Vishnusurya Projects and Infra
- Vishnusurya Projects and Infra is coming out with an initial public offering (IPO) of 73,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share.
- The issue will open for subscription on September 29, 2023 and will close on October 4, 2023.
- The shares will be listed on NSE Emerge Platform.
- The share is priced 6.80 times higher to its face value of Rs 10.
- Book running lead manager to the issue is Khandwala Securities.
- Compliance Officer for the issue is Vakaday Subramanian Ravikumar.
Profile of the company
Vishnusurya Projects and Infra was incorporated in the year 1996 with a small and dedicated team of construction experts, service providers, contractors, suppliers, and consultants to accomplish one shared goal, building a responsible future. Its Promoter and Promoter Group have interest in diverse set of business spread across Engineering Procurement and Constructions (EPC), mining, education, technology, risk mitigation, media, consultancy, drones etc.
The company is engaged in mining of rough stones and manufacturing of aggregates & Manufacture-sand by using Crushing Plants and Sand washing plants. In addition to mining activities, it is engaged in EPC Projects (construction and infrastructure) delivered across all key sectors such as water, transportation, rail, resource, and institutional development. The company executed and delivered multiple real estate projects in past such as construction of villas, multi storied apartments, specific contracts like compound wall, renovation works, site formation, etc. and design and construction of various infrastructure projects for the government, autonomous and private bodies in state of Tamil Nadu. The company is also engaged in buying, selling and providing integrated solutions for Drones as a Service for surveillance, mapping and surveying purposes.
It has been accredited as a Class I contractor with various departments and agencies viz. (1) Greater Chennai Corporation (GCC), (2) Government of Tamil Nadu Water Resources Department, (3) Tamil Nadu Water Supply and Drainage Board, (4) Highways Departments pursuant to which it is eligible to participate and undertake projects awarded by various other departments and agencies. The scope of its services includes detailed engineering of the project, procurement of key materials, and project execution at the sites with overall project management up to the commissioning of these projects.
Proceed is being used for:
- Funding of working capital requirements of the company
- Repayment / Prepayment, in part or full, of certain outstanding borrowings availed by the company
- General Corporate Purposes
Industry overview
India’s high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors. The government’s focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The $1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Infrastructure support to nation’s manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical.
India has to enhance its infrastructure to reach its 2025 economic growth target of $5 trillion. India’s population growth and economic development requires improved transport infrastructure, including through investments in roads, railways, and aviation, shipping and inland waterways. The government has also suggested an investment of $750 billion to strengthen railway infrastructure, and envisioned the Maritime India Vision 2030 which estimates massive investments in world-class infrastructure development at Indian ports. Global investment and partnerships in infrastructure, such as the India-Japan forum for development in the North East are also indicative of more investments. These initiatives come at a momentous juncture as the country aims for self-reliance in future-ready and sustainable critical infrastructure. India, it is estimated, needs to invest $840 billion over the next 15 years into urban infrastructure to meet the needs of its fast-growing population.
Meanwhile, UAVs, also termed drones, started off from being utilised for military reasons, are currently used by civilians. Advancements in robotics, artificial intelligence, miniaturisation, automation, thermal imaging, materials science, etc. have supported various commercial and civilian usage of drones in sectors like power, agriculture, infrastructure, telecom, and mining, undertaking different activities with substantial enhancements in cost and efficiency. India’s drone ecosystem is advancing, driven by the rise in manufacturers in the market. The Indian drone manufacturing industry is flooded with start-up companies and a few listed players entering the space through the inorganic route. Going forward, drones are expected to create considerable employment opportunities and drive economic growth as they provide various advantages (versatility, high reach and ease of use, particularly ‘in India’s remote and isolated areas). The government and various enterprises are recognising the economic and social prospects offered by the drone manufacturing industry. Therefore, India’s drone industry has great potential to increase its scale exponentially from the current level.
Pros and strengths
Focused on infrastructure projects: Over the past years, the company has booked income of approximately Rs 14,027.12 lakhs by execution of various EPC projects. Most of its projects have been executed in the State of Tamil Nadu. The company’s focused approach over the years on the construction, roads and infrastructure projects has enabled the company to bid for various projects. In addition, the company has also established an in-house design and engineering team, which enables it to undertake turnkey contracts which include design, engineering, procurement and construction.
