In the past three years, road construction companies faced several challenges such as slower awarding of contracts and higher interest costs, making many projects unviable, and contraction of margins from increased competition. Ashoka Buildcon was no exception and FY13 was difficult. However, the recent decision of the Cabinet Committee on Investments has helped the order inflow increase and led to its strong performance for FY14.
¨Selection of the right projects helped us,¨ says Satish Parakh, Managing Director, Ashoka Buildcon Ltd. ¨Execution challenges must be analysed well before bidding for the project such as quarrying, sourcing of raw materials, land acquisition and any local political issue. By ensuring these factors, one can protect both the topline and bottomline.¨ Besides, the parent company being well-funded and having low debt helped tremendously.
In terms of safety measures, Parakh shares, ¨While the entire market was very aggressive in bidding, we have been conservative about bidding and traffic estimate as well as being highly accurate in estimating project cost.¨ Going forward, he avers that the company´s proven capability in project execution and design as well as complete control over the entire value chain of BOT projects will help immensely.