Ashoka Buildcon: How Ashok Katariya built a Rs 1,700 crore construction company from a seed capital of Rs 5,000
At present, we have contracts worth Rs 2,500 cr in TN, K'taka & Maha. We came out with our IPO of Rs 225 cr in 2010 & it was over-subscribed by 15 times.
(As told to Amit Shanbaug)
I realised early in life that education was the answer to all the financial problems faced by my family. I lost my mother when I was five years old and my father had a tough time taking care of my four older sisters and me.
So I would help him sell foodgrains after school at Sinnar, near Pune, but we managed to make only Rs 2-3 each day. However, after he sold his house and all the belongings to get my sisters married, he was forced to put me in a hostel in Pune when I was in class IX, while he went to live with his sister at Nashik.
At school, I won scholarships, which funded my education and hostel stay. Then I got admission at Fergusson College, Pune, and later, at the College of Engineering, from where I graduated in 1973. I immediately got a job at the Public Health Department for a monthly salary of Rs 240.
I took up another part-time job with a property developer in Pune to supplement the income and continued till 1975. At this point, I decided to strike out on my own, so I borrowed nearly Rs 5,000 from my father-in-law and friends to bid for a construction project worth Rs 56,000. It involved building a small shop for a government organisation in six months. I successfully bid for it and completed it in a record time of four months.
I made a profit of Rs 5,500 after taking care of expenses and repaying all loans. The contractors were happy with my work and started giving me similar projects. I partnered with another engineer and registered my company as Ashoka Construction.
We rented a small place for Rs 125 a month in Pune and hired a person to do clerical work. Our turnover in the first year was around Rs 56,000. Then, in 1979, after a series of small projects, we got a contract worth Rs 10 crore for constructing 43 bungalows for senior MSEB officials.
We were lucky as much bigger companies like Gammon India and L&T had bid for the project. At this time, my newborn son fell ill and had to be hospitalised, but I could not be with him. The doctors were furious, and yet I was determined to complete the project so that I could give him a better future.
Luckily, my wife was very supportive and handled the situation very well. We completed and handed over the project successfully, which boosted our confidence. From 1982 onwards, we started with institutional construction.
In 1985, we developed a project called Riverview Apartments, and as a part of the deal, we retained the first three floors for our company. We moved there there and it continues to be our registered corporate office. By 1987-88, our turnover had touched Rs 1 crore.
In 1987, the government came out with a policy, allowing education trusts to set up their own colleges and educational institutions.
In a boost to the company, we cornered several of these and managed to construct most of the bigger medical, engineering and educational institutions, including the MIT and the Bharati Vidyapeeth, in Maharashtra. We not only delivered quality work, but did so in record time.
While the construction time quoted in the tenders was 18 months, we did so in just nine months. We successfully bid for our first BOT (build-operate-transfer) contract in 1996, under which private players build infrastructure and transfer it back to the government.
We won a Rs 7 crore contract for the Dhulia bypass road in Maharashtra and finished it in nine months, while the stipu lated time was 24 months. It was at this point that we also renamed the company, Ashoka Buildcon.
After the first BOT contract, we moved to other states like Madhya Pradesh, Rajasthan, Chhattisgarh, Karnataka and Tamil Nadu. So far, we have undertaken contracts in eight states, including the 1.6 km bridge in Kolkata.
In 2000, we also got into the manufacturing of ready-mix concrete (RMC), which we decided to explore commercially from 2002 onwards, and now, sell it to third parties as well. We have invested nearly Rs 3 crore in office space and have offices in cities like Mumbai, Delhi, Nagpur, Kolkata and Belgaum.
In 2006, IDFC invested around Rs 100 crore on the condition that we would go public. Thanks to it, we managed to organise our business, which benefited us immensely.
Three years later, we started work in the power sector, when we were awarded a contract by the Maharashtra State Electricity Distribution Company for the construction and commissioning of subtransmission lines, distribution lines, power transformers and new sub-stations.
At present, we have contracts worth Rs 2,500 crore in Tamil Nadu, Karnataka and Maharashtra. We came out with our initial public offering (IPO) of Rs 225 crore in 2010, and it was over-subscribed by nearly 15 times. We also plan to enter sectors like agriculture, biogas and education in the near future.
Our turnover in 2012-13 was around Rs 1,700 crore and we expect to cross Rs 2,000 by the end of this year, that is, March 2014.
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