Vision Infra Equipment Solutions IPO: A Closer Look at the Red Flags Aware

Vision Infra Equipment Solutions Introduction

Vision Infra Equipment Solutions Limited, founded in 2015, specializes in providing equipment rental, trading, and refurbishment services across various sectors, including airports, smart cities, irrigation, factories, and railroads

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Brief about Vision Infra Equipment Solutions

Summary of the business of Vision Infra Equipment Solutions

We are a solution provider in the equipment space delivering our services in airports, smart cities, irrigation, building & factories, mining , railways , etc. Our portfolio of services includes: renting of road construction equipment and trading and refurbishment of these equipment. Our services offer several advantages, such as improved efficiency, cost control and a streamlined supply chain. Our business of renting of road construction equipment is executed in two rental modes based on: (i) “time-based pricing” and (ii) “output based pricing”.

Vision Infra Equipment Solutions History

Company was originally formed as a partnership firm under the Indian Partnership Act, 1932 as “M/s Vision Infra” at Pune, India with effect from October 28, 2015. Further, “M/s Vision Infra” was subsequently converted from the partnership firm to a Public Limited Company under Part I of Chapter XXI of the Companies Act, 2013 in the name of “Vision Infra Equipment Solutions Limited” pursuant to a certificate of incorporation dated January 12, 2024, bearing registration number 227226 issued by the Registrar of Companies.

Vision Infra Equipment Solutions Promoters & Board of Directors

• Sachin Vinod Gandhi, Chetan Vinod Gandhi and Sameer Sanjay Gandhi are the Promoters of Company.

Vision Infra Equipment Solutions Board of directors

Vision Infra Equipment Solutions Share Holding pattern

Vision Infra Equipment Solutions Strength

• own a large and young fleet of road construction equipment.
• Wide presence in domestic market with vast customer base
• Leverage capabilities to capture strong industry tailwinds and growth prospects for road infrastructure
• In house execution team and established track record
• Order Book for road construction activities across India
• Experienced Promoters and senior management team
• Stable financial performance

Vision Infra Equipment Solutions Strategies

• Expansion of geographical footprint
• Continue to enhance core strengths by attracting, retaining and training skilled personnel and process up gradation
• Foster Strong relationship with suppliers and customer and expand customer base
• Continue to focus on building young fleet of equipment with quick equipment turnover.
• Cost effective procurement
• Focus on timely fulfilment of orders

Industry Outlook

ROAD TRANSPORT

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Road transport is the dominant mode of transport in India, both in terms of traffic share and contribution to the national economy. Apart from facilitating the movement of goods and passengers, road transport plays a key role in promoting equitable socio-economic development across regions of the country. It also plays a vital role in social and economic integration and development of the country. Easy accessibility, flexibility of operations, door-to-door service and reliability have earned road transport a greater significance in both passenger and freight traffic vis-à-vis other modes of transport.

Strengthening ITS in Public Transport System: The Ministry has revamped its previous ITS Scheme and issued guidelines on June 23rd, 2022, to continue the previous scheme. This will provide additional financial support to STUs to equip themselves with advanced ITS technologies, improved bus services, operations, performance, and customer conveniences. The Scheme provides support of hardware and software components for Fleet Management System, Electronic Ticketing & Fare Collection System (including NCMC) and Passenger Information & Feedback System.

So far, proposals amounting to over Rs 200 crores have been received in the Ministry from several STUs such as TSRTC, KSRTC, GSRTC, BEST, Ahmedabad Jalmarg Ltd., Bhopal City Link Ltd., Kerala SRTC etc. These proposals are under consideration of this Ministry and several of them are already in advanced stages of appraisal.

PORT CONNECTIVITY

India has a total of 226 ports which comprise 12 Major ports. At present, there are 87 operational / under implementation ports which are being considered for assessment in terms of connectivity or capacity augmentation. For improving first/ last mile connectivity to all Major & Non-major ports of the country specifically the operational/ under implementation ports, 55 port connectivity and associated hinterland projects with a total length of 2,779 km have already been initiated by the Ministry and its implementing agencies. As of now, 8 projects of length 294 km have been completed, 14 projects of length 1,645 km are under implementation, 13 projects of length 363 km are under bidding and 20 projects of length 476 km are yet to be awarded. Post completion of these projects, 45 maritime ports will be provided with National Highway or 4 Lane+ connectivity.

MoRTH is working to enhance the ports logistics ecosystem by connecting Major & Minor Ports with National Highways, with NHLML spearheading this endeavour. The programme has been envisioned to connect all major ports, non-major ports as well as inland waterway terminals in the country to create an integrated network to support efficient and unhindered freight movement. As many as 52 critical infrastructure gap projects identified by MoPSW for connecting maritime ports and IWTs (Inland Waterway Terminals) to be taken up under PM Gati Shakti National Master Plan. Currently, DPR of total 56 projects (including 11 IWT projects) under this category with total of 1215 km length are under bidding stage for the feasibility assessment of these projects, which is being carried out by NHAI.

