MSK Projects raises 336 mln rupees

October 22, 2007

MUMBAI (Reuters) – Construction firm MSK Projects India Ltd said on Monday it had raised 336 million rupees through a preferential issue to a private equity firm, which would help it bid for bigger toll projects.

MSK said it had issued 4 million shares to Subhkam Ventures at 84 rupees each, raising the latter’s stake in the company to 24.26 percent. Subhkam will now make an open offer for another 20 percent at the same price.

“We need money for our development. We have an existing relationship with Subhkam, so we agreed to this,” MSK’s Managing Director Ashok Khurana told Reuters. “We will be using this money for our BOT (build-operate-transfer) projects.”

The Baroda-based construction firm has forayed into toll road and water distribution projects and is also developing a couple of bus terminals. It has completed seven BOT projects and is currently doing two toll road projects.

After the fund infusion, the company will be able to bid for larger projects, Khurana said. It is also working on raising 3.5-4 billion rupees as debt for this purpose. “After this deal, the funding process will be completed,” he said.

Subhkam said it had not decided whether to take up a board representation, but retained an option for one board seat.

MSK shares, which hit a day’s high of 101.40 rupees on the news, ended at 100 rupees, up 3.5 percent in the Mumbai market.

Written by ITW Editor · Filed Under Investment and Finance

DS Constructions forays into automated parking sector

October 12, 2007

DS Constructions Ltd., the pioneer in PPP infrastructure development and engineering construction in India, today announced that it has bagged an Automated, Multi-storey car parking project on BOT basis from New Delhi Municipal Council (NDMC). Located on the Kasturba Gandhi Marg near Connaught Place, the parking lot would be spread over 6200 sq mtrs and will have a capacity of accommodating 1500-1600 Equivalent Car Spaces (ECS). The concession period for the project is 30 years.

Speaking on the occasion, Mr. M S Narula, Managing Director of DS Constructions said, “Our vision is to be a leading Infrastructure developer and investor in India. We already have significant presence in the roads and highways, hydro power, railways and SEZ sectors and are actively pursuing Sea Port & Airport projects and today we are proud to have made our debut in the automated parking sector with this project. We are evaluating the opportunities in this sector and are keen to develop and invest in more such parking projects in the country.”

“This project holds grave importance owing to its magnitude and strategic location, as it lies in the heart of the sprawling business and commercial zone of the capital. We will be deploying the latest technology from Germany for multi-storey automated parking, with optimum space utilization to ensure that the facility accommodates the maximum number of cars. We are confident of completing the project much before the Commonwealth games.” Mr. Narula further added.

Source: moneycontrol.com

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CARE assigns A+ rating to NCD issue Era Infra Engg

October 4, 2007

CARE has assigned a ‘CARE A+ [Single A (Plus)]’ rating to the proposed Non Convertible Debentures (NCDs) aggregating Rs.100cr. of Era Infra Engineering Ltd.(EIEL), formerly known as Era Constructions (India) Ltd. These NCDs would be redeemed in 8 quarterly installments in 2nd and 3rd year from the date of allotment. Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

CARE has reaffirmed a ‘CARE A+ [Single A (Plus)]’ rating to the Secured NCDs aggregating Rs.50cr. of Era Infra Engineering Ltd. (EIEL). . Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

CARE has reaffirmed a ‘CARE A+ [Single A (Plus)]’ rating to the Unsecured NCDs aggregating Rs.100cr. of Era Infra Engineering Ltd. (EIEL). Instruments with this rating are considered to offer adequate safety for timely servicing of debt obligations. Such instruments carry low credit risk.

The ratings take into account EIEL’s experience in diversified construction activities, strong pre-qualification credentials, increasing order book position resulting in improved financial performance, reputed clients and positive outlook for the construction sector. However, the rating is constrained by increasing working capital requirements given the aggressive growth, increasing investment requirement for BOT projects, vulnerability to increasing competitive pressures given its relative size and inherent cyclical trends associated with construction sector.

EIEL, the flagship company of Era Group was incorporated in September 1990, promoted by Mr. H.S Bharana, a civil engineer by profession, having more than two decades of experience in construction industry. The company is engaged in construction activities of infrastructure, institutional, industrial, commercial and housing. EIEL has executed 65 projects in the last 16 years valued at Rs.650cr.

Total operational income of the company has increased 99% and 145% in FY’06 and FY’07 respectively due to increase in average contract size and its ability to execute projects as per time schedules.

Consequent to the increase in the total income, profitability of the company has also been rising consistently. PBILDT margin during FY’07 have increased from 15.64% to 18.35% due to increase in ticket size of the contracts and changing project mix towards high value turnkey contracts.

Overall gearing, however, has increased as on Mar 31, 2007 on account of issue of FCCBs and increase in borrowings to meet capex, investment in BOT and working capital requirements. On excluding FCCBs, overall gearing improves to 1.68 as on Mar 31, 2007.

