Construction Sector Update - 141013

Your success is our success
October 14, 2013

Nitin Arora
nitin.arora@emkayglobal.com
+91-22-66242491
Ajit Motwani
ajit.motwani@emkayglobal.com
+91-22-66121255
Construction
Strengthening the Weak Links
Premium restructuring another bid to clear clog, may not be enough to
improve project viability
The Cabinet Committee on Economic Affairs (CCEA) has given the principal approval for
restructuring premium payments for certain projects with the aim to improve project
viability and ease cashflows of already strained developer balance sheets. The deferred
premium payments would help concessionaires to use cashflows from the initial few
years for equity commitments for the project. However, it may not be sufficient to improve
viability of projects due to aggressive bids. In our view, the cancellation and re-bidding of
projects would be a prudent option [recently the National Highway Authority of India
(NHAI) cancelled four BOT projects, which are set to come up for re-bidding] against
premium restructuring, which is likely to face challenges.
Re-bidding of stalled contracts likely to push awarding activity upwards in

2HFY14E; NHAI targets 4000km
In the last 6 months, the NHAI has made attempts to resolve issues pertaining to the
sector by: a) de-linking forest and environmental clearances for linear projects, b)
directing banks to lower land acquisition requirements for disbursal of loans, c) classifying
debts for BOT projects as secured loans, d) CCEAs exit offer for road developers
irrespective of the construction stage, and e) restructuring of projects via rescheduling of
premium. As a result, the NHAI is now aims to award more than 50% of the total target of
4000km in FY14E on an EPC basis. Given the prevailing financial and structural
challenges in the sector, we see scope of new orders to emerge from potential re-bidding
of stalled contracts and EPC projects (will not garner interest of large developers due to
the small project size). However, the window for resolving the major reform premium
restructuring is very short given the upcoming elections in 2014. In case the standoff
continues it is unlikely that NHAI will be able to bid out a sizeable number of BOT projects
this year/H1FY15.
Substitution of concessionaire not to address financial unviable projects

The government/NHAI-approved substitution of developers (to replace SPV in
consultation with lenders) allowed the latter to sell projects irrespective of the stage of
construction. The substitution policy entails the SPV to hold a 51% stake in the project
post the sale. We believe the policy will not make any significant impact to help revive the
sector sentiment, as it would not largely benefit financially unviable projects, as: a)
developers opting for substitution of stalled contracts, where delays occurred due to the
concessionaire default, the new SPV becomes liable to pay a penalty on delayed
completion, and b) only eight projects of the 47 projects tendered in FY12 have
commenced construction till June 2013. This implies that the majority of the projects were
not given the appointed date, since exit policy would be applicable for projects that have
achieved the appointed date. Also, the ambiguities related to whether tax benefits would
pass on to the new SPV would involve additional costs (stamp duty that itself is 2.5% of
the transaction value).
Authority aims to clear the clog: Maintain Buy on IRB, Ashoka Buildcon
In the last 2 years, the road sector did not witness any awarding or construction activity.
A large part of the construction work did not keep up with execution run rates, which led
to project delays, mainly due to EC FC clearances and the limited ability of prospective
bidders to mobilize additional equity and competitive bidding, making the project
cashflows unviable to support premium payments. Heightened risk perception about BOT
projects causes financial institutions to be reluctant to take additional exposure in
highway BOT projects.
In this scenario, we maintain a Buy rating on IRB infrastructure and Ashoka Buildcon
because of their strong road-asset portfolio and stable order-books. With a minimal
funding requirement, these companies remain well-funded for exploiting new
opportunities as and when the NHAI awarding activity picks up. We retain a hold rating on
ITNL, given its high parent leverage, along with decelerating high margin fee income
could mean rising interest cost pressures, thereby causing deterioration in profitability.
Emkay Global Financial Services Ltd.
Sector Update
Emkay
Construction
Sector Update
CCEA in-principle approval for rescheduling of premiums

With regard to Kishangarh-Udaipur-Ahmedabad, Cuttuck-Angul, and Shivpuri-Dewas
projects, which have asked for rescheduling of the premium on account of delays in
acquiring land and variations in traffic seen from the time of bidding (which would make the
projects financially unviable), CCEA has approved rescheduling of premiums for 23 road
projects wherein appointed dates were not given . The underlying principle of this
rescheduling process is to maintain the NPV of these premium payments while allowing
some relief in the initial years to compensate for delays in clearances and traffic slowdown.
CCEA stated that NHAI would now consider each project on a case-to-case basis to
determine its eligibility for the rescheduling of restructuring. However, details are still
awaited regarding broad principles agreed on rescheduling like the discounting rate (1012%), besides conditions such as bank guarantee and upfront penalty. Developers of
another 16 road projects have also approached the NHAI for restructuring of premiums, but
the roads ministry is not yet to consider their proposals
Exhibit 1: Projects considered for premium restructuring
Projects
Concessionaire
Rampur- Kathgodam
Lucknow - Sultanpur
Agra - Etawa by pass
Hospet-Chitradurga NH-13
Cuttack-Angul NH-42
Solapur - MH/KNT border NH-9
Shivpuri-Dewas
Raipur - Bilaspur
Vijaywada - Gundugolanu
Obdedullganj-Betul
Solapur - Bijapur
Aurangabad-Barwa Adda
Rajumundary - Gundugulanu
Jalgaon - Gujarat/MH Border
Amravati - Jalgaon
Jind-Punjab/Haryana Border
Kota - Jhalwar
Sangareddy to MH-KNT Border NH-9
Hospet-Bellary NH-63
Kishangarh-Udaipur-Ahmedabad
Anandpuram - Vishakhapatnam - Ankapalli
Coimbatore Mettupalayam
Barwa Adda Panagarh
ERA-Sibmost
Essar-Atlanta
Ramky Infrastructure
Ramky Infrastructure
Ashoka Buildcon
Coastal-SREI
GVK
IVRCL A&H
Gammon Infrastructure
Transstroy
Sadbhav
KMC
IVRCl A&H
L&T
L&T
Unity Infra
Keti Constructions
L&T
PNC
GMR Infrastructure
Transstroy
Transstroy-OJSC
IL&FS Transportation
Total
Length Km
Project cost Rsmn
Premium Quoted Rsmn
Bid date
93
123
125
120
112
100
332
126
104
123
111
222
121
209
275
69
88
145
95
555
58
53
123
8,500
10,790
13,460
10,450
11,240
9,230
28,150
12,160
17,430
9,120
10,025
24,190
17,510
19,730
25,259
4,388
5,300
12,660
9,101
53,870
8,630
5,920
1,665
340
96
1,281
630
611
280
1,809
455
576
330
756
1,350
721
1,451
1,310
102
35
800
180
6,360
820
23-Nov-11
13-Sep-11
24-Nov-11
18-Nov-11
18-Nov-11
12-Dec-11
1-Aug-11
18-Nov-11
24-Jan-12
17-Jan-12
26-Mar-12
30-Mar-12
30-Mar-12
30-Mar-12
30-Mar-12
30-Mar-12
15-Apr-11
30-Sep-11
29-Jul-11
29-Jul-11
30-Mar-12
420
10-Apr-13
328777
20712
Source:
Premium Restructuring: Attempt to resolve developers/project cashflow

issues for the short term
The government has made attempts to kick-start the projects worth over Rs300bn, which
also remains essential in terms of creating appetite for contracts lined up for the next round
of bidding. However, it remains to be seen whether the relief offered to developers under
this proposal would be sufficient and acceptable to developers. The underlying statement
of the NHAI that restructuring would be looked into on a case to case basis implies its
ambiguous applicability across all projects is likely to engender litigation issues. Our view
on this development is as follows:
Emkay Research
October 14, 2013
Loans provided by the NHAI, which will not reflect in developers books; however, it
would provide interim relief to concessionaire, as deferred premium payments would
help concessionaires to use cashflows from the initial few years for equity
commitments for the project, ultimately to improve project viability and ease cashflows
of already strained developer balance sheets. At the same time, the government also
wants to ensure adequate financial commitment from developers so as to ensure
timely completion of projects.
2
Construction
Sector Update
As the NHAI would be considering rescheduling on a case to case basis, smallpremium projects and premium projects, which have commenced work, are likely to
remain out of the mechanism. There is a risk that some of these developers may
litigate if they, too, are not given this premium restructuring option, causing further
delays.
The window for resolving this standoff is very short, given the upcoming elections in
early 2014. In case the standoff continues, it is unlikely that the NHAI would be able to
bid out a sizeable number of BOT projects in 2HFY14E/1HFY15E.
The prudent strategy, we believe, is to kick-start the projects that have been weighed
down due to financial closure and aggressive biddings, and re-invite them for rebidding, which would attract serious developers and discover a new premium or a grant
base.
In our view, the major persistent issue with regard to projects involves financial
restructuring, since other structural problems related to land acquisition, re-bidding for
those projects that have not achieved financial closure (though the intensity can be lower),
and asking financial Institutions to take additional exposure in highway BOT projects,
especially in those cases where the NHAI satisfies all precedent conditions, can still be
resolved.
Premium restructuring not enough, re-bid of projects the prudent option

The projects are broadly categorized into four segments: a) projects wherein developers
are prepared to make progress based on the original bidding parameters as long as the
NHAI fulfills its obligations, b) projects that need to be terminated with a penalty in cases
where the concessionaire has defaulted, c) projects that would be terminated and re-bid
but without a penalty in cases where the concessionaire has defaulted and the NHAI has
failed to meet its obligations, and d) projects wherein concessionaires may be willing to
make progress with some changes to bidding conditions (such as premium restructuring).
As per NHAI estimates, 28 projects (3042.60km) were awarded, but they have not
achieved financial closure, whose grace period of 120 days (over and above the 180 days
required to achieve financial closure) end in October 2013. Recently, the NHAI scrapped
four road projects without penalising the developer as wildlife clearance was still pending.
Kota-Jhalawar road project (80km, a 4-laning project won by Keti Construction)

Meerut Bulandshahr (60km, a 4-laning project won by C&C Construction)
Rampur-Kathgodam (93km, a 4-laning project won Era Infrastructure)
Agra-Etawah (125km, a 6-laning project, won by Ramky Infrastructure)
We have noticed that developers are weighed down by economically unviable road projects
as a result of aggressive biddings and due to a lack incentives to help them keep the
projects in their kitty (in some cases the performance guarantee was not submitted which
forms 1% of the project cost). We have highlighted a list of 21 stalled projects (Exhibit 10)
on account of land acquisition issues (delay caused due to EC/FC clearances ), with
majority of them considered for premium for restructuring, part of which is likely to come up
for re-bidding . We believe the solution to kick-start these projects that are weighed down
due to financial closure is to re-invite them for re-bidding, which would attract serious
developers and discover a new premium or a grant base.
Emkay Research
October 14, 2013
Construction
Sector Update
Exhibit 2: Projects delayed due to land acquisition

Road projects stuck due to land Acquisition
Contractor
(km)
Cost (bn)
Lane
1. Vijayawada-Eluru-Gundu Golanu
VG Road project
103.6
16.8
2. Rajahmundry-Gundu Golanu
IVRCL
121.0
16.2
3. Anandapuram-Vskp-Anakapalli
TRanstroytollway
4. Raipur-Bilaspur
IVRCLAssets
5. Jind-Punjab/Haryana border
UnityInfra
6. Aurangabad-Barwa Adda
KMCConstruction
7. Hospet-Bellary
PNCBetul
8. Sangareddyto Maha border
L&T DPL
9. Hospet-Chitradurga
RamkeyInfra
120.0
10.3
10. Shivpuri-Dewas
GVK
332.5
28.2
11. Obedullaganj-Betul
TRanstroyOJSC
121.0
9.1
12. Solapur-Karnataka border
Coartal Srei
100.0
9.2
13. Solapur-Bijapur
SadhbhavEngineering
110.0
9.9
14. Jalgaon-Gujaratborder
L&T Infra
208.0
19.7
15. Amravati-Jalgaon
L&T Infra
275.0
25.4
16. Agra-Etawah
RamalkyInfra
124.5
12.1
17. Cuttack-Angul
Ashoka Buildcon
112.0
11.2
18. Kota-Jhalawar
Keti Construction
88.1
5.3
19. Kishangarh-Ahmedabad
GMR Infra
555.5
53.9
20. Lucknow-Sultanpur
Essar Atlanta
125.9
10.4
21. Rampur-Kathgodam
ERA-Sibmost
93.2
7.9
59.0
8.6
126.5
12.2
69.4
4.4
220.0
24.2
95.4
9.1
145.0
12.7
Source: Emkay Research, NHAI
Emkay Research
October 14, 2013
Construction
Sector Update
Awarding activity to inch upwards in 2HFY14E; NHAI targets 4000km

