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TRANSCRIPT
Vascon Engineers Limited
Investor PresentationMay, 2013
Safe Harbor
This presentation and the accompanying slides (the “Presentation”), which have been prepared byVascon Engineers Limited (the “Company”), have been prepared solely for information purposes anddo not constitute any offer, recommendation or invitation to purchase or subscribe for any securities,and shall not form the basis or be relied on in connection with any contract or binding commitmentwhatsoever. No offering of securities of the Company will be made except by means of a statutoryoffering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which theCompany considers reliable, but the Company makes no representation or warranty, express orimplied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairnessand reasonableness of the contents of this Presentation. This Presentation may not be all inclusiveand may not contain all of the information that you may consider material. Any liability in respect ofthe contents of, or any omission from, this Presentation is expressly excluded.
Certain matters discussed in this Presentation may contain statements regarding the Company’smarket opportunity and business prospects that are individually and collectively forward-lookingstatements. Such forward-looking statements are not guarantees of future performance and aresubject to known and unknown risks, uncertainties and assumptions that are difficult to predict.These risks and uncertainties include, but are not limited to, the performance of the Indian economyand of the economies of various international markets, the performance of the industry in India andworld-wide, competition, the company’s ability to successfully implement its strategy, theCompany’s future levels of growth and expansion, technological implementation, changes andadvancements, changes in revenue, income or cash flows, the Company’s market preferences andits exposure to market risks, as well as other risks. The Company’s actual results, levels of activity,performance or achievements could differ materially and adversely from results expressed in orimplied by this Presentation. The Company assumes no obligation to update any forward-lookinginformation contained in this Presentation. Any forward-looking statements and projections made bythird parties included in this Presentation are not adopted by the Company and the Company is notresponsible for such third party statements and projections.
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Contents
A Corporate Overview 4
B Real Estate Business 7
C EPC Business 14
D Clean Room Partitions & BMS 19
E Financial Highlights 24
F Road Ahead 30
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Corporate Overview
Business Segments
• Real Estate leverages our EPC expertise• Cost-efficient development model through JVs & JDAs• Real Estate Project Portfolio aggregates 620 acres with
developable area of 53 msft
Real
Es
tate
Real Estate Picture
5
• Over 26 years of diverse experience• Track record for high quality and timely delivery• Cumulative construction over 20 msft• Current EPC Third party Order book of Rs. 14,755 mn• Current execution capabilities built for 10msf per annum
EPC EPC Picture
• Turnkey Solution Provider • One of the largest manufacturers of Clean Room Partitioning
Systems within the Indian subcontinent• Presence in the fields of Clean Room Technology, Modular
Furniture, Building Management Systems, HVAC etc.Clea
n Ro
om
Part
ition
s & B
MS
Hospitality Picture
Management Team
R Vasudevan, Managing Director
• Founded EPC business in 1986 and diversified into Real Estate and Hospitality
• Responsible for the overall management of the company
• A Civil Engineer with over 35 years of experience
• Recipient of various prestigious awards for excellence in EPC and Real Estate
• Heads Business Development and Procurement
• A Civil Engineer with over 19 years experience in the construction industry
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Amit Kumar Govil, President
Santosh Sundararajan, Chief Executive Officer
• Heads Technical operations, Project feasibility and Project Implementation
• Doctorate in structural design from Singapore with over 12 years of experience in the construction industry
• Heads Corporate Affairs, Strategy and Project Finance• CA,CS, CMA & BGL with experience of over 26 years in
construction and hospitality sectors
M Krishnamurthi, Chief Corporate Affairs
D Santhanam, Chief Financial Officer
• Head the Finance Function
• A Chartered Accountant with over 25 years of experience in construction industry
Real Estate Business Update
8
Real Estate Projects Progress
As on March 31, 2013
Project Name Location Vascon Share
Total Vascon Share
Project Area Area Sold Sale Value Collection Sale Value Collection Rev.
