R & B Infra Projects LIMITED Has Filed DRHP for an IPO with SEBI on 03.10.2022

R & B Infra Projects LIMITED Has Filed DRHP for an IPO with SEBI on 03.10.2022

R & B Infra Projects Limited has filed DRHP with SEBI on 3rd, October, 2022 to launch its IPO. The IPO comprises both Fresh Issue and Offer for Sale.  

Business Model of Company 

The Company is an integrated Engineering, Procurement and Construction (EPC) company with an experience of more than two decades in design, project management services and diverse engineering works in India. The Company’s operations are serving majorly in three sectors Road, Power and Urban Infrastructure. The Company is registered as a Civil – Class I-A contractor for MCGM and Central Public Works Department with unlimited bidding rights for its civil works. It is also registered as a Class AA Registration contractor for Roads & Building Department – Gujarat. 

The total order book as on August 31, 2022 stood at Rs. 1,25,629.92 Lakhs consisting of 31 projects. 

Since commencing the business of the company in 2005, it has serviced a diverse range of construction and infrastructure projects and services in sectors such as water supply, solid waste management, road construction, canals, sewerage operation, building construction etc. 

The Company is the flagship company of the Rathore Group; the group was founded by the promoters, Ratan Singh Rathore in the year 1994 having an experience of more than 25 years in the same line of business and has been instrumental in driving the growth and business strategies of the Company. 

Who is the Management of the Company?

According to DRHP filed with SEBI, Following is the list of management of Ikio Lightning Limited-

(i) Ratansingh Rathore, aged 56 years is the founding Promoter and is currently designated as Chairman and Managing Director of the Company. He was appointed as the First Director on the Board of the Company at the time of incorporation of the Company on June 15, 2005. He has more than twenty years of experience in civil, construction industry and business development. He is looking after the overall management and financial areas of the Company. 

(ii) Rajkumarsingh Deora, aged 36 years is a Whole Time Director of the Company. He was appointed on the Board of the Company on February 15, 2022. He has experience of over a decade in the civil construction industry. He started his own venture in the name of RI Brothers & Company which provides consultancy services in the areas of civil construction industry. 

 Why is the company raising funds via IPO?

The Promoter Selling Shareholder will be entitled to the proceeds of the Offer for Sale after deducting his proportion of Issue expenses and relevant taxes thereon. The Company will not receive any proceeds from the Offer for Sale by the Promoter Selling Shareholder and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.

The object of the Fresh Issue is to Funding working capital requirements of the Company and  General Corporate Purpose. In addition to the aforementioned objects, the Company intends to strengthen its capital base and expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges, including among other things, enhancing the visibility of the brand and Company among the existing and potential customers.

Is there any OFS in the IPO?

The IPO comprises both Fresh Issue  and Offer for Sale. The size of Fresh Issue is up to 35,00,000 Equity Shares whereas the OFS of up to 15,00,000 Equity Shares. The Promoter Ratansingh Rathore is selling up to 15,00,000 Equity Shares. 

Financials of the company?  

According to the consolidated financial statement, in FY22, the gross revenue of the company has increased 15% to Rs. 215 crore as against Rs. 186 crore in the previous financial year. The total expenses of the company have also increased 15% to Rs. 199 crore as against Rs. 173 crore in the previous financial year. The Profit Before Tax of the company has grown  21% to Rs. 160 crore as against Rs. 132 crore in the previous financial year. The Profit After Tax of the Company has increased 20% to 12 crore as against Rs. 10 in the previous financial year. 

The total assets of the Company stood at Rs. 207 crore as against Rs. 208 crore in the previous financial year. The total equity and liabilities of the company stood at Rs. 207 crore as against Rs. 208 crore in the previous financial year. 

The net cash generated from operating activities of the company was Rs. 31 crore as against Rs. 20 crore in the previous financial year. The net cash used in investing activities of the company was 5 crore as against Rs. 2 crore cash generated in the previous financial year. The net cash used in financial activities of the company was Rs. 19 crore as against Rs. 23 crore in the previous financial year. 

The net cash and cash equivalents generated stood at Rs. 7 crore as against Rs. 1 crore cash used in the previous financial year.

Risk in The IPO

Requirements of Certain Approval and Renewal of Approvals

The Company requires certain approvals and licenses in the ordinary course of business and is required to comply with certain rules and regulations to operate the business, and the failure to obtain, retain and renew such approvals and licenses in a timely manner or comply with such rules and regulations or at all may adversely affect the operations. Non-renewal of the  permits and licenses would adversely affect the operations, thereby having a material adverse effect on the business, results of operations and financial condition of the company. 

Involvement of Promoters in Certain Legal Proceedings 

The Promoter/Director and the Group Companies are parties to certain legal proceedings. These legal proceedings are pending at different levels of adjudication before various courts, tribunals and forums. Any adverse decision in such proceedings may have a material adverse effect on the business, results of operations and financial condition.

Conduction of searches at the Premises of the Company

On February 25, 2022, income-tax authorities conducted searches at the premises of the Company at Borivali and the premises of the Promoter/Director namely Ratan Singh, Motisingh Rathore at Borivali under Section 132 of the Income Tax Act, 1961. Any adverse outcome of the searches would have an adverse effect on the operations and reputation of the Company, which in turn could have an adverse impact on the business, financial condition and results of operations.

Penalty of On the Company’s Business 

Most agreements that the Company entered into in connection with the business, contain a penalty or liquidated damage clause for delay in the completion of a project that takes effect should the completion of a project be delayed.   Delays in the completion of projects could also increase the working capital requirements and cause damage to the reputation, which could in turn adversely affect the ability of the company to pre-qualify for Projects.

Delay in Supply Chain and Increase in the Price of Raw Materials 

The timely and cost effective execution of the projects is dependent on the adequate and timely supply of key raw materials. Further, the cost of raw materials, fuel for operating the construction and other equipment, labor and other inputs constitute a significant part of the operating expenses. The prices and supply of raw materials depend upon factors that are beyond the control of the company including but not limited to general economic conditions, transportation costs, market prices, competition, import duties, and these prices are cyclical in nature.  The profitability and results of operations may be adversely affected in the event of any disruption in the supply of raw materials or increase in the price of raw materials, fuel costs, labor or other inputs.