NKG Infrastructure Limited files DRHP with SEBI

October 3, 2007

NKG Infrastructure Limited (the “Company”), an ISO 9001:2000 Certified Construction Company, engaged primarily in execution of infrastructure projects like Highways, Roads & Bridges, Extension and Grading of Runway at airport, errection and installation of power sub-station and construction of buildings has filed its Draft Red Herring Prospectus (“DRHP”) with the Securities & Exchange Board of India (“SEBI”) to enter the capital market with its initial public offering of equity shares. At present, it is executing 67 projects including projects in joint ventures across various states in India. The value of projects under execution is Rs. 526.87 cr.

The Company proposes to issue 63,00,000 equity shares (the “Issue”) of Rs. 10 each for cash at a price to be decided through a 100% Book-Building process constituting 44.41% of the fully diluted post issue paid-up capital of the Company. The objects of the Issue are to deploy the proceeds for funding the capital expenditure requirements, investment in joint venture & BOT projects & augmenting the working capital resources.

The Equity Shares are proposed to be listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The Book Running Lead Manager (“BRLM”) to the Issue is SPA Merchant Bankers Limited.

Incorporated in 1989, the Company is engaged primarily in execution of infrastructure projects and civil construction projects. Recently the Company has diversified into installation and erection of electric substations, with project for installation / testing / commencing of external electrical works in Gomti Nagar, Lucknow. The major projects of the Company are in the state of Uttrakhand, Uttar Pradesh and Madhya Pradesh. It is also executing/executed projects in the states of Haryana, Punjab, Gujarat, Himachal Pradesh & Pondicherry. Its major clients include Public Works Department & other agencies of various state governments & development bodies like Noida Development Authority, Lucknow Development Authority, Ghaziabad Development Authority, etc. It is also executing project for Airport Authority of India in joint venture for extension and grading of runway at Pant Nagar airport. The private sector clients include construction companies like Era Construction India Ltd., Nagarjuna Construction Company Ltd. and Marg Construction Ltd.

Source: moneycontrol

Written by ITW Editor · Filed Under Construction, Infrastructure, Investment and Finance

Subscribe to Maytas Infra, looks reasonable: India Infoline

October 3, 2007

Maytas Infra, a construction and infrastructure development company, is open for subscription with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.

The issue will close for subscription on October 4, 2007. The company has fixed the price band between Rs 320 and Rs 370 per equity share.

India Infoline report on Maytas Infra IPO

Investment rationale

Diversified portfolio with pan India presence

MIL construction portfolio is diversified across six sectors including irrigation, roads and bridges, buildings and structures, power, oil and gas, and railways. Their infrastructure development projects are into power, road and port sectors. These 11 BOT projects are geographically widespread through 12 states in India.

Along with national presence they are exploring international opportunities in construction space; they have established a joint venture with Dhabi Contracting Est. in Dubai in December 2006.

Investment in infrastructure to witness a CAGR of 13.8%

India is the fourth largest economy in the world in GDP terms on the basis of purchasing power parity. Over the last decade, India has been one of the fastest growing economies in the world with a real GDP of 9.2% in FY07. Infrastructure has been a big contributor. This growth is visible in roads, bridges, airports, commercial buildings, townships, power systems, rural and urban development.

According to the Pre-Budget Memo 2006- 07 prepared by the Construction Federation of India, construction is the second largest employer after the agriculture sector. Currently, the construction industry in India, directly or indirectly, employs approximately 32mn workers, accounts for 40% of gross investment and 60% of infrastructure costs.

According to CRIS INFAC, investment in construction is expected to grow to approximately Rs 6,129 billion in 11th five year plan from Rs 3,213 billion in 10th five year plan at a CAGR of 13.8%. The construction segment constitutes a significant part of infrastructure development in the economy.

The infrastructure boom is also likely to help construction companies. Government initiatives in the form of developing national highways, golden quadrilateral, and setting up public –private partnerships and BOT models are likely to attract strong investment in the infrastructure sector.

