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, based on any subsequent developments, information or events.


The Fiscal 2022 saw several challenges being thrown up to the Indian Economy. The second wave of Covid in the early part of the year, coupled with the third wave in December-2021/ January 2022 resulted in a slight slowdown of the otherwise quick-paced recovery that the country witnessed. Advance estimates suggest that the Indian economy is expected to witness real GDP expansion of 9.2 per cent in 2021-22 after contracting in 2020-21. This implies that overall economic activity has recovered past the pre-pandemic levels. (Source: Economic Survey 2021-22). The Governments policy thrust on quickening virtuous cycle of growth via capex and infrastructure spending has increased capital formation in the economy lifting the investment to GDP ratio to about 29.6 per cent in 2021-22, the highest in seven years. (Source: Economic Survey 2021-22). Global geo-political issues could have an impact on input costs with Crude Oil and Coal prices seeing steep increases towards the end of Fiscal 2022. Notwithstanding these factors, the Indian Economy seems to be in a strong position going into the next fiscal.


With the Governments focus of "Make in India" and "Make for World" there has been a renewed focus on Infrastructure to ensure uninterrupted movement of factors of production as well as output. For several years, India has been focusing on infrastructure driven by the fact the quality of the infrastructure determines the ability of the country to utilize its comparative advantage and enables cost competitiveness. The Government has also set an ambitious target of making India a US$ 5 Trillion economy by Fiscal 2025. In order to achieve this, India would need to spend about $1.4 trillion over these years on Infrastructure. Keeping this objective in view, National Infrastructure Pipeline (NIP) was launched with projected infrastructure investment of around Rs.111 lakh Crore (US$ 1.5 trillions) during Fiscals 2020-2025. (Source: Economic Survey 2021-22)

NIP was launched with 6,835 projects, which has expanded to over 9,000 projects covering 34 infrastructure sub-sectors. During the fiscals 2020 to 2025, sectors such as energy (24%), roads (19%), urban (16%), and railways (13%) amount to around 70 % of the projected capital expenditure in infrastructure in India.

While there are several areas of population concentration, Indias economic activity is spread across the country and one of the key means of socio-economic integration is having a strong road network. As Indias economy is developing, Road transport remains one of the most cost effective and convenient modes of transportation in India both for freight and passengers as it has high penetration level with door-to-door delivery. With this in mind, the Government has continued increasing the outlay for strengthening, widening and increasing the road network. This is evident in the fact that Indias road network (consisting of National Highways (NH), State-Highways (SH), District Roads, Rural Roads, Urban Roads and Project Roads), is the second largest in the world after the United States of America.

The focus of the Government can be seen in the outlay provided to the Road sector in the NIP.

3.1. Ministry of Road Transport and Highways MoRTH

Historically, investments in the transport sector have been made by the Government. However, in order to encourage private sector participation, the Ministry has laid down comprehensive policy guidelines for private sector participation in the development of National Highways. The Government of

India had launched major initiatives to upgrade and strengthen National Highways through various phases of the National Highways Development Project (NHDP) and is taking the initiative forward through the umbrella program of Bharatmala Pariyojna, Phase-I and other schemes and projects. The year 2021-22 was a year for consolidating the gains that have accrued from major policy decisions taken in the previous six years and aspiring to maintain the momentum of the historically highest pace of road development (about 37 km/day) achieved last year.

3.2. Ordering Activity in the Sector

In order to provide a boost to infrastructure development and enable it to overcome the impact of COVID-19 pandemic, Ministry placed the highest ever target of 12,000 kms for award and 12,000 kms for construction for the year 2021-22. Overall road projects exceeding 64,000 km in length, costing more than Rs. 11 lakh Crore, are in progress out of which work in respect of projects of more than 40,000 km length has been completed and in balance length of more than 24,000 km works are in progress. National Highways of 10,457 km length have been constructed as at the end of FY 2021-22.