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CONSTRUCTION

The Construction industry in India consists of the Real estate as well as the Urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others. While Urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare.

• United Nations projects India’s population to be 1.64 Bn by 2047, an estimated 51% of India’s population is likely to be living in urban centres.
• One of the leading recipients of FDI in the country; construction development sector inflows $32 Bn (Apr 2000-Sept 2023).
• 100% Foreign direct investment in the construction industry in India under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.
• 100% Foreign direct investment in the construction industry is allowed under the automatic route for urban infrastructures such as urban transport, water supply, sewerage, and sewage treatment.

INDUSTRY SCENARIO

• The construction Industry in India is expected to reach $1.4 Tn by 2025.
• Cities Driving Growth – By 2030, cities are expected to generate 70% of India’s GDP (MGI, 2011).
• The construction industry market in India works across 250 sub-sectors with linkages across sectors.
• Residential- An estimated 600 Mn people are likely to be living in urban centres by 2030, creating a demand for 25 Mn additional mid-end and affordable units.
• Under NIP, India has an investment budget of $1.4 Tn on infrastructure – 24% on renewable energy, 18% on roads & highways, 17% on urban infrastructure, and 12% on railways.
• Schemes such as the revolutionary Smart City Mission (target 100 cities) are expected to improve quality of life through modernized/ technology driven urban planning.
• 54 global innovative construction technologies identified under a Technology Sub-Mission of PMAY-U to start a new era in Indian construction technology sector.
• Over 3,500 cities have certified as ODF+ and 1,191 cities as ODF++ under SBM-U.
• 35 Multimodal Logistics Parks (MMLPs) to be developed at a total capital cost of $ 6.1 Bn, will cater to 50% of the freight movement.
• Since 2014, over INR 18 Lakh Cr has been invested in urban transformation.
• Union Budget 2023 Highlights:
• INR 10 Lakh Cr: 33% Increase in capital Investment Outlay
• The outlay for PM Awas Yojana is being enhanced by 66 % to over INR 79,000 Cr
• Urban Infrastructure Development Fund: INR 10,000 Cr Outlay per year to create urban infrastructure in tier 2 & 3 cities.

INFRASTRUCTURE

• High budgetary allocation for infrastructure
  • In Budget 2023-24, capital investment outlay for infrastructureis being increased by 33% to Rs.10 lakh crore (US$ 122 billion), which would be 3.3 per cent of GDP.
  • Infrastructure Finance Secretariat is established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure.
• Increasing private sector involvement
  • The Indian government has introduced various formats in order to attract private investments, especially in roads and highways, airports, industrial parks and higher education and skill development sectors.
  • Private Equity-Venture Capital firms invested US$ 3.5 billion (across 71 deals) in Indian companies in May 2023.
• High budgetary allocation for infrastructure
• Increasing private sector involvement
• Improvement in logistics
• Rising Foreign Direct Investment (FDI) in the sector
• Improvement in logistics
  • India’s logistics market is estimated to be US$ 435.43 billion in 2023 and is expected to reach US$ 650.52 billion by 2028, growing at a CAGR of 8.3%.
  • The Ministry of Commerce and Industry, states that the logistics sector accounts for 5% of India’s GDP and provides jobs for nearly 2.2 crore Indians.
• Rising Foreign Direct Investment (FDI) in the sector
  • FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.42 billion and US$ 32.08 billion, respectively, between April 2000-September 2023.

