the Company has signed Concession Agreement for Three (3) HAM projects i.e. Bettadahalli Shivamogga Road and Banwara Bettadahalli Road HAM Projects in Karnataka and Kandi Ramsanpalle Road HAM project in Telangana. The Company is in the process of Debt tie-ups for all the three (3) HAM projects and expects to do Financial Closure in near term.


The Company recorded the revenue growth of around 3.71% Year-on-Year in the Financial Year2019-20; delayed appointment date coupled with elongated rains had impacted the execution work. It was further impacted by the lockdown imposed due to Global Pandemic COVID-19. Execution work came at grinding halt from March 25, 2020 to April 20, 2020. The execution work has started at all the project site post the partial relaxation in the Lockdown, and expects execution to pick-up gradually. During the financial year 2019-20, standalone BOT division recorded a marginal decrease in Toll Collection to Rs.30.04 Crore from Rs.31.68 Crore recorded in financial year 2018-19.


Ashoka Concessions Limited, a Subsidiary of the Company, was successful in winning two Road HAM projects worth Rs.2,035 Crore under Bharatmala Pariyojana in Telangana & Karnataka.

• Kandi Ramsanpalle Road project entails four laning of NH- 161 from Kandi Km 498.250 of NH-65 to Ramsanpalle (Design Km 39.980/Existing Km 44.757 in Telangana with a Bid Project cost of Rs.1,000 Crore.

• Tumkur-Shivamogga Section (Package-III) includes four laning of Tumkur-Shivamogga section from Km 119+790 to Km 166+100, Banwara to Bettadahalli section of NH- 206 in Karnataka with a Bid Project Cost of Rs.1,035 Crore.

The Company also won a road project on EPC basis worth Rs.1,080 Cr from Uttar Pradesh Expressways Industrial Development Authority (UPEIDA). The project entails development of Bundelkhand Expressway Project (“Package- Ill”) from Kaohari (Dist. Mahoba) to BaroliKharka (Dist. Hamirpur) (Km100+000 to Km149+000) on EPC Basis.

During the year, the Company won projects worth Rs.313.72 Crore in the Smart Infrastructure Development space, a new segment opening up for the Company.

In other major developments:

In FY 2019-20, your Company have acquired remaining 29% of equity in Ashoka GVR Mudhol Nipani Road Projects Limited, held by GVR Infra Projects Limited. With this Ashoka Buildcon now holds 99.99% equity share in this SPV. The consideration of Rs.35.69 Crore for the transaction has already been paid in cash in the past.


The balance Order Book of the Company stood at Rs.8,981 Crore. In terms of break-up of balance order book, Road Projects are Rs.7,318 Crore which is 81% of order book; Rs.1,602 Crore is from power T & D and Railway Projects which comprises of 18% of order book, while CGD contributes Rs.61 Crore, which is 1% of the Order book. Among Road order book, EPC Projects are of Rs.2,392 Crore and the balance is of BOT Projects worth Rs.4,926 Crore. In FY 19-20, there was a slowdown in the tendering and ordering activity by NHAI.

On the background of the governments focus on the infrastructure development, the Company believes that the improved scenario in terms of land acquisition and availability of funds will help the sector and the ordering activity to pick-up in near-term.


The Company continues its focus on newer, innovative construction practices as well as ensuring high quality in its entire works. Your Company is also conscious of the threat posed by global warming to our planet and therefore takes its responsibility towards the environment seriously. In this regard, your Company has the following accreditations:

• Integrated Management System comprising of Certification of ISO 9001: 2008, ISO 14001: 2008 and OHSAS 18001: 2007;

• Environmental Management System ISO 14001: 2004;

• Occupational Health and Safety Management System 18001: 2007;

• Quality Management System ISO 9001 2008; and

• Green House Gases ISO 14064.1:2006 & ISO 14064.2:2006


The Company is happy to state in the year under review; it made payment towards interest and full redemption of 1500 Non-Convertible Debentures (NCDs), worth Rs.150 Crore at the Interest rate of 9.80%, issued by the Company.

