Ashoka Buildcon Ltd Management Discussions.


This report may contain forward looking statements, which describe the 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.


The fiscal ended March 2021 was challenging as the economies over the world were combating the unprecedented covid-19 pandemic. India faced the gashes of the pandemic because of sudden halt in economic activities amid nationwide lockdown; the Indian economy experienced a sharp recovery during the second half of the fiscal. The infrastructure sector faced interruptions in the execution primarily on account of labor shortage, supply chain disruption, restriction in movement, amidst the lockdown during the first half that witnessed strong revival during the second half of the fiscal. According to the International Monetary Fund (IMF), the Indian economy is expected to grow by 12.5 percent in FY2022 and 6.9 percent in FY2023; with the core focus on infrastructure growth. The Government of Indias timely policy support and the continuing focus on tendering and awarding activity has been a major backbone that ensures persistent growth of the infrastructure sector.

The Government of India launched the National Infrastructure Pipeline (NIP) for FY 2020-2025 to facilitate world-class infrastructure projects to be implemented. This initiative will boost the economy, generate better employment opportunities and drive the competitiveness of the Indian economy. Jointly funded by the Central Government, State Government, and the private sector; the NIP was launched with the projected infrastructure investment of 111 lakh Crore during the period FY2020-2025. The sectors like energy, roads, urban infrastructure, railways have a major share in the NIP. In India, private investment in infrastructure has come mainly in the form of Public Private Partnerships (PPPs). PPPs help in addressing the infrastructure gap as well as improve efficiency in infrastructure service delivery.

Indias transport system is largely dependent on the road network; it is very well integrated with the multi-modal transportation system providing crucial links with airports, railways, ports and other logistical hubs. Road network enables ~64.5% of goods transportation in the country and ~90% of Indias total passenger traffic uses the road network to commute. India has the second-largest road network in the world, with over 6.39 million kms of rural-urban roads and national-state highways. With proactive government policy initiatives in the sector, the road network has continuously been expanding in the country.

Further, to thrust the growth in the sector, under the National Infrastructure Pipeline FY2019-25, the roads sector is likely to account for 18% of capital expenditure over FY2019-25. The Government, through a series of initiatives, is working on policies to attract significant foreign portfolio investors to boost investment in the sector. In the six years period from FY15 to FY20, total investment in the Roads and Highway sector has gone up more than three times.

Particulars FY15 FY16 FY17 FY18 FY19 FY20 FY21*
Total Budgetary Support 29,359 45,949 49,172 59,636 76,137 75,853 45,508
IEBR 3,343 23,281 33,118 50,533 61,217 74,988 17,128
Private Sector Investment 19,232 29,770 16,029 16,501 21,605 21,926 6,029
Total Investments 51,935 99,000 98,319 126,670 158,959 172,767 68,665

*Upto September 2020

Source: Economic Survey 2021 - Volume - 2


The road sector being key priority sector to thrust the economic growth, the MoRTH proposed to develop additional 60,000 kms of national highways in next five years of which 2,500 kms are expressways/access controlled highways, 9,000 kms are economic corridors, 2,000 kms are coastal and port connectivity highways and 2,000 kms are border road/strategic highways. The ministry also intends to improve connectivity for 100 tourist destinations and construct bypasses for 45 towns/cities.

Additionally, NHAI has started the planning of Bharatmala Pariyojana Phase-II. Under the Bharatmala project, around 65,000 kms of national highways are to be constructed in two phases. In Phase I, national highways projects of 34,800 kms were to be awarded by 2022, of which over half has been awarded; NHAI expects to complete the phase-I project awarding by FY2023. This indicates the strong order pipeline in coming years. To boost the funding in the sector, in recent years the government has formulated various policies. In next five years, National Highway Authority of India (NHAI) will be able to generate Rs 1 lakh Crore annually from toll and other sources, this to further aid the ordering activity. (source: IBEF)

Highway-Construction & Project awarding picked-up pace in FY2021

Despite the pandemic led disruption, the Ministry of Road Transport and Highways touches a record of 36.4 kilometer per day highway construction in financial year 2020-21. During the year, the highway construction stood at 13,298 kilometers as against around 10,240 kilometers in FY20; recording a stellar growth of ~30% y-o-y; surpassing the target set by the government at the beginning of the year. The government initiated a slew of relief measures like a shift from milestone- based billing to monthly billing, release of retention money or performance guarantee in proportion to the work already executed, amongst others, aided in reduction of cash conversion cycle leading to sharp improvement in execution in the latter half of the fiscal. The rate of construction of national highways has more than doubled since FY 2015 and the length of national highways has gone up by 50% from 91,287 kilometers as on April 2014 to 1,37,625 kilometers as on 20 March 2021.

