BigBloc Construction, a manufacturer of aerated autoclaved concrete (AAC) blocks, bricks and panels, is looking at revenue growth of 25-30% for the financial 2023-24 and an EBITDA margin of 20-25%. Total capital expenditure for FY24 is estimated to be around Rs 65 crore and almost 65% of it (about Rs 42 crore) will come in form of debt from the bank, said Mohit Saboo, director and CFO of the company.
Its current debt/equity ratio stands at 1.11 times, ROCE was at 31% and return on equity was at 39%. For the last three years company has achieved CAGR of 19% in revenue.
Company’s revenue in H1 FY24 was flattish due to slowdown in construction activity in general for the industry. We expect H2 FY24 to be much better with higher capacity utilization across plants, said Saboo.
Over the period of 18-24 months, the company is looking to invest Rs 150-200 crore. About 60-65% of the capital expenditure will be funded through debt and 30-35% equity. This may take debt equity to 1.4-1.5:1, which is at comfortable levels for us, said Saboo.
According to him, the shift from red bricks to AAC block was slower in the last decade due to hesitation from builders as industry was in nascent stage with few players and supply side constraints. But now in metros, top builders have shifted to AAC blocks and adoption is over 60-70%. Demand from industrial segment is going strong as well. In tier-II cities also 40% industry has shifted to AAC blocks.
The company has agressive expansion plans. Currently, the company has an installed capacity of 8.25 lakh cubic meter (cbm) per annum. Post completion of current expansion, its manufacturing capacity will increase to 13.75 lakh cubic meter per annum.
Its manufacturing plants are located in Umargaon (Vapi) and Kapadvanj (Ahmedabad) in Gujarat and Wada in Maharashtra. It is exploring opportunities to set up a plant in the North Indian region around Delhi as well as South Indian region around Chennai and has identified land for the projects. The new projects in South India and North India will be set up in the next 18-24 months.
Bigbloc Building Elements, a wholly owned subsidiary, has recently commenced commercial production of first phase – 2.5-lakh cbm per annum AAC Block plant at Wada. Company has invested Rs. 48 crore and work on Phase 2 is expected soon. At full capacity, Wada plant is expected to generate revenues of Rs. 200 crore per year and will employ around 350-400 people at the plant. At full capacity plant will 5-lakh cbm per annum AAC Block plant, according to Saboo.
BigBloc Construction recently entered into a joint venture with Thailand’s SCG Group and is setting up 3 lakh cbm per annum plant for ALC Panels and AAC Blocks at Kapadvanj Ahmedabad (Gujarat). It has acquired 60,000 sq meter land for the project. The plant is expected to start commercial production in next 6-7 months. “Capacity of the joint venture plant in the second phase can be increased to 5 lakh cubic meter in future with approval from both companies. The ratio of holding in that company is 52% by Bigbloc and 48% by SCG. So, we’ll have to put in our share of 52% which will be around most around Rs 12 crore to Rs 15 crores and the rest will be put in by our venture partners,” informed Sab oo.
The company is setting up 450 KW solar rooftop projects at its Umargam and Kapadvanj manufacturing facilities and will be able to replace approximately 33% of its power requirement at both its plant with renewable green energy. For this it will be investing around Rs. 4.5 crore.
BigBloc Construction currently generates 60-65,000 carbon credit units per annum for the Umargaon unit. At full capacity, Wada project is expected to generate 100,000 carbon credit units. It expects to generate over 2 lakh units of carbon credits per annum post all expansions are completed.