Advantage India

• Robust Demand
  • India intends to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion.
  • India’s population growth and economic development require improved transport infrastructure, including investments in roads, railways, aviation, shipping and inland waterways.
• Policy Support
  • Budget 2023-24 is complemented with a continuation of the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs. 1.3 lakh crore (US$ 16 billion).
  • Under the National Infrastructure Pipeline (NIP), projects worth Rs. 108 trillion (US$ 1.3 trillion) are currently at differe nt stages of implementation.
  • In November 2022, National Investment and Infrastructure Fund (NIIF) is set up as a collaborative investment platform between the Government of India, global investors, multilateral development banks (MDB) and domestic financial institutions to facilitate investment across multiple sectors in India through an India Japan Fund.
• Attractive Opportunities
  • Development of infrastructure has a multiplier effect on demand and efficiency of transport and increases commercial and entrepreneurship opportunities.
  • In June 2022, the Minister of Road Transport and Highways, opened 15 national highway projects worth Rs. 13,585 crore (US$1.7 billion) in Patna and Hajipur, Bihar.
  • In October 2021, the Dubai government and India signed a contract in October 2021 to build infrastructure in Jammu and Kashmir, including industrial parks, IT towers, multipurpose towers, logistics centres, medical colleges, and specialized hospitals.
• Increasing Investment
  • Under Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to Rs.10 lakh crore (US$122 billion), which would be 3.3% of GDP and almost three times the outlay in 2019-20.
  • Under Budget 2023-24, Infrastructure Finance Secretariat is being established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure, and power.
• Strong momentum in expansion of roadways
  • India has about 63.73 lakh km of road network, which is the second largest in the world.
  • National Highways play a very important role in the economic and social development of the country by enabling efficient movement of freight and passengersand improving access to the market. MoRTH and its implementing agencies have implemented multiple initiatives in the last 8 years to augment the capacity of the National Highway infrastructure in India.
  • In the Union Budget 2023-24, the government has decided to raise the allocation towards the Ministry of Roads by some 36% to Rs. 2.7 lakh crore (US$ 32.6 billion) for 2023-24.
  • In FY23, the total length of National Highways in the country was 1,45,240 km.
  • National Highways had increased from 91,000 km in 2008 to 1,41,000 km in 2022, and the pace of construction had improved from 12 km a day to 42.03 km in FY23.
  • In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated and laid the foundation stone of 8 National Highway projects of 226 km length worth Rs. 1800 crore (US$ 217.4 million) at Igatpuri, Nashik, Maharashtra. In October 2022, the Prime Minister of India laid the foundation of road and ropeway projects worth more than Rs. 3,400 crores (US$ 410 million) in Mana, Uttarakhand. A network of 35 Multimodal Logistics Parks is planned to be developed as part of Bharatmala Pariyojana, with a total investment of about Rs. 46,000 crore (US$ 5.5 billion), which once operational, shall be able to handle around 700 million metric tonnes of cargo. Of this, MMLPs at 15 prioritized locations will be developed with a total investment of about Rs. 22,000 Crore (US$ 2.6 billion).
  • Government is working towards the development of a national highway network of 2 lakh kms by 2025. The Indian Railways expects to complete total revenue of Rs. 2,64,500 crore (US$31.81 billion) by the end of 2023-24.

Infrastructure development in northeast India

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• Investing in infrastructure would generate employment and would play a major role in thwarting secessionist movements in the Northeast region.
• In Budget 2023-24, there have been significant increases in the Ministry of Development of North Eastern Region (MDoNER) Scheme-wise outlays, that will increase the impact in infrastructure, social-development and livelihood sectors in the NER.
• Finance minister Nirmala Sitharaman’s Budget for 2023-24 underlines sustained focus on the northeast for “inclusive development” as one of the seven priorities, which act as the ‘Saptarishi’ guiding the government “through the Amrit Kaal”.
• Budget 2023-24 highlights:
• For FY24, the budgetary allocation for the Ministry of Development of Northeastern Region stood at Rs. 5892 crore (US$ 711 million).
• Rs. 2,200 crore (US$ 265.5 million) allocated for Prime Ministers Development Initiative for North-East (PMDevINE) Scheme.
• Rs. 2491 crore (US$ 300.6 million) was allocated to North East Special Infrastructure Development Scheme (NESIDS).
• In 2022, India’s Finance Minister announced the execution of several rail, road and air connectivity projects worth Rs. 1,34,200 crore (US$ 16.2 billion) in the northeast.
• 4,000 km of roads, 20 railway projects for 2,011 km and 15 air connectivity projects are being developed.
• National waterways on the Ganges, Brahmaputra and Barak rivers (National Waterways (NW)-1 on the Ganges, NW-2 on the Brahmaputra and NW-16 on Barak) are under development to provide better connectivity.
• As the cost of travel by water is the least when compared to air, road and rail networks, the riverine systems of India and Bangladesh can be leveraged for all types of transportation.
• Along the Brahmaputra River, the development of the entire area between Sadiya and Dhubri in Assam is ongoing for improved connectivity.
• Multimodal hub that includes a ship repairing port at Pandu, four tourist jetties, and 11 floating terminals on the Brahmaputra in Guwahati is under construction.
• North Eastern Region Power System Improvement Project (NERPSIP) is a major step towards economic development of the North Eastern Region through strengthening of Intra – State Transmission and Distribution systems.

