Vascon Engineers Limited — Investor Presentation 2019

Oct 24, 2019

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Date: October 24, 2019

To, To, National Stock Exchange of India Limited, Listing Department, Exchange Plaza, Bandra (E), Mumbai – 400 051

BSE Limited, The Department of Corporate Services Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai 400 001

Ref Symbol: VASCONEQ

Ref: Scrip Code: 533156

Subject: Presentation Update

Dear Sir/ Madam,

Please find enclosed Presentation by the Company Post Board meeting.

This is for your information and records.

Thanking you,

For Vascon Engineers Limited,

Digitally signed by DANI VIBHUTI D DN: c=IN, o=Personal, DANI postalCode=380004, st=GUJARAT, serialNumber=5ffb5233027b6a065fda fd4bd57df381e1b2a60176f5d2a643ce Vibhuti Dani 63e261d7c0a3, cn=DANI VIBHUTI D VIBHUTI D Company Secretary and Compliance Officer Date: 2019.10.24 17:27:43 +05'30'

Enclosures: as above

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This document is signed electronically

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INVESTOR PRESENTATION | October 2019

DISCLAIMER

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• This presentation and the accompanying slides (the “Presentation”), which have been prepared by Vascon Engineers Limited (the “Company”), have been prepared solely for information purposes and do 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 commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

• This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but 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.

• Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject 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 economy and of the economies of various international markets, the performance of the real estate & infrastructure industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its 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 or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.

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2

HIGHEST-EVER ORDER-INTAKE IN YTD FY20

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EPC Business- External Order-Intake

	467 225	1,407 YTDFY20	Order Intake	(In Rs. Cr.)
			Bangalore Metro Rail Corporation, Karnataka	160
			Public Works Department, Raipur, Chhattisgarh	506
			Maharashtra State Police Housing & Welfare Corporation Ltd.	465
			Pune Municipal Commission	104
			Tycoon Avanti Projects	172
			Total	1,407
	FY18 FY19 (In Rs. Cr)

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3

KEY HIGHLIGHTS

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EPC Business Rs 2,042 Cr Rs 1,917 Cr Rs 125 Cr Total Order Book External Orders Internal Orders

Real Estate Business

Witnessing decent traction in sales of Good Life & Windermere projects

New Sales booking of 64,383 sqft for a total Order Intake of Rs Cr in YTD FY20 1,407 sales value of Rs 57 Cr in H1FY20

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4

P&L HIGHLIGHTS- Q2 & H1 FY20

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Particulars (Rs. Crs)	Standalone	Standalone	Standalone	Standalone	Consolidated	Consolidated	Consolidated	Consolidated
	Q2 FY20	Q2 FY19	H1 FY20	H1 FY19	Q2 FY20	Q2 FY19	H1 FY20	H1 FY19
Revenue Other Income	76.96	69.65 11.98	172.59	163.53 16.1	121.34	117.27 13.13	252.02	254.24 19.84
	2.23		12.14		2.69		13.49
Total Income	79.19	81.63	184.73	179.63	124.03	130.4	265.51	274.08
Construction Expenses / Material Consumed Employee Cost# Other Expenses EBITDA EBIDTA Margin (%)		55.38 13.02 8.19 5.04 6%		125.05 24.88 16.16 13.54 8%		86.13 20.88 13.58 9.81 8%		190.84 39.44 26.69 17.11 6%
	53.89		130.23		80.02		177.06
	8.4		19.14		16.85		35.06
	5.05		10.92		10.61		21.53
	11.85		24.44		16.55		31.86
	15%		13%		13%		12%
Depreciation Finance Costs Profit Before Tax Tax		2.04 5.12 -2.12 -0.99		3.88 10.29 -0.63 -0.99		3.36 5.89 0.56 -0.99		6.51 11.95 -1.35 -0.99
	2.18		4.22		3.77		7.31
	7.16		12.38		8.12		14.23
	2.51		7.84		4.66		10.32
	-		-		-		-
Profit After Tax	2.51	-1.13	7.84	0.36	4.66	1.55	10.32	-0.36
Other Comprehensive Income Total Comprehensive Income	-0.06	-0.55 -1.68	0.03	-0.21 0.15	-0.06	-0.55 1	0.03	-0.21 -0.57
	2.45		7.87		4.60		10.35

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5

SEGMENTAL PROFIT & LOSS - AFTER ALLOCATION

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Particulars (Rs. Cr)	RE#	EPC##	GMP	Inventorised	Total
Revenue	69.2 53.98 15.22 22%	115.13 86.64 28.49 25%	78.88 46.79 32.09 41%	0.33	263.21 187.74 75.47 29%
Cost of Sales
Gross Profit
Gross Profit Margin %
Other Income	4.63 6.61 6.58	7.35 12.53 5.36	2.27 15.92 10.87		14.25 35.06 22.81
Employee Cost
Other Expenses
EBITDA	6.66	17.95	7.57		31.85
EBIDTA Margin (%)	10%	16%	10%		12%
Depreciation	0.94	3.37	3		7.31
EBIT	5.72	14.58	4.57		24.54
EBIT Margin (%)	8%	13%	6%		9%
Finance Costs					14.23 10.32 -
Profit Before Tax
Tax
Profit After Tax	-	-	-		10.32

