Vascon Engineers Limited — Investor Presentation 2020

Aug 18, 2020

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Date: August 18, 2020

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

Ref Symbol: VASCONEQ

To,

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

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=5ffb5233027b6a065fdaf d4bd57df381e1b2a60176f5d2a643ce63 Vibhuti Dani VIBHUTI D e261d7c0a3, cn=DANI VIBHUTI D Date: 2020.08.18 17:17:40 +05'30' Company Secretary and Compliance Officer

Enclosures: as above

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This document is signed electronically

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INVESTOR PRESENTATION | August 2020

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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BUSINESS UPDATE- GRADUALLY RAMPING-UP OPERATIONS

Resumption of Construction Activity	• April, May and June 2020 witnessed significantly lower execution activity • In July 20, resumed execution at majority of our project sites with the relaxation in lock‐down and gradually ramping‐up the executions • Currently, Labour availability back to60%of pre‐covid levels. Expect normalcy to return inH2FY21
Healthy Order‐Book	• Total Order Book stands atRs 2,026 Crs; comprising External Order Book of Rs1,920 Crsand Internal Order Book ofRs. 106 Crs • Order Book with higher share of government projects at~76%;providing visibility of faster execution and uninterrupted Cash Flows
Impact on Real Estate Business	• No major impact on ongoing project due to lower existing unsold inventory levels • In Q1FY21, New Sales booking of9,220 sqftfor a total sales value ofRs 5 Crs • New launchwould be reviewed thoroughly in terms of Product, Pricing and Timing
Focus on prudent measures towards cost control and maintaining sufficient liquidity	• Adapted stringent Cost Control measures to minimize the impact on the Profitability • Focused on maintaining adequate liquidity to meet the business requirements smoothly

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P&L HIGHLIGHTS- Q1FY21

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Particulars (Rs. Cr)	Standalone	Standalone	Consolidated	Consolidated
	Q1 FY21	Q1FY20	Q1 FY21	Q1FY20
Revenue	32.34	95.63	42.77	130.68
Other Income	3.19	9.91	2.57	10.80
Total Income	35.53	105.54	45.34	141.48
Construction Expenses / Material Consumed Employee Cost# Other Expenses## EBITDA	29.04	76.34 10.74 5.87 12.59	35.40	97.04 18.21 10.92 15.31
	9.08		15.12
	17.69		21.50
	‐20.28		‐26.68
EBIDTA Margin (%)	NA	12%	NA	11%
Depreciation	1.81	2.04	3.01	3.54
Finance Costs #	6.85	5.22	7.65	6.11
Profit Before Tax	‐28.94	5.33	‐37.34	5.66
Tax	‐	‐	‐	‐
Profit After Tax	‐28.94	5.33	‐37.34	5.66
Other Comprehensive Income	‐0.37	0.09	‐0.37	0.09
Total Comprehensive Income	‐29.31	5.42	‐37.71	5.75

# EMPLOYEE COST INCLUDES PROVISION OF RS 5 CR AS EX‐GRATIA TO MR R. VASUDEVEN, EXECUTIVE CHAIRMAN ON ACCOUNT OF COMMENDABLE SERVICES RENDERED TO THE COMPANY IN PREVIOUS YEAR ## OTHER EXPENSES INCLUDES ADDITIONAL PROVISION OF RS 15 CR, CONSIDERING CURRENT PANDEMIC AND ECONOMIC UNCERTAINTY, AS A PRECAUTIONARY MEASURE, MANAGEMENT HAS DECIDED TO TAKE ADDITIONAL PROVISION ON RECEIVABLE OF FEW OLD PROJECT WITH PRIVATE ENTITIES

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Q1FY21- SEGMENTAL PROFIT & LOSS - AFTER ALLOCATION

Particulars (Rs. Cr)	RE#	EPC##	GMP	Inventorised	Total
Revenue	1.31 1.28 0.03 2%	33.60 29.79 3.81 11%	10.72 6.30 4.42 41%	0.12	45.63 37.49 8.14 18%
Cost of Sales
Gross Profit Gross Profit Margin %
Other Income Employee Cost Other Expenses	0.08 4.13 3.41	0.88 4.95 17.11	1.31 6.04 1.45		2.27 15.12 21.97
EBITDA	(7.43)	(17.37)	(1.76)		(26.68)
EBIDTA Margin (%)	NA	NA	NA		NA
Depreciation	0.08	1.78	1.15		3.01
EBIT	(7.51)	(19.15)	(2.91)		(29.69)
EBIT Margin (%)	NA	NA	NA		NA
Finance Costs					7.65 (37.34) ‐
Profit Before Tax
Tax
Profit After Tax					(37.34)

# 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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BUSINESS OVERVIEW

VASCON – AT A GLACE

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ENGINEERING PROCUREMENT & CONSTRUCTION

One of the leading EPC Company in India

REAL ESTATE DEVELOPMENT

Focus on Affordable Housing

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EPC BUSINESS- OVERVIEW

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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 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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MARQUEE CLIENTS

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MAINTAINING CONSISTENT QUALITY STANDARDS ENSURING REPEAT ORDERS
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ORDER BOOK BUILD-UP & KEY ORDERS

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(In Rs. Cr)	(In Rs. Cr)	(In Rs. Cr)			2,060	2,060	2,026	2,026	2,026		Project External Order book	Location	Amt(Rs. Cr)
					107			106			Maharashtra State Police Housing PWD,Raipur	Mumbai Raipur	414 401
											Tycoon	Mumbai	163
											Metro Rail Depot	Bangalore	153
											Goa Airport	Goa	131
	1,066		1,044								MMRC Mumbai Metro Adhiraj	Mumbai Mumbai	131 105
	190			137	1,953		1,920				PMC‐Affordable Housing Adampur Airport	Pune Adampur	99 69
	515										Kailash Enclave	Lucknow	52
											Other Projects		202
				907							Total		1,920
											Internal Order book
											Windermere‐Bunglows	Pune	18
											Forest Edge	Pune	20
	FY18			FY19	FY20		Current				Katvi‐Affordable Housing	Talegaon,Pune	68
							Order Book				Total		106
											Total EPC Business Order book		2,026
	Internal Order Book				External Order Book

EXECUTION OF NEW ORDERS TO IMPROVE REVENUE VISIBILITY & CAPACITY UTILISATION

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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

‐ END TO‐END CAPABILITIES

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

LOW OPERATING COST

Flat organization structure with agile decision reduces operating cost

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ASSET LIGHT MODEL

JV and JDA with land owners with low upfront deposit

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SUCCESSFULLY LAUNCHED REAL ESTATE PROJECTS

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	Projects Vascon Share Dev. Area (msft) Launch Status Forest Edge (JV) A 50% 0.08 18‐Jan Fully Sold Forest Edge (JV) B 50% 0.08 19‐Sep 60% sold Windermere (JV)# 45% 0.38 18‐Mar 57% sold Vascon Goodlife – Value Home (Own) 100% 0.3 18‐May 62% sold Forest County 50% 0.18 18‐Dec 92% sold Xotech C (JV) 50% 0.04 18‐Oct Fully Sold	REAL ESTATE SALES (RS CR)
		272 116 5
		FY19 FY20 Q1FY21
#Relaunch

Relaunch

“FOREST EDGE” – VASCON GOODLIFE ‐ KHARADI, PUNE KATVI, TALEGAON

RE‐LAUNCH OF WINDERMERE#

XOTECH‐ PUNE

FOREST COUNTY ‐ KHARADI

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TRACK RECORD OF REAL ESTATE SALES

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Q‐O‐Q SALES AREA SQ. FT (‘000)

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92
80
47
43
39
32
18
9
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Q‐O‐Q SALES VALUE (RS. CR.)
78
58
44
31
28
21
13
5
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
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CURRENT REAL ESTATE PROJECTS UNDER DEVELOPMENT

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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	0.13	89	44	43	22	‐
Forest County	Pune	JV	50%		0.18	0.16	121	27	60	6	‐
Windmere Residential	Pune	JDA	45%		0.38	0.21	253	206	114	92	114
Platinum Square (I&II)	Pune	JV	70%		0.14	0.14	140	130	98	91	93
Vascon GoodLife	Talegaon	Own	100%		0.46	0.18	65	23	64	22	‐
Xotech (I&II)	Hinjewadi	JV	50%		0.08	0.08	36	33	18	17	18
Total					1.40	0.90	704	463	397	250	225

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REAL ESTATE PROJECTS – PIPELINE (LAUNCHES IN NEAR-TERM)

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Sr. No.	Projects	Type	Segment	Total	Total	Vascon Share	Vascon Share
				Saleable Area	Expected Sales Value	Saleable Area	Expected Sales Value
				msft	(Rs. in Cr)	msft	(Rs. in Cr)
1	Coimbatore	JDA	Residential	0.33	179	0.23	125
2	Madurai	JDA	Residential	0.49	220	0.37	165
3	4 Acre HDH ‐ Phase I	JV	Residential	0.26	182	0.13	91
4	4 Acre HDH ‐ Phase II	JV	Residential	0.22	150	0.11	75
	Total			1.3	731	0.84	456

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REAL ESTATE PROJECTS – PIPELINE (OTHER PROJECTS)

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Sr. No.	Projects	Type	Segment	Total	Total
				Saleable Area	Expected Sales Value
				msft	(Rs. in Cr)
1	Bavdhan ‐ Comm	JDA	Commercial	0.23	158
2	Willows ‐ Comm	JV	Commercial	0.23	191
3	Kalyani Nagar ‐ Comm	JDA	Commercial	0.3	330
4	Kalyani Nagar	JDA	Residential	0.5	550
	Total			1.26	1,229

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CONTINUOUS FOCUS ON CASH GENERATION

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LAND MONETIZATION OF RS. 170 CR	IDENTIFIED NON‐CORE ASSETS
Seller Ms Ajanta Enterprise, 50% JV of Vascon Acquirer Pune BP Development Pvt. Ltd. (SPV of Mapletree Investments Pte Ltd ) Location Kharadi Village, Pune Land Parcel Area 30,955 sq. mt. Gross Consideration Rs. 170 Cr ( Entire c_onsideration received by Ms_ Ajanta Enterprise) Net Cashflow to Vascon Rs. 52.5 Cr Cashflow Utilisation Reducing High Cost Debt & financing incremental Working Capital
	• 44% EQUITY STAKE IN HOTELS AT GOA
	• COMMERCIAL PROPERTY AT KALEDONIA, ANDHERI (E)
	• 9 ACRE LAND PARCEL IN AURANGABAD
	• GMP TECHNICAL SOLUTIONS (85% SUBSIDIARY OF VASCON

After this Land Sale transaction, Ajanta Enterprise has following :

Total development of ~ 800,000 sft

CONTINUE FOCUS ON GENERATING CASH

• a) Under Development : 160,000 Forest Edge & 180,000 sft Forest BY MONETIZING IDENTIFIED NON County, CORE ASSETS

b) To be launched : ~ 400,000 sft

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THANK YOU!

Mr. Punit Bhayani punit@vascon.com

Vascon Weikfield Chambers, Pune - 411014

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