Increasing investments in Indian infrastructure

The National Infrastructure Pipeline (NIP) for 2019-2025 is a first-of-its-kind, whole-of-government exercise to provide world- class infrastructure to citizens, improving their quality of life.
Infrastructure is the backbone of any country. Its development implies growth in all sectors of the economy, not to mention real estate, an indirect beneficiary of every headwind in infrastructure sector. The PM Awas Yojna and the extended credit-linked subsidy scheme address the affordability concern by provisioning increment in the PM Awas Yojna by 66% to 79,000 crores and extension of CLSS till 2027.
FDI in construction development (townships, housing, built-up infrastructure and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.23 billion and US$ 28.95 billion, respectively, between April 2000-September 2022.
In January 2023, the Construction arm of Larsen & Toubro secured orders for its power transmission & distribution and buildings & factories businesses to establish a 112.5MW Solar Power Plant in West Bengal and to construct a 600-bed super speciality hospital in Mumbai, respectively. In December 2022, BHEL formed a consortium with Titagarh Wagons and is among five entities which have bid for the mega Rs. 58,000 crore (US$ 7 billion) contract to manufacture 200 Vande Bharat trains and maintain them for the next 35 years.

In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated and laid the foundation stone of 8 National Highway projects of 226 km length worth Rs. 1,800 crore (US$ 217.4 million) at Igatpuri, Nashik, Maharashtra. In December 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways inaugurated 7 National Highway projects worth Rs. 2,444 crore (US$ 295 million) with a total length of 204 km in Rewa, Madhya Pradesh. In November 2022, the Prime Minister of India laid the foundation stone of various road projects worth over Rs. 2200 crore (US$ 2.6 billion), namely the Medak-Siddipet-Elkathurthy section of NH-765DG; Bodhan-Basar-Bhainsa section of NH-161BB; Sironcha to Mahadevpur Section of NH-353C in Telangana.
In October 2022, National Highways Infra Trust (NHAI InvIT), the infrastructure investment trust sponsored by the National Highway Authority of India (NHAI) to support the Government of India’s National Monetization Pipeline, raised a sum of Rs. 1,430 crore (US$ 172.6 million) from domestic and international investors through the placement of its units, for part funding its acquisition of three additional road projects from NHAI. As many as 52 critical infrastructure gap projects identified by MoPSW for connecting maritime ports and IWTs (Inland Waterway Terminals) to be taken up under PM Gati Shakti National Master Plan. Currently, the DPR of a total of 56 projects (including 11 IWT projects) under this category with a total of 1215 km length are under the bidding stage for the feasibility assessment of these projects, which is being carried out by NHAI.

Vision Infra Equipment Solutions Business Data

Vision Infra Equipment Solutions Verticals

• RENTAL OF ROAD CONSTRUCTION EQUIPMENT
• OUTPUT BASED PRICING (milling and crushing)
• TRADING AND REFURBISHMENT OF ROAD CONSTRUCTION EQUIPMENT

Vision Infra Equipment Solutions Product wise break-up

(Rs. In Lakhs except percentages and ratios)

Vision Infra Equipment Solutions Revenue contribution from Geography presence

(Rs. In Lakhs except percentages and ratios)

Vision Infra Equipment Solutions Customer dependency

• During Fiscal 2024, 2023 and 2022 revenue generated from our top ten customers were ₹20,699.7 lakhs, ₹29,169.51 lakhs and ₹24,751.28 lakhs which represented 62.21%, 81.07% and 84.02% respectively of revenues from operations.

Competition

competition depends on various factors, such as the type of road construction orders, total order value, location of the project and availability of appropriate fleet of equipment. While service quality, technical ability, performance record, experience, health and safety records and the availability of skilled personnel are key factors in client decisions among competitors, price often is the deciding factor. While there are various large and small service providers in the said business that provide similar services, we do not have any direct listed competitor of our business.

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Vision Infra Equipment Solutions Peer companies comparison

• There are no listed companies in India that are engaged in a business similar to that of Vision Infra Equipment Solutions Company accordingly it is not possible to provide an industry comparison in relation to Company.

Vision Infra Equipment Solutions SWOT ANALYSIS

• Strengths
  • Diverse Service Portfolio: Offering equipment rental, trading, and refurbishment services across multiple sectors like airports, smart cities, and railroads.
  • Skilled Workforce: A team of experienced professionals ensures high-quality service delivery and maintenance.
  • Flexible Pricing Models: Time-based and output-based pricing models cater to different customer needs, enhancing customer satisfaction.
  • Comprehensive Solutions: End-to-end services including deployment, operation, maintenance, mobilization, and demobilization streamline project execution for clients.
• Weaknesses
  • Dependence on Specific Sectors: Heavy reliance on sectors like road construction and smart cities may limit growth opportunities in other areas.
  • Capital Intensive: High initial investment in equipment and maintenance can strain financial resources.
  • Market Competition: Facing stiff competition from established players in the equipment rental and trading market.
• Opportