LEADING FROM THE FRONT

Nitin Patel, CFO and Executive Director of Ahmedabad-based Sadbhav Engineering, takes great pride in the achievements of his company. Sadbhav is today the leader in the new hybrid annuity model (HAM) for highway projects launched by the government about 18 months ago, he points out. Under this, the National Highway Authority of India ( NHAI) pitches in 40 per cent of funds during the construction phase and the developer raises the balance 60 per cent in the debt: equity ratio most agreeable to the lenders. And in 15 years, it will be paid back as annuity in some 30 odd annuities by the NHAI. The repayment is guaranteed by the NHAI and the debt is annuity–linked unlike the riskier yield (density of traffic) –linked. “Under this model, the NHAI has so far called for 55 bids for projects worth around `50,000 crore and out of these, Sadbhav has participated in 42 of them and emerged the lowest bidder in seven bids with a total value of around `6,000 crore,” says Patel. “With these seven, Sadbhav leads the space winning the highest number of hybrid-annuity model bids.” Out of these seven, financial closure has been achieved for five projects. Today, the order book for Sadbhav Engineering is `9,500 crore. About 65 per cent of the total turnover is from “transportation business” (largely highways), 18 per cent to 20 per cent from irrigation and remaining 15 per cent from mining sector, according to Patel.

Typically, Sadbhav Infrastructure, the subsidiary of Sadbhav Engineering, bids for projects. The execution is done by Sadbhav Engineering, the parent company with strengths in EPC. Today, Sadbhav has presence across 18 states. Currently, the company, Patel seems to suggest, is driving in top gear, executing 48 EPC projects across the country and includes irrigation, mining, metro, road BOT and road EPC projects.