The Company is comfortably placed in its working Capital financing. The Long Term rating of the Company is ‘AA- / Stable by CRISIL.

Interest cost has also been kept low due to treasury instruments like Supply Chain Finance, Working Capital Demand Loans and Commercial Papers.

The Company is well placed with the funds and resourcing for the funding of the ongoing projects and upcoming projects.

The Company is fully compliant to the terms of the engagement with the various agencies.


Industry/ policy risk: The Companys business is highly dependent on road and bridge projects in India undertaken or awarded by Government Authorities and other entities funded by the Government. Any change in Government policies resulting in a decrease in the amount of road and bridge projects undertaken or a decrease in private sector participation in road and bridge projects adversely affects our business and results of operations. Our business may be affected by changes in interest rates, changes in Government policy, taxation, exchange rates and controls, social and civil unrest and political, economic or other developments in or affecting India.

Project risk:

• Infrastructure projects involve agreements that are long-term in nature (as much as three years in EPC contracts and around 30 years in Design, Build, Finance, Operate and Transfer (DBFOT) road projects. All long term projects have inherent risks associated with them and involve variables that may not necessarily be within our control. These include inflation, interest rates movements, liquidity, commodity and oil prices, governance, construction delays, material shortages, unanticipated cost increases, cost overruns, inability to negotiate satisfactory arrangements with joint venture partners and disagreements with our joint venture partners/associated/investors.

• We are increasingly bidding for large-scale infrastructure projects. There are various risks associated with the execution of large-scale projects. Managing large-scale integrated projects may also increase the potential relative size of cost overruns and negatively affect our operating margins. In addition, we may need to execute large-scale projects through joint ventures with other companies, which expose us to the risk of default by our Joint Venture Partners/ associates.

• We are increasingly bidding and bagging large-scale infrastructure projects. There is huge requirement of funds for the execution of the same and the funding can be a concern for the same on both the fronts of Equity and Debt. There may be delay in the arrangement of the same which may expose to increase in financial cost and financial leverage.

traffic risk: The Companys business depends substantially on accuracy of traffic estimates. Any material decrease in actual traffic volume and our forecast could have material adverse effect on cash flows, results of operation and financial condition.

Input and labour cost risk: Cost of Input materials such as Petroleum Products (Bitumen, Diesel, Furnace Oil) depends upon the International Market for Oil. As Petroleum Products are a major raw material, any change in the oil prices affects the overall cost of the projects. The availability of labour for execution of projects is also a major risk factor.

Inflationary impacts: Our toll revenues are a function of Toll rates and Traffic Growth and the Toll rates are impacted by Wholesale Price Index (WPI). In view of the lower inflationary trends, WPI has been quite low leading to low toll rate increases. Also any changes in the WPI components and method of calculation of the same may have impact on toll rates.

human resources development

The Company believes that its continued success will depend on its ability to attract and retain key personnel with relevant skills and experience. The attrition rate among the Top Management of the Company has been negligible in last many years. The Company has robust process of human resource development. The Company had 2951 permanent employees as on March 31, 2020 at various levels. The Company has a HR Policy in place and encouraging working environment. The Company has continued to focus on various aspects like employee training, welfare and safety thereby maintaining a constructive relationship with employees.

overview of the standalone financial


1. The stand-alone income for FY20 is Rs.4082.36 Crore as against Rs.3,936.34 Crore in FY19.

a) The increase in income has been mainly on account of Contract revenues which increased from Rs.3,589.01 Crore in FY19 to Rs.3,763.13 Crore in current year mainly on account of contract revenue of annuity EPC and third party EPC projects. Further toll collection marginally decreased to Rs.30.04 Crore in FY20 as compared to Rs.31.68 Crore in FY19 mainly on account of nationwide lockdown due to outbreak of COVID-19 at the end of FY20.

b) Income from sales activities has decreased as compared with last year from Rs.174.67 Crore to Rs.103.50 Crore. The decrease in sales was mainly due to reduction in real estate activities and lowering down of business scale. Other operating revenue has increased to Rs.40.76 Crore from Rs.25.27Crore mainly on account of scrap sale, Sale of other construction material.

c) Further, other income has increased from Rs.115.69 Crore to Rs.144.93 Crore mainly on account of interest income on loan given to SPV companies, deposits with bank and other interest income.