# IT INCLUDES REVENUE & EXPENSES RELATED TO AJANTA ENTERPRISE & PHOENIX VENTURES, IN FINANCIALS SHARE OF PROFIT IS TAKEN (AS PER IND AS ) ## IT INCLUDES INTERNAL EPC ORDER REVENUE AND CONSTRUCTION EXPENSES

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6

BALANCE SHEET

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	Rs. Crs	Sep– 19	Mar– 19		Rs. Crs	Sep– 19	Mar– 19
	Non-current assets	350.64	345.39		Shareholder’s Fund	711.39	699.59
	Fixed assets	113.64	114.26		Share capital	178.14	178.14
	Financial Assets	190.85	187.19		Other Equity	523.64	512.1
					Non Controlling Interest	9.61	9.35
	Other Non Current assets, Income Tax & Deferred Tax	46.15	43.94		Non-current liabilities	133.09	159.3
					Long term borrowings	113.8	140.22
	Current assets	976.8	985.34
					Other Financial liabilities	19.29	19.08
	Inventories	472.92	500.23
					Current liabilities	482.96	471.84
	Investments	14.39	4.33
					Short term borrowings	108.03	92.76
	Trade receivables	183.23	201.67		Trade Payables	198.94	201.67
	Cash and bank balances	50.72	72.12		Other Financial liabilities	52.32	31.32
	Loans & Other Financial assets	230.89	188.96
	Other current assets	24.65	18.03		Other current liabilities & Provisions	123.67	146.09
	Total Assets	1,327.44	1,330.73		Total Liabilities	1,327.44	1,330.73

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7

VASCON – AT PRESENT

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ENGINEERING PROCUREMENT & CONSTRUCTION

One of the leading EPC Company in India

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REAL ESTATE DEVELOPMENT

Focus on Affordable Housing

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8

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ENGINEERING PROCUREMENT & CONSTRUCTION

EPC BUSINESS

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 Construction Experience across various verticals

• Executed over 200 projects with construction area of over 50 msft

 Ability to execute around 8 msft per annum

• Currently executing around 3 msft p.a . – operating at 40% utilization

• Number of Personnel in Project / Engineering team - 489

 Higher margins Because of Turnkey Capabilities

• In-house Design and Engineering team

• Ability to demand premium over other construction companies

 New Orders Target

• Focus on Affordable Housing

• Focus on large and high value civil contracts by Government Agencies and reputed Private Companies

 Generate positive cash flows from all the projects and re-invest to drive growth

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10

MARQUEE CLIENTS

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MAINTAINING CONSISTENT QUALITY STANDARDS ENSURING REPEAT ORDERS
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11

ORDER BOOK BUILD-UP

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(In Rs. Cr)

RECEIVED ORDER WORTH RS. 1,407 CRORE SINCE THE BEGINNING OF THE CURRENT FINANCIAL YEAR

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2,042
1,066 1044
515
FY17 FY18 FY19 Current Order Book
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EXECUTION OF NEW ORDERS TO IMPROVE REVENUE & CAPACITY UTILISATION… LEADING TO BETTER OPERATING MARGINS

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12

EXISTING ORDER BOOK

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Project	Location	Amt (Rs. Cr)
External Order book
PWD, Raipur	Raipur	505
Maharashtra State Police Housing	Mumbai	465
Tycoon	Mumbai	168
Bangalore Metro Rail Corporation	Bangalore	160
Adhiraj	Mumbai	117
PMC-Affordable Housing	Pune	103
Kailash Enclave	Lucknow	79
Adampur Airport	Adampur	77
Other Projects		243
Total		1,917
Internal Order book
Windermere-Bunglows	Pune	29
Forest Edge	Pune	25
Katvi-Affordable Housing	Talegaon, Pune	71
Total		125
Total EPC Business Order book		2,042

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13

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READY TO CAPITALIZE ON THE GROWTH OPPORTUNITIES

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Housing for all 2022

1. Opportunity under PMAY(U), Smart Cities, AMRUT, HIRDAY.

2. Housing shortage of 19 million in Urban Areas

3. Government investment of Rs. 2 trillion for Housing for all 2022

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Education & Hospitality

1. Government focus on developing Educational Institutions and Hospitals

2. Higher Education funding agency (HEFA) outlaid funding of Rs. 53 billion for development of IITs, IIMs, IISERs, IISc, NIT and 44 new KVs

