group a2 introduction presentation

8/15/2019 Group A2 Introduction Presentation

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VASCON ENGINEERS

Ltd. An introduction to company’s business, strength

& strategy

Kunal mandalaywala, CP0712

Shridhar Nayak, CP0812

Arjun Patel, CP0912

Akansha Rathi, CP1012

Arpana Roy, CP1112

Romil Sagar, CP1212

PRESENTED BY:


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OVERVIEW

• VASCON are an engineering, procurement and construction servicesand real estate development company with operations in a number of states and union territories in India.

• According to a survey conducted by the Construction World publication in June 2007, they are among the top ten builders in

India, based on parameters such as size, brand or image, quality of construction, goodwill, innovative product offerings, socialobligations and commitments, use of technology and best business

practices.

• They provide EPC services and develop real estate directly or indirectly through our Subsidiaries and the Other Development

Entities.• Subsidiaries and the Other Development Entities engage Company

to provide EPC services for the development of their projects andCompany also provides EPC services independently to third parties


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OVERVIEW

• MISSION: They believe in providing high quality

and innovative projects on a timely basis.

• The Company commenced operations primarily

as an EPC services company in 1986.

• Operations span across all aspects of real estate

development, from identification and acquisition

of land to providing EPC services and sales andmarketing of their projects to operation of their

completed projects .


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OVERVIEW

• As of December 31, 2009, they had completed an aggregateof 181 EPC Contracts, with a total contract value of Rs.8,888.70 million.

• Third party EPC clients include well-known Indian and

multi-national companies such as Cipla Limited, Kirloskar Brothers Limited and Symbiosis.

• For the six months period ended September 30, 2009, theyhad consolidated total income of Rs. 3,620.39 million andconsolidated net profit, as restated, of Rs. 232.31 million

and for the fiscal year 2009, they had consolidated totalincome of Rs. 5,247.57 million and consolidated net profit,as restated, of Rs. 306.41 million.


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Strengths:

1. Significant experience and strong track record.

2. Diversified portfolio of business and diverse revenuestreams.

3. Quality and strength of execution.4. Emphasis on innovative and theme based

developments.

5. Qualified and proven project teams and experienced

management.6. Established brand name.

7. Effective development structure to optimise resources.


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Strategy:

1. Diversify geographically into new locations.

2. Optimise business mix.

3. Continue to grow our real estate development projects.

4. Maintain and upgrade high standards of

quality and reliability.


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PRESENTATION OVERVIEW

• SUMMARY OF BUSINESS, STRENGTHS AND STRATEGY

• SUMMARY FINANCIAL INFORMATION

• THE ISSUE

•

GENERAL INFORMATION• CAPITAL STRUCTURE

• OBJECTS OF THE ISSUE

• BASIS FOR ISSUE PRICE

• STATEMENT OF TAX BENEFITS

22-Aug-13 VASCON ENGINEERS LTD. 7


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SUMMARY FINANCIAL INFORMATION

Financial year ends on 31st March.

They have given consolidated as well as unconsolidated financial

statements.

Financial statement

22-Aug-13 VASCON ENGINEERS LTD. 8

http://d/sEM%203/IF/financial%20statements.pdfhttp://d/sEM%203/IF/financial%20statements.pdf


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EQUITY SHARE OFFERED:

Issued by the company:1,08,00,000

Employee reservation:1,00,000

QIB Portion

64,20,000

Non- institutionalportion

10,70,000

Net issue :1,07,00,000

Retail portion

32,10,000


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General information:

• They were originally incorporated on January 1, 1986 as a privatelimited company under the provisions of the Companies Act, 1956as Vascon Engineers Private Limited.

• They became a deemed public company by virtue of Section 43A of the Companies Act with effect from August 25, 1997 and were

renamed as Vascon Engineers Limited.• Consequent to the amendment of Section 43A of the Companies

Act, became a private limited company with effect from January16, 2001.

• Pursuant to a resolution of shareholders on December 7, 2006, theywere converted to a public limited company with effect fromDecember 7, 2006.