2. EBITDA increased to Rs.730.56 Crore in FY20 from Rs.630.88 Crore in FY19, mainly on account of increase in overall turnover, value engineering in material consumption and reduction in finance cost.

3. Reduction in Effective Tax Rate to 27% from 31%.

4. Depreciation and Finance Expenses -

a. Depreciation cost has increased by Rs.34.86 Crore to Rs.111.13 Crore in FY20 from Rs.76.27 Crore in FY19, increase in depreciation on construction assets procured capitalized during previous financial year;

b. Financial Expenses have decreased by 5.77% to Rs.85.45 Crore in FY20 from Rs.90.68 Crore in FY19, Mainly due to lower utilisation of bank limits and timely recovery of receivables from customers.

5. As at 31st March 2020, the Net Worth stood at Rs.2,598.94 Crore as against Rs.2,212.03 Crore in previous year.

6. The Gross Debt as at 31st March 2020 stood at Rs.433.45 Crore resulting in Debt/Equity Ratio of 0.17, which is well within acceptable standards of the industry. Net Worth is considered at Rs.2,806.34 Crore including Rs.207.40 Crore of obligation towards investment in Subsidiary.



Key highlights for the quarter & year ended March 31, 2020.

• Yearly Turnover for FY2020 increased to Rs.5,152.21 Crore against Rs.5,007.23 Crore in FY 2019, mainly due to EPC business ;

• PBT Increased to Rs.326.24 Crore in FY2020 against Rs.130.62 Crore in FY2019 showing 149% increase Y-o-Y;

Revenue for Q4FY2020 - marginally down to Rs.1609.12 Crore in Q4FY20 from Rs.1624.05 Crore in Q4FY2019;

EBIDTA for Q4FY2020 increased by 20.55% as compared to the previous corresponding period from Rs.414.84 Crore to Rs.500.12 Crore;

PBT for Q4FY2020 increased to Rs.179.84 Crore from Rs.54.81 Crore in FY2019, showing substantial increase of more than 200%;

• Debt Equity ratio is improved to 10.59 as at 31st March 2020 against 14 on 31st March 2019;

• Total comprehensive profit attributable to owners (after adjustment of minority interest) is Rs. 163.37 Crore for FY20 as against loss of Rs. 34.08 Crore during the year FY19. The major reason for profit during FY 19-20 is the charge of CCD obligation was recorded upto 6th July 2019 only as per agreement, amounting to Rs. 44.37 Crore as against Rs. 122.44 Crore of FY 18-19;

• Additional reason for increase in profitability is there are no exceptional items during FY2020 vis-a-vis FY2019 of Rs.60.13 Crore; and

• As per accounting treatment in the previous years, amount contributed by investors in ACL was treated as a part of NonControlling Interest but under IND AS due to variability on account of conversion of CCDs, this investment in CCDs is considered as financial obligation and is valued on each reporting period. In previous years, some portion of this financial liability was classified under ‘Non-Controlling Interest, which now has been re-classified under ‘Financial Liability as ‘Obligation towards investment in Subsidiary recorded this obligation as financial liability at its fair value as at April 1, 2016, March 31, 2017, March 31, 2018, March 31, 2019 and March 31, 2020 amounting to Rs.1,066.68 Crore, Rs.1,184.81 Crore, Rs.1,359.19 Crore, Rs.1,481.63 Crore and Rs.1,526.00_ Crore, respectively. On account of this treatment, there is a substantial decrease in the Net Worth of the Company. However, in the year of conversion of CCDs, this obligation will get reversed and correspondingly Net Worth will increase.

For and on behalf of the Board of Directors
(ashok KATARIYA)
Place Nashik Chairman
Date June 15, 2020 (Din: 00112240)