Recognised
Equity Revenue msft msft Rs. mn Rs. mn Rs. mn Rs. mn Rs. mn
Willows Phase (C,D) Pune 100% 56% 0.11 0.11 510 489 286 274 282
Willows Phase (E,F) Pune 100% 56% 0.16 0.14 585 449 328 251 266
Vista - Phase II Nashik 100% 100% 0.14 0.11 265 216 265 216 209
Forest County (11 bld.) Pune 50% 100% 0.84 0.74 2,774 1,882 1,387 941 840
Tulips – Phase I Coimbatore 100% 100% 0.05 0.05 193 182 193 182 193
Tulips - Phase II Coimbatore 70% 70% 0.20 0.10 412 169 288 118 0
Windmere Duplex Pune 100% 45% 0.17 0.05 438 107 193 47 46
Windmere Apartments Pune 100% 45% 0.21 0.09 928 259 408 114 48
Xotech Pune 50% 100% 0.15 0.03 125 92 63 46 28
Nature Spring Pune 100% 65% 0.26 0.06 187 33 129 23 0
Nature Nest Pune 100% 65% 0.25 0.03 88 15 61 10 0
Ela Pune 100% 100% 0.12 0.06 282 98 282 98 147
Garnets Bay Pune 50% 100% 0.03 0.02 171 45 86 23 0
Eco Tower Pune 100% 100% 0.04 0.02 100 34 100 34 33
Total 2.72 1.63 7,059 4,070 4,068 2,377 2,090
Real Estate Portfolio
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City Area Dev. Area Vascon Share
Acres msft Msft Joint Development Agreement (JDA)
Belgam 1.7 0.2 0.1Chennai 105.0 8.7 6.6Hyderabad 3.5 0.6 0.4Madurai 28.2 2.7 1.8Nashik 3.7 0.2 0.1Pune 191.1 11.6 6.6
Joint Venture (JV)Pune 55.4 3.3 1.6Thane 145.1 19.0 8.4
JV & JDACoimbatore 37.2 2.9 1.5Pune 1.6 0.3 0.1
Owned LandAurangabad 9.0 0.8 0.8Goa 7.6 0.5 0.5Nashik 11.1 0.5 0.5Pune 14.1 0.9 0.9
Total 614.3 51.9 30.0
Land Bank of 52 msft totally paid for, available for development
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Forthcoming Projects
City Dev. Area Vascon share
msft msft Nashik 0.31 0.27Madurai 0.30 0.20Coimbatore 0.50 0.26Pune 1.77 1.23Chennai 1.57 1.19Total 4.45 3.16
Madurai
Around 12.5 million sq. ft. of saleable area• 0.3 million sq. ft. to be launched in Phase
I 1,2,3 BHK, Row Apartments, Bungalows etc.• size ranging from 650 sq. ft. to 2,000 sq.
ft. Township with latest amenities like club
house, Swimming pool, Gymnasium, Tennisand Basketball court, Jogging track, Partyhall, water show in lake, Pharmacy, FarmersMarket in Park etc.
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Forthcoming ProjectsLiticia, Kalyaninagar Pune
Net Land area - 5.5 acres Potential saleable – 0.65 mn Sq.Ft. Phase-I details:• Land -3.41 acres • Potential sale area 0.39 mn Sq.ft. • Sizes ranging from 1,185 sq. ft to 2,295 sq. ft• No of buildings - 3
Phase-II details• Land area -2.09 acres • potential sale area – 0.25 mn Sq.ft. • No of Buildings -2
Vista Phase III, Nashik
0.15 million sq. ft. of saleable areaResidential project with 2 & 3 BHK• Sizes ranging from 1,195 sq. ft. to 1,575
sq.ft. Township with latest amenities like club house,
well designed landscape garden, kids play area,sewage treatment plant, rain water harvestingetc. To be developed over 2.5 years from date of
commencement
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Forthcoming Projects
Oragadam, Chennai
Around 10 million sq. ft. of saleable area• 1.57 million sq. ft. to be launched in Phase I• Phase I to be developed over 3 years
1,2,3 BHK, Row Apartments, Bungalows etc.• size ranging from 564 sq. ft. to 2,500 sq. ft.
Township with latest amenities like club house,Swimming pool, Gymnasium, Tennis andBasketball court, Jogging track, Party hall, watershow in lake, Pharmacy, Farmers Market in Parketc.
Neelambur, Coimbatore
0.94 million sq. ft. total saleable areaResidential project with 1 & 2 BHK• sizes ranging from 975 sq. ft. to 1,100 sq.ft.
Township with latest amenities like club house,Swimming pool, Gymnasium, Party hall, welldesigned landscape garden, kids play area,sewage treatment plant, rain water harvestingetc. To be developed over 3 years from date of
commencement
Real Estate Business – Scalability Driver
Leveraging our EPC experience• Strong EPC base will give cutting edge to rise above industry standard in terms of
execution capabilities• Synergies of operating diverse businesses
Unique Business model focused to lower land acquisition costs• Real Estate development through Joint Ventures (JVs) and Joint Development
Agreements (JDAs)• Partnerships augurs well for local market dynamics• Focus on Tier II and Tier III cities
Presence across the entire universe of projects• Residential and Office Complexes, IT parks, Shopping malls, Multiplexes,
Hospitality properties and other buildings• Completed more than 40 projects aggregating ~ 5 msf of Saleable area
Entire spectrum of Real Estate Development Activities• Identification and acquisition of land, providing EPC services and sales and
marketing of projects to operations of completed projects
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EPC Business Update
EPC Business – Key Developments• Orderbook Review & Renegotiation
– Delay in Projects resulting in cost overruns– Projects stalled due to non payment by developers affected execution cycle and resulted in
significant cost overrun– Economically not viable to continue execution of Projects on same commercial terms– Initiated discussion and renegotiation of the EPC contract with the Clients
• TNLA project – Letter received from PWD Tamil Nadu for conversion of Assembly Building into Medical College and
Hospital– Work to be resumed by next quarter
• Fresh Order Inflow– Order Intake of Rs. 3,543 mn in FY 13– Orders received from prestigious clients and reputed names
• Godrej, Pune• Unitech, Chennai• Dayand Medical College, Ludhiana• Sadhu Vaswani Mission, Pune• Gift City, Ahmedabad
Current EPC Orderbook of Rs. 12,287 mn
Landmark Projects executed
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Ruby Mills
Tallest commercial building in Mumbai. Total Constructed area around 1.55 mn sq. ft Winner of “Well Built Structure” by Builder’s Associaton
of India
Symbiosis College
Educational Institute Located at Viman Nagar, Pune Total Constructed area around 0.3 mn sq. ft Completed much before scheduled deadline in March
2007 Won the BAI-Pune Centre award
Nucleus Mall
Mall cum office space with state of the art facilitieslocated in Camp, Pune
Total Constructed area around 0.32 mn sq. ft Recipient of awards like BAI – Pune , Brick Mortar (West
Zone) and Spectrum Foundation awards for its innovativedesign & development
Landmark Projects executed
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Suzlon One Earth
Rated Platinum by LEED Rated 5-star by GRIHA Awarded as Best Corporate Building by AESA Acclaimed as “greenest corporate headquarters on earth” CREDAI Real Estate Award, Best Commercial & Retail
Office Complex – Non Metro Total Constructed area around 0.82 mn sq. ft
Delhi Airport MLCP
India’s Largest car parking building. IGI Airport, New Delhi Total Constructed area around 1.2 mn sq. ft Completed within 15 months.
Cipla SEZ, Indore
Total Constructed area around 1.55 mn sq. ft Construction tenure - 18 months
EPC Business – Driving Growth
Construction experience across various verticals• Residential Complexes, Commercial Buildings, IT Parks, Hospitality Properties,
Hospitals, Shopping Malls, Multiplexes and other buildings• Executed more than 200 projects with construction area over 32 msf• Forays in Government Contracts
Established Brand name• Known for quality, transparency, reliability, ethics and value• Consistent high quality standards and timely execution of Projects• Repeat orders from clients testimony of standards delivered
Capability to provide Turnkey and Customized services• Activities such as Project Management, Engineering and design of the entire project
or part of project, procurement of material, construction activities and commissioning / start-up of project
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Clean Room Partitions & BMS
GMP Technical Solutions
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An ISO 9001:2000 Certified company Established in year 2005
State-of-the-art manufacturing facility at Baddiin Himachal Pradesh
Corporate office at Mumbai & branch offices inmajor Indian cities like Noida, Goa, Bangalore,Indore, Hyderabad
One of the largest manufacturers of Clean RoomPartitioning Systems and Turnkey SolutionProvider within the Indian subcontinent
Business Segments : Clean Room Technology;Modular Furniture; Building Management Systems;IBMS; IT & Networking; HVAC and Electricals
GMP Product Range
Clean room Modular Partitions (GI, Laminates, GRP, HPL & SS)
Clean room & Fire Proof Doors in Galvanized Iron
Clean room Equipment like LAFs, RLAFs, Pass Boxes
Dispensing Booths and ISOLATORS
Modular Furniture
Office Partitions
Aluminum Windows
Company is also specialized in Turnkey Jobs & has expertise in giving one window solution to the clients in the following fields:
Project Management
HVAC (Design, Supply & Installation)
Integrated Building Management System (IBMS)
Clean room Validation Services
Integrated provider of Engineering services :
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GMP Certification
Warrington Fire, UK
Underwriters Laboratory, USA
CBRI, Roorkee
ISO 9001:2008, Moody International
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Manufacturing Facility & Clientele
Manufacturing capacity of 400 units (doors & panels)per day (10, 000 sq. ft. panels and 200 doors)
Manufacturing area: 1,50,000 Sq. ft. with a over allsupportive infrastructure area: 4,50,000 Sq. ft.
State of art facility in excise free zone, Baddi (H.P.)-India
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Manufacturing Facility at Baddi Major Clientele
Financial Highlights
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Consolidated Profitability Statement
Rs. Mn Q4 FY13 Q4 FY 12 FY 2013 FY 2012
Revenue 1874 1807 7076 7121
Other Income 116 43 290 158
Total Income 1990 1850 7366 7279
Construction Expenses / Material Consumed 1432 1678 5388 5467
Employee Cost 213 140 773 697
Other Expenses 184 304 681 680
EBITDA 161 -272 524 436
EBITDA Margin 8.11% -14.69% 7.12% 5.99%
Interest 58 -2 332 370
Depreciation 59 48 205 182
Exceptional Items 40 -346 59 -391
PBT 4 27 -72 275
Tax 37 -29 98 120
PAT -33 56 -170 155
PAT Margin -1.66% 3.05% -2.31% 2.13%
Segment-wise Financial Highlights
Rs. Mn Revenue Cost of Sales Gross Profit Gross Profit %
FY 13 FY 12 FY 13 FY 12 FY 13 FY 12 FY 13 FY 12
EPC 3,495 4,300 2,919 3,758 576 542 16.48% 12.61%
Real Estate 1,693 1,142 1,275 690 419 451 24.72% 39.52%
Clean Room Partitions & BMS 1,833 1,591 1,189 995 644 596 35.13% 37.46%
Revenue growth in other Segments
Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13
273 297259 258 276
435
160
295
Real Estate Segment
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Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13
411
536
374
498 492470
Clean Room Partition & BMS Segment
Rs Mn. Rs Mn.
Revenue from sale of commercial buildings
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Consolidated Balance Sheet
Rs. Mn Mar-13 Mar-12
Net Worth 7,135 7,305
Minority Interest 122 119
Non Current Liabiliteis
Long Term Borrowigs 460 582
Deferred Tax Liabilities 3 4
Other Long Term Liabilities 52 5
Long Term Provision 13 9
528 599
Current Liabilites
Short Term Borrowings 1,994 2,349
Trade Payables 1,737 1,658
Other Current Liabilities 3,112 2,858
Short term Provisions 156 164
6,998 7,029
Total Equity & Liabilities 14,783 15,053
Rs. Mn Mar-13 Mar-12
Non Current Assets
Net Fixed Assets 2,270 2,319
Non Current Investments 362 328
Deferred Tax Assets 16 33
Long term loans & Advances 2,198 2,167
Other Non current Assets 22 42
4,868 4,888
Current Assets
Current Investments 290 474
Inventories 3,527 3,828
Sundry Debtors 2,701 2,569
Cash & Bank Balances 459 445
Short terms Loans & Advances 982 899
Other Currents Assets 1,956 1,951
9,915 10,165
Total Assets 14,783 15,053
Focus on Debt Reduction
FY 12 FY 13
3,8203,036
Rs Mn.
Rs. in Mn. FY 13 FY 12
Long Term Debt 460 582
Short Term Debt 1,994 2,349
Current Liabilities 582 889
Total 3,036 3,820
Gross Debt Reduction of
Rs. 784 mn
in FY 2013
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Investment in Hospitality Business
Hotel Galaxy Resorts Hyatt Holiday Inn Coimbatore
Location Goa Pune Pune Coimbatore
Holding 43.83% 19% 28.70% 70%
Category 3 Star 5 Star 5 Star 4 Star
No. of Keys 65 306 187 129
Total Area (Sft) 70,000 4,50,000 1,09,769 1,06,500
Operator Royal Orchids Hyatt Holiday Inn To be tied up
Operational Jan 2005 Nov 2010 April 2011 FY 2013
Vascon Investment (Rs. Mn.) 37 304 240 140
Exploring divestment of Hospitality portfolio
The Road Ahead
1. Continue focus on Cash Flow Improvement
2. Focus on Real Estate project development
3. Selective on new EPC orders
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For further information, please contact:
Company :
Vascon Engineers Ltd.Mr. M Krishnamurthi , Chief Corporate [email protected]
Mr. Punit [email protected]
www.vascon.com32