In FY13, project award activity fell sharply and was at its lowest levels since FY05, with the
exception of FY09. Both BOT (build-operate-transfer) and EPC (engineering, procurement
and construction) project awards by the NHAI declined to 1128km in FY13 from 6380km in
FY12. We have seen a surge in ordering activity in BOT mode between FY09 and FY12,
while the contribution of projects awarded in EPC mode was negligible. However, in FY13,
we noticed the tapering off awarding activity, with 14 BOT projects worth Rs150bn/1822 km
failing to attract any bids. This led to awarding of only 1128kms of BOT projects as against
the original target of 8800km. As a result, the NHAI is now aims to award more than 50% of
the total target of 4000km in FY14E on an EPC basis. Till date, the NHAI has awarded
(YTD FY14E) 356km and 123km in EPC and BOT modes, respectively. Given the
prevailing financial and structural challenges in the sector, we see scope of new orders to
emerge through the EPC route and potential re-bidding of stalled contracts.
Exhibit 3: Ordering activity remains sedate
3000
2500
2000
1500
6380
1000
479
FY14
(Sep2013)
635
2205
2693
1784
2249
2848
637
FY13
FY12
FY11
FY10
FY09
Length completed (Km)
Source: Emkay Research , NHAI
FY14
(Sep2013)
Length aw arded (Km)
1682
753
FY08
FY12
FY11
FY10
FY09
643
500
1116
FY13
1145
FY08
FY07
1390
FY07
3360
1608
FY06
5058
FY06
7000
6000
5000
4000
3000
2000
1000
0
Exhibit 4: Construction work per km
Source: Emkay Research , NHAI
Exhibit 5: Awarding activity in BOT and EPC
7000
6000
5000
4000
3000
2000
1000
0
6380
5058
3360
3055
1608
1390
1145
345
FY06
89
FY07
FY08
Length aw arded (Km) BOT
1116
643
123 356
FY09
FY10
FY11
FY12
FY13
FY14
(Sep2013)
Length aw arded (Km) EPC
Exhibit 6: Balance of work to be awarded

Total
Length (km)
Completed
4/6 lane(km)
Under
Length (km)
Implementation
No. of projects
NHDP Phase-I
7522
NHDP Phase-II
6647
7514
10
5647
610
52
385
NHDP Phase-III
12109
5611
4813
89
1685
NHDP Phase-IV
NHDP Phase-V
20000^
285
4130
33
10384
6500
1584
2496
28
2420
NHDP Phase-VI
1000
1000
NHDP Phase-VII
700*
21
20
659
Misc. Projects
656
363
293
NH-34
5.5
5.5
NHDP component
SARDP-NE
Total
Balance for award of

civil works (km)
388
69
43
276
55528
21094
12419
226
16808
Source: Company, Emkay Research
Emkay Research
October 14, 2013
Construction
Sector Update
Exhibit 7: BOT Projects to be tendered

Road Stretch
State
(kms)
Cost (Rs.mn)
Barwa Adda-Panagarh
West Bengal
122.9
16,650
Jabalpur-Lakhanadone
Madhya Pradesh
80.8
7,770
Bids invited
Bhavnagar-Verawal (4 lane)
Gujarat
260.0
32,400
Bids invited
Yadgiri-Warangal (4 lane)
Andhra Pradesh
99.0
9,570
Hospet-Hubli (4 lane)
Karnataka
143.3
12,930
Numaligarh-Jorhat (4 lane)
Assam
51.2
5,850
Ghoshpukur-Salsabari (4 lane)
West Bengal
154.9
22,120
Karaikudi-Ramanathapuram (2 lane)
Tamil Nadu
80.0
3,360
Bids to be re-invited
Demoh-Dibrugarh (4 lane)
Assam
46.0
4,730
No bids received, project to be restructured
Jorhat-Demoh (4 lane)
Assam
81.8
8,750
Chas-Ramgarh (2/4 lane)
Jharkhand
Aurangabad-Vedishi (4 lane)
Maharashtra
Chandikhole-Dubari-Bhuban (4 lane)
Odisha
62.2
6,520
Parwanoo-Shimla (4 lane)
Himachal Pradesh
89.6
22,930
Chhutmalpur-Saharapur-Yamunagarh-Haryana/UP border
Uttarakhand/ UP
104.8
10,240
EPS (6 lane)
Haryana/ UP
135.0
NA
Solapur-Vedishi (4 lane)
Maharashtra
98.7
9,700
Hissar-Dabwali (4 lane)
Haryana
145.8
13,320
2,023.30
208,530
Total
78.3
2,980
189.1
18,710
Status
Work Awarded to ITNL
NA
Bids to be re-invited
Bids to be invited
Bids invited
PPPAC proposal circulated
Substitution/exit policy to bring back momentum?

In order to clear the clog in the sector, the government has made provisions to allow
developers to sell projects (replace the SPV in consultation with lenders) irrespective of the
stage of construction. The substitution policy entails the SPV to hold a 51% stake in the
project post the sale. However, according to the NHAI, there are no restrictions on second
sale. The decision would be applicable to following projects:
The on-going 2- and 4-laning NHAI projects, where financial closures have been
achieved by the concessionaire, but COD has not yet been declared by the authority.
The 6-laning NHAI projects, where financial closures have been achieved by the
concessionaire, but a project completion certificate has not yet been declared by the
authority.
Completed 2-, 4- and 6-laning NHAI projects awarded in BOT mode.
All new NHAI projects under PPP yet to be bid out in BOT mode in line with case a, b,
and c as the case may be.
The provision substitution has always been in-built in the model concession
agreement:
Concession agreement for 2000: 51% during the construction period for 3 years
following COD and to hold 26% for the remaining concession period.
Concession agreement post-November 2009 (B. K. Chaturvedi Committee): 51%
during the construction period till COD, and for a period up to 3 years, the bidder can
reduce the shareholding to 33%. Thereafter, the shareholding can be brought down to
26% for the remaining concession period.
The current concession agreement provides a 51% stake during the construction
period for 2 years following COD.
However, the current concession agreement contains provision for substitution of the
existing concessionaire to lenders, and such a substitution could have been involved in
case of: (a) financial default (delays of 3 months in servicing debt), (b) concessionaire
default (lender gets 270 days to substitute concessionaire), and (c) other cases of breach
of provisions of MCA.
Emkay Research
October 14, 2013
Construction
Sector Update
Substitution/exit policy to help financially viable projects

Arguably, the move would benefit only financially viable projects (presumably, the projects
will not have too many problems), the exit option may not garner interest for projects which
have been bid aggressively (buyers focus only on value generating projects, and it lacks
incentives to share upfront losses). But the real problem lies with economically unviable
projects. However, we do not rule out possibilities, where weaker developers could use this
exit option to sell their stakes in projects (both completed and under-construction can be
sold) and use the resulting equity in other projects or on fresh bids without being blacklisted
for not complying with concession agreement commitments. Besides, such provision can
also help lenders to exercise greater control over projects funded by them (creates
flexibility to substitute concessionaires, particularly the non-performing ones).
Exit policy for projects achieved appointed date

It is to be noted that the substitution of the SPV would be applicable for projects that have
achieved the appointed date (all clearances related to EC and FC and other pre-conditions
of the NHAI). However, we have observed that of the total 47 projects tendered in FY12,
only eight projects have commenced construction till June 2013. This implies that the
majority of the projects were not given the appointed date. This move, we believe, would
not benefit these projects. It also presents ambiguity about whether the tax holiday that the
first SPV is eligible for would be passed on to the new SPV, the additional cost of new
stamp duty for forming a new SPV, which is usually 2.5% of the value of the transaction,
and the imposition of penalty for exiting the projects.
83% of projects awarded in FY12 yet to commence construction

The NHAI awarded 15,894km of road projects over FY10-13, both in BOT and EPC mode,
with 98% of the projects on a BOT basis. However, the strong tendering activity did not
corroborate the real progress on the execution front. We have observed that of the total 47
projects tendered during FY12, only eight projects commenced construction activity till
June 2013, increasing the average time to begin construction after a BOT project is
awarded to 18 months (the difference between the LOA date and till date). This is likely to
increase even further if the current clog is not cleared soon. Among the 11 projects
tendered in FY13, only one has started construction, which implies that the average time to
commence construction is 10-12 months, as 80% of the projects were tendered in 1HFY13.
This is expected to increase in the future. The NHAI targets to undertake 2500km of
construction activity in FY14E (the target was 2580km in FY13), with 637km of road
construction already completed till July 2013.
Emkay Research
October 14, 2013
Construction
Sector Update
Exhibit 8: Out 47 projects tendered during FY12, only eight projects commenced construction till date
Projects
Bidder
Award date
Nagpur-Wainganga bridge
JMC projects, Artefact projects
May-11
Km Type
45 BOT
Apr-12
Construction Start date

May-13
Panikholi-Rimoli
Gayatri projects
Aug-11
163 BOT
2 laning of Kisnagiri-Tindivanam
Transitory-OJSC corporation
May-11
176 Annuity Apr-12
Vijaywada-Machhlioatnam
Madhucon projects
Nov-11
64 BOT
Kota -Jhalwar
Keti construction
Apr-11
88 BOT
Rampur-Kathgodam
Era infra-OJSC-SIBMOST
Nov-11
93 BOT
MH/KNT Border Sangareddy
L&T IDPL
Nov-11
145 BOT
Hospet Chitradurga
Ramkey infra
Nov-11
120 BOT
4-laning Solapur-Bijapur
Sadbhav eng
Mar-12
110 BOT
4-laning of Cuttcuk-Aangul
Ashoka Buildcon
Nov-11
12 BOT
4-laning of UP Harayana border-Yamunagar-Saha-Barwala
Gammon Infra
Mar-12
107 BOT
4-laining of Solapur-Maharashtra/KTK section
Coastal-srie Consortium
Dec-11
100 BOT
4-laning of Rohtak-Jind
Vijai infra
Dec-11
48 BOT
4-laining of Mulbagal-Karnatka/AP Border
JSR Construction
Mar-12
22 BOT
4-laining of Kiratpur ner chowk
IL&FS transportation
Feb-12
84 BOT
Beawer-Pali-indwara
L&T IDPL
May-11
244 BOT
Dec-11
2-laining with PS Motihari-Raxaul
Tantia-Jiangsu
Jan-11
69 BOT
Oct-11
4-laning of Punjab-Harayana border-Jind
Unity Infra
Mar-12
68 BOT
2-laning of Jowai-Meghalaya/Assam border
Simplex infra
Mar-12
102 BOT
Patna Buxar
Gammon infra
Nov-11
124 BOT
4- laning of Obedullnganj-Betul
Transitory
Feb-12
125 BOT
4-laning of Khagaria-Bakhtiarpur
Navayuga Engineering
Mar-12
112
4-laning of Hoskote-Dobbaspet
Transitory-OJSC Consortium
Mar-12
80 BOT
4-laining of Jalgaon-Maharashtra/Gujarat
L&T IDPL
Mar-12
208 BOT
4-laining of Amravati-Jalgoan
L&T IDPL
Mar-12
275 BOT
Jabalpur to Lakhanadone
Gannon Dunkerley
Jul-11
80 BOT
4-laning of Gwalior-Shivpuri
Essel infraprojects
Sep-11
125 BOT
4-laning of Shivpuri-Dewas
GVK Transportation
Sep-11
330 BOT
4-laning of Raipur-Bilaspur
IVRCL Asset holding
Nov-11
126 BOT
Rehabitation & upgradation to Birmitrapur to barkote
Gammon infrastructure
Mar-12
125 BOT
4-laning to Hospet-Bellary-Karnataka/AP
PNC Infratech-BF utility
Oct-11
95 BOT
4-laning of Mahulia to Behgora to Kharagpur
Simplex infrastructure
Dec-11
127 BOT
79.3 BOT
4-laning of Gomti-Chauraha-udaipur
Sadbhav Engg, Arvee
Mar-12
4-laning of Meerut-Bulandshahar
C&C construction
Sep-11
66 BOT
4-laning of Lucknow-Sultanpur
Essar-Atlanta(JV)
Oct-11
125 BOT
2-laning of Muzaffarpur-Barauni
KNR, frischmann prabhu
Oct-11
107 BOT
Lucknow-Raibareli
Essel infratructure
Nov-11
4-laning of Angul, Sambalpur
Abhijit Roads
Nov-11
153 BOT
4-laining of Jabalpur-Katni-Rewa
Soma Tollways
Aug-11
225 BOT
6-laning of Gundugolanu-Rajamundry
IVRCL asset & holding
Mar-12
120 BOT
6-laning of Anandapuram-visakapatnam-Anakapalli
Transtroy-OJSC corporation
Mar-12
58 BOT
Jul-12
70 Annuity
Ahmedabad to Vadodra
IRB infrastructure
Apr-11
102 BOT
6-lanining of Aurangabad-Barwa Adda
KMC construction
Mar-12
221 BOT
Vijaywada-Gundugolanu
Gammon Infra
Feb-12
103 BOT
Eatawah-Chakeri (Kanpur)
Oriental structural
Nov-11
160 BOT
Agra-Etawah Bypass
Ramky Infra
Nov-11
124 BOT
6-laning of Kishangarh-Udaipur-Ahmedabad
GMR Infra
Sep-11
555 BOT
Jan-13
Mar-13
Emkay Research
October 14, 2013
Construction
Sector Update
EPC to propel momentum?