Healthy order book position of 5.6x FY07 revenue

MIL has a healthy order book of Rs 35.8 billion, 5.6x FY07 revenues as of June 30, 2007, inclusive of its joint venture projects. On a standalone basis, the order book stands at Rs 26.9 billion, 4.2x FY07. It also includes higher-margin construction contracts in the power, oil and gas, infrastructure and railway sectors. MIL has also placed a bid for lift irrigation projects rather than for purely irrigation contracts. Irrigation construction contracts account for maximum contribution to the revenue.

Risk and concerns

Price fluctuations

MIL has contracts on fixed-price, lump-sum or item-rate basis, the company is exposed to price escalation in construction materials, fuel and equipment.

Controlling interest

MIL holds less than 50% of controlling interest in most of its SPV projects.

Single supplier

The Gautami power station and the KVK Nilachal power station rely on a single supplier, GAIL and Mahanandi Coal Fields respectively, for fuel as well as external operators for their operation and maintenance. Any disturbance in supply would affect their operations.

New entrance in infrastructure

MIL is very new in the infrastructure sector. It has completed only one road project till date in this vertical.

Government policies

A substantial part of MIL’s revenue has been from government projects. Any change in the political or financial policies will directly affect the company’s operating margins.

Recommendation

Based on an order book position of Rs 35.8 billion and an aggressive foray into the infrastructure sector with 11 BOT projects, MIL seems to be fundamentally strong. On a post issue basis, considering the EPS of Rs.9.4, the issue is available at P/E at 34.2x lower price band and 39.6x upper price band. The issue looks reasonable at both the ends compared with its peers. We recommend Subscribe.

Written by ITW Editor · Filed Under BOT, Infrastructure, Investment and Finance

D.S.Constructions to Deploy SAP

October 1, 2007

D.S.Constructions, a part of the D S Group, through its innovative and selective strategy has established itself in the infrastructure development sector. The company is a pioneer in BOT infrastructure development and engineering with projects under execution in the highways, expressways and railway, and hydro power. It’s now pursuing privatization of airports and ultra mega power projects, Special Economic Zones (SEZs), etc., in a short span of 5 years.

The company growing at a fast rate felt that it would be possible to keep pace with growth only with the introduction and use of good IT tools. The technology selection parameters of D.S.Constructions are investment protection, past history, future roadmap, and support.

“We’re little late in IT deployment, however, we’re now doing overtime to catch up. As a first step, we’ve started our SAP implementation for ERP along with creating a good IT infrastructure,” stated C.R.Narayanan, vice president (IT) of D.S.Constructions.

Commenting on the deployment, he further added, “We evaluated various vendors like SISL and Wipro before zeroing in on SAP. IBM is our implementation partner for this. The deployment starts on October 3, 2007. In addition, for our WAN bandwidth, TULIP IT is our partner and for WAN equipments, Fortinet is partnering us.”

The company is taking all measures beforehand so that it doesn’t land into any problems later on. “There aren’t many IT deployments in infrastructure development phase in India. We need to suitably modify the global best practices to the Indian environment,” said Narayanan.

With businesses spread across, the centralized system would help the company in gathering data and will also enable it to connect anytime, anywhere, thereby helping it to determine the status of materials at the various project sites. The cycle time would be reduced and the implementation would determine availability of information, alerts, and knowledge repository.

The company predominantly deploys packaged applications and only for very specific applications it develops bolt ons.

D.S.Constructions believes that HR and IT work very close. “A HR portal is under deployment which would address induction, appraisal, helpdesk, MIS, and staffing. This is a hosted solution, which is from HR Mantra of Mumbai. The deployment will start in 15 days from now,” said Narayanan.

Spending around 2-3% of its revenue, the IT expenditure estimated by the company for this year is about Rs.4 crores. With the growth of its business in the coming years, it expects this expenditure to grow further.

The company has presently taken a pilot project of SAP implementation, which is expected to go on till end of 2008. Hence, all other extended IT iniatives of ERP would be considered for deployment by mid-June or -July, 2009.

Written by ITW Editor · Filed Under BOT, Construction, Infrastructure, Investment and Finance

Infrastructure companies — Stack up with discretion

October 14, 2006

Driven by infrastructure spending, the demand side for construction companies remains robust. The key to success will lie in their ability to ramp up resources and capitalise on order flow.

