- Sandeep Garg, Managing Director, Welspun Enterprises
Technology and innovation are at the core when we plan, design and execute projects, ensuring quality in construction, says Sandeep Garg, Managing Director, Welspun Enterprises. He shares more on the Mumbai-based company's recently bagged projects.
How has the change in NHAI awarding projects from BOT to EPC and HAM helped companies?
Under HAM, NHAI pays 40 per cent of the project cost during construction, which is of great help to concessionaires with strong balance sheets in getting financial closure. The HAM concession agreement also ensures that the construction starts after at least 80 per cent of the required project length is available for construction. Welspun Enterprises has been a focused player in HAM projects ever since its introduction in 2015. We find the risk-reward balance of HAM projects attractive. In terms of profitability, our 2017-18 EBITDA was Rs 1.66 billion, an increase of 145 per cent over 2016-17; similarly, our 2017-18 PAT of Rs 1.10 billion was 154 per cent up on a Y-o-Y basis. This improvement is primarily owing to our focus on HAM.
Tell us about the key strategy applied by the company while bidding for projects in FY17-18.
Welspun Enterprises' focus has always been on operational excellence and creating value for stakeholders. We have been selective in the projects we bid for, the primary selection criteria being projects where we can bring in a differentiation and where returns can meet our internal target.
Please list your recently bagged projects under NHAI.
Our company was awarded the Aunta-Simaria (six-lane Ganga Bridge) HAM project in Bihar by NHAI in August 2017. We have achieved financial closure for the Rs 11.61 billion project. We also became the sponsor for three NHAI HAM projects: Gagalheri-Saharanpur (Uttar Pradesh), Gagalheri-Roorkee-Ganeshpur (Uttar Pradesh and Uttaranchal), and Chikhali-Tarsod (Maharashtra). We are happy to state that our first HAM project v the 14-lane Delhi-Meerut Expressway (Delhi Section) v was completed in a record 18 months as against 30 months.
Are you looking at executing projects on a consortium basis?
Our preference is to bid for projects by ourselves. But we are also open to participating in a consortium on a selective basis, for reasons of project size, complexities involved or the consortium partner bringing execution strength in a particular geography.
How do you intend to raise funds?
Welspun Enterprises is a listed company with a healthy balance sheet. We have little debt on our books and have cash reserves of over Rs 7 billion as on March 31, 2018. This sufficient to cater for equity investments in our projects going forward. Our subsidiary project SPVs will raise debt funds as required for financial closure. We are also open to the option of monetising our assets as and when the construction stage is complete.
Tell us about the company's performance in FY2017-18, and your expectations for FY18-19?
Our company's revenue in FY17-18 was just over Rs 10 billion, with an EBITDA of Rs 1.66 billion.
The company has an outstanding order book of over Rs 60 billion, largely contributed by the roads segment. Our target is to double our revenue every year to reach a figure of Rs 40-Rs 45 billion in FY19-20, with our EBITDA margin remaining stable.