Vascon Engineers Limited — Investor Presentation 2020

Jun 12, 2020

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Date: June 12, 2020

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 DANI VIBHUTI D VIBHUTI D Date: 2020.06.12 Vibhuti Dani 15:15:58 +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 | June 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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IMPACT OF COVID-19

Construction Activities

• Construction activities came to halt amid lockdown across the country which will lead to extension of construction timelines.

• Labor Migration may pose a challenge in getting construction activities to normalcy in near-term. Expect gradual ramp-up in execution activity.

Real Estate Demand

• Expect short-term demand disruption in the sector.

• Our existing unsold inventory is at lower level due to which impact on ongoing projects will be less.

• New launch - To be reviewed thoroughly in terms of Product, Pricing and Timing.

Working Capital

• Working Capital issue may arise in the sector as Banks & NBFCs getting more risk averse, resulting funding issues for many developers. Initiative by Government and Central Bank may infuse some breather for interim liquidity.

• Company’s liquidity is adequate to meet the business requirements and do not foresee any liquidity concern in near term.

• Our current order book remains unchanged despite of COVID 19 as majority of our Order Book

• Ordering comprises of Government Project. Execution has been resumed at most of the project sites. Activity

• Also, we are receiving substantial interest of expression / Tender for new Government Projects.

• Reduction of Home loan rates may boost real estate sector.

Government Initiative to boost the Real Estate / EPC

• Re-assessment of DP, Working Capital and reduced borrowing rate likely to infuse liquidity for the sector.

• Release of partial BG as against proportionate work done also enhance both fund and non fund based limit.

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MAJOR DEVELOPMENT IN FY20

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• In FY20, Bagged order worth Rs. 1,671 Cr for third-party EPC, which is highest-ever order intake in a year.

• Total Order Book Stands at Rs. 2,060 Cr; External Orders is at Rs. 1,953 and Internal Orders is at Rs. 107 Cr

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Entered into New Segment- Bagged an Order for Metro (Building Construction) from Metro Rail Cooperation in Mumbai & Bangalore.

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Airport Authority of India – Received Order for ‘ Extension of existing Terminal Building ’ at Goa Airport, Dabolim

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• Land Monetization of Rs. 170 Crores in Ajanta Enterprise (50% JV of Vascon)

• Leasing of Commercial Property at Kaledonia, Andheri (E)

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New Sales booking of 1,35,412 sqft for a total sales value of Rs 116 Cr in FY20

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Identified Real Estate Projects launch worth ~ Rs. 450 Cr (Vascon Share), however due to COVID-19 will take cautious approach in launching

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HIGHEST-EVER ORDER-INTAKE IN FY20

	1,671 1,953 Order Intake (FY20) Current External Order Book (In Rs. Cr) EPC Business- External Order-Intake
		Order Intake State Rs. Cr.
	(In Rs. Cr)	Public Works Department, Raipur, Chhattisgarh 506
		Maharashtra State Police Housing & Welfare Corporation Ltd. Maharashtra 465
		Tycoon Avanti Projects Maharashtra 172
		Bangalore Metro Rail Corporation Karnataka 160
		Airport Authority of India Goa 133
		Mumbai Metro Rail Corporation Maharashtra 131
		Pune Municipal Corporation Maharashtra 104
		Total 1,671

RECEIVED ORDER WORTH RS. 1,671 CRORE SINCE THE BEGINNING OF THE CURRENT FINANCIAL YEAR

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LAND MONETIZATION OF RS. 170 CR

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

After this Land Sale transaction, Ajanta Enterprise has following :

Total development of ~ 800,000 sft a) Under Development : 160,000 Forest Edge & 180,000 sft Forest County, b) To be launched : ~ 400,000 sft

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DELIVERING CONSISTENT PERFORMANCE

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Revenue EBITDA PAT
62 38
392
383
359
284
44
43
38
15
11
6
FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20
STANDALONE NUMBERS (IN RS. CRS )
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DESPITE CHALLENGING INDUSTRY ENVIRONMENT, COMPANY HAS MAINTAINED CONSISTENT REVENUE GROWTH AND FOCUSED ON BUILDING PROFITABILITY

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P&L HIGHLIGHTS- Q4 & FY20

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Particulars (Rs. Cr)	Standalone	Standalone	Standalone	Standalone	Consolidated	Consolidated	Consolidated	Consolidated
	Q4 FY20	Q4 FY19	FY20	FY19	Q4 FY20	Q4 FY19	FY20	FY19
Revenue	92.13	117.79	366.00	363.45	125.52	158.76	520.92	524.11
Other Income	2.08	4.96	17.24	28.80	3.99	7.24	19.97	36.90
Total Income	94.21	122.75	383.24	392.25	129.51	166.00	540.89	561.01
Construction Expenses / Material Consumed Employee Cost Other Expenses EBITDA	75.39	91.20 8.49 8.78 14.28	253.98	270.71 43.65 33.36 44.53	96.49	115.85 16.11 21.84 12.20	348.93	383.29 72.26 61.47 43.99
	13.86		42.18		21.25		71.79
	5.59		24.78		10.94		46.30
	-0.63		62.30		0.83		73.87
EBIDTA Margin (%)	-1%	12%	16%	11%	1%	7%	14%	8%
Depreciation	2.26	1.98	8.65	7.99	3.91	3.44	14.99	13.42
Finance Costs #	-2.88	5.44	15.51	22.35	-1.88	7.40	19.05	26.32
Profit Before Tax	-0.01	6.86	38.14	14.19	-1.20	1.36	39.83	4.25
Tax	-	-	-	-1.02	-0.25	-0.01	0.09	-1.02
Profit After Tax	-0.01	6.86	38.14	15.21	-0.95	1.37	39.74	5.27
Other Comprehensive Income	1.77	0.04	1.63	-0.32	1.26	-0.18	1.12	-0.54
Total Comprehensive Income	1.76	6.90	39.77	14.89	0.31	1.19	40.86	4.73

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# FINANCE COST INCLUDES REVERSAL OF INTEREST PROVISION OF RS 10.39 CR AND RS 12.85 CR

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FY20- SEGMENTAL PROFIT & LOSS - AFTER ALLOCATION

Particulars (Rs. Cr)	RE#	EPC##	GMP	Inventorised	Total
Revenue	161.12 93.11 68.01 42%	277.05 210.01 67.04 24%	152.82 95.15 57.67 38%	0.31	590.99 398.58 192.41 33%
Cost of Sales
Gross Profit
Gross Profit Margin %
Other Income	7.30 13.54 16.66	10.95 28.64 12.52	4.59 29.61 20.66		22.84 71.79 49.84
Employee Cost
Other Expenses
EBITDA	45.11	36.83	11.99		93.62
EBIDTA Margin (%)	28%	13%	8%		16%
Depreciation	1.91	6.93	6.15		14.99
EBIT	43.20	29.90	5.84		78.63
EBIT Margin (%)	27%	11%	4%		13%
Finance Costs					19.05 59.58 19.85
Profit Before Tax
Tax
Profit After Tax	-	-	-		39.73

# 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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BALANCE SHEET- CONSOLIDATED

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Rs. Cr	Mar– 20	Mar– 19		Rs. Cr	Mar– 20	Mar– 19
Non-current assets	340.53	345.15		Shareholder’s Fund	743.67	699.59
Fixed assets	107.62	114.26		Share capital	178.14	178.14
Financial Assets	189.78	187.19		Other Equity	556.16	512.10
Other Non Current assets, Income Tax & Deferred Tax	43.13	43.70		Non Controlling Interest Non-current liabilities	9.37 116.64	9.35 159.30
Current assets	1,015.13	985.34		Long term borrowings	98.33	140.22
Inventories	480.86	500.23		Other Financial liabilities	18.31	19.08
Investments	18.03	4.33		Current liabilities	495.35	471.60
Trade receivables	180.97	201.67		Short term borrowings	101.65	92.76
Cash and bank balances	68.80	72.12		Trade Payables	201.59	201.67
Loans & Other Financial assets	236.69	188.96		Other Financial liabilities	65.49	31.32
Other current assets	29.78	18.03		Other current liabilities & Provisions	126.62	145.85
Total Assets	1,355.66	1,330.49		Total Liabilities	1,355.66	1,330.49

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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 reinvest 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

	876 907 1,953 190 137 107 FY17 FY18 FY19 Current Order Book Internal Order Book External Order Book (In Rs. Cr) 515 1,044 2,060 1,066	Project	Location	Amt(Rs. Cr)
	(In Rs. Cr)
		External Order book
		PWD,Raipur	Raipur	416
		Maharashtra StatePoliceHousing	Mumbai	414
		Tycoon	Mumbai	163
		MetroRail Depot	Bangalore	156
		GoaAirport	Goa	132
		MMRCMumbai Metro	Mumbai	131
		Adhiraj	Mumbai	105
		PMC-AffordableHousing	Pune	102
		Adampur Airport	Adampur	71
		Kailash Enclave	Lucknow	55
		Other Projects		208
		Total		1,953
		Internal Order book
		Windermere-Bunglows	Pune	18
		ForestEdge	Pune	21
		Katvi-Affordable Housing	Talegaon, Pune	68
		Total		107
		Total EPC Business Order book		2,060

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

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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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SUCCESSFULLY LAUNCHED REAL ESTATE PROJECTS

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

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REAL ESTATE SALES (RS CR)
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272
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192

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116
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FY18 FY19 FY20

Relaunch

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“FOREST EDGE” –
KHARADI, PUNE
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VASCON GOODLIFE - RE-LAUNCH OF KATVI, TALEGAON WINDERMERE#

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XOTECH- PUNE
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FOREST COUNTY - KHARADI

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TRACK RECORD OF REAL ESTATE SALES

Q-O-Q SALES AREA SQ. FT (‘000)

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92
80
47
43
39
32
18
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
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Q-O-Q SALES VALUE (RS. CR.)
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78
58
44
31
28
21
13
Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
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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	0.13	86	43	43	22	-
Forest County	Pune	JV	50%	0.18	0.16	120	12	60	6	-
Windmere Residential	Pune	JDA	45%	0.38	0.21	253	205	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	64	22	64	22	-
Xotech (I&II)	Hinjewadi	JV	50%	0.08	0.08	36	33	18	17	18
Total				1.40	0.90	699	445	397	249	225

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

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)

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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NON-CORE ASSETS

1. 44% EQUITY STAKE IN HOTELS AT GOA

2. COMMERCIAL PROPERTY AT KALEDONIA, ANDHERI (E)

3. 9 ACRE LAND PARCEL IN AURANGABAD

4. GMP TECHNICAL SOLUTIONS (85% SUBSIDIARY OF VASCON)

CONTINUE FOCUS ON GENERATING CASH BY MONETIZING IDENTIFIED NON CORE ASSETS

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THANK YOU!

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Mr. Punit Bhayani punit@vascon.com

Mr. Gauranh Vasani/ Ms. Hina Agarwal vgaurang@stellar-ir.com hina@stellar-ir.com

Vascon Weikfield Chambers, Pune - 411014

Kanakia Wall Street, Andheri (East), Mumbai 400 093