In 2022-23, the Ministry of Road Transport and Highways has been allocated nearly Rs 68,000 Crore more than the revised expenditure in 2021-22. In absolute terms, this is the highest increase among all ministries in 2022-23. Nearly all of this additional allocation has been earmarked for investment in NHAI. The total expenditure on the Ministry of Road Transport and Highways for 2022-23 is estimated at Rs.1,99,108 Crore. This is 52% higher than the revised estimates for 2021-22. In 2022-23, capital expenditure is estimated at Rs.1,87,744 Crore while revenue expenditure is estimated at Rs.11,364 Crore. In 2022-23, 94% of the Ministrys spending is estimated to be on capital expenditure. (Source: Economic Survey 2021-22)

3.3. Union Budget 2022-23

Capital expenditure allocation is up by 35.4% from FY22 to Rs.7.5 trillion, a key factor highlighting the commitment of Government of India on National Infrastructure Plan (NIP) spending. Roads have been the key focus area for budget allocations over the years. Under the Union Budget 2022-23, the Government of India has allocated Rs.199,107.71 Crore to the Ministry of In the Union Budget of 2022-23, the increase in Budget was a robust 68% compared to the last year. The Government has expressed its intention of completing 25,000 kms of National highways in the forthcoming financial years. NHAI rolled out a plan to construct 5,795 kms of highways that will connect 117 districts. The plan was worth Rs.1 trillion. The Indian government launched Gati Shakti-National Master Plan, which will help lead a holistic and integrated development of infrastructure generating immense employment opportunities in the country. The aim of the plan is to create a digital platform that would enable 16 ministries to collaborate on integrated planning and coordinated implementation of projects. The plan will also bring together departments such as railways, roads & highways and others and implementation will be done with the help of geo-satellite imaging and Big Data, land and logistics.

Indias Gati Shakti program has consolidated a list of 81 high impact projects, out of which road infrastructure projects were the top priority. The major highway projects include the Delhi-Mumbai expressway (1,350 kms), Amritsar-Jamnagar expressway (1,257 kms) and Saharanpur-Dehradun expressway (210 kms). The main aim of this program is a faster approval process which can be done through the Gati shakti portal and digitized the approval process completely. (Source: IBEF).


4.1. Business Overview for the Fiscal

In the Fiscal 2022, your Company witnessed a steady improvement in the operating environment, coupled with a robust increase in operating revenue, both sequentially, as well as on a year-on-year basis. This has helped your Company post a robust 20.27% growth in revenue from operations from Rs.38,175 million in Fiscal 2021 to Rs.45,915 million in Fiscal 2022.

4.2. Successes in Asset Monetization Program

The improvement in the overall business environment also helped your Company in monetizing some of its assets. Five SPVs, namely, Ashoka Highways (Bhandara) Limited, Ashoka Highways (Durg) Limited, Ashoka Belgaum Dharwad Tollway Limited, Ashoka Sambalpur Baragarh Tollway Limited and Ashoka Dhankuni Kharagpur Tollway Limited were sold to Galaxy Investments II Pte. Ltd. (KKR owned entity) for an aggregate consideration of Rs. 1,337 Crore. About Rs. 1,200 Crore from the proceeds is expected to be used to provide an exit to the SBI-Macquarie consortium for its stakes in Ashoka Concessions. The deal is expected to be completed by September 2022 post customary compliance.

Post this transaction, the Company will remain with following major projects in highway portfolio.

74% equity stake in one toll project Jaora-Nayagaon in the state of Madhya Pradesh; Four (4) annuity projects which include 50% equity stake in Chennai ORR and three fully owned projects Hungund-Talikot, Bagewadi Saundatti, and Mudhol-Nipani; and

Fully owned portfolio of 11 HAM projects.

4.3. Successful Project Execution

During the year, barring a few weeks of intermittent delays on account of the Covid-19 led restrictions, your Companys execution saw a steady increase on a monthly basis. This increased execution has helped your Company deliver strong results in Fiscal 2022.