• Company Identification Number: U70100MH1986PLC038511


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Board of director of the issuer:

R. Vasudevan

Managing Director and Non-Independent

K.G. Krishnamurthy

Non-Executive Director and Non-Independent

Nominee director of HDFC Ventures Trustee Company Limitedacting in its capacity of trustee of HDFC Property Fund

V. Mohan

Chairman and Independent director

Ameet Hariani

Non-Executive Director and Non-IndependentR. Kannan

Independent Director


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• Refund Banker

– HDFC Bank • 5th, Atur Chambers,

Moledina Road, Campus,

Pune

• Bankers to the Company

– HDFC Bank Limited • HDFC Bank House,

Senapati Bapat Marg,Lower Parel,Mumbai 400 013

– State Bank of India• Industrial Finance Br., Pune,

Tara Chambers, Mumbai-Pune Road, Pune 411 003

• Auditors

– Anand Mehta & Associates

• Chartered Accountants Mulratna, First Floor, 334, Narshi Natha Street,Masjid (West), Mumbai 400 009


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• Monitoring Agency

– There is no requirement for a monitoring agency

for the Issue pursuant to Regulation 16 of the SEBI

ICDR Regulations.

• IPO Grading Agency

– CRISIL Limited

• 1061, Solitaire Corporate Park,151 Andheri Kurla Road, Andheri (E), Mumbai 400093


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List of Responsibilities between the

Book Running Lead Managers


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• Even if many of these activities will be handled

by other intermediaries, the BRLMs shall be

responsible for ensuring that these agencies

fulfill their functions and enable them todischarge this responsibility through suitable

agreements with the Company.


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• Credit Rating

– As this is an Issue of Equity Shares, there is no

credit rating for this Issue.

• IPO Grading

– This Issue has been graded by CRISIL Limited and

has been assigned a grade of ‘3’ out of amaximum of ‘5’, indicating average fundamentals.

The IPO Grading is assigned on a five point scale

from 1 to 5, with IPO Grade 5/5 indicating strong

fundamentals and IPO Grade 1/5 indicating poorundamentals.


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• Trustees

– As this is an Issue of Equity Shares, the

appointment of Trustees is not required.

• Project Appraisal

– There is no project being appraised.

• Book Building Process

– Book Building Process refers to the process of

collection of Bids, on the basis of the Red Herring

Prospectus within the Price Band. The Issue Priceis fixed after the Bid Closing Date.


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• The principal parties involved in the Book BuildingProcess are:

(a) Our Company;(b) Book Running Lead Managers;

(c) Syndicate Members who are intermediaries registeredwith SEBI or registered as brokers with the

Stock Exchanges and eligible to act as underwriters. Syndicate

Members are appointed by the BRLMs;(d) Registrar to the Issue; and

(e) Escrow Collection Banks.

•

The Book Building Process is subject to change fromtime to time and the investors are advised to maketheir own judgment about investment through thisprocess prior to making a Bid in the Issue.


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• Bidders can bid at any price within the price band. For

instance, assume a price band of Rs. 20 to Rs. 24 per equity

share, issue size of 3,000 equity shares and receipt of five bids

from bidders, details of which are shown in the table below. Agraphical representation of the consolidated demand and

price would be made available at the bidding centers during

the bidding period. The illustrative book below shows the

demand for the equity shares of the issuer company atvarious prices and is collated from bids received from various

investors.


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CAPITAL STRUCTURE


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Changes in the Authorised Share Capital of our

Company since Incorporation


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• This Issue has been authorized by a resolution of

our Board of Directors dated August 27, 2009 and

a resolution of our shareholders dated

September 22, 2009.• The Equity Share capital of our Company after the

Issue, assuming full exercise of all outstanding

options which have been vested and are yet to beexercised i.e. 333,500 options, under the ESOP

2007,will comprise 90,349,550 Equity Shares.


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• The RBI has by a letter dated December 18, 2007permitted FIIs to subscribe to the present Issueunder the portfolio investment scheme in termsof Regulation 1(5) of Schedule 2 to RBI

notification no FEMA 20/2000- RB dated May 3,2000. However it provided that FII investments inany pre-ipo placement would be treated on parwith FDI and will have to comply with the

guidelines for such FDI such as minimumcapitalisation norms and lock in-period and otherconditions prescribed vide Press Note 2 (2005)Series.


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Requirement and Sources of Funds


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Means of finance

• The fund requirement and deployment is based on internal management

estimates and has not been appraised by any bank or financial institution. The

fund requirement below is based on our current business plan. In view of the

highly competitive and dynamic nature of the industry in which we operate, we

may have to revise our business plan from time to time.