Compound Annual Growth over 3 Years (%)
Indicative OPM across segments (%)

Click on the image to enlarge

Infrastructure has been the new market mantra the past two years. While private equity investors showed keen interest in infrastructure/construction companies, a number of mutual funds also jumped on to this booming bandwagon, investing a chunk of their assets in the sector. An annualised revenue growth of 30-40 per cent over the past three years and an average order size of three-four times the revenues also seem to justify this newfound enthusiasm.

Written by ITW Editor · Filed Under BOT, Infrastructure, NHAI

The DND Experience

September 8, 2006

DND Experience

Written by ITW Editor · Filed Under DND, Infrastructure, NHAI, Toll Management System, Tolling

Road projects in limbo, thanks to red tape

August 20, 2006

NEW DELHI: The Planning Commission’s failed attempt at redesigning public-private partnership contracts for roads since January 2005, has paralysed the nation’s highway building exercise, once the showpiece of government performance.

Government sources concede that apart from roughly 30 projects processed earlier, not a single kilometre of new BoT (build-operate-Transfer) projects have been awarded since early 2005. After two years, matters have reached a new low, with NHAI taking a decision in a July 29 board meeting, to hold award of projects, pending resolution of new norms.

Written by ITW Editor · Filed Under Construction, Infrastructure, Investment and Finance, NHAI, Projects

PLUS lands Mumbai job

August 8, 2006

PETALING JAYA: After years of scouting around globally for projects to widen its earnings stream, PLUS Expressways Bhd has landed a RM148mil BOT (build, operate and transfer) job that involves a 21.6km highway near Mumbai in India.

This is PLUS’ first foray overseas but the company hopes to clinch many more jobs in India where it is said to be in talks with several other state governments for similar projects. Nearer home, it is trying to secure projects in Indonesia and Vietnam.

Written by ITW Editor · Filed Under Infrastructure, Investment and Finance, PLUS, Projects, Tech, Toll Management System, Tolling

Jharkhand hoping PPPs will attract investors

July 28, 2006

Jharkhand is yet to see the concept of public-private partnership (PPP) take off in any form, especially on its 7,000-odd km network of roads and bridges. The state has not itself tried out the concept; it has seen the National Highways Authority of India (NHAI) thrice floating tenders for the Ranchi-Barhi road on a build-operate-transfer (BOT) basis without evoking any response from the private sector. And the Barhi-Ranchi stretch is said to be the state’s highest traffic corridor!

“Let’s see what happens here (at the PWD level), as we are going to launch the concept in the state soon,” said an apprehensive senior road construction department bureaucrat. Says DK Tiwari, secretary of the department: “We are now seeking to get some roads on that (PPP) basis.”

Written by ITW Editor · Filed Under BOT, Default, Infrastructure, Investment and Finance, NHAI, PPP, PWD

Madhucon bags Rs 820cr NHAI project

July 12, 2006

Madhucon Projects has signed a concession agreement with the National Highways Authority of India (NHAI) for laying over 126 km stretch of road between Madurai and Tuticorin on build, operate and transfer (BOT) basis.

Written by ITW Editor · Filed Under BOT, Construction, Default, Highway, Infrastructure, Investment and Finance, NHAI, Projects

Elevated expressway to connect Bangalore to electronic hub

June 23, 2006

Bangalore, June 23 (IANS) A dedicated 10-km elevated expressway is being built from the Silicon hub of Bangalore to the electronics city to ferry thousands of techies to their workplace in top gear, non-stop.

Prime Minister Manmohan Singh is scheduled to kick-start the project by laying the foundation stone Saturday here in the presence of union Urban Development Minister S. Jaipal Reddy, Governor T.N. Chaturvedi, Chief Minister H.D. Kumaraswamy and top officials.

The brainchild of the National Highway Authority of India (NHAI) and the Karnataka government, the four-lane expressway will be raised above the six-lane national highway (NH-7), connecting Bangalore to Hosur across the state border in Tamil Nadu.

Written by ITW Editor · Filed Under BOT, Construction, Default, ETC, Highway, Infrastructure, Investment and Finance, NHAI, NHDP, Projects, Toll Management System, Tolling