Aarvi Encon Limited — Investor Presentation 2021

Jun 7, 2021

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1

Company Overview

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• Incorporated in 1987, Aarvi Encon pioneered the concept of Technical staffing services in India.

• Starting from humble beginnings it is now one of the largest Technical staffing solutions company with more than 4,000 engineers/ technical personnel on payroll and working at the client location.

• Aarvi is India’s leading technical staffing company, which specializes in providing expert engineering staffing solutions.

• Services Offered include Deputation of Technical Staffing, Project Management, Construction supervision, Inspection Services, Pre-Commissioning & Commissioning Assistance and O&M Services.

• Aarvi offers services that are highly effective and affordable, giving significant cost savings to clients.

• The company has deployed over 30,000 personnel since inception and has a current deployed team strength of more than 4,000 professionals.

• It has leveraged its track record in India to successfully expand its operations internationally, providing a wide range of engineering services on various international projects, particularly in the UAE, and Kingdom of Saudi Arabia.

• The company has an esteemed clientele list including marquee names like, Larsen & Turbo Industries, Cairn, Reliance Industries Limited, Engineering India Limited, Indian Oil, Technip etc.

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Operational Revenue (INR Mn) &

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EBITDA Margins (%)
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2,181
2,060
2,018
1,735
5.65% 5.34% 4.76%
4.22%
FY18 FY19 FY20 FY21
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Manpower Deputation

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4,394
4,119
3,901
2,796
FY18 FY19 FY20 FY21
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3

Business Overview

• Aarvi provides engineers /designers/technicians right from conceptualization of the project to Design to Construction to Pre-commissioning & Commissioning to Operations and Maintenance of the plant.

• It can also mobilize large manpower for shutdown assignment of 15 days to a few months

• Aarvi has a large in-house database i.e. more than 700,000 resume data base and a very strong referral program to attract talent from the industry

• Its recruiters are well trained and can identify the candidates meeting the client’s project requirements.

• The company targets sectors like oil & gas, power, LNG, PNG, refinery, petrochemical, pipeline, wind power, solar power, offshore, E&P, infrastructure, ports & terminals, telecom, fertilizers, cement, automobile, metro & monorail, railway, metals and minerals, information technology.

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FY21 Business Mix

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O&M
43%
Manpower
Outsourcing
57%
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FY21 Industry Wise Revenue

Niche Area of Service

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Manpower Outsourcing Operation and Maintenance
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LPG/LNG, 4% Others, 5%
Power, 2%
Renewable, 5%
Chemicals, 6%
Oil & Gas, 37%
CGD, 6%
Pipelines, 3%
Refinery, 15%
Engineering, 17%
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4

Financial Highlights

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Q4-FY21 Financial Performance (Consolidated):

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Operational Income EBITDA EBITDA Margin Net Profit PAT Margin Diluted EPS
INR 570 Mn INR 23 Mn 4.04% INR 30 Mn 5.26% INR 2.05
FY21 Financial Performance (Consolidated):
Operational Income EBITDA EBITDA Margin Net Profit PAT Margin Diluted EPS
INR 2,018 Mn INR 96 Mn 4.76% INR 105 Mn 5.20% INR 7.08
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5 Operational Highlights

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• § Added more than 15 new clients during the financial year

• § Won large and long-term contracts with companies like Nayara, BORL, IOCL, and Shell LNG.

• § To expand the network in eastern India, a branch was opened in Kolkata.

• § The formation of the subsidiary in Oman is nearing completion and is expected to be operational by Q2-FY22.

• § The procedures for establishing an office in Indonesia has begun, and is expected to be operational by Q2-FY22

• § Appointed an advisor in the United Kingdom to build a business strategy for growing in that geography

• § The company is also in advance talks with agency agreement in Kuwait and Saudi Arabia

• § Also expecting growth coming from Infrastructure and manufacturing sectors

• § Received large IT refund for the financial years 2018 – 19 and 2019 – 20; Total IT Refund 20.28 Cr + Interest 1.70 Cr = Total Receipt 21.98 cr.

• § Surplus cash is intended to be used for inorganic expansions

6 Quarterly Financial Performance - Consolidated

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Particulars (INR Mn)	Q4-FY21	Q4-FY20	Y-o-Y	Q3-FY21	Q-o-Q
Operational Income	570	687	(17.0)%	498	14.5%
Total Expenses	547	644	(15.1)%	482	13.5%
EBITDA	23	43	(46.5)%	16	43.8%
EBITDA Margins (%)	4.04%	6.26%	(222) Bps	3.21 %	83 Bps
Other Income	6	1	NA	10	(40.0)%
Depreciation	2	3	(33.3)%	2	NA
Finance Cost	1	2	(50.0)%	1	NA
PBT	26	39	(33.3)%	23	13.0%
Tax	(4)	(2)	NA	(3)	NA
Profit After tax	30	41	(26.8)%	26	15.4%
PAT Margins (%)	5.26%	5.97%	(71) Bps	5.22 %	4 Bps NA 23.1%
Other Comprehensive Income	2	5	(60.0)%	-
Total Comprehensive Income	32	46	(30.4)%	26
Diluted EPS (INR)	2.05	2.75	(25.5)%	1.79	14.5%

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FY21 Consolidated Performance

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Particulars (INR Mn)	FY21	FY20	Y-o-Y
Operational Income	2,018	2,181	(7.5)%
Total Expenses	1,922	2,089	(8.0)%
EBITDA	96	92	4.3%
EBITDA Margins (%)	4.76%	4.22%	54 Bps
Other Income	23	6	NA
Depreciation	10	12	(16.7)%
Finance Cost	6	16	(62.5)%
PBT	103	70	47.1%
Tax	(2)	(2)	NA
Profit After tax	105	72	45.8%
PAT Margins (%)	5.20%	3.30%	190 Bps
Other Comprehensive Income	(3)	7	NA
Total Comprehensive Income	102	79	29.1%
Diluted EPS (INR)	7.08	4.86	45.7%