As awarding activity has stagnated in FY13 and 1HFY14E for various reasons discussed
above, the NHAI is trying to make progress to get the order momentum back on track via
awarding EPC projects. Till date, the NHAI has awarded six projects of 356km via the EPC
route. It is targeting to tender awards of 2000km in 2HFY14E.
Features of EPC Model concession agreement:

The agreement is stringent with regard to technical criteria, where EPC contracts have set
minimum criteria of 2.5x the estimated project cost for projects and construction business
(both highways and other core sectors combined) carried out by the bidder over the past 5
financial years. This compares with the BOT contract requirement of 1x the project costs
worth of project business (highways and other core sectors) accumulated over the past 5
years.
Leeway provided on financial net worth. The concession agreement currently provides
leeway in terms of minimum net-worth threshold, which is at 10% of the project cost as
against 25% of the project cost for BOT contracts.
DLP (defect liability period) of 2 years on completion of the project highway and
additional DLP for major bridges and structures of 3 years (total 5 years).
Defined maintenance period of 2 years after the completion of work; 1.5% and 2% of
the contract price to be paid to the contractor in the first and second year, respectively.
Incentive for the contractor for early completion in the form of a bonus.
Damages up to 1% of the project cost would be paid by the authority on account of any
delay from their side.
The contractor cannot sub-contract any work in more than 70% of the total project
length.
The EPC contract allows for a JV of maximum three players, with the lead member
responsible for satisfying 60% of technical and financial requirements (others have to
satisfy 30% of requirements). This is in addition to the weighted score exceeding the
technical and financial requirements.
Large players may deter to participate in EPC projects

Our discussions with the NHAI and road companies reveal aggressive biddings across
EPC projects in the past, since the EPC qualification document, as per our understanding,
encourages participation with no cap on the number of bidders (it is leant that some bidders
have quoted at a 30% discount to the NHAI benchmark cost) in small-size projects of
Rs3bn (20 bidders) and project size of Rs3-5bn (10 bidders). We consider this aggressive
bidding in EPC projects as generation of negative value for bidders, as: a) scalability of
margins is capped in EPC, b) project value is at risk due to delays in land acquisition (this
would increase overheads), and c) if any change in scope of work, which ultimately would
put project completion at risk. We also believe that small project size of Rs3-4bn (Rs3040mn/km) may dissuade large players such IRB Infrastructure and ITNL.
Emkay Research
October 14, 2013
Construction
Sector Update
Exhibit 9: Projects to tendered on EPC basis

Road Stretch
Bheem-Parsoli including Bheem & Parsoli Bypass
State
Rajasthan
(kms)
33.0
Cost (Rs.mn)
1,000
Status
Awarded
Parsoli-Gulabpura
Rajasthan
36.3
1,140
Awarded
Jhalawar-Rajasthan/ Madhya Pradesh Border
Rajasthan
62.2
1,770
Awarded
Merta City-Lambia-Jaitaran-Raipur
Rajasthan
52.8
1,580
Awarded
Raipur-Bheem (Jassa Khera)
Rajasthan
32.4
1,490
Awarded
Ambedkarnagar-Raebareilly (2 lane)
Uttar Pradesh
155.9
4,960
Bids invited
Raebareilly-Banda (2 lane)
Uttar Pradesh
133.3
3,510
Bids invited
Ladnu Nimbi Jodhan-Degna-Merta City (2 lane)
Rajasthan
139.0
3,680
Bids invited
Bhilwara-Ladpura (2 lane)
Rajasthan
67.8
2,370
Bids invited
Padhi-Dahod (2 lane)
Rajasthan
85.6
2,790
Proposal given
Unaira-Gulabpura (2 lane)
Rajasthan
214.0
5,710
RFP stage
Sitarganj-Tanakpur (2 lane)
Uttarakhand
Karauli-Dholpur (2 lane)
Rajasthan
Biharsharif-Barbigha-Mokama (2 lane)
52.2
2,200
100.9
2,890
Bihar
56.3
1,940
Chhapra-Rewaghat-Muzzaffarpur (2 lane)
Bihar
75.0
3,050
Patna-Gaya-Dhobi (4 lane)
Bihar
127.2
10,270
Jalandhar-Amritsar (6 lane)
Punjab
20.0
4,930
Thanjavur-Pudukkotai (2 lane)
Tamil Nadu
55.2
1,700
Tirumayam-Mannamadurai (2 lane)
Tamil Nadu
77.7
2,520
Bareilly-Sitarganj (2 lane)
UP
74.5
2,970
Uncha Nagar-Khanuawa-Roppas-Dholpur (4 lane)
Rajasthan
75.0
Bar-Bilara-Jodhupur (2 lane)
Rajasthan
125.0
Barmer-Sanchor-Gujarat Border (2 lane)
Rajasthan
154.0
2,005.10
62,470
Total
Source: NHAI
Emkay Research
October 14, 2013
10
Construction
Sector Update
To reduce competitive intensity further among new BOT projects

With the competitive intensity edging lower in FY13 across 11 projects, developers stayed
away for putting final bids across projects barring one project, where erratic bidding was
witnessed in the Walajahpet-Poonamallee road project, with 19 financial bids being placed.
We analysed 38 projects accounting for around 50% of the total length awarded by the
NHAI since FY11. In FY13, the final participation (final bids submitted as percentage of prequalified bidders) has fallen sharply, barring four projects, which witnessed double-digit
participation. The average participation from pre-qualified players in the final bidding for the
projects awarded between FY11-12 has declined from 36% to 13% for the projects
awarded in FY13. We also see an increase in the awarding activity of EPC road projects
will garner interest for core construction players, thereby further reducing competitive
intensity in the BOT space. Given that 2000km is ready to get awarded via the BOT route,
we believe, developers who have the financial muscle will benefit the most in the next
round of bidding.
Exhibit 10: Competitive intensity amongst developers
Date
Name of Project
Winners
Cost
(Rs
bn)
Apr-11
Apr-11
May-11
Jul-11
Sep-11
Sep-11
Oct-11
Nov-11
Nov-11
Nov-11
Nov-11
Nov-11
Nov-11
Dec-11
Dec-11
Jan-12
Jan-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Mar-12
Apr-12
May-12
May-12
Jul-12
Jul-12
Aug-12
Nov-12
Nov-12
Nov-12
Mar-13
Mar-13
Ahmedabad Vadodara
Beawar-Pali-Pindwara
Barwa Panagarh
Kishangarh--Ahmedabad
Gwalior Shivpuri
Shivpuri Dewas
Lucknow Sultanpur
Cuttak Angul
Etawah and Chakeri (Kanpur)
Hospet Chitradurga
Mah/KNT- Sangareddy
Patna - Buxar
Raipur Bilaspur
Bikaner - Suratgarh
Chittorgarh Neemachah
Kiratpur - Ner chowk
Obdellagang - Betul
Amravati Jalgaon
Anadpuram- Visakhapatnam - Ankapalli
Gomti Chauraha - Udaipur
Hoskote - Dobaspet
Jalgaon - Guj/Mah Border
Jind - Punjab/Haryana Border
Kharagpur-Baleshwar
Rajahmundry - Gundugulunu
Sikar - Bikaner
Solapur - Bijapur
Bridge across Narmada (Vadodara - Surat section)
Walajahpet - Poonamallee
Goa karnataka - Kundapur
Raebareli-Jaunpur
Coimbatore-Mettupalayam
Walayar-Vadakkancherry
Kashipur-Sitarganj
Rajasthan border-Fatehpur-Salasar
Rajsamand-Gangapur-Bhilwara 87 6.8 Sadbhav Engg Ltd
Rohtak-Hissar
Khed-Sinnar
IRB Infrastructure
L&T
DSC
GMR Infra
Essel Infraprojects
GVK
Essar - Atlanta
Ashoka Buildcon
Oriental Structural
Ramky Infra
L&T
Gammon Infra
IVRCL
MBL Infra
Chetak Enterprises Ltd.
Transtroy
L&T
Transtroy - OJSC
Sadbhav Engineering
Transtroy - OJSC
L&T
Unity infrastructure
IVRCL Asset
Sadbhav engineering
HCC
Essel project
IRB Infra
PNC Infratech
Transstroy-OJSC Consortium
KNR Construction
Galfar Engg & Contracting SAOG
Galfar Engg & Contracting SAOG
Sadbhav Engg Ltd
Sadbhav Engg Ltd
IL&FS Transportation Networks
49.2
23.9
16.7
53.9
10.6
28.2
10.4
11.2
14.9
10.5
12.7
8.1
12.2
5.1
5.1
18.2
9.1
25.4
8.4
11.1
7.2
19.7
4.4
4.8
16.2
6.3
11.0
5.1
12.9
24.0
5.7
5.9
6.8
6.1
5.3
6.8
9.6
13.5
195
244
123
556
125
330
126
112
160
120
145
105
127
172
117
113
121
275
58
79
80
209
69
119
121
238
110
6
93
187
166
54
54
77
154
87
99
138
13
16
9
7
15
14
12
16
9
14
19
1
17
6
9
4
6
12
6
10
4
17
5
5
3
1
16
2
19
2
8
6
1
1
2
1
5
4
22
19
20
11
28
19
34
27
35
37
37
36
33
33
36
28
36
22
35
39
36
29
40
40
35
30
38
35
37
35
30
35
32
30
32
35
34
40
59%
84%
45%
64%
54%
74%
35%
59%
26%
38%
51%
3%
52%
18%
25%
14%
17%
55%
17%
26%
11%
59%
13%
13%
9%
9%
42%
6%
51%
6%
27%
17%
3%
3%
6%
3%
15%
10%
479.6
5,686
296
942
33%
Total
Players
% Final
Length
Final
prebids
(km) bidders qualified participation
Source:
Emkay Research
October 14, 2013
11
Construction
Sector Update
Traffic growth muted

Our analysis of traffic growth over a period of 17 quarters in 21 road projects owned by IRB
infrastructure, Ashoka Buildcon, ITNL, GMR Infrastructure and Sadbhav Engineering
shows a declining trend. The sectors flat traffic growth in the past 2-3 quarters can be
attributed largely to: a) lower port traffic witnessed across major ports, which has been
declining for seven consecutive quarters, b) early arrival of the monsoon, with the higherthan-expected rainfall during June-July 2013, and c) overall economic slowdown and the
resultant lower GDP growth.
Exhibit 11: Road Traffic growth Flattish
Traffic grow th
Source: Emkay Research , Companies
Q1FY14
Q4FY13
Q3FY13
Q1FY14
-4
Q4FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
Q2FY12
Q1FY12
Q4FY11
Q3FY11
Q2FY11
Q1FY11
Q3FY13
(1.3)
-2
(0.8) (2.2)
(1.4) (1.4)
Q2FY13
0.0 (0.1)
Q1FY13
0.0
Q4FY12
1.2
Q3FY12
0.4
(4.8) (7.2) (5.4)

Q2FY12
1.8
2.0
(2.0)
0.8
3.1
4.0
5.8
Q1FY12
3.7
Q4FY11
6.0
5.8
4.9
Q3FY11
6.9
8.0
Q2FY11
9.7
10.0
Q1FY11
12.0
Exhibit 12: Port traffic edged lower
-6
-8
Port traffic
Source: Emkay Research , IPA
Exhibit 13: Container traffic declined
8.0
6.0
5.0
6.0
6.0
5.0
5.7
3.3
3.2
4.0
2.5
2.0
1.0
0.2
(0.3)
Q4FY12
Q1FY13
(2.0)
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
(4.0)
Q2FY13
Q3FY13
Q4FY13
Q1FY14
(3.8)
(6.3)
(6.0)
(8.0)
Container traffic
Source: Emkay Research, IPA
Emkay Research
October 14, 2013
12
Construction
Major amendments
Agreement
Sector Update
discussed
under
Model
Concession
Proposed amendments in pre-qualification criteria of the RFQ document