EIEL has raised USD 75 million (Rs. 326 crs) through FCCBs in Jan’07 to fund capex plans and investment in BOT projects. As per FCCB terms, the conversion price will be decided in Jan’08 and conversion process would commence from Mar’08.

EIEL has issued 55 lakh fresh warrants to promoters and associates in May 2007 at a price of Rs.425. Application money equal to 10% (Rs.23cr.) has been received at the time of issue of these warrants. These warrants would be converted to equal number of equity shares in Nov 2008, expected to bring Rs.210cr. Besides, existing warrants issued in Dec 2005 at a price of Rs 135 would contribute Rs.48cr. towards equity in FY’08.

Liquidity as measured by current ratio is satisfactory at 2.78 times as on March 31, 2007. Company’s working capital requirements have been mostly funded from the borrowings during the year. Going forward, the liquidity of the company is likely be under pressure on account of increasing order book position, working capital intensive nature of operations, increasing order book position and increasing investments in BOT projects.

Source: moneycontrol.com

Written by ITW Editor · Filed Under Investment and Finance

IRB Infrastructure files DRHP with SEBI

October 3, 2007

IRB Infrastructure Developers Limited, an integrated infrastructure development and construction company in India with significant experience in the roads and highways sector, proposes to enter the capital markets with a public issue of 51,057,666 Equity shares of Rs 10 each through 100% book building process.

It has also diversified into the business of real estate development sector. It has filed DRHP for this purpose with SEBI. Deutsche Equities India Private Limited is the Sole Global Coordinator and BRLM for the Issue and Kotak Mahindra Capital Company Limited is the Co-BRLM for the Issue.

IRB Infrastructure Developers Limited is the holding company of the IRB Group. The Company was formed to fund the capital requirement of the IRB Group’s initiatives in the infrastructure and construction sectors. Its infrastructure development portfolio includes several large BOT projects in the road sector, including the Mumbai-Pune Express Highway and NH.4 BOT project and the BOT project for the Bharuch to Surat section of NH.8. In January 2007.

It has formed a consortium with Deutsche Bank AG Singapore Branch to jointly bid for certain road infrastructure projects.
As a part of its business strategy, the company now proposes to invest in its subsidiary IDAA and make prepayment and repayment of existing loans of the Company and the Subsidiaries through the net proceeds of the Issue.

Deutsche Bank Hong Kong Branch, Jade Dragon (Mauritius) Limited (a subsidiary of Goldman Sachs) and CPI Ballpark Investments Limited (a subsidiary of Merrill Lynch) each hold 3.85% stake, and Somerset Emerging Opportunities Fund hold 0.54% stake in the equity share capital of the company.

The Company’s infrastructure development business involves construction, development and operation of infrastructure development projects. It is an established infrastructure company in the roads sector in India and has a large portfolio of completed and operational BOT projects in the Indian road infrastructure sector.

The Company’s construction business complements its infrastructure development business and involves engineering, procurement and construction work for construction project on a contractual basis, including in the roads sector.

Source: indiainfoline.com

Written by ITW Editor · Filed Under 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 Investment and Finance

New hybrid model likely to fund highway projects

November 22, 2006

NEW DELHI, NOV 22: The Centre is likely to stop financing future highway projects on a build-operate-transfer (BOT) annuity basis because the entire traffic risk falls on National Highways Authority of India (NHAI) or the government that collects the toll.

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Nine road projects cleared by PPP appraisal committee

November 1, 2006

NEW DELHI, NOV 1: Road sector projects seem to be on the fast track with the public private partnership appraisal committee (PPP-AC) clearing nine road projects in its second meeting on Wednesday.

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Financial closure on Rs 765cr Bangalore Expressway achieved

November 1, 2006

The consortium of Soma Enterprise Ltd., a leading infrastructure developer with Nagarjuna Construction Co. and Maytas Infra Pvt. Ltd., today announced that financial closure on the Rs.765 crore Elevated Toll Expressway Project on Bangalore – Hosur Section of NH-7 (from Km 9.5 to Km 18.5) on BOT basis has been achieved. Out of the Rs.765 crore, Rs.600 crore of debt has been raised from a consortium of banks, led by Canara Bank. The consortium will operate the expressway for a period of 20 years. The special purpose vehicle formed for this project is Bangalore Elevated Tollway Ltd.

Written by ITW Editor · Filed Under Investment and Finance

Evaluating toll road credits

November 1, 2006

It has been recently reported that the government of India has given its approval for six-laning of 6,500 km of national highways, including 5,700 km forming part of the Golden Quadrilateral at a total cost of Rs 41,210 crore. In terms of financing, the expectation is that private sector will commit investments of Rs 35,690 crore. Also the government, in order to accelerate implementation of highway projects of Rs 2,20,000 crore, has set a target of awarding 175 contracts for Rs 76,540 crore, all on BOT basis by March 2008. Since a number of these projects are going to be predominantly debt financed with repayments supported by toll collections, it would be timely and useful to have an analytical framework for assessing the credit quality of various types of toll roads and financing structures.

Written by ITW Editor · Filed Under 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 Uncategorized

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