Projects Trend - Total Awarded and Constructed (in Kms)

Source: Industry

On the project award front, with governments thrust on economic revival, the project awarding remained buoyant in financial year 2020-21, the project awarded was up by ~17% y-o-y to 10,237 kilometers as against 8,948 kilometers in the preceding fiscal. In FY2020-21, National Highway Authority of India (NHAI) awarded 4,788 kilometers of projects, which is ~50% higher than the last financial year. The share of engineering procurement and construction (EPC) projects was 50% followed by hybrid annuity model (HAM) at 49%. In the current fiscal, the awarding activity is expected to remain strong; the NHAI has targeted to award projects worth around Rs 2.25 lakh Crore in FY2021-22.

Union BUDGET 2021-22

Over the years, infrastructure has been a priority sector for the government to fuel economic growth, development and employment generation. In Union Budget 2021-22, infrastructure sector continued to receive strong budgetary support from the government; Infrastructure sector received a sharp increase in capital expenditure of Rs 5.5 lakh Crore for FY2021-22, an unprecedented increase of 35.4% y-o-y, to push growth via infrastructure creation. Further, the government has expanded the National Infrastructure Pipeline (NIP) to 7,400 projects from 6,835 projects.

To aid the long-term sustainable financing in the sector, government proposed to set-up a new Development Finance Institution (DFI) with budgetary allocation of INR 20,000 Crore for funding infrastructure projects. The DFI to extend funding support of Rs 5 lakh Crore to the infrastructure sector within a time frame of 3 years. Additionally, government provided thrust on asset monetization to support financing for new project awarding activities; proposed to launch a ‘National Monetization Pipeline of potential Brownfield infrastructure assets. The Government has announced to make required changes in the legislation to enhance debt financing in InvITs and REITs from foreign portfolio investors. The NHAI is working on INvIT infrastructure with 5 projects valuing up to Rs 5000 Crore. With government stepping up towards project financing, the industry continues to see positive trends towards project awarding. Road Infrastructure continues to be the key priority with the sector receiving strong budgetary support. In Union Budget 2021-22, the government have enhanced capital outlay for Ministry of Road Transport and Highways (MoRTH) to Rs 1.18 lakh Crore, including Rs 1.08 lakh Crore of capital expenditure; the highest ever allocation to MoRTH. The government has announced the project awarding of 8,500 km and completion of an additional 12,000 kms of national highway corridors by the end of FY2022, signaling the high ordering activity in FY2022.


The financial year 2020-21 began amidst global pandemic, containment of which led to countries adopting unprecedented measures like nation-wide lockdown that brought economy to grinding halt; significantly impacting the execution during the first half of the fiscal. In FY2020-21, your Company has reported annual standalone revenue of Rs 4009.60 Crore as against Rs 4,082.36 Crore in financial year 2019-20; primarily due to Covid-19 induced disruptions. Further, during the first half of the year the toll revenues were also significantly impacted due to the restriction in the movement; with easing-up of travel restrictions and gradual recovery in the economic activities, the toll collection reached pre-covid levels during the second half of the fiscal.

During the year, your Company successfully received an Appointment Date for Kandi Ramsanpalle Road HAM project. Further, the Company is in the process of Debt tie-ups for Bettadahalli Shivamogga Road and Banwara Bettadahalli Road HAM Projects in Karnataka and expects to do Financial Closure in near term.


The Covid-19 pandemic had an impact on the execution of projects amid implementation of countrywide lockdown to contain the widespread of the virus. The shortage of labor, erratic availability of raw materials, and restriction in movement majorly impacted the Companys execution during the first half of fiscal. The second half witnessed a strong ramp-up in the execution leading to partially off-setting the losses incurred in the first half and enabling your Company to deliver performance in-line with the last year. Despite challenges, during the year, your Company has successfully received the provisional completion certificate for Kharar Ludhiana and Ranastalam Anadapuram Road HAM projects and commenced the commercial operation.

We have successfully handed over the Ahamadnagar - Aurangabad Road Project to the Authority as per contract. There is no toll collection during the year under review.


During the year, the Company was successful in winning two Road EPC projects worth Rs 1,390 Crore under Bharatmala Pariyojana Phase-1 from National Highway Authority of India (NHAI) in Bihar:

> Four laning of Arrah to Pararia section of NH-319(old NH- 30) from Km 0+000 to Km 54+530 (Design Chainage) under Bharatmala Pariyojana Phase-I on EPC Mode (Package-I), with the bid value of Rs 700 Crore; and

> Four laning of Pararia to Mohania section of NH-319 (Old NH-30) from Km 54+530 to Km 115+330 (Design Chainage) under Bharatmala Parlyojana Phase-I on EPC Mode (Package II); the contract value of the project is Rs 690 Crore.