Your Company received the Provisional Certificate (COD) the following Projects:

Khairatunda Barwa Adda Road Project of NHAI in Jharkhand in October, 2021;

Belgaum Khanapur Road Project of NHAI in Karnataka with effect from October, 2021; and

Ankleshwar Manubar Expressway Project of NHAI with effect from March 31, 2022.

Your Company received Appointed Date for Ashoka Bettadahalli

Shivamogga Road (HAM) in October, 2021.

Your Company tied-up Debt for its wholly owned subsidiary viz. Bettadahalli Shivamogga Road HAM Project and the financial closure had been achieved.

4.4. Key Projects Won

During the year, your Company was successful in adding Projects aggregating over Rs.10,500 Crore. Some of the key projects that your Company secured were:

LOA from MCGM Rs. 1,046 Crore to Ashoka Buildcon consortium in February, 2022 - Construction of Sewage Treatment Plants based on MBR technology on Design Build Operate (DBO), along with 15 years of O&M LOA for NHAI Project of Rs. 829 Crore in January, 2022 - Construction of 6 laning from Belgaum to Sankeshwar Bypass NH-48 in Karnataka on EPC mode under Bharatmala Pariyojana (Package-I) LOA for MORTH Project worth Rs. 769 Crore in December, 2021 - Construction of Six lane link road with paved shoulder configuration to Mopa Airport in the State of Goa on EPC mode LOA for North Frontier Railway of Rs. 693 Crore in February, 2022 - Electrificationof Railway Lines in state of Assam on EPC mode

LOI for construction of mall cum Multiplex of Rs. 112 Crore in January, 2022 - Work of construction of Mall cum Multiplex, B2+B1+LG+G+4, near Pillar 64, Bailey Road, Patna to be completed within 15 months LoA for the Project viz. ‘Execution of Civil & associated works on Engineering, Procurement & Construction (EPC) basis of Six Laning of National Corridor NH-19 from Pangarh to Palsit from km. 521.120 to km. 588.870 (total design length 67.750 km) in the State of West Bengal at EPC Price of Rs.1,567.45 Crore.

4.5. Order Book

As elucidated previously, the Fiscal 2022 saw a significant uptick in order inflows for your Company. As of March 31, 2022, your Company had an EPC order backlog of Rs.13,731 Crore, of which ~58% was Roads (both EPC and HAM) and 42% from other Sectors (including Power T&D, Railways, Buildings & CGD, etc.).

The Governments focus continues to drive investments in the sector and the forthcoming year is expected to bring in larger orders and as one of the leading players in the Industry, your Company is well positioned to capitalize on the opportunity.

4.6. Innovation, Quality, Safety and Environment

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

4.7. Resources and Liquidity

The Share Purchase Agreements (SPAs) of the five aforementioned SPVs would help in reducing the consolidated project debt of your Company by over Rs.3,090 Crore as on March 31, 2022. 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 (Reaffirmed) 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.

4.8. Challenges Risks & Concerns


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) 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. 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 Toll 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 like 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 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.

4.9. Human Resource Management

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. It has always ensured that all employee related matters are handled through an established and well-defined HR policy to drive the employees to perform on the organizational vision by providing talent development, and constantly improving on employee engagement.

The Company has already automated most of its HR processes and practices such as hiring employees, segregating employees based on various factors such as department level, payment days, payment details etc. leading to increase in its efficiency and response time of HR function. Most of the employee records are now being digitally maintained.

Training programs are organized for the productivity improvement of the new recruits through various formats including instructor led training, e-learning, and on-the-job simulations within the first week of joining. The Company provides a healthy work environment, and maintains dialog with every person to keep strong employee engagement.

The drive initiated for passing on the benefit of Atma Nirbhar Bharat Rojgar Yojana 3.0 scheme launched by Central Government gave financial benefit to the subcontractors in crucial period, amid pandemic.