The current RFQ document has been able to encourage a large number of bidders to
participate in the pre-qualification process. It has also been observed that many bidders,
who are not competent to undertake the project, are also getting pre-qualified. This is
leading to problems in the post-award scenario of the projects with such bidders. The
overcrowding and aggressive bidding by such bidders have also led to a situation, where
reputed and competent bidders stay away. Lately, a number of projects with such bidders
either have failed to achieve financial closure or are facing substantial delays in completion.
Such projects in distress are susceptible to defaulting on loan repayments and becoming
non-performing assets (NPAs). In the course of experience gained in evaluating the RFQ
applications for various projects, it has been felt that some provisions of the Model RFQ
required modifications and/or clarifications.
A) Assessment of Available Capacity for execution of future projects

The technical capacity of the applicant is calculated on the basis of aggregate
project/construction execution experience under different categories of projects during the
last 5 financial years preceding the applications due date. However, the above
methodology of assessing technical capacity only takes into account the past experience of
the applicant and does not capture the available technical capacity of the firm at the time of
bidding with respect to present commitment on deployment of resources for other projects
undertaken by the firm for development/implementation. As a result, applicants with limited
or no capacity available for execution of additional projects are also pre-qualified, and in
the event of the project award are failing to either achieve financial closure or execute the
project in a timely manner. Therefore, it is pertinent to consider the applicants
committed resources/investments on the ongoing projects to arrive at the available
technical capacity. Thus, it is proposed that in addition to assessing the past
performance of project executions, the available bid capacity with respect to
resource commitment in projects under development/execution may also be
assessed while pre-qualifying the applicants.
B) Assessment of Financial Capacity

The applicants financial capacity is assessed on the basis of the net worth of the firm in the
preceding financial year. In order to qualify, the net worth of the applicant is required to be
minimum 25% of the total project cost for which the applications are invited, and the net
worth of the applicant is computed as the sum of subscribed and paid-up equity and
reserves from which the sum of revaluation reserve, miscellaneous expenditure not writtenoff and reserves not available for distribution to equity shareholders is deducted. However,
it has been observed in a number of cases that applicants qualifying in the net worth
criteria are failing to achieve financial closure or unable to infuse equity in the awarded
projects due to unavailability of adequate equity capital and/or a highly leverage balance
sheet of the applicant. It clearly demarcates that net worth as the only deciding factor
is not the sufficient parameter to assess the applicants ability to arrange financing
required for the project.
Therefore, it has proposed to introduce the following additional qualification criteria in the
RFQ document with respect to financial capacity of the applicants:
(i) Adjustment of Net Worth with respect to Debt-Equity ratio of the Applicant:
It is proposed that net worth of the applicants shall be suitably adjusted with a factor linked
to the debt-to-equity ratio of the applicant. This will reduce the applicable net worth of the
applicant in case of a highly leveraged entity, thus preventing it from qualifying for highvalue projects.
Emkay Research
October 14, 2013
13
Construction
Sector Update
Exhibit 14: Adjustment to net worth for debt-equity ratio

Debt-Equity Ratio
Applicable Factor
Less than or equal to 3:1
More than 3:1 & upto 6:1
0.85
More than 6:1 &upto 10:1
0.6
More than 10:1
0.2
(ii) Submission of Equity Financing Plan by the Applicants:

It is proposed that applicants will have to furnish a detailed equity financing plan on the
equity requirement with regard to the total project cost for the project indicated in the RFQ
document. The proposed equity financing plan shall include submission of certificates with
regard to sources of equity to the applicant. Additionally, the applicants shall also require to
furnish their equity commitment for projects to be executed during the construction period
of the project, which will prevent bidders from participating in projects unrealistically without
ensuring availability of equity required for the project.
Exhibit 15: TPC of the project that bidder has applied (Rsbn)
Debt-Equity
Project cost
0-2.5
30% of TPC
Above 2.5-upto-6.5
25% of TPC
Above 6.5
205 of TPC
(iii) Restriction on the Applicants on account of pending financial closure and nonperforming assets
It is proposed that applicants shall be restricted from participating in the project in case
financial closure of three or more awarded projects is pending on the date of the RFQ
submission for reasons attributable solely to the applicant. Currently, this provision is
provided in the RFP document.
Payment of Premium by the Concessionaire

With a view to mitigating the initial cash-flow constraints, it is proposed that the payment of
premium may start 3 years after COD for 4-laning projects, and from the scheduled project
completion date for 6-laning projects. Further, keeping in view the likely increase in the
cashflows of the projects and the reduction in debt service requirements, it is proposed that
after the 10th anniversary of COD for 4-laning projects/project completion date for 6-laning
projects, the percentage/absolute increase in premium would be higher compared with the
initial period.
The following options are being proposed:

Option 1 Revenue Sharing Principle
To ensure that there is no revenue sharing during the initial years of the project, it is
proposed to modify the concession agreement provision as per the following:
For 4-laning projects: Percentage revenue sharing would start from the fourth year of
COD or thereafter (depending on the bid), and would increase by 1% every year till the
tenth anniversary of COD. Thereafter, the increase would be 2% per year for the rest of
the phase of the concession period.
For 6-laning projects: Percentage revenue sharing would start from the scheduled
project completion date or thereafter (depending on the bid), and would increase by 1%
every year till the tenth anniversary of project completion date. Thereafter, the increase
would be 2% per year for the rest of the phase of the concession period.
Option 2 Fixed Monetary Value Principle
Emkay Research
October 14, 2013
For 4-laning projects: Bidders should quote a specific monetary amount that is payable
to the authority from the fourth year of COD, and this amount should increase by 5%
per year till the tenth anniversary of COD. Thereafter, the increase would be 8% per
year for the rest of the phase of the concession period.
14
Construction
Emkay Research
October 14, 2013
Sector Update
For 6-laning projects: Bidders should quote a specific monetary amount that is payable
to the authority from the scheduled project completion date, and this amount should
increase by 5% per year till the tenth anniversary of completion of construction.
Thereafter, the increase would be 8% per year for the rest of the phase of the
concession period.
15
IRB Infrastructure
Separating Fundamentals from the Noise
October 14, 2013
Rating
Buy
CMP
Target Price
Rs78
Rs158
EPS Chg FY14E/FY15E (%)
NA/NA
Target Price change (%)
Earnings to remain flat over FY13-15E. But we expect a

CAGR of 10% in cash profits, providing the ability to fund
equity in new projects
Biggest beneficiary of new road projects to be tendered out

in 2HFY14E. 4 projects scheduled to commence toll
collections over the next.
Attractive valuations at 0.8x P/BV & 5.9x PE near the end

2008 troughs IRB remains our preferred road BoT asset play.
Maintain buy with the revised target price of Rs158/share
-7
Nifty
6,096
Sensex
20,529
Price Performance
(%)
1M
Absolute
Rel. to Nifty
3M
6M 12M
-22
-31
-50
-1
-25
-38
-54
Source: Bloomberg
Relative price chart

Rs
% 0
150
-14
125
-28
100
-42
75
-56
50
Oct-12
Strong cashflows from a healthy mix of operating and underconstruction assets, and moderate gearing the key
competitive differentiators in a capital-intensive business
Previous Reco
Buy
175
Dec-12
Feb-13
Apr-13
IRB Infrastructure (LHS)
Jun-13
Aug-13
-70
Oct-13
Rel to Nifty (RHS)
Source: Bloomberg
Stock Details
Sector
Construction
IRB IB
Bloomberg
Equity requirement of Rs3-4bn in FY14E, Rs17-18bn over 2-3 years

IRB Infrastructure Developers (IRB) has 15 road projects under it portfolio, of which 10
are currently operational and the rest are under construction. The companys total equity
requirements over the next 2-3 years have been estimated at Rs17bn. On account of
commissioning of 4 road projects i.e. Jaipur-Deoli, Amravati-Talegaon, AmritsarPathankot, & Ahmedabad-Vadodra along with EPC arm will garner cumulative operating
cash flow Rs19.6 bn from FY13-15E. These, coupled with current cash of Rs14.7bn,
would be sufficient to meet equity requirements of the company for the next 2 years.
Peak D:E of 2.33x still manageable

IRB Infrastructures consolidated debt (adjusted for loans and advances) stands at
Rs79bn, including its standalone debt of Rs11.4bn, with cash balance of Rs14.7bn as of
March 31, 2013. Debt worth Rs71.3bn, accounted for individual road projects, is fairly
positive for the company compared to other road developers like ITNL, which has debt
worth Rs37bn on its standalone balance sheet as of March 2013, with no certainty of
recurring income to offset the surge in the interest cost. We estimate peak debt (for
current projects in its kitty) of Rs116bn, which would imply debt equity of 2.33x.
3,324
Equity Capital (Rs mn)
10
Face Value(Rs)
332
No of shares o/s (mn)
158/ 52
52 Week H/L
Market Cap (Rs bn/USD mn)
26/ 427
Daily Avg Volume (No of sh)
3,061,331
Daily Avg Turnover (US$mn)
3.7
Shareholding Pattern (%)

Sep'13 Mar'13 Dec'12
Promoters
62.9
62.9
62.7
FII/NRI
22.3
22.3
22.7
Institutions
4.0
4.0
4.0
Private Corp
3.9
3.9
4.3
Public
6.9
6.9
6.3
Source: Bloomberg
Nitin Arora
+91-22-66242491
Ajit Motwani
+91-22-66121255
Current price implies less than 1x book value adjusted for Mumbai-Pune
The stock has corrected 34% over the last 3 months. The current market price of Rs79
(market capitalization of Rs26.2bn) implies value of 0.4x the invested book (historically
seen at 1x) adjusted for the Mumbai-Pune Expressway Project (MIPL). IRB has invested
Rs33bn in FY13 as equity investments, and loans and advances in BOT road projects.
We have adjusted the value for MIPL of Rs13.6bn (FY13 revenue is Rs4.16bn; likely to
report revenue of Rs4.39bn and Rs5.43bn in FY14E and15E, respectively), with
relatively low debt of Rs8.76 bn. MIPL (Mumbai - pune ) accounts for 24% of our SOTP
and 40% of value derived for the total BOT road assets. This is one the non-disputable
road assets, which has certainty of cashflows, with a revenue CAGR of 14% over FY1315E as against 13% during FY11-13. We understand that there have been concerns
over the recent project (Ahmedabad-Vadodara), with relatively aggressive bid & traffic
disappointment. However, we believe, Amritsar-Pathankot, Jaipur-Deoli and AmravatiTalegaon projects have potential value, as these were won in a low-competitive
environment and at high grant levels (close to 40%).
Financial Snapshot (Consolidated)
YE-
Net
EBITDA
Mar
Sales
(Core)
(%)
FY12A
31,307
13,735
FY13A
36,872
16,333
FY14E
41,433
FY15E
44,109
(Rsmn)
EPS
EPS
RoE
EV/
APAT
(Rs) % chg
(%)
P/E
EBITDA
P/BV
43.9
4,960
14.9
9.6
18.8
5.3
5.6
0.9
44.3
5,567
16.7
12.2
20.4
4.7
5.5
1.0
18,705
45.1
4,471
13.5
-19.7
16.1
5.8
5.7
0.9
21,184
48.0
5,636
17.0
26.1
17.8
4.6
5.9
0.8
16
Company Update
Emkay
IRB Infrastructure
Company Update
Despite strong execution E&C order-book at Rs56bn provide reasonable

visibility; however, growth could remain subdued
IRB Infrastructures order-book at the end of March 2013 stood at Rs 76.6bn. Out of this,
Rs56bn worth of orders would be executed over the next 3 years. The backlog includes
Rs23bn worth of Goa-Kundapur project, which the company added in Q2FY13.
The companys construction revenue is likely to moderate, due to completion or nearing
completion of its key projects. Recently, the Talegaon-Amravati project was completed,
while Jaipur-Deoli, Amritsar-Pathankot and Tumkur are complete 95%, 90% and 85%,
respectively. Irrespective of the completion of its four key projects, the company would able
to maintain construction revenue for FY14E at the similar level of what it had garnered in
FY13, due to increase in contributions from Ahmedabad-Vadodara and Goa-Kundapur
(which is expected to be executed in 2HFY14E; it is waiting for financial closure) .
IRB Infrastructure expects the bidding activity to regain momentum during Q3/Q4FY14
(expects 1,000-2,000km of fresh projects to come up from the NHAI, while 3,000-4,000km
to be bid out during 3Q/4QFY14E), and expects new orders to come from potential re-bids
(projects stalled on account of non-achievement of financial closure and fresh biddings).
Exhibit 16: Revenue CAGR of 9.4% over FY13-15E
Exhibit 17: EBITDA CAGR of 14% over FY13-15E
50
25
40
20
30
15
20
10
17
24
37
31
41
44
10
5
10
14
19
21
FY10
FY11
FY12
FY13
FY14E
FY10
FY15E
18
16
14
12
10
8
6
4
2
5.0
4.0
3.0
4.0
FY10
FY11
FY12
FY13
FY14E
FY15E
Exhibit 19: EPS
6.0
4.5
FY11
Exhibit 18: PAT growth to remain Flat
2.0
16
5.6
5.0
5.6
4.5
1.0
-
15
13
12
FY10
FY11
17
17
13
FY12
FY13
Emkay Research
October 14, 2013
FY14E
FY15E
FY12
FY13
FY14E
FY15E
17
IRB Infrastructure
Exhibit 20: Flat EPC revenue growth
Company Update
Exhibit 21: BOT revenue to surge higher
30
25
25
20
20
15
15
26
10
5
21
17
26
24
10
20
15
10
11
FY10
FY11
FY12
FY13
FY10
FY11
FY12
FY13
FY14E
FY15E
FY14E
FY15E
Exhibit 22: Current market price implies less than 1x invested book value
CMP
No of shares
79
332
Market cap Rsmn
26260
Value for Mumbai Pune Rsmn
13,411
Market cap adj. for Mumbai Pune project
12,849
Investments (equity + L&A) in road projects at end-FY2013
33,075
Investments in MIPL at end-FY2013