•Company may also reallocate expenditure to newer projects or those with earliercompletion dates in case of delays in our existing projects. Consequently,

company’s fund requirement may also change accordingly. Any change in

company’s plans may require rescheduling of our expenditure programs, starting

projects which are not currently planned, discontinuing projects currently planned

and an increase or decrease in the expenditure for a particular project at the

discretion of the management of Company. The objects as mentioned above willbe financed from the Net proceeds of the Issue. The remaining balance and in case

of any variations in the actual utilization of funds earmarked for the activities set

forth below, increased fund deployment for a particular activity will be met from

internal accruals of Company. The balance proceeds of the Issue, if any, will be

used for growth opportunities and general corporate purposes.


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The details of shares to be locked-in

for one year are given below


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In terms of Regulation 40 of the SEBI

ICDR Regulations• The Equity Shares held by persons other than the Promoters prior

to the Issue may be transferred to any other person holding theEquity Shares of our Company which are locked-in as per Regulation37, subject to continuation of the lock-in in the hands of thetransferees for the remaining period and compliance with SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,as applicable.

• Equity Shares held by the Promoters may be transferred to andamong the Promoter Group or to a new promoter or persons incontrol of our Company which are locked-in as per Regulation 36,subject to continuation of the lock-in in the hands of the

transferees for the remaining period and compliance with SEBI(Substantial Acquisition of Shares and Takeover) Regulations, 1997,as applicable.


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Top Ten Shareholders

15%

13%

13%12%11%

9%

9%

8% 7% 3%

% of Shares

HDFC Ventures Golden Temple Pharma

Dreamz Impex R.Vasudevan*

DNA Pharma Premratan ExportsMedicreams India Orion Lifesciences

Vatsalya Enterprises Lalitha Vasudevan

Shareholder % of share

HDFC Ventures 14.66 %

Golden Temple Pharma 12.35 %

Dreamz Impex 12.35 %R.Vasudevan* 11.71 %

DNA Pharma 11.32 %

Premratan Exports 8.42 %

Medicreams India 8.42 %Orion Lifesciences 7.72 %

Vatsalya Enterprises 6.60 %

Lalitha Vasudevan 3.33 %


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• Neither the Company, the Promoters, the Directors northe BRLMs have entered into any buy-back and/orstandby arrangements for the purchase of EquityShares from any person.

• Except as disclosed in this Red Herring prospectus,there will be no further issue of capital whether by wayof issue of bonus shares, preferential allotment, rightsissue or in any other manner during the period

commencing from submission of this Red HerringProspectus with SEBI until the Equity Shares to beissued pursuant to the Issue have been listed.


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• We have not issued any Equity Shares out of revaluation reserves or for consideration otherthan cash other than the Equity Shares issuedthrough a bonus issue, which was from the freereserves of our Company.

• The Equity Shares held by our Promoters are notsubject to any pledge

• Over-subscription to the extent of 10% of theIssue can be retained for the purpose of roundingoff while finalising the basis of Allotment.


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• Our Promoters and members of our PromoterGroup will not participate in the Issue.

• There will be only one denomination of Equity

Shares unless otherwise permitted by law andthe Company shall comply with such disclosureand accounting norms as may be specified bySEBI from time to time.

• The Equity Shares will be fully paid up at the timeof allotment failing which no allotment shall bemade.


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OBJECTS OF THE ISSUE

The objects of the Issue are to raise funds for:

a. Construction of our EPC contracts and real estate

development projects

b. Repayment of debtc. General corporate purposes and

d. Achieve the benefits of listing on the Stock

Exchanges


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Details of the Object


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Construction of our EPC contracts and

real estate development projects

• We are engaged in construction of our EPC contracts and

real estate development projects and intend to deploy Rs.

1,150.00 million


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Zenith Project

• They propose to deploy Rs. 900.00 million of

the net proceeds of the Issue towards meeting

construction costs of Zenith Project at Pune,

Maharashtra involving construction of a mall.

• The total amount we intend to deploy for the

construction of the project is Rs. 1035.00

million of which Rs. 39.90 million is alreadyincurred.


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Details about the land acquisition of

the Project• The Company had entered into a joint venture agreement dated

February 2, 2005 and the addendum agreement dated August 10,2006 with Sumangal Enterprises, a partnership firm, ‘ZenithVentures’ to jointly acquire the development rights fordevelopment of certain lands located at Kharadi, Pune.

