ARSS Infrastructure Limited

by Manshu on March 8, 2008

in IPO/NFO

Business of ARSS Infrastructure Projects

ARSS is involved in the construction business and undertakes construction of railways infrastructure, roads, highways, bridges and irrigation projects. The company has expertise in the railways infrastructure projects and has a dominating presence in the state of Orissa. In recent years the company has expanded to other states like Jharkhand, Chhatisgarh, Rajasthan, Haryana and Tamil Nadu.

The major clients of ARSS are Ministry of Railways, State Government of Orissa, Rail Vikas Nigam Limited, NTPC and NHAI among others.

ARSS has completed around 200 km railway line construction and 300 km of roads and highways and has an employee base of 788 employees as at February 2008.

Financials of ARSS Infrastructure Projects

ARSS has been having a high growth period and the revenues for the past five years have grown at a phenomenal CAGR of 117% and stood at Rs.13383.21 lakhs and the profits stood at Rs.1022.57 lakhs for the year 2007 and grew at a CAGR of 162%.

Much of this absolute growth of revenues has come between the year 2006 and 2007 when the revenues almost doubled itself from Rs.6057.88 lakhs to Rs.13,383.21 lakhs and the profit after tax rose from Rs.323.22 lakhs to Rs.1022.57 lakhs.

Similarly the EPS has also grown quite a bit from Rs.1.98 in the financial year 2005 to Rs.3.71 in the next year and Rs.10.61 for the financial year ended 2007.

Objects of the Issue

ARSS is raising funds in order to purchase equipment, investing in joint ventures or BOT projects or funding long term working capital requirements. A sum of Rs.6000 lakhs, Rs.3000 lakhs and Rs.6300 lakhs has been earmarked for these three activities.

Key Risks

One of the promoters of the company is involved in a criminal proceeding in relation to murder of one person. Apart from this there are various other legal proceedings against the company which are in the nature of civil, sales and income tax.

There have been cases of default in the payment of amounts due to third parties and also various banks by ARSS Infrastructure.

ARSS Infrastructure does not have any experience in executing BOT projects and also the company has not yet been awarded with any BOT projects for which the funds are being raised through the IPO.

ARSS operates in a very competitive environment with a lot of Indian and international players present in this field with significantly more financial resources as well as project execution experience than ARSS themselves and this poses a threat to the company.

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