´We stick to a clear strategy of not diversifying beyond the core sector.´
- Nitin R Patel, Executive Director, Sadbhav Engineering
Established in 1988, Sadbhav Engineering focuses on execution of roads and highways, bridges, large scale irrigation projects and contract mining. In FY15-16, the timely and cost efficient execution of BOT and EPC projects has been crucial along with efficient arrangement of required equity and debt, especially for BOT projects. Nitin R Patel, Executive Director and CFO, Sadbhav Engineering, says, ´We stick to a clear strategy of not diversifying beyond the core sector.´ He adds that efficient finance management, in terms of assessment of equity as well as long and short term fund requirement, and arranging these in a right and timely manner proved beneficial.
´We avoided the aggressive bidding phase of BOT projects throughout the business cycle in the last 10 years,´ says Patel. As for FY16-17, the company has successfully managed to change the consortium of Sadbhav Engineering at the parent level, wherein cost of funds has been reduced by at least 150-175 basis as compared to FY15-16. Also, the company has completed refinancing five SPVs and is close to complete refinancing of another two, saving about Rs 90 crore of finance cost on the bottomline. This has supported its overall profit growth with sufficient cash flows to cater growth for the next five to seven years. Further, refinancing has managed reduction in cost of fund and repayment obligation for 15-18 years from the earlier seven to eight years. ´This process will give us cash surplus of around Rs 700-750 crore for the coming three years from now,´ says Patel, adding, ´Last fiscal, we have lined up equity capital of Rs 800 crore through QIP and promoters contribution of Rs 375 crore at Sadbhav Engineering level and through an IPO of Rs 425 crore at Sadbhav Infrastructure level.´