October 7, 2013
Concession period of 30 years including construction period of 910 days will start from the appointed date
Infrastructure firm Sadbhav Engineering today said NHAI has fixed October 9 as appointed date for a road widening project in Rajasthan, which it bagged from highways regulator recently.
“National Highways Authority of India (NHAI) has declared October 9 as appointed date for the project – four laning of Rajsamand-Gangapur-Bhilwara Sadbhav Engineering in Rajasthan on design, build, finance, operate and transfer (DBFOT) basis,” the company said in a filing to the Bombay Stock Exchange.
The appointed date is the date from which the concession agreement starts.
The company has recently won a Rs 778-crore project for widening of the 87 km stretch, which it said will “executed through our special purpose vehicle, i.e. Bhilwara-Rajsamand Tollway Pvt Ltd.”
The concession period of 30 years including construction period of 910 days will start from the appointed date, it said.
March 25, 2013
Nitin Patel, ED, Sadbhav Engineering , says that recently the company as emerged as a successful bidder for the two lane project in Tamil Nadu. The project is based on annuity basis. The company has also submitted another bid for Rohtak-Hissar project for Rs 1300 crore, the results for which is expected today evening.
Out of the 12 projects, 8 projects are now operational and the company expects the ninth project to be operational by June. Going forward, depending on the equity and investment commitment the company may go for asset securitization.
Below is the edited transcript of his interview to CNBC-TV18.
Q: It is understood that your company has emerged as a successful bidder in NHAI’s two lane Tamil Nadu project. By when do you plan to start construction on the project? What will be the total cost and your profit margins?
A: This is a two lane road project based on annuity. The existing highway has width of seven meter which needs to be extended to 10 meter and the length of the project is 80 kilometers. We estimate the total project cost to be around Rs 400 crore and it will take around two years to complete the job. We have received a concession period of 15 years. So, for the remaining 13 years we will receive annuity amount from NHAI as per the terms of concession.
Q: How much margins do you make upfront?
A: In normal course, we expect to make around 12-13 percent at EBITDA level at EPC value and around 16-18 percent as returns on investment. This is the normal bidding criteria for us.
Q: What has been the activity from NHAI side on both build-operate-transfer (BOT) and EPC. How does the order pipeline looks? Are they looking aggressive in awarding orders?
A: On cash contract front, NHAI invited around 8-9 tenders during last month. The response was quite good and NHAI received bidders at almost 20-22 percent lower then their estimate cost on the cash contract front. On BOT front, only one tender went to IL&FS Transportation Networks (India) Limited (ITNL) which is of Barwa Adda to Panghat.
We have received annuity for the second project. Today, we have submitted a bid for Rohtak-Hissar project for Rs 1300 crore, the results is expected to be out by today evening. Five entities have submitted their bid including us. Another 2-3 bids will be submitted before March 31, the central government and the Planning Commission will give approval for rates for the projects. Later, based on that, NHAI will come for the bidding and particularly in BOT and annuity front.
Q: Do you have any plans to reduce debt, are you securitizing any project, your debt stands at over Rs 3000 crore?
A: Out of the 12 projects that the company has, 8 are now operational and we expect the ninth project to be operational by June. So, in terms of the operational projects the number of projects is high and also the revenue parameter seems reasonable.
So, based on our requirement of the equity and investment commitment we will plan to securitise one or two assets. We have started that process but we require equity investment over the period four years from now so the planning will be done as and when needed.
Sadbhav Engineering: Low debt, consistent growth record make the company an attractive investment option
October 18, 2011
Ahmedabad-based Sadbhav Engineering is a diversified construction company, with projects related to construction of roads and highways, irrigation and mining. It has completed over 48 projects across these sectors. A substantial portion of the company’s revenues — around 70% –comes from road projects, while the remaining comes from mining (17%) and irrigation (13%) projects.
INVESTMENT RATIONALE : Sadbhav Engineering’s ability to maintain margins consistently makes it a good investment prospect. In the last five financial years, the company has been able to maintain its operating profit margin at 11-12% and net profit margin at 4-5%. This seen in the light of the changing interest rate scenario indicates the company’s sound project execution ability. Another factor that has helped the company maintain margins is its low debt and interest expense. Even as interest rates have increased over the last year-and a-half to June 2011, the company’s interest expense as a percentage of net sales has stayed in the 1-2.5% range, while the company’s net sales have grown by 34% to Rs 612 crore in the same period. It has an order book of Rs 6,586 crore, a big chunk of which comes from build-operate-transfer (BOT) projects.