Investments adjusted for MIPL
Implied P/B (x)
1,073
32,002
0.40
Emkay Research
October 14, 2013
18
IRB Infrastructure
Company Update
Exhibit 23: Total Investments (Equity, Loans & advances )

Project Rsmn
Investments in road projects
FY11
FY12
FY13
Loans & advances
Loans & advances
Loans & advances
Equity
Short Long
term term
Thane-Bhiwandi bypass
611
Mumbai-Pune Expressway
778
Pune-Sholapur
451
Pune-Nashik
519
12
Ahmednagar-Karmala-Tembhurni
80
Bridge over Patalganga River-Kharpada
80
200
Total Equity
611
611
978
778
451
451
531
519
80
80
Short Long
term term
18
Total Equity
Short
term
Long
term
Total
629
611
1212
778
451
451
451
534
519
519
80
80
80
80
80
80
80
722
222
228
5,472
6344
872
2680
3,552
434
15
1,073
80
Thane-Ghodbunder
222
707
929
222
Bharuch-Surat
872 2,297
3169
872
855
855
1,336
227
1563
1,336
566
1,902
2,611
2611
4,653
1,117
5770
4,653
847.8
5,501
Integrated Road Development in Kolhapur

Surat-Dahisar
500
611
295
Pathankot-Amritsar
355 1,180
257
1792
355
162 1,145
1662
774
7.9
2326.3
3,109
Talegaon-Amravati
322
57
381
322
151
828
1301
364
352
1093.4
1,810
Jaipur-Deoli
390
264
272
480.62
2924.9
4,380
Panji-Goa
311
929
1173.1
1,485
1110 315.727
1110.7
2,537
1000
33.61
2950.0
3,984
801
972.92
6,558 11578.2
33,075
Tumkur-Chitradurg
0 1,181
156
926
780
200 1,837
2817
975
1240
311.4
1,173
1484
311
1337
476
476
952
1,000
69 2,950
4019
Ahmedabad-Vadodara Expressway
MVR Infra
Subtotal - Investment in road projects
8,457 6,772
742 15971 12,846
7,832 8,942 29620.4 14,939
1,775
Investments in other subsidiaries

Construction subsidiary
312 1,588
1900
312
1353.2
1665.2
312
957
1,269
Real estate subsidiary
586
587
586
587
586
587
26
26
119.4
119.5
0.09
182
182
182
182
10.1
10.2
0.09
211
211
898 1,796
2694
898 1483.81
2381.81
898
1351
2,249
32002 15,837
7,909
Hospitality subsidiary
Sindhudurg Airport
Subtotal - Investment in other subsidiaries
Total investments in subsidiaries
9,354 8,570
742 18666 13,744
9,316 8,942
11,578
35,324
Emkay Research
October 14, 2013
19
IRB Infrastructure
Company Update
Maintain Buy with a Revised Target price of Rs 158

With significant slow down in NHAI awarding activity (only 1300 km awarded in FY13
Annual target ~9K kms) and possibly impact on NHAI funding plan on account of recent
termination of road project we do not foresee meaningful increase in awarding activity by
NHAI. Hence we have build in just Rs20bn of new project wins for IRB in FY14 similar to
levels the company has achieved till FY13.
With minimal funding requirement IRB remains well funded for exploiting new opportunities
as and when NHAI awarding activity pick up. However in the mean time company is
focusing on reducing its interest cost and has managed to lower the interest rates at
Bharuch Surat by 150bps to 10.65% and is evaluating the prospect of refinancing debt of
Surat Dahisar from IIFCL which will again lead to similar correction in interest rates at the
project debt level.
We have revised our target price lower by 6% as we lowered E&C multiple for construction
business from 4x to 5x at Rs42/share (Earlier Rs53/share) on account lower carry forward
order backlog as order offtake slows down.
With 4 projects schedule to commence toll collection over the next year, minimal funding
requirement and benefits of lower interest rate, we believe IRB remains the Road BoT
asset to play. We maintain our BUY rating and revised our TP to Rs 158 as compared to
Rs169 earlier.
Exhibit 24: SoTP Fair value at Rs 158
Holding
Valuation
Measure
Disc rate
Value
(Rs mn)
Value
/Share
EPC Business
100%
PV of O&M Contracts
100%
PER
14128
42.5
NPV
13.5%
3,178
9.6
17,306
52
100%
FCFE
12.5%
13,411
40.3
Surat Dahisar
90%
FCFE
13.5%
2,590
7.8
Bharuch Surat
100%
FCFE
13.5%
3,442
10.4
Mohol-Mandrup Road
100%
FCFE
13.5%
-37
-0.1
Kharpada-Patalganga Bridge
100%
FCFE
13.5%
226
0.7
Ahmednagar Tembhurni Road
100%
FCFE
13.5%
244
0.7
Thane Ghodbunder
100%
FCFE
13.5%
1,109
3.3
Pune Nashik
100%
FCFE
13.5%
306
0.9
Pune Sholapur
100%
FCFE
13.5%
522
1.6
Thane Bhiwandi Bypass
100%
FCFE
13.5%
1,462
4.4
Kolhapur City Roads
100%
FCFE
14.5%
3,268
9.8
Namakkal - Omallur - NH-7
100%
FCFE
13.0%
656
2.0
Amritsar Pathankot
100%
FCFE
14.5%
6,531
19.7
Jaipur - Deoli
100%
FCFE
14.5%
6,952
20.9
Amravati Talegaon
100%
FCFE
14.5%
2,970
8.9
Tumkur Chitradurga
100%
FCFE
14.5%
200
0.6
Ahmedabad Vadodara
100%
FCFE
14.5%
-3,731
-11.2
Goa - Kundapur
100%
FCFE
15.5%
-610
-1.8
39,513
119
Asset Operated
Value of Construction segment - (a)

Mumbai Pune Expressway & NH4
Gross value of BOT

Add: PV of Loans to SPV
Less : Net Debt at Parent Level
Value of BOT - Net of debt - (b)
Aryan Infra Investment - (C)
Total Value - (a+b+c)
66% Book value
2,411
7.3
-8,275
-24.9
33648.7
101.2
1,650
5.0
56,137
158
Source: Emkay Research
Emkay Research
October 14, 2013
20
IRB Infrastructure
Company Update
Key Financials (Consolidated)

Income Statement
Balance Sheet
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
FY15E
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
Net Sales
31,307
36,872
41,433
44,109
Equity share capital
3,324
3,324
3,324
3,324
28.4
17.8
12.4
6.5
Reserves & surplus
25,243
29,232
32,630
37,139
17,572
20,540
22,728
22,925
Net worth
28,566
32,556
35,954
40,463
1,376
1,557
1,731
1,722
1,123
1,092
1,030
927
Secured Loans
50,455
66,349
72,259
90,491
Unsecured Loans
17,913
12,712
12,712
12,712
Loan Funds
68,367
79,060
84,970 103,203
259
259
Growth (%)
Expenditure
Employee Cost
Other Exp
SG&A
Minority Interest
FY15E
970
1,223
1,330
1,330
13,735
16,333
18,705
21,184
Growth (%)
25.6
18.9
14.5
13.3
Net deferred tax liability
EBITDA margin (%)
43.9
44.3
45.1
48.0
Total Liabilities
98,315 112,967 122,213 144,851
Gross Block
57,817
57,918
91,005
2,283
2,830
3,368
3,917
Net block
55,534
55,088
87,636
92,113
24,452
49,160
36,024
48,548
186
620
620
620
28,399
27,205
17,714
16,802
1,624
2,488
2,171
1,003
EBITDA
Depreciation
2,970
4,415
5,581
6,538
10,765
11,918
13,124
14,646
34.4
32.3
31.7
33.2
Other Income
1,252
1,301
1,236
1,193
Capital work in progress
Interest expenses
5,505
6,153
7,730
7,917
Investment
PBT
6,512
7,066
6,630
7,923
Current Assets
Tax
1,552
1,530
2,221
2,390
Inventories
EBIT
EBIT margin (%)
Effective tax rate (%)
Less: Depreciation
23.8
21.7
33.5
30.2
4,960
5,536
4,409
5,533
6.9
11.6
-20.4
25.5
Loans & advances
15.8
15.0
10.6
12.5
Other current assets
(Profit)/loss from JVs/Ass/MI
-31
-62
-103
Adj. PAT After JVs/Ass/MI
4,960
5,567
4,471
5,636
Reported PAT
4,960
5,567
4,471
5,636
Net current assets
PAT after MI
4,960
5,567
4,471
5,636
Misc. exp
9.6
12.2
-19.7
26.1
FY12A
FY13A
FY14E
FY15E
PBT (Ex-Other income)
5,260
5,765
5,394
6,730
Profitability (%)
Depreciation
2,970
4,415
5,581
6,538
Interest Provided
5,505
6,153
7,730
7,917
-779
476
442
Tax paid
-1,587
-2,422
Operating Cashflow
11,369
Capital expenditure
Free Cash Flow
Adjusted PAT
Growth (%)
Net Margin (%)
E/O items
Growth (%)
Cash Flow
Sundry debtors
259
259
96,030
141
310
1,033
1,046
18,208
14,710
4,813
5,057
8,427
9,696
9,696
9,696
Current lia & Prov
10,265
19,106
19,954
13,403
Current liabilities
10,017
15,996
16,844
10,293
248
3,110
3,110
3,110
18,134
8,099
-2,240
3,399
Cash & bank balance
Provisions
Total Assets
98,315 112,967 122,041 144,680
Key Ratios
Y/E Mar (Rsmn)
Other Non-Cash items

Chg in working cap
Other income
Investments
Investing Cashflow
Equity Capital Raised
FY12A
FY13A
FY14E
FY15E
EBITDA Margin
43.9
44.3
45.1
48.0
Net Margin
15.8
15.0
10.6
12.5
ROCE
14.1
12.9
12.9
12.5
-5,395
ROE
18.8
20.4
16.1
17.8
-2,221
-2,390
RoIC
24.0
22.9
20.3
17.1
14,387
16,925
13,400
Per Share Data (Rs)
-24,201
-25,456
-24,994
-23,538
EPS
14.9
16.7
13.5
17.0
-12,832
-11,069
-8,068
-10,138
CEPS
23.9
30.0
30.2
36.6
1,252
1,301
1,236
1,193
BVPS
85.9
78.4
88.7
102.2
1.8
4.0
3.2
0.0
-3,702
1,680
-25,484
-21,167
-23,758
-22,344
Y/E Mar
DPS
Valuations (x)
PER
5.3
4.7
5.8
4.6
Loans Taken / (Repaid)
24,457
14,815
5,910
18,232
P/CEPS
3.3
2.6
2.6
2.1
Interest Paid
-5,505
-6,153
-7,730
-7,917
P/BV
0.9
1.0
0.9
0.8
Dividend paid (incl tax)
-1,319
-1,191
-1,245
-1,127
EV / Sales
2.4
2.5
2.6
2.8
EV / EBITDA
5.6
5.5
5.7
5.9
2.3
5.1
4.1
0.0
2.9
Income from investments