In Financial Year 2020-21, in Power T&D space, your Company successfully bagged a solar project on EPC basis worth Rs 502 Crore from NTPC Renewable Energy Limited. The project includes Operation and Maintenance of a complete ‘150 MW Solar PV Plant for a period of three years from the date of successful completion of the trial run. Your Company also bagged other few Projects in Power Sector worth Rs 542.69 Crore aggregating Rs 1,087.13 Crore.

In other major developments:

In FY 2020-21, your Company has entered into a share purchase agreement (SPA) with India Infrastructure Fund (IIF) for purchasing directly or through its subsidiary, 49% stake held by IIF in Ashoka Highways (Bhandara) Limited along with Zero Interest Shareholders Loan for an aggregate consideration of Rs 35.98 Crore. Ashoka Concession Limited, a subsidiary of the Company, already holds 51% of the stake in Ashoka Highways (Bhandara) Limited (AHBL). With the completion of the transaction, the Company along with the subsidiary would hold 100% stake in AHBL. The completion of the transaction is subject to receipt of the approvals from National Highways Authority of India (NHAI) and if required, from Lenders.


The balance Order Book of the Company stood at Rs 8166.90 Crore. In terms of break-up of balance order book, Road Projects are Rs 6182.50 Crore which constitute 75.70% of order book; Rs 1375.90 Crore is from power T & D & Others forming 16.84% of order book and Railway Projects contribute Rs 537.40 Crore, comprising of 6.58% of order book, while CGD contributes Rs 71.10 Crore, which is 0.87% of the Order book. Among Road order book, EPC Projects are of Rs 2711.80 Crore and the balance is of HAM Projects worth Rs 3470.70 Crore.

On the background of the governments focus on the infrastructure development aided by strong budgetary support in FY2021-22, the Company believes the ordering activity to remain strong in the financial year 2021-22. Your Company being one of the prominent players in the sector, will be able to capitalize the opportunity.


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. Your Company is very much sensitive and concerned about the health and safety of all its employees. QHSE Policy has been framed and is implemented at all sites and offices.

In this regard, your Company has the following accreditations:

> Integrated Management System comprising of Certification of ISO 9001: 2015, ISO 14001: 2015 and ISO:45001:2018

> Quality Management System ISO:9001:2015

> Environmental Management System ISO 14001: 2015;

> Occupational Health and Safety Management System ; ISO:45001:2018; and

> Green House Gases Monitoring and Measurement and planning for reduction management system ISO 14064.1:2006 & ISO 14064.2:2006


During the year, your company focused on maintaining the liquidity of the Company; your Company did not claim for loan moratorium at standalone levels. At SPV levels, the Company has opted for the loan moratorium for the principal amount except for Jaora Naygaon toll project.

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

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

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 banks / financial institutions or 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 longterm in nature (as much as three years in EPC contracts and around 30 years in Design, Build, Finance, Operate and Transfer (DBFOT) 17 years in Hybrid Annuity Project (HAM) 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 project planning, designing, change of scope, inflation, interest rates movements, liquidity, commodity and oil prices, governance, construction delays, material shortages, government guidelines and controls, public unrest, labour shortage, unanticipated cost increases, cost overruns, inability to negotiate satisfactory arrangements with joint venture partners and disagreements with our joint venture partners/associates/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 Debt and customer receipts. 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 operations 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, government policy for working (like in times of COVID-19) 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). Also, our HAM revenues are impacted by Wholesale Price Index (WPI) and Consumer Price Index (CPI) in that region / area. In view of the lower inflationary trends, WPI & CPI have been quite low leading to low toll rate / Price Index Multiple (PIM) increases. Also any changes in the WPI, CPI components and method of calculation of the same may have impact on toll rates / PIM of the project.


As on 31st March 2021, the number of permanent employees in the Company is 2,517 at various levels. Talent management has always been the crucial factor for the Company, as your 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 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.

The Management had taken all required efforts for implementation of terms and conditions laid down by Ministry of Home Affairs of Central Government of India for prevention of outbreak at work places through detailed Standard Operating Procedure and Human Resource Department had taken effort in its implementation at all the sites. Moreover, all the required insurance policies were obtained for employees of the Company and its subcontractors, manpower suppliers for providing treatment cover for COVID-19 infection.

The necessary arrangement were made through site HR officials for groceries, vegetables during lockdown phases and the required home isolation facilities were allocated to the workers of subcontractors too during the entire period.

The drives taken by Human Resource Department in ‘3Ts such as Track, Test and Treat was proven formula to keep all work sites in operation throughout the week and supporting speedy progress in execution of work by following all guidelines of the Ministry of Home Affairs.


1. The standalone total income for FY21 is Rs 4009.60 Crore as against Rs 4082.36 Crore in FY20. FY21 faced challenge for unprecedented covid-19 pandemic and nationwide lockdown. Interruptions were faced primarily on account of labor shortage, unavailability of material, restriction in movement mainly during the first half FY21.