8

Consolidated Income Statement

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Particulars (INR Mn)	FY19	FY20	FY21
Operational Income	2,060	2,181	2,018
Total Expenses	1,950	2,089	1,922
EBITDA	110	92	96
EBITDA Margins (%)	5.34%	4.22%	4.76%
Other Income	12	6	23
Depreciation	10	12	10
Finance Cost	11	16	6
PBT	101	70	103
Tax	15	(2)	(2)
Profit After tax	86	72	105
PAT Margins (%)	4.17%	3.30%	5.20%
Other Comprehensive Income	3	7	(3)
Total Comprehensive Income	89	79	102
Diluted EPS (INR)	5.84	4.86	7.08

9 Consolidated Balance Sheet

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Consolidated Balan	ce Shee	t
Particulars(INR Mn)	FY20	FY21		Particulars(INR Mn)	FY20	FY21
EQUITIES & LIABILITIES				ASSETS
Shareholder Funds	763	851		Non-Current Assets	472	330
(A)Share Capital	148	148		(A)Property,Plant and Equipment	106	100
(B)Other Equity	615	703		(B)Goodwill on Consolidation	2	2
Non-Current Liabilities	19	16		(C)Right of Use Asset	6	-
(A)Financial Liabilities				(D)Other Intangible Assets	-	-
i. Borrowings	1	-		(E) Intangible Asset Under Development	1	2
ii. Lease Liability	5	-
iii. Others	10	13		(F)Financial Assets		-
(B)Provisions	-	-		i. Loans and Advances	23	18
(C)Deferred Tax Liabilities	3	3		ii. Others	91	132
(D)Other Non Current-Liabilities	-	-		(G)Deferred Tax Asset	2	2
Current Liabilities	398	335		(H)Other Non-Current Assets	241	74
(A)Financial Liabilities				Current Assets	708	872
i. Borrowings	87	35		(A)Financial Assets
ii. Lease Liability	2	-		i. Investments	3	3
iii. Trade Payables	95	54		ii. Trade Receivable	580	534
iv. Others	141	172		iii. Cash and Cash Equivalents	49	164
(B)Other Current Liabilities	72	74		iv. Other Bank Balances	16	72
(C)Provisions	1	-		v. Loans and Advances	3	3
(D)Liabilities for Current Tax	-	-		vi. Others	46	78
GRAND TOTAL - EQUITIES & LIABILITIES	1,180	1,202		(C)Other Current Assets	11	18
				GRAND TOTAL- ASSETS	1,180	1,202

10 Key Metrics

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Operational Revenue (INR Mn)

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2,181
2,060 2,018
1,735
FY18 FY19 FY20 FY21
Debt to Equity (x)
0.03 0.03
FY18 FY19 FY20 FY21
-0.08
-0.24
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EBITDA (INR Mn and PAT (INR Mn) and PAT
EBITDA Margin (%) Margin (%)
5.65%
110 5.20%
4.76% 4.50% 105
4.17%
5.34%
98 4.22% 96 78 86 72 3.30%
92
FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21
Net worth (INR Mn) ROE and ROCE (%)
16.04%
851 15.24%
763 12.54%
702
621 10.90%
12.51% 12.30% 12.30%
9.36%
FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21
ROCE ROE
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11

Capital Market Data

Share Price Data as on 31st March,2021

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250% Share Price Data as on 31st March,2021
200% Aarvi Nifty
150%
100%
50%
0%
-50%
-100%
Apr/20 May/20 Jun/20 Jul/20 Aug/20 Sep/20 Oct/20 Nov/20 Dec/20 Jan/21 Feb/21 Mar/21
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Price Data ( 31st March, 2021)
Face Value	10.0
Market Price	51.7
52 Week H/L	62.50/20.15
Market Cap(Mn)	764.33
Equity Share Outstanding (Mn)	14.7
1 Year Avg Trading Volume (‘000)	11.83

Shareholding Pattern as on 31[st] March, 2021

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Public
26.53%
Promoter
73.47%
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12 Disclaimer

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Aarvi Encon Limited

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. Certain statements made in this presentation may not be based on historical information or facts and may be "forward looking statements" based on the currently held beliefs and assumptions of the management of Aarvi Encon Limited, which are expressed in good faith and in their opinion reasonable, including those relating to the Company ʼ s general business plans and strategy, its future financial condition and growth prospects and future developments in its industry and its competitive and regulatory environment.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance or achievements of the Company or industry results to differ materially from the results, financial condition, performance or achievements expressed or implied by such forward-looking statements, including future changes or developments in the Company ʼ s business, its competitive environment and political, economic, legal and social conditions. Further, past performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements to reflect future events or developments. This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any jurisdiction, including the United States. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. None of our securities may be offered or sold in the United States, without registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration there from.

This presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.

Valorem Advisors Disclaimer:

Valorem Advisors is an Independent Investor Relations Management Service company. This Presentation has been prepared by Valorem Advisors based on information and data which the Company considers reliable, but Valorem Advisors and the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.

Valorem Advisors also hereby certifies that the directors or employees of Valorem Advisors do not own any stock in personal or company capacity of the Company under review.

For further details, please feel free to contact our Investor Relations Representatives:

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Mr. Anuj Sonpal Valorem Advisors Tel: +91-22-4903 9500 Email: aarvi@valoremadvisors.com

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Thank
You
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