Vishnu Prakash R Punglia Limited

Vishnu Prakash R Punglia Limited filed its DRHP with market regulator SEBI on May 19, 2023 to raise capital through IPO. The IPO of the Company consists of Fresh Issue only. The size of IPO is Upto 31,200,000* Equity Shares aggregating upto ₹ [●] crore.

Business Model of the Company

Vishnu Prakash R Punglia Limited is an integrated engineering, procurement and construction (“EPC”) company with experience in design and construction of various infrastructure projects for the Central and State Government, autonomous bodies, and private bodies across 9 States and 1 Union territory in India. The principal business operations are broadly divided into four categories:

(i) Water Supply Projects
(ii) Railway Projects
(iii)Road Projects
(iv) Irrigation Network Projects.

The Company has design and engineering, procurement, project management and quality management teams along with a fleet of a hundred and eighty four (484) construction equipment and vehicles. The Company’s in-house teams deliver the projects from design to completion. This reduces dependency on third parties for key materials such as ready-mix concrete, stone aggregates, bitumen and services such as design and engineering, transportation and logistics required in the development and construction of its projects.

The Company undertakes projects on EPC basis, with or without operation and maintenance services (“O&M”). The scope of the services includes detailed engineering of the project, procurement of key materials, and project execution at the sites with overall project management up to the commissioning of these projects. In addition, the Company also undertakes operation and maintenance of projects in accordance with its contractual arrangements. The employee resources and fleet of equipment, together with its engineering capabilities, enable it to execute a range of projects on a turnkey basis.

Management of the Company

(i)Vishnu Prakash Punglia is the Chairman and Whole-time Director of the Company. He has been associated with the Company since its inception. He has an experience of more than thirty-eight (38) years in the construction and EPC business and is instrumental in making strategic decisions of the Company. He aspires to help the nation in building world-class infrastructure. His interpersonal skills, liaisoning skills with various Government departments and networks have acted as a catalyst in the growth of the Company. Currently, he is a director in Vishnu Prakash R Punglia Construction Limited, the Group company and partner in M/s Vishnu Prakash R Punglia Agro Food.

(i) Manohar Lal Punglia is the Managing Director of the Company. He has been associated with the Company since its inception. Upon completion of his secondary education, he joined his uncle, Mr. Vishnu Prakash Punglia, to provide assistance in his business. He has an experience of more than three decades in the construction and EPC business. On his personal level, he is a believer in giving back to society and takes active participation in various social organizations / events. Currently, he is the President of Mahalaxmi Education Institution, Jodhpur, Rajasthan and Treasurer at Akhil Bhartiya Maheshwari Sewa Sadan. He is also a director in Vishnu Prakash R Punglia Construction Limited, the Group Company and partner in M/s Vishnu Prakash R Punglia Agro Food.

Object of the Issue

The Company proposes to utilize the Net Proceeds from the Issue towards funding the following
objects:
1. Funding capital expenditure requirements for the purchase of equipment/machineries

2. Funding the working capital requirements of our Company
3. General corporate purposes.

In addition, the Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges and enhancement of the Company’s visibility and brand image and creation of a public market for its Equity Shares in India.

Risks in the IPO

The Company, Promoters and Director are parties to certain legal proceedings

The Company, Promoters and Director are parties to certain legal proceedings. These legal proceedings are pending at different stages before various courts, tribunals and forums. In the event of adverse rulings in these proceedings or levy of penalties/fines by courts, tribunals and forums, the Company may need to make payments or make provisions for future payments, which may increase the expenses and current or contingent liabilities and also, adversely affect the reputation, business, financial condition and results of operation.

The projects are exposed to various implementation and other risks
The projects are exposed to various implementation and other risks, including risks of time and cost overruns, and uncertainties. Any future failures to complete projects on schedule could increase our working capital requirements, resulting in a material adverse effect on the results of operations and financial condition. Such failures to complete projects could also have an impact on the reputation of the Company.

Significant portion of Company’s revenues comes from a limited number of clients

The Company derives its significant portion of the revenues from a limited number of clients. For the nine (9) month period ended December 31, 2022 and the financial years ended March 31, 2022, March 31, 2021 and March 31, 2020, its top five (5) clients accounted for approximately 80.14%, 81.92%, 82.98% and 77.51% of its revenues from operations, respectively. The loss of any significant clients may have an adverse effect on the business, financial condition, results of operations, and prospect.

The Business of the Company is working capital intensive involving relatively long implementation periods. It requires substantial financing for the business operations. The indebtedness and the conditions and restrictions imposed on by the financing arrangements could adversely affect the ability to conduct the business.

Unfavorable terms and conditions

The revenue is generated from projects undertaken with Government entities or agencies, contracts of which usually contain terms that favor the clients. Such projects/contracts are awarded on the basis of certain pre-qualification criterias and competitive selection process and are usually in a standard form, restricting the ability to negotiate the terms and conditions. Any change in the Government policies or focus and/or the Company is unable to recover payments in a timely manner, would adversely affect its business and result of operations.

Financial Performance

As per the financial statements of the Company, the total revenue of the Company was Rs. 714 crore for the nine months ended 31st December 2022 and the total expenses during this period was Rs. 645 crore. The profit before tax of the Company was Rs. 68 crore and profit after tax of the Company was Rs. 50 crore for nine months ended 31st December 2022. In FY22, the total revenue of the Company increased 38% to Rs. 787 crore as against Rs. 487 crore in FY21. During FY22, the total expenses of the Company have also increased 57% to 727 crore as against Rs. 461 crore in FY21. During the financial year 2022, the net profit of the Company increased 140% to Rs. 60 crore as against Rs. 25 crore in FY21. During this period, the profit after tax of the Company increased 144% to Rs. 44 crore as against Rs. 18 crore in FY21.

In FY22, the total assets of the Company increased to Rs. 743 crore as against Rs. 497 crore in FY21. In FY22, the total equity and liabilities of the Company also increased to Rs. 743 crore as against Rs. 497 crore in FY21.

In FY22, the total cash used in operating activities of the Company was Rs. 3 crore as against Rs. 34 crore cash generated in FY21. During this, the total cash used in investing activities of the Company Rs. 29 crore as against Rs. 5 crore in FY21. In FY22, the total cash generated from financial activities of the Company was Rs. 41 crore as against Rs. 29 crore cash used in FY21. In FY22, the cash and cash equivalents at the end of the year of the Company was Rs. 4 crore as against Rs. 3 crore in FY21.