Like hundreds of enterprising entrepreneurs before him, Vishnubhai Patel started off his journey in the world of business not with a flash-bang start-up launch but through the failsafe but predictable route of joining his family business. The training and business insights he received during his time at Bhavna Construction seem to have paid off, however, given the success of the company Patel went on to launch nearly three decades ago — Sadbhav Engineering. Now among India’s most successful engineering and infrastructure construction companies, Sadbhav Engineering operates in three key segments — road construction, irrigation and mining. Apart from its dominance in the road sector, where it undertakes cash contracts, Sadbhav has emerged as one of the largest build-operate-transfer (BOT) players in the country.
As a result of Sadbhav’s astute bidding and timely execution, the company today has an order book of ₹8,350 crore in Q2FY15, with its stock delivering a 241% return over the past year. Analysts believe that three key factors explain Sadbhav’s phenomenal performance. “The company believes in selectively bidding for projects in the roads sector. It stays away from projects where competition is really high and bids aggressively for projects its peers cannot take on. This is why Sadbhav has been able to deliver and execute projects well ahead of schedule,” says Kunal Sheth, a research analyst with Prabhudas Lilladher Securities.
Result of inaction
The last government’s indecision shrunk Sadbhav’s road order book
Indeed, between FY07 and FY09, Sadbhav’s peers — such as HCC and Ramky Infrastructure — overbid for projects and ended up missing deadlines and revenue projections due to delays in clearances and lower than expected traffic growth. This led to a dip in response to NHAI projects in FY10, an opportunity that Sadbhav made the most of, bagging nearly ₹5,000 crore worth of projects that year in the road sector alone. “The company has been very consistent in bagging orders in the minin