•

Under the terms of the addendum agreement, SumangalEnterprises is entitled to 42.5% of the gross sale proceeds of theshops in the mall to be sold or leased, upon construction.

• The amount so arrived at will be assumed to be inclusive of thecapital contribution made by Sumangal Enterprises for the purchaseof the said land.

• The Company will be entitled to the profit arrived after deductingexpenses including statutory liabilities, payment relating to theproject and fixed share of profit of Sumangal Enterprises.


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Details about the land acquisition of

the Project

• Zenith Ventures has entered into a development agreement

dated November 8, 2005 with Dr. Vijay Tatyarao Dangat, the

owner of the land, Ganaraj Developers, a partnership firm,

and Suyash Realtors Private Limited as the consenting parties

to whom development rights were transferred by the owners,for the development of land admeasuring 3.63 acres located

at Kharadi, Pune.

• Under the said agreement, Dr. Vijay Tatyarao Dangat has

transferred development rights in the said property to ZenithVentures for a lump sum consideration payable to the owner

and the consenting parties.

• As per the work order dated August 8, 2009, Zenith Ventures

awarded the contract for construction of the Zenith Project toour Com an .


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Details of the Cost of the Project

• The breakdown of the internal estimated construction cost of the

Zenith project is as follows:


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Nucleus Belgaum project

• We propose to deploy Rs. 250.00 million of the net proceeds of the Issue towards meetingthe development and construction costs of

our Nucleus Belgaum project at Belgaum,Karnataka involving construction of a mall.

• The total amount we intend to deploy towardsdevelopment and construction of the project

is Rs. 330.00 million which is excluding thecost of land, which has already been acquired.


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Details of the Cost of the Project


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Repayment of the loan taken

• We have entered into a loan agreement datedNovember 28, 2008 with Housing DevelopmentFinance Corporation Limited under which they areallowed to borrow up to Rs. 500.00 million with an

interest payable, at the rate of 14.25% per annum,which is set in accordance with the prevailing HDFCCLPR rate.

• As on December 31, 2009 the principal outstanding is

Rs. 411.68 million.• We intend to repay up to Rs. 396.28 million from the

Net Proceeds of the Issue during the Fiscal year 2010.


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Issue related expenses

• The expenses of this Issue include, among others, underwriting and

management fees, printing and distribution expenses, legal fees,

statutory advertisement expenses, IPO grading expenses and listing

fees.


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BASIS FOR ISSUE PRICE

• The Issue Price will be determined by us inconsultation with the BRLMs on the basis of the demand from investors for the Equity

Shares through the Book-Building Process.• The face value of the Equity Shares is Rs. 10

and the Issue Price is X times the face value atthe lower end of the Price Band and X times

the face value at the higher end of the PriceBand.


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• Qualitative factors:

Significant experience and strong track record;

Quality and strength of execution;

Emphasis on innovative and theme-based

developments;

Qualified and proven project teams and

experienced management; and Effective development structure to optimize

resources.


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• Quantitative factors:

The information presented below relating to theCompany is based on the restated unconsolidated

financial statements of the Company for the sixmonth period ended September 30, 2009 andFiscal 2009, 2008, 2007 and restated consolidatedfinancial statements of the Company for the six

month period ended September 30, 2009 andFiscal 2009, 2008 and 2007 prepared inaccordance with Indian GAAP.


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Some of the quantitative factors are:

1. Basic and Diluted Earnings per Share (EPS) as per Accounting

Standard 20


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2. Price Earning Ratio (P/E) in relation to the Issue Price of Rs. X pershare of Rs. 10 each

a. P/E ratio in relation to the Floor Price : X times

b. P/E ratio in relation to the Cap Price : X times

c. P/E based on EPS for the year ended March 31, 2009 : X timesd. P/E based on Weighted average EPS : X times

e. Industry P/E*

i. Highest :391.2

ii. Lowest : 2.8

iii. Industry Composite : 38.5

* P/E based on trailing twelve month earnings for the entireconstruction sector


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4. Minimum Return on Total Net Worth after Issue needed to

maintain Pre-Issue EPS for the year ended March 31, 2009 is X

5. Net Asset Value


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6. Comparison with other listed companies EPS (Rs.) P/E

group a2 introduction presentation

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