Visible growth with strong order book: The company’s primary focus on construction, roads, waterways, bridges and flyovers has helped it in gaining technical expertise for undertaking such projects of different sizes involving varying degree of complexities establishing modern fleet of construction machinery, equipment and skilled manpower. As on August 31, 2023, the company is executing 5 (five) ongoing projects which include 1 (one) of road construction and 4 (four) EPC projects with an aggregate order book value of Rs 23,550 lakh. This Order Book would provide it with sustainable growth and ability to enhance shareholders’ value in the future.
Industry experience with strong execution capabilities: Over the past years, the company has booked income of approximately Rs 7,955 lakh by execution of various EPC projects. The company’s focus is to leverage its strong project management and execution capabilities to complete projects in a timely manner while maintaining high quality of engineering and construction works. The company has the three important ingredients required by any infrastructure company i.e., an in-house design and engineering team, a fleet of modern construction machinery and equipment to ensure high quality construction and skilled manpower to execute projects in a timely manner.
Risks and concerns
Geographical constrain: The company’s construction and infrastructure activities are primarily focused in and around the Tamil Nadu region, which may be subject to market conditions and regulatory developments that are different from other regions within India. As of August 31, 2023 the company did not have any ongoing projects in any other areas apart from Tamil Nadu region. As a result, the business, financial condition and results of operations have been and will continue to be heavily dependent on the performance of, and the prevailing conditions affecting, the construction and infrastructure industry in the region. The construction and infrastructure industry in this region may be affected by various factors outside its control, including prevailing local and economic conditions, changes in the applicable governmental regulations, employment and income levels and interest rates, among other factors. These factors may adversely affect its business, financial condition and results of operations.
Capital intensive business: The company’s business requires a significant amount of working capital which is based on certain assumptions, and accordingly, any change of such assumptions would result in changes to its working capital requirements. A significant amount of working capital is required to finance its operations, the purchase or manufacturing of materials, mobilization of resources and other work on projects before payment is received from clients. The company’s working capital requirements may increase if it undertakes larger or additional projects or if payment terms do not include advance payments or such contracts have payment schedules that shift payments toward the end of a project or otherwise increase its working capital burden.
Stiff competition: The infrastructure sector, including for BOQ and EPC contracts, is competitive and highly fragmented. The company competes against various domestic engineering, construction and infrastructure companies for infrastructure projects. Some of its competitors may have larger financial resources or access to lower cost funds, or may have stronger engineering or technical capabilities in executing complex projects, or projects with certain specifications or in certain geographies. They may also benefit from greater economies of scale and operating efficiencies. As the company seeks to diversify its regional focus, it may face competition from existing competitors as well as local infrastructure companies, who may have better market understanding and reputation in such geographies. These competitive factors may result in reduced revenues, reduced margins and loss of market share. Failure to compete successfully against current or future competitors could harm its business, operating cash flows and financial condition.
Outlook
Vishnusurya Projects and Infra is engaged in the mining of rough stones and manufacturing of aggregates and manufacture-sand by using Crushing Plants and Sand washing plants. The company has been accredited as a Class I contractor with various departments and agencies viz. (1) Greater Chennai Corporation (GCC), (2) Government of Tamil Nadu Water Resources Department, (3) Tamil Nadu Water Supply and Drainage Board, and (4) Highways Departments pursuant to which the company is eligible to participate and undertake projects awarded by various other departments and agencies. On the concern side, most of the company’s businesses are operated in and from the state of Tamil Nadu. Due to this geographic concentration of the business operations, the company’s results of operations and growth might be restricted to the economic and demographic conditions of Tamil Nadu. Moreover, the company’s business is capital intensive. If it experiences insufficient cash flows to meet required payments on its debt and working capital requirements, there may be an adverse effect on the results of its operations.
The company is coming out with an IPO of 73,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share to mobilize Rs 49.98 crore. On performance front, the company’s revenue from operations increased by 73.12% to Rs 132.37 crore comprising of 99.33% of its total revenue in March 31, 2023 from Rs 76.46 crore, comprising 79.62% of its total revenue in March 31, 2022. The company’s profit for the year increased by 111.21%, from Rs 7.85 crore in March 31, 2022 to Rs 16.58 crore in March 31, 2023. Going forward, the company’s primary focus is to strengthen its prospects in executing construction, roads, waterways and infrastructure projects. Over the next few years, it will continue to focus on the operations and maintenance of its existing projects while seeking opportunities to further expand its business. Moreover, the company intends to bid and execute larger projects of various authorities by entering into partnerships with various other players in the roads, bridges and water supply projects segment of the infrastructure industry in the near future.