Others
Financing Cashflow
Net chg in cash
Dividend Yield (%)
17,633
7,471
-3,064
9,188
Gearing Ratio (x)
3,518
691
-9,897
244
Net Debt/ Equity
1.8
2.5
2.7
Opening cash position
12,000
18,208
14,710
4,813
Net Debt/EBIDTA
3.7
3.9
4.3
4.6
Closing cash position
15,518
18,899
4,813
5,057
Working Cap Cycle (days)
-0.9
-65.4
-62.1
-13.7
Emkay Research
October 14, 2013
21
Higher Leverage to Suppress Earnings
October 14, 2013
Rating
Robust order backlog (3x FY13 E&C rev) to help construction

income CAGR of 24% over FY13-15E, but high margin fee
income to stagnate, implying a muted EBITDA CAGR of 4%
Standalone leverage to surge higher to 2.2x, as ITNL pumps

in equity (Rs24bn) to complete the projects
High leverage in the absence of meaningful rate cuts to

exert pressure on standalone profitability
Dilution imminent in and post-FY15E, as standalone leverage

unsustainable. Earnings highly leveraged to new orders.
Retain hold with the revised target price of Rs134
Previous Reco
Hold
Buy
CMP
Target Price
Rs111
Rs134
NA/NA
Nifty
6,096
Sensex
20,529
Price Performance
(%)
1M
3M
6M 12M
Absolute
-7
-25
-39
-40
Rel. to Nifty
-9
-28
-45
-45
Source: Bloomberg

225
Rs
% 20
200
175
-12
150
-28
125
-44
100
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
IL&FS Transportation (LHS)
Aug-13
-60
Oct-13
Rel to Nifty (RHS)
Source: Bloomberg
Construction revenue growth intact, but fee income to stagnate

Supported by back-ended FY13 order wins (Rs38bn), ITNLs order-book currently
stands at healthy Rs146bn. With robust revenue visibility (3.1x FY13E construction
revenues), we expect the standalone construction revenues to surge at a CAGR of 24%
over FY14-15E. In Q1FY14, the company witnessed execution delays in projects such
as Chennai Nashri (due to regional violence and unrest) and Moradabad Bareilly (delays
in land acquisition), besides delays in other projects caused by early monsoons.
However, with majority of the fee income on new order wins has already been booked in
FY13, we see fee income stagnating over FY13-15E (50% of the booked FY14E fee
income in Q1 to edge lower from Q2 onwards). With only Rs3-3.5bn of residual fee
income to be booked on the current backlog (driven largely by projects such as KhedSinnar and Barwa-Adda), arguably the company will have to significantly depend on new
order wins for fee income growth. Hence, we see ITNLs fee income stagnating at
Rs5.5bn, as we model an order inflow of Rs90bn over FY14-15E (Rs45bn each year).
Muted EBIDTA a CAGR of 4%
Stock Details
Sector
Construction
ILFT IB
Bloomberg
1,943
10
Face Value(Rs)
194
Since fee income is a high-margin stream of revenue for ITNL and the contribution of fee
income to total revenues is expected to tumble from 17% in FY13E to 10.9% in FY15E
as per our calculations, we estimate standalone EBIDTA growth to remain muted at a
CAGR of 4% over FY13-15E, with the EBITDA margin likely to contract by 200bps and
260bps in FY14E and FY15E, respectively.
52 Week H/L
229/ 97
Leverage to surge higher putting pressure on standalone profitability

Due to lower contribution of fee income to overall revenue, we see ITNL resorting to
taking further debt on the standalone book to infuse equity requirements towards funding
its new projects. The company plans to raise Rs15.5 bn via preferential issue (already
raised Rs4 bn) and rights issue to address the equity requirement (Rs24 bn over FY1315E) for future projects. We believe that even after raising funds at upper end 40% of
the equity requirements will be funded by taking debt on standalone books (Q1FY14
debt at Rs40 bn) and will increase further on account of new orders. Hence, we see a
surge in debt on the standalone balance-sheet from Rs37bn in FY13 to Rs53 bn by
FY15E, which would lead to further deterioration in its leverage ratios, which would
increase the interest burden on ITNL. However, in case leverage increases further, it
would become essential for the company to maintain its EBITDA at Rs6.5bn and Rs7bn
in FY14E and FY15E, respectively, to service interest costs on standalone level.
22/ 353
88,829
0.2

Jun10 May10 Dec10
Promoters
46.3
46.5
46.5
FII/NRI
43.3
43.6
42.6
Institutions
6.5
7.0
7.0
Private Corp
1.8
1.0
1.2
Public
2.2
2.1
2.6
Source: Bloomberg

Nitin Arora
+91-22-66242491
Ajit Motwani
+91-22-66121255
YE-
Net
EBITDA
Mar
Sales
(Core)
(%)
FY12A
56,056
14,656
FY13A
66,449
18,396
FY14E
64,185
FY15E
77,908
(Rsmn)
EPS
EPS
RoE
EV/
APAT
(Rs) % chg
(%)
P/E
EBITDA
P/BV
26.1
4,970
25.6
14.8
20.2
4.3
8.3
0.8
27.7
5,194
26.7
4.5
16.4
4.2
8.8
0.6
19,171
29.9
4,368
22.5
-15.9
11.4
4.9
8.8
0.5
24,430
31.4
4,711
24.2
7.8
11.2
4.6
7.7
0.5
22
Company Update
Emkay
Company Update
Earnings highly leveraged to order inflows, high debt still remain a concern:
Maintain Hold
With robust order inflow in till FY13, ITNL has been able to deliver 17% earnings growth
over FY10-13 led by its high margin fee income. However as ITNLs earning & cash flows
are highly leverage to new order inflows, we believe sustaining such high growth rate in fee
income is unlikely. Given this backdrop of decelerating high margin fee income growth, the
high parent leverage (standalone debt at Rs53 bn with D:E at 2.2x in FY15E) could mean
increasing interest cost pressures for ITNL. High leverage in absence on meaningful rate
cuts to put pressure on standalone profitability and could mean increasing interest cost
pressures for ITNL. Dilution eminent in/post FY15E as standalone leverage unsustainable.
We have cut our target price to Rs134 (Earlier TP 150) as we have adjusted traffic for some
of the projects like kiratpur ner chowk (implied P/BV0.45x) as well as for projects like sikar
Bikaner & khed sinnar and reduced our E&C multiple to EV EBITDA of 3x from 3.5x as
construction earnings will edge lower in FY14E and construction earnings trajectory
remains uncertain as some projects faces structural issues.
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
Exhibit 26: Fee income as a % of total revenue
6.9
5.7
5.6
5.7
5.7
5.2
(Rs bn)
(Rs bn)
Exhibit 25: Fee income to stagnate
FY10
FY11
FY12
FY13
FY14E
40%
35%
30%
25%
20%
15%
10%
5%
0%
FY15E
34%
21%
FY11
Fee income
3.6
3.3
3.5
3.4
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
-
169
2.1
148
144
1.6
102
50
55
33
FY10
FY11
FY12
FY13
Consolidated Debt
FY14E
2.5
1.8
1.5
0.9
50
40
1.1
30
53.5
1.0
0.5
41.5
37.4
15.3
18.9
FY10
FY11
20
27.3
10
0
FY12
FY13
Standalone Debt
FY14E
FY15E
Debt/equity
Exhibit 30: Consolidated EBITDA
100.0
30
77.9
80.0
66.4
(Rs bn)
40.5
24.1
20.0
24
25
64.2
56.1
60.0
60
1.8
1.4
Net Debt/equity
Exhibit 29: Consolidated revenue
40.0
FY15E
2.2
2.0
FY15E
(Rs bn)
FY14E
Exhibit 28: Standalone debt to surge higher
(Rs bn)
(Rs bn)
100
FY13
10.9%
Exhibit 27: Consolidated debt to inch higher
150
FY12
15%
Fee income as a % total revenue
200
17%
18
20
15
10
19
15
12
8
0.0
0
FY10
FY11
FY12
FY13
FY14E
FY15E
FY10
FY11
Revenue
Emkay Research
October 14, 2013
FY12
FY13
FY14E
FY15E
EBITDA
23
Exhibit 31: Consolidated PAT
Exhibit 32: Consolidated ROE
6.0
4.4
4.3
4.7
27.0
22.2
25.0
3.0
16.4
15.0
2.0
10.0
1.0
5.0
11.4
11.1
FY13
FY14E
FY15E
6.46
6.49
FY10
FY11
FY12
FY13
FY14E
FY10
FY15E
FY11
PAT
Exhibit 33: Standalone revenue
Exhibit 34: Standalone EBITDA
60
47.9
50
37.7
27.7
30
16.2
20
10
33.7
(Rs bn)
40
8.5
0
FY10
FY11
FY12
FY13
FY14E
FY15E
8
7
6
5
4
3
2
1
0
5.48
5.32
5.52
FY10
FY11
FY12
Revenue
Emkay Research
October 14, 2013
FY12
ROE
(Rs bn)
20.2
20.0
3.4
(%)
(Rs bn)
4.0
30.0
5.2
5.0
5.0
Company Update
FY13
FY14E
6.98
FY15E
EBITDA
24
Company Update
Exhibit 35: SOTP fair value at Rs134hare
SPV
Holding
Valuation
Measure
Disc
Equity
Value
Stake
Value
rate
(Rs mn)
(Rs mn)
Value/
Share
BOT
Gujarat Road and Infrastructure company ltd
WGEL
Delhi - Noida
Gomti - Beawar
RIDCOR
RIDCORII
83.6%
Operational
FCFE
13%
7,525.5
6,292.1
32.4
100.0%
Operational
FCFE
14%
1,613.9
1,613.9
8.3
25.4%
Operational
FCFE
14%
6,268.8
1,589.1
8.2
100.0%
Operational
FCFE
14%
350.4
350.4
1.8
50.0%
Operational
FCFE
14%
8,130.2
4,065.1
20.9
50.0%
Under development
FCFE
15%
3,783.6
1,891.8
9.7
100.0%
Under Construction
FCFE
15%
2,846.3
2,846.3
14.7
Chadrapur Warora Road Project
35.0%
Under development
FCFE
15%
1,683.5
589.2
3.0
Narkatapally to Addanki Road Project
50.0%
Under development
FCFE
15%
3,288.7
1,644.3
8.5
Moradabad Bareili Road Project
100.0%
Under development
FCFE
15%
7,088.7
7,088.7
36.5
Kharagpur - Baleshwar
100.0%
Under development
FCFE
15%
-258.3
-258.3
-1.3
Kiratpur Ner Chowk
100%
Under development
FCFE
15%
2923
2923
15
Sikar Bikaner
100%
Under development
FCFE
15%
829.8
829.8
4.3
Khed Sinnar
100%
Under development
FCFE
15%
816.5
816.5
4.2
Barwa Adda Panagarh
100%
Under development
FCFE
15%
623.5
623.5
3.2
47,514
32,905.4
169
94%
Operational
FCFE
13%
1,145.6
1,071.2
5.5
Pune Sholapur NH-9 Road Project
Toll Projects - (A)

North Karnataka expressway ltd Road Project
Thiruvananthpuram Road Development Company Ltd Road Project
50%
Operational
FCFE
13%
-468.7
-234.0
-1.2
Andhra Pradesh expressway ltd Road Project
100%
Operational
FCFE
13%
-494.9
-494.9
-2.5
East Hyderabad expressway ltd Road Project
74%
Under Construction
FCFE
13%
537.2
397.5
2.0
Hyderabad Ring Road
26%
Under Construction
FCFE
13%
-54.9
-14.3
-0.1
Hazaribaug Ranchi expressway ltd Road Project
74%
Under Construction
FCFE
14%
185.0
136.9
0.7
Jharkhand - Ph - I Road Project
100%
Under Construction
FCFE
14%
157.2
157.2
0.8
Jharkhand Ph - II Road Project
100%
Under development
FCFE
14%
544.9
544.9
2.8
Shillong Jorbat Road Project
50%
Under development
FCFE
14%
1121.2
560.6
2.8
Chenani Nashri Road Project
100%
Under development
FCFE
14%
1,791.0
1,791.0
9.2
4,463.6
3,915.9
20.2
14%
301.6
301.5
1.6
Annuity Projects - (B)

Vansh Nimay infraprojects Ltd
100%
Operational
FCFE
ITNL ENSO Rail system limited
70%
Under Construction
FCFE
14%
1,159.2
811.5
4.2
MP Check post
51%
Under development
BV
0.75x
1,174.2
880.6
4.5
YuHe Project - Chonguin Road project
49%
Operational
BV
0.8x
Urban Infra Projects - '(C)

Investments in Elsamax
100%
BV
1.0x
Investments in other Companies

Pipavav rail corporation
Autovia Spain
48%
Net Debt at parent levels

Total Value (A+B+C+D+E)
16.3
14.0
2,722.2
14.0
1,109.3
1,109.3
5.7
1.0x
179.1
179.1
BV
1.0x
930.2
930.2
1,123.4
3,831.6
19.7
19,525
19,525
100.5
26,663.4
26,663.4
117
-37,329
-37,329
-192
37,931.7
26,018.2
134
EV/EBITDA
Construction business - (E)
6.1
3,169.6
BV
Other Subsidiaries - (D)

E&C business
1,176.0
2,635.0
3x
Source:
Emkay Research
October 14, 2013
25
Company Update

Income Statement
Balance Sheet
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
FY15E
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
Net Sales
56,056
66,449
64,185
77,908
1,943
1,943
1,943
1,943
38.5
18.5
-3.4
21.4
Reserves & surplus
24,834
34,456
38,028
41,943
Net worth
26,777
36,398
39,970
43,885
2,935
2,716
3,444
3,778
Growth (%)
Expenditure
41,401
48,053
45,014
53,478
Employee Cost
3,694
3,819
4,074
4,775
Minority Interest
Other Exp
1,704
2,016
2,016
2,016
Secured Loans
Unsecured Loans
SG&A
FY15E
81,124 135,931 104,735 113,801
3,210
4,483
4,957
5,816
14,656
18,396
19,171
24,430
Growth (%)
26.9
25.5
4.2
27.4
EBITDA margin (%)
26.1
27.7
29.9
31.4
Total Liabilities
134,878 185,992 195,098 220,039
Gross Block
122,174 174,991 176,703 198,337
EBITDA
Depreciation
EBIT
EBIT margin (%)
766
944
1,336
1,826
13,890
17,452
17,835
22,604
24.8
26.3
27.8
29.0
Loan Funds
Less: Depreciation
Net block
Other Income
1,238
1,414
1,591
1,769
Interest expenses
7,282
11,190
12,672
17,204
PBT
7,846
7,676
6,754
7,169
Current Assets
Tax
2,457
2,274
2,001
2,124
Inventories

Adjusted PAT
Growth (%)
21,996
8,522
44,524
56,149
103,120 144,453 149,259 169,951

2,047
4,412
2,425
5,356
2,425
6,692
2,425
8,518
117,762 169,635 170,011 189,820

0
3,954
6,871
6,871
7,077
30,759
29,277
37,671
46,232
210
169
311
311
Sundry debtors
8,820
7,517
10,276
12,728
Cash & bank balance
2,838
4,544
1,679
4,273
17,143
14,170
19,629
22,024
Investment
31.3
29.6
29.6
29.6
5,389
5,402
4,753
5,045
19.8
0.2
-12.0
6.1
Loans & advances
Net Margin (%)
9.6
8.1
7.4
6.5
1,748
2,877
5,777
6,896
419
208
385
334
Current lia & Prov
17,602
19,911
19,574
23,209
4,970
5,194
4,368
4,711
Current liabilities
15,455
17,297
17,458
21,093
2,146
2,614
2,116
2,116
Reported PAT
4,970
5,194
4,368
4,711
Net current assets
13,157
9,367
18,098
23,024
PAT after MI
4,970
5,194
4,368
4,711
Misc. exp
14.8
4.5
-15.9
7.8
FY12A
FY13A
FY14E
FY15E
7,846
7,676
6,754
7,169
Profitability (%)
766
944
1,336
1,826
EBITDA Margin
7,282
11,190
12,672
17,204
E/O items
Growth (%)
Cash Flow
Provisions
Total Assets
134,873 185,873 194,980 219,921
Key Ratios
Y/E Mar (Rsmn)

Depreciation
Interest Provided
Chg in working cap
Y/E Mar
FY12A
FY13A
FY14E
FY15E
26.1
27.7
29.9
31.4
9.6
8.1
7.4
6.5
ROCE
14.0
11.8
10.2
11.7
Net Margin
3,212
5,497
-11,597
-2,332
ROE
20.2
16.4
11.4
11.2
Tax paid
-2,457
-2,274
-2,001
-2,124
RoIC
13.8
11.5
9.9
11.4
Operating Cashflow
16,648
23,033
7,164
21,744
Per Share Data (Rs)
Capital expenditure
-56,318
-47,495
-1,712
-21,634
25.6
26.7
22.5
24.2
Free Cash Flow
-39,670
-24,462
5,453
109
CEPS
29.5
31.6
29.4
33.6
BVPS
137.8
187.4
205.7
225.9
4.0
3.4
3.4
0.0
PER
4.3
4.2
4.9
4.6
P/CEPS
3.8
3.5
3.8
3.3
P/BV
0.8
0.6
0.5
0.5
EV / Sales
2.2
2.4
2.6
2.4
Other income
Investments
Investing Cashflow
-2,010
-2,917
-206
-58,328
-50,412
-1,712
-21,840
EPS
DPS
Valuations (x)
47,590
41,332
4,806
20,692
Interest Paid
-7,282
-11,190
-12,672
-17,204
-903
-786
-796
-796
EV / EBITDA
8.3
8.8
8.8
7.7
3.6
3.1
3.1
0.0
3.8

Others
-162
-271
343
Dividend Yield (%)
Financing Cashflow
39,242
29,085
-8,318
2,691
Gearing Ratio (x)
Net chg in cash
-2,438
1,707
-2,866
2,594
Net Debt/ Equity
3.7
3.8
3.7
5,275
2,838
4,544
1,679
Net Debt/EBIDTA
6.8
7.6
7.7
6.8
2,838
4,544
1,679
4,273
67.2
26.5
93.4
87.8
Emkay Research
October 14, 2013
26
Ashoka Buildcon
Scalable with assured growth
October 14, 2013
Rating
Ramp in current orderbook attributed to newly won projects,

will help garner EPC earnings CAGR of 6.4% over FY13-15E,
Revenue from BOT (adj for stake) to register 13.4% CAGR
Scalability potential/capacity to bid enhances as secures

funding for current & future growth, qualified to bid for a
single project worth Rs31.8 bn
Well funded portfolio, sufficient internal cash flows to cater

current equity requirement. Minimal funding constraint with
moderate leverage (Cons. debt equity at 2.3x ,standalone
debt equity at 0.3x) provide growth opportunity
Scale up in the BOT portfolio (80% of BOT projects to get

operational by FY15E). Upgrade FY15E earnings by 12% on
higher order inflow. Maintain Buy with TP Rs91
Previous Reco
Buy
Buy
CMP
Target Price
Rs47
Rs86
NA/NA
-5
Nifty
6,096
Sensex
20,529
Price Performance
(%)
1M
3M
6M 12M
Absolute
-3
-13
-24
-40
Rel. to Nifty
-6
-16
-32
-45
Order Backlog provides reasonable EPC earnings visibility
Source: Bloomberg

80
Rs
% 10
72
-2
64
-14
56
-26
48
-38
40
Oct-12
Dec-12
Feb-13
Apr-13
Ashoka Buildcon (LHS)
Jun-13
Aug-13
-50
Oct-13
Rel to Nifty (RHS)
Source: Bloomberg
Stock Details
Sector
Construction
ASBL IB
Bloomberg
790
Face Value(Rs)
158
83/ 41
52 Week H/L
7/ 122
11,528
0.0

Sep'13 Mar'13 Dec'12
Promoters
67.5
67.5
67.4
FII/NRI
N/A
N/A
0.0
Institutions
18.4
18.4
18.3
Private Corp
6.4
6.4
6.5
Public
7.7
7.7
7.8
Source: Bloomberg
Nitin Arora
+91-22-66242491
Ajit Motwani
+91-22-66121255
ABL enjoys a 1.5x (ex Cuttuck Angul, Chennai ORR, T&D orders of Rs11.5 bn ) visibility
on FY13 construction revenues with order backlog of Rs21.9bn however including
recently won road project Chennai ORR and two T&D orders , the order book provides
reasonable visibility of 2.7x on FY13E construction revenue. It also remains lower
bidder for road project Mudhol-Maharashtra border project (est project cost of Rs3.2 bn),
however have not received LOA for the project. On account of recently won projects
where major ramp in revenue to starts getting reflect in FY15E we expect construction
revenue CAGR of 6.4% over FY13-15E. We also believe that the that the exclusion of
Cuttuck Angul project (not included in the ACL portfolio) which had cost overruns of 67%, gives further scalability to bid for new projects to be given states like Andhra ,
Karnataka, & Maharashtra.
Funding secured for future growth, Equity requirement of Rs1.5 bn over

the next 2 years
The companys current equity requirement stands at Rs1.5 bn which needs to be infused
over the next two years towards the project like Belgaum project, the Dhankuni project
and Sambalpur whereas balance Rs3.5 bn will be invested by SBI Macquarie. ABLs
business ramp up is ideally complemented by its lucrative cash generating portfolio &
strong execution skills, which will ensure that ABLs transition to a full scale national
level player is smooth with limited dilution. We expect ABL to generate operating cash
flows in BOT /EPC segment of ~Rs 1.9bn/Rs2.5 bn over FY13- 15E which largely take
care of the equity required for existing projects , newly won Chennai road project as well
as debt repayment and working capital requirement over FY14-15E. The current funding
structure leaves a shortfall of Rs1.37 bn which we believe a strong parent balance sheet
at 0.3x Debt: Equity also offers ample room for increasing leverage to fund the equity of
several SPVs.
(Rsmn)
YE-
Net
EBITDA
EPS
EPS
RoE
Mar
Sales
(Core)
(%)
APAT
FY12A
15,000
3,250
21.7
1,248
7.9
FY13A
18,527
3,719
20.1
999
6.3
FY14E
18,406
4,001
21.7
1,046
6.6
FY15E
21,947
5,257
24.0
1,017
6.4
EV/
(Rs) % chg
(%)
P/E
EBITDA
P/BV
23.8
12.9
6.0
7.4
0.7
-19.9
9.6
7.4
8.2
0.7
4.7
9.5
7.1
10.5
0.6
-2.7
8.4
7.3
9.7
0.6
27
Company Update
Emkay
Ashoka Buildcon
Exhibit 36: EPC Revenue to propel higher
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Company Update
Exhibit 37: Toll revenue CAGR 13.4% over FY13-15E
5.0
4.0
3.0
14.8
10.3
14.7
16.8
1.0
5.5
2.6
2.9
3.0
FY12
FY13
FY14E
3.7
4.0
FY12
FY13
FY14E
19.4
21.7
20.1
21.7
FY11
FY12
FY13
FY14E
1.7
1.9
FY10
FY11
FY10
FY11
FY12
FY13
FY14E
FY15E
Source: Company, Emkay research
FY15E
Exhibit 38: Revenue CAGR 8.8% over FY13-15E
Exhibit 39: EBITDA to inch higher
25.0
6.0
20.0
5.0
4.0
15.0
10.0
5.0
4.3
2.0
11.4
13.0
15.0
18.5
18.4
3.0
21.9
5.3
2.0
1.0
8.0
2.1
2.5
FY10
FY11
3.3
0.0
FY10
FY11
FY12
FY13
FY14E
FY15E
FY15E
Exhibit 40: EPS
Exhibit 41: EBITDA Margin
8.0
30.0
7.0
25.0
6.0
20.0
5.0
4.0
3.0
5.4
6.5
15.0
7.3
5.7
2.0
3.9
26.9
10.0
4.9
24.0
5.0
1.0
-
FY10
FY11
FY12
FY13
FY14E
FY15E
FY10
FY15E
Exhibit 42: Incremental Equity requirement over FY14-15E

Project
Rsmn
Source of funds
Dhankuni , Belguam, Sambalpur(adj for stake)
1,500
FY13 Cash
Chennai orr(adj for stake)
1,000
BoT CFO over FY13-15E
1,919
Working capital Requirement
1,000
E&C CFO Over FY13-15E
2549
Debt repayment
2,695
Total
6,195
Surplus/(Shortfall)
Rsmn
338
4,806
(1,389)
Source: Emkay research
Emkay Research
October 14, 2013
28
Ashoka Buildcon
Company Update
New projects to drive Toll revenue growth

Revenue from BOT business adjusted for stake to surge higher 13.4% CAGR over FY1315E whereas total revenue from BOT to post CAGR of 23% over FY13-15E. Majority of the
ramp in revenue will come from projects like Durg Chattisgarh and Chattisgarh Bhandara in
FY14E followed by commissioning of Sambalpur Baragarh & Belgaum Dharwad. The
Belgaum-Dharwad (have scalability for high traffic growth due to traffic running from
Mumbai to Bangalore on GQ) and Dhankuni-Kharagpur projects (Goods to Eastern belts ,
Traffic from Haldia post to Northern & Southern region , handles minerals as well ) being 6laning projects, impart high visibility and comfort over future revenue ramp-up.
Partnership with SBI-Macquarie gives scalability

SBI Macquarie (SBI-M) has committed to invest Rs7bn (Already invested till sate of Rs3.8
bn in ACL), the holding company for ABLs new road concessions (ABL is required to invest
its share of equity of Rs8.5bn, already invested Rs7 bn). According to the agreement SBI
will have 34% stake in ACL which implies pre-money valuation of 1.6x P/B for ACL. These
valuations appear attractive considering the IRR profile of the underlying projects, and also
lend considerable credibility to ACLs project portfolio. The terms of the agreement assure
SBI-M a guaranteed 12% IRR on its initial investment of Rs7bn in ACL which entails outgo
of Rs14.6 bn by FY20E.
According to the agreement there are three ways that the private investor can exit:
IPO of ACL
Sale to others or swap into the individual asset SPVs. In case of a shortfall in realizing
the guaranteed returns even after swapping into the SPVs, SBI-M can increase its
stake in ACL to a maximum of 49% however; no provision to swap into the parent
company, ABL which we believe is a key positive for the shareholders of ABL.
We believe that investment is a value creating proposition considering the interest rates are
currently holding up for road project financing at 12-13% and availability of equity capital
ensures timely project completion and faster cash generation from the BOT assets. We
dont believe that 12% capital protection rate a concern considering the IRR of ACL
projects under ranges between 13-20%.
Exhibit 43: NPV of ACL portfolio
NPV
ACL Stake FY14E FY15E FY16E FY17E FY18E FY19E FY20E
Dhankuni - Kharagpur
100%
3732
6241
8332 10175 12174 13820 15435
Sambhalpur - Baragarh
100%
1216
2228
2562
2937
3360
3861
4438
Belgaum - Dharwad
100%
860
972
1484
2008
2563
3145
3981
Pimpalgaon - Nasik
26%
1008
1242
1408
1612
1789
2090
2340
Jaora - Naigaon
38%
2615
3001
3385
3877
4392
4908
5402
Durg - Chhattisgarh
51%
99
362
580
738
922
1183
1468
Chhattisgarh - Bhandara
51%
56
65
81
100
129
192
260
Under construction projects
Total
9585 14111 17832 21448 25328 29199 33324
Source: Emkay research
Emkay Research
October 14, 2013
29
Ashoka Buildcon
Company Update
Upgrade earnings estimates FY15E as order intake surpassed expectation

The company has bagged orders worth Rs12 bn in FY14E against our expectation of Rs5
bn and also surpassed our order intake expectation for FY14-15E (our assumption of Rs10
bn). We have increased our EPC revenue by 14% to Rs16.8 bn due to which the total
revenue increases by 10% to Rs21.94 bn. We have revised our EBITDA/PAT estimate by
5%/12% for FY15E.
Exhibit 44: Earnings revision table
FY14E
Rs Mn
FY15E
Earlier
Revised
change
Earlier
Revised
change
Sales
19,875.0
21,947
10%
EBIDTA
5,008.0
5,257
5%
EBIDTA (%)
25.2%
24.0%
-5%
APAT
689.0
771
12%
EPS
4.4
4.9
12%
Maintain Buy, Revised Target price to 86

Project execution on Dhankuni Kharagpur remains on track and toll rates escalation at
Dhankuni Kharagpur project ahead of schedule will provide additional boost. We have
valued the BOT arm at Rs58/ share valuing the ACL portfolio at 66% stake (from earlier
61%). We have revised Equity value downwards for Jaora Naigaon to Rs10/share from
Rs16/share due to lower traffic. We have valued the BOT projects at 13.5%/14.5%/15.5% cost
of equity for operational/ under construction / under development portfolio. While the E&C
arm is valued at Rs 24 at 4x FY14 earnings. Due to change in our BOT valuation we have
revised our target downwards by 5% to Rs86/share based on FY14 numbers.
Exhibit 45: Fair value of SOTP Rs91/share
Description
Ashoka Concessions Ltd.
Dhankuni - Kharagpur
Sambhalpur - Baragarh
Belgaum - Dharwad
Pimpalgaon - Nasik
Value for Under construction projects (a)
Jaora Naigaon
Durg Chhattisgarh
Chhattisgarh Bhandara
Value of ACL at 66% stake (b)
Indore - Edalabad
Waiganga river Bridge
Pune - Shirur
Dewas Bypass
Katni Bypass
A'nagar - Karmala
A'nagar - Aurangabad
Nasirabad Road ROB
Sherinallah Bridge
Dhule Bypass
Anwali Kasegaon
FOBs - Eastern Exp H'way - 6
Value for operating projects (c)
Total BOT Fair value (a + b + c)
Add: Net holding company cash/debt
Net Value of BOT
Add: EPC valuation
Fair value per share
Cost of Equity
Eq value
Stake
ABL value
ABL per share/value
14.8%
15%
15%
15%
3,417.2
1,215.7
859.8
3,875.5
9,368.20
4,103.1
372.1
110.4
13,953.8
1,533.6
594.1
328.0
841.4
432.8
88.1
97.5
-
100.0%
100.0%
100.0%
26.0%
0.0%
37.5%
51.0%
51.0%
3,417.2
1,215.7
859.8
1,007.6
6,500.3
1,538.7
189.8
56.3
5,468.2
1,533.6
297.0
328.0
841.4
432.3
88.1
97.5
-
21.6
7.7
5.4
6.4
41.2
9.7
1.2
0.4
38.8
9.7
1.9
2.1
5.3
2.7
0.6
0.6
-
17.4
3,635.3
0.1
23.0
17,886.7
9,103.5
58
17,887
3,861
344
9,447.5
3,861
2
60
24
21,747.9
13,308.0
86
15%
14%
15%
14%
14%
14%
14%
14%
14%
14%
14%
14%
14%
14%
17.4
3,932.8
100.0%
50.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
5.0%
100.0%
Source:
Emkay Research
October 14, 2013
30
Ashoka Buildcon
Company Update

Income Statement
Balance Sheet
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
FY15E
Y/E Mar (Rsmn)
FY12A
FY13A
FY14E
Net Sales
15,000
18,527
18,406
21,947
701
675
675
675
15.2
23.5
-0.7
19.2
Reserves & surplus
9,640
9,832
10,877
11,894
11,750
14,808
14,405
16,690
10,341
10,507
11,553
12,570
431
502
594
723
630
2,787
2,681
2,483
17,069
23,469
34,684
43,700
Growth (%)
Expenditure
Employee Cost
Other Exp
SG&A
Net worth
Minority Interest
Secured Loans
FY15E
310
482
678
1,031
Unsecured Loans
3,250
3,719
4,001
5,257
Loan Funds
Growth (%)
28.9
14.4
7.6
31.4
10
EBITDA margin (%)
21.7
20.1
21.7
24.0
Total Liabilities
28,050
36,763
48,918
58,753
20,761
20,275
20,275
56,883
4,503
5,275
6,626
8,216
EBITDA
Depreciation
EBIT
EBIT margin (%)
Other Income
17,069
23,469
34,684
43,700
850
1,324
1,351
1,590
Gross Block
2,401
2,395
2,651
3,667
Less: Depreciation
16.0
12.9
14.4
16.7
Net block
16,258
15,000
13,649
48,667
26,780
96,100 106,756
80,636
354
294
269
323
Interest expenses
1,144
1,395
1,428
2,558
Investment
2,052
2,824
3,584
4,401
PBT
1,610
1,295
1,492
1,433
Current Assets
7,362
9,672
8,843
10,103
Tax
451
685
591
662
Inventories
2,770
5,399
4,629
4,984
1,467
862
1,089
1,425
500
518
251
266
2,624
2,893
2,875
3,428

Adjusted PAT
Growth (%)
28.0
52.9
39.6
46.2
Sundry debtors
1,159
610
901
771
Cash & bank balance
12.4
-47.4
47.7
-14.4
Loans & advances
Net Margin (%)
7.7
3.3
4.9
3.5
89
389
145
246
Current lia & Prov
25,689
87,624
84,706
85,846
1,248
999
1,046
1,017
Current liabilities
25,689
87,624
84,706
85,846
157
Reported PAT
1,248
1,156
1,046
1,017
Net current assets
-18,327
-77,953
-75,863
-75,744
PAT after MI
1,248
999
1,046
1,017
Misc. exp
23.8
-19.9
4.7
-2.7
26,763
35,971
48,125
57,960
FY12A
FY13A
FY14E
FY15E
FY12A
FY13A
FY14E
FY15E
1,610
1,451
1,492
1,433
Profitability (%)
850
1,324
1,351
1,590
EBITDA Margin
21.7
20.1
21.7
24.0
1,144
1,395
1,428
2,558
Net Margin
7.7
3.3
4.9
3.5
46
-85
ROCE
10.8
8.3
6.8
7.4
21,595
61,230
-2,356
-104
ROE
12.9
9.6
9.5
8.4
-456
-702
-591
-662
RoIC
41.8
-7.3
-4.2
-8.2
7.9
6.3
6.6
6.4
E/O items
Growth (%)
Cash Flow
Provisions
Total Assets
Key Ratios
Y/E Mar (Rsmn)

Depreciation
Interest Provided
Chg in working cap
Tax paid
Operating Cashflow
Capital expenditure
Free Cash Flow
Other income
Investments
Investing Cashflow
Y/E Mar
24,874
64,999
1,323
4,815
-27,632
-69,694
-10,656
-10,488
Per Share Data (Rs)
-2,758
-4,695
-9,333
-5,674
CEPS
13.3
14.7
15.2
16.5
-274
BVPS
65.5
66.5
73.2
79.6
-586
-772
-760
-817
0.0
0.0
0.0
0.0
-28,218
-70,740
-11,416
-11,305
PER
6.0
7.4
7.1
7.3
P/CEPS
3.5
3.2
3.1
2.9
P/BV
0.7
0.7
0.6
0.6
EPS
DPS
Valuations (x)
148
11,798
4,238
-4,395
11,215
9,016
-1,144
-1,395
-1,428
-2,558
EV / Sales
1.6
1.6
2.3
2.3
EV / EBITDA
7.4
8.2
10.5
9.7
0.0
0.0
0.0
0.0

Interest Paid
Others
Financing Cashflow
Net chg in cash
39
47
Dividend Yield (%)
3,242
6,008
9,826
6,506
Gearing Ratio (x)
-102
267
-267
15
Net Debt/ Equity
1.6
2.2
3.0
3.5
602
500
518
251
Net Debt/EBIDTA
5.1
6.2
8.6
8.3
500
767
251
266
Emkay Research
October 14, 2013
-458.1 -1,546.0 -1,509.4 -1,264.1
31
Construction
Sector Update

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October 14, 2013
www.emkayglobal.com
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Construction Sector Update - 141013

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Your success is our success

October 14, 2013

Re-bidding of stalled contracts likely to push awarding activity upwards in

Substitution of concessionaire not to address financial unviable projects

Emkay Global Financial Services Ltd.

CCEA in-principle approval for rescheduling of premiums

Project cost Rsmn

Premium Quoted Rsmn

Premium Restructuring: Attempt to resolve developers/project cashflow

October 14, 2013

Premium restructuring not enough, re-bid of projects the prudent option

Kota-Jhalawar road project (80km, a 4-laning project won by Keti Construction)

October 14, 2013

Exhibit 2: Projects delayed due to land acquisition

8. Sangareddyto Maha border

12. Solapur-Karnataka border

Source: Emkay Research, NHAI

October 14, 2013

Awarding activity to inch upwards in 2HFY14E; NHAI targets 4000km

Length completed (Km)

Source: Emkay Research , NHAI

Length aw arded (Km)

Exhibit 4: Construction work per km

Source: Emkay Research , NHAI

Exhibit 5: Awarding activity in BOT and EPC

Length aw arded (Km) BOT

Length aw arded (Km) EPC

Source: Emkay Research, NHAI

Exhibit 6: Balance of work to be awarded

Balance for award of

Source: Company, Emkay Research

October 14, 2013

Exhibit 7: BOT Projects to be tendered

No bids received, project to be restructured

No bids received, project to be restructured

Chas-Ramgarh (2/4 lane)

PPPAC proposal circulated

Source: Emkay Research, NHAI

Substitution/exit policy to bring back momentum?

October 14, 2013

Substitution/exit policy to help financially viable projects

Exit policy for projects achieved appointed date

83% of projects awarded in FY12 yet to commence construction

October 14, 2013

JMC projects, Artefact projects

Construction Start date

176 Annuity Apr-12

MH/KNT Border Sangareddy

4-laning of UP Harayana border-Yamunagar-Saha-Barwala

4-laining of Solapur-Maharashtra/KTK section

4-laining of Mulbagal-Karnatka/AP Border

4-laining of Kiratpur ner chowk

2-laining with PS Motihari-Raxaul

4-laning of Punjab-Harayana border-Jind

2-laning of Jowai-Meghalaya/Assam border

IVRCL Asset holding

Rehabitation & upgradation to Birmitrapur to barkote

PNC Infratech-BF utility

4-laning of Mahulia to Behgora to Kharagpur

Sadbhav Engg, Arvee

KNR, frischmann prabhu

4-laning of Angul, Sambalpur

IVRCL asset & holding