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Airports

1. Government aims to spend Rs. 250 billion for development of 20 plus airports over the next 5 years

Growing demand for Commercial and Retail Space

1. Organised Retail to grow by 25-30% annually

2. Huge Demand for Commercial Space in Metros due to rapid growth in service Sector

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GOVERNMENT INITIATIVES IN REAL ESTATE SECTOR

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Pradhan Mantri Awas Yojana – Urban - Sanctioned Rs. 4.83 lakh crore for the Construction of over 81 lakh houses , construction started of about 47 lakh houses

Pradhan Mantri Awas Yojana – Gramin aims to achieve "Housing for All" by 2022- In Second Phase i.e. 2019-20 to 2021-22, to provide 1.95 crore houses with basic amenities

Investment of Rs. 100 lakh crore in infrastructure intended over the next five years

To use Joint development and concession mechanisms for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs

Government launched The Liquidity Infusion Facility (LIFT ) scheme to infuse Rs. 10,000 crore in housing finance sector which will be valid upto 30[th] June 2020. HFCs registered with NHBs with minimum internal rating of ‘B’ will be eligible to withdraw maximum amount of Rs. 500 crore under this scheme

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15

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REAL-ESTATE DEVELOPMENT

REAL ESTATE BUSINESS

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BRAND EQUITY

Landmark developments (Windermere, Forest County and Willows) have established the Brand Vascon in Pune Market

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- END TO-END CAPABILITIES

In-house Design and Construction team gives us a unique advantage over other Real Estate Developers

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LOW OPERATING COST

Flat organization structure with agile decision reduces operating cost

ASSET LIGHT MODEL

JV and JDA with land owners with low upfront deposit

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17

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SUCCESSFULLY LAUNCHED REAL ESTATE PROJECTS

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Dev. Area
Projects Launch Status REAL ESTATE SALES (RS CR)
(msft)
Forest Edge (JV) A 0.08 Jan-18 Fully sold
272
Forest Edge (JV) B 0.08 Sep-19 12% sold
197
Windermere (JV)# 0.38 Mar-18 55% sold
Vascon Goodlife – Value Home 57
0.3 May-18 60% sold
(Own)
Forest County 0.18 Dec-18 83% sold
FY18 FY19 H1FY20
Xotech C 0.04 Oct-18 Fully Sold
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Relaunch “FOREST EDGE” – VASCON GOODLIFE - RE-LAUNCH OF FOREST COUNTY - XOTECH- PUNE KHARADI, PUNE KATVI, TALEGAON WINDERMERE# KHARADI

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NEW SALE BOOKING OF ~64,383 SQFT FOR A TOTAL SALES VALUE OF ~RS. 57 CR IN H1FY20 AGAINST SALE BOOKING OF 4,20,998 SQFT FOR A TOTAL SALES VALUE OF ~RS. 272 CR IN FY19

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18

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CURRENT REAL ESTATE PROJECTS UNDER DEVELOPMENT

Project Name	Location	Vascon Share	Vascon Share	Total	Total	Total	Total	Vascon Share	Vascon Share	Vascon Share
				Project Area	Area Sold	**Sale Value **	**Collection **	**Sale Value **	Collection	Rev. Recognized
		Type	Share	msft	msft	Rs. Cr	Rs. Cr	Rs. Cr	Rs. Cr	Rs. Cr
Forest Edge (A&B)	Pune	JV	50%	0.16	0.09	60	32	30	16	-
Forest County	Pune	JV	50%	0.18	0.15	105	9	53	5	-
Windmere Residential	Pune	JDA	45%	0.38	0.21	244	192	110	86	109
Platinum Square (I&II)	Pune	JV	70%	0.13	0.13	133	115	93	81	93
Vascon GoodLife	Talegaon	Own	100%	0.46	0.18	64	17	64	17	-
Xotech (I&II)	Hinjewadi	JV	50%	0.08	0.08	36	30	18	15	18
Total				1.39	0.84	642	395	367	219	220

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19

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REAL ESTATE PROJECTS PIPELINE

Sr. No.	Projects	Type	Segment	Saleable Area	Expected Sales Value
				msft	(Rs. in Cr)
1	Coimbatore	JDA	Residential	0.33	179
2	Madurai	JDA	Residential	0.49	220
3	Bavdhan - Comm	JDA	Commercial	0.23	158
4	Willows - Comm	JV	Commercial	0.23	191
5	4 Acre HDH	JV	Residential	0.35	245
6	Kalyani Nagar - Comm	JDA	Commercial	0.30	330
7	Kalyani Nagar	JDA	Residential	0.50	550
	Total			2.41	1,873

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THANK YOU!

Mr. Punit Bhayani punit@vascon.com

Vascon Weikfield Chambers, Pune - 411014

Mr. Gauranh Vasani/ Ms. Hina Agarwal vgaurang@stellar-ir.com hina@stellar-ir.com Kanakia Wall Street, Andheri (East), Mumbai 400 093