The Break-up of total income is as follows.

a) Contract revenue marginally increased during FY21 to Rs 3,763.13 Crore from Rs 3,702.89 Crore in FY20 mainly on account of contract revenue of annuity EPC and third party EPC projects.

b) Further, the Company has handed over Nagar - Aurangabad toll road Project to the authority as per contract during FY21 and hence the toll collection is Nil as compared to Rs 30.04 Crore in FY20.

c) Income from sales was decreased from Rs 103.50 Crore in FY2020 to Rs 66.79 Crore in FY2021. The decrease in sales was mainly due to COVID 19 lockdown restrictions and business activities in real estate were also lowered. Considering challenging business scenario, the company has reduced its scale of business.

d) Other operating revenue has increased to Rs 47.84 Crore from Rs 40.76 Crore mainly on account of scrap sale, sale of other construction material; and receipt of insurance claims, etc.

e) Further, other income has increased from Rs 144.93 Crore to Rs 192.08 Crore mainly on account of interest income on loans given to SPVs fixed deposits with bank and other interest income.

2. EBITDA has decreased marginally to Rs 711.60 Crore in FY21 from Rs 730.56 Crore in FY20, but same is in line with standalone income of the Company.

3. Depreciation and Finance Expenses:

a. Depreciation & amortisation cost has decreased by Rs 23.93 Crore to Rs 87.20 Crore in FY21 from Rs 111.13 Crore in FY20. There was no major addition to construction and other assets during the year; and

b. Financial Expenses have decreased by 9.69% to Rs 77.17 Crore in FY21 from Rs 85.45 Crore in FY20, mainly on lower utilisation of bank limits and timely recovery of receivables from customers.

4. Reduction in Effective Tax Rate to 25.42% from 27.50% due to fact that, in FY20, the Company shifted to new tax regime and DTA was calculated at new rates, so there was one time hit of tax amount. Henceforth, tax rate should be approx. 25%.

5. As at 31st March 2021, the Net Worth stood at Rs 3,006.74 Crore as against Rs 2,598.94 Crore in previous year.

6. The Gross Debt as at 31st March 2021 stood at Rs 439.64 Crore resulting in Debt/Equity Ratio as 0.15, which is well within acceptable standards of the industry.

7. Internal control systems and their adequacy

The Companies Act, 2013 re-emphasizes the need for an effective Internal Financial Control System (IFC) in the Company which should be adequate and shall operate effectively. The Company has an Internal Control System including Internal Financial Controls, commensurate with the size, scale and complexity of its operations. The same is approved by Audit Committee. The Joint Internal Auditors evaluate the efficacy and adequacy of internal control system, accounting procedures and policies adopted by the Company for efficient conduct of its business, adherence to Companys policies, safeguarding of Companys assets, prevention and detection of frauds & errors and timely preparation of reliable financial information etc.

The Internal Financial Controls are adequate and working effectively. The scope and authority of the Internal Audit is laid down by the Audit Committee and accordingly the Internal Audit Plan is approved.

The Board is of the opinion that the Company has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and /or improved controls wherever the effect of such gaps would have a material effect on the Companys operations.

8. There have been no significant changes as compared to the immediately previous financial year in key financial ratios. Key Financial Ratios are as under.

Current Ratio 1.12
Debt Equity Ratio 0.15
Debt Service Coverage Ratio 5.00
Interest Service Coverage Ratio 12.97
Inventory Holding 52 days
Debtors Turnover 97 days
Operating Profit Margin (%) 17.7%
Net Profit Margin (%) 10.18%
Return on Net Worth 7.37



Key highlights for year ended March 31, 2021.

• Turnover for FY2021 was marginally decreased to Rs 5,121.87 Crore against Rs 5152.21 Crore in FY 2020, mainly due to lockdown on account of Covid 19;

• Revenue from toll collection during FY21 was Rs 821.43 Crore, as compared to Rs 883.57 Crore in FY20, reduction in toll revenue is mainly restriction in movement due to COVID 19 and nationwide lock down.

• PBT increased to Rs 437.65 Crore in FY2021 against Rs 326.24 Crore in FY2020 showing 34% increase Y-o-Y;

• Debt Equity ratio is improved to 8.08 as at 31st March 2021 against 11.53 on 31st March 2020;

• Total comprehensive profit attributable to owners

(after adjustment of minority interest) is Rs 276.07 Crore as against Rs 163.37 Crore during the year FY20. Increase in profit during FY20-21 is mainly due to reduction in finance cost, depreciation & amortisation cost and reduction in average rate of income tax for the year.

Disclosure of Accounting Treatment:

The Company has consistently followed a treatment that has been prescribed in Indian Accounting Standards in the preparation of financial statements and the same shows true and fair view of the financial statements.

For and on behalf of the Board of Directors
(Ashok Katariya)
(DIN: 00112240)
Place : Nashik Date : June 18,2021