The excellent demonstration of team work by HR & Admin department and HSE department led controlling hospitalization of employees, its dependent amid pandemic at the same time keeping round the clock support to site teams on day to day work affairs maintaining adequate speed of project progress.

4.10. Internal Control and Its Adequacy

Internal Financial Controls means the policies and procedures adopted by the Company to ensure the following: orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Company has a well-placed, proper and adequate internal control system, which ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. The Companys internal financial control framework commensurate with the size and operations of the business and is in line with requirements of the Companies Act, 2013. The Management have approved, adopted and implemented various policy documents/standard operating procedures which assists the various departments of the Company in ensuring accountability, accuracy, controls and transparency within the organization.

The internal audit plan is approved by Audit Committee in the first meeting of each financial year. The Audit Plan includes a combination of audit of internal control systems and operational audits. Audit of internal control system focuses on the adequacy of internal controls in the Company and also the reporting system in various functional areas like purchase, sales, accounts, human resource, administration, contracts and other departments. The Audit committee reviews the audit observations, management responses to the same and suggests corrective actions, if necessary. It maintains a constant dialog with the auditors to ensure that internal control systems are operating effectively.


5.1. Standalone Financial Overview


All figures in Rs. Crore

Fiscal Fiscal
2021 2022
Revenue from Operations 3,817.52 4,591.46
Other Income 192.08 198.83
Total Income 4,009.60 4,790.29
Cost of Material Consumed 1,248.74 1,431.49
Construction Expenses 1,730.31 2,369.65
Employee Benefits Expenses 168.48 181.11
Finance Expenses 77.17 85.62
Depreciation and Amortisation 87.20 69.71
Other Expenses 150.47 106.70
Total Expenses 3,462.37 4,244.28
Less -Exceptional Items - 769.60
Profit /(Loss)before Tax 547.23 (223.59)
Tax Expense: 139.10 85.05
Current Tax 143.11 91.82
Deferred Tax (4.01) (6.76)
Add - Other Comprehensive Income (0.33) 0.63
Profit /(Loss) for the year 407.80 (308.02)

Revenue from Operations

During the Fiscal 2022, on Standalone basis, your Company registered revenue from operations of Rs.4,591.46 Crore as against Rs.3,817.52 Crore in Fiscal 2021, an increase of 19%, mainly due to an increase in revenue from contracts with customers on account of improvement in overall business environment and with lesser impact of the COVID-19 pandemic.

Other Income

Other income for the Fiscal 2022 stood at Rs.198.84 Crore as compared to Rs.192.08 Crore in Fiscal 2021, with marginal increase of 3.52%. It primarily constitutes interest income on fixed deposits, interest income from Subsidiary & Joint venture and write back of old balances.

Cost and Expenses

Cost of Material Consumed and Construction Expenses increased by 27.60% to Rs.3,801.14 Crore in Fiscal 2022 from Rs.2,979.05 Crore in Fiscal 2021 primarily on account of more execution resulting in increased turnover, this cost has proportionately increased further. It is also increased marginally due to inflation/price rise impact.

Employee Benefit Expenses

Employee Benefit Expenses increased by 8% to Rs.181.95 Crore in Fiscal 2022 from Rs.168.48 Crore in Fiscal 2021 primarily on account of recruitment of qualified staff has been made for new Projects and also on account of increments to staff.

Other Expenses

Other expenses reduced by 29% in Fiscal 2022 as compared to the previous financial year mainly due to Lesser provisioning for bad and doubtful debt and written-off of balances. The other expenses mainly comprise of rent, rates and taxes, insurance, repairs and maintenance, traveling and conveyance, legal & professional expenses, donation etc.


Depreciation reduced by 20.06% to Rs.69.71 Crore in Fiscal 2022 from Rs.87.20 Crore in Fiscal 2021. Addition in Fixed Assets was mainly at the year end and the Company follows WDV method for depreciation.

Finance Costs

Finance costs increased from Rs.77.17 Crore in Fiscal 2021 to Rs.85.62 Crore in Fiscal 2022. The finance cost comprises of interest on term loan, working capital loan, bank guarantee charges and other borrowing costs.

5.2. Consolidated Financial Overview


All figures in Rs. Crore

Fiscal Fiscal
2021 2022
Revenue from Operations 4,991.70 5,945.80
Other Income 130.18 201.42
Total Income 5,121.88 6,147.22
Particulars Fiscal 2021 Fiscal 2022
Cost of Material Consumed 1,290.90 1,520.38
Construction Expenses 1,607.28 2,190.05
Employee Benefits Expenses 321.04 354.14
Finance Expenses 969.60 1,003.75
Depreciation and Amortisation 275.87 338.23
Other Expenses 236.98 145.35
Total Expenses 4,701.67 5,551.91
Profit / (loss) from associate and
17.44 10.89
joint venture
Less -Exceptional Items - (326.00)
Profit /(Loss) before Tax 437.65 932.21
Tax Expense:
Current Tax 148.38 130.29
Deferred Tax 15.79 30.51
Add - Other Comprehensive
(0.18) 1.30
Profit for the year 273.30 772.71

Revenue from Operations

During the Fiscal 2022, on a consolidated basis, your Company registered revenue from operations of Rs.5,945.80 Crore as against Rs.4,991.70 Crore in Fiscal 2021, an increase of 19%, mainly due to an increase in revenue from contracts with customers on account of improvement in overall business environment and having lesser impact of the COVID-19 pandemic and increase in toll collection.

Other Income

Other income for the Fiscal 2022 stood at Rs.201.42 Crore as compared to Rs.130.18 Crore in Fiscal 2021, an increase of ~55%. It primarily constitutes interest income on fixed deposits, interest income from Subsidiary & Joint venture, clams receipt and write back of old balances at projects.

Cost and Expenses

Cost of Material Consumed and Construction Expenses increased by 28% to Rs.3,710.43 Crore in Fiscal 2022 from Rs.2,898.18 Crore in Fiscal 2021. This cost has proportionately increased further. It is also increased marginally due to inflation/ price rise impact.

Employee Benefit Expenses

Employee Benefit Expenses increased by 10.30% to Rs.354.14 Crore in Fiscal 2022 from Rs.321.04 Crore in Fiscal 2021 primarily on account of increased manpower for new Projects and increments to staff.

Other Expenses

Other expenses decreased by ~39% in Fiscal 2022 as compared to the previous financial year. The other expenses mainly comprise of rent, rates and taxes, insurance, repairs and maintenance, traveling and conveyance, legal & professional expenses, donation etc.


Depreciation increased by 22.60% to Rs.338.23Crore in Fiscal 2022 from Rs.275.87 Crore in Fiscal 2021 primarily on account of increase in depreciation of toll projects due to increase in toll collection.

Finance Costs

Finance costs slightly increased from Rs.969.60 Crore in Fiscal 2021 to Rs.1,003.75 Crore in Fiscal 2022 due to effective utilization of working capital and equipment loans due to more execution.

The finance cost comprises of interest on term loan, working capital loan, bank guarantee charges and other borrowing costs and unwinding of discount on financials liabilities.

5.3 Key Financial Ratios

Particulars Fiscal 2021 Fiscal 2022
Current Ratio 1.12 1.61
Debt Equity Ratio 0.15 0.21
Debt Service Coverage Ratio 4.17 4.17
Interest Service Coverage Ratio 12.97 11.46
Inventory Holding 52 days 65 days
Debtors Turnover 97 days 75 days
Operating Profit Margin (%) 17.7% 14.6%
Net Profit Margin (%) 10.18% 9.6%
Return on Net Worth (excluding exceptional item) 0.15 0.16

5.4. 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

of Ashoka Buildcon Limited


(Ashok Katariya)


(DIN: 00112240)

Place: Nashik

Date: May 25, 2022