H.G. Infra Engineering Ltd is an infrastructure construction, development and management company. They are coming up with an initial public offer which will hit the primary market on 26th February 2018 and closes on 28th February 2018. The company aims to raise around Rs 300.00 Cr by offering shares at Rs 263 – Rs 270 per Equity Share.
H.G. Infra Engineering Ltd was incorporated as “H.G. Infra Engineering Private Limited” on January 21, 2003, as a private limited company under the Companies Act 1956, at Jodhpur. They are an infrastructure construction, development and management company with road projects, including highways, bridges and flyovers. Their main business operations includes:-
(i) Providing engineering, procurement and construction (“EPC”) services on a fixed-sum turnkey basis.
(ii) Undertaking civil construction and related infrastructure projects on item rate and lump sum basis, primarily in the roads and highway sector.
They are nowadays focusing themselves in executing water pipeline projects and are currently undertaking two water supply projects in Rajasthan on turnkey basis which includes the designing, construction, operation and maintenance of the project. They have executed or are executing projects across various states in India covering Rajasthan, Uttar Pradesh, Haryana, Uttarakhand, Maharashtra and Arunachal Pradesh.
During the last five years, HGIEL has completed 13 projects above the contract value of Rs.40 crore in the roads and highways sector aggregating to a total contract value of Rs.1674 crore, which included construction, improving, widening, strengthening of two and four lane highways, construction of high level bridge and construction of earthen embankment, culverts and cart track underpasses. The Company has 21 ongoing projects in the roads and highways sector which includes construction, improving, widening, strengthening, up gradation and rehabilitation of two, four and six lane highways construction of high level bridge and construction of road network.
They had a total of 21 projects in the roads and highways sector, four civil construction projects and two water supply projects of total Order Book of Rs. 3707 crore as of November 30, 2017.
They are pre-qualified to bid independently on an annual basis for bids by NHAI and MORTH. Their public sector clients include NHAI, PWD, MES and Jaipur Development Authority. They have also executed road construction contracts as a sub-contractor for their private sector clients such as Tata Projects Limited and IRB-Modern Road Makers Private Limited.
They are certified,such as the ISO 9001:2015, ISO 14001:2004, OHSAS 18001:2007 certification for quality management systems, environment management systems, and health and safety management systems, respectively, issued by LMS Assessment Services Private Limited.
HGIEL have a project portfolio consisting of 27 ongoing projects. Generally, the construction contracts are as follows:
- EPC Contracts- EPC contracts are fixed-price contracts wherein the client provides conceptual informationabout the project.
- Lump-Sum turn-key contracts – Lump-sum turn-key contracts provide for a single price for the total amountof work, subject to variations pursuant to changes in the client’s project req
- Item rate contracts – These contracts are also known as unit-price contracts or schedule contracts. For itemrate contracts, they are required to quote rates for individual items of work on the basis of a schedule ofquantities furnished by their client. The design and drawings are provided by the client.
- Continue focusing on EPC business in the roads and highways sector and enhancing execution efficiency.
- Selectively expand geographical footprint.
- Selectively explore hybrid annuity based model to optimize project portfolio.
- Diversify beyond projects in the roads and highways sector by leveraging existing capabilities.
Some of the qualitative factors and strengths which form the basis for computing the Offer Price are:
- Established roads and highways sector focused construction developer.
- Efficient business model.
- Strong project management and execution capabilities.
- Visible growth through their growing Order Book and improved pre-qualification credentials.
- Experienced management team.
Objects of the Issue
The Offer comprises a Fresh Issue of Rs.300 Cr, aggregating up to Rs.3, 000 million by the Company and an Offer for Sale of up to 6,000,000 Equity Sharesby the Selling Shareholders.
The Offer for Sale
Each of the Selling Shareholders will be entitled to the respective proportion of the proceeds of the Offer for Sale. Company will not receiveany proceeds of the Offer for Sale by the Selling Shareholders.
The Fresh Issue
The Net Proceeds of the Fresh Issue are proposed to be utilized by the Company for the following objects:
(a) Purchasing capital equipment.
(b) Repayment/ prepayment in part or in full, of certain indebtedness.
(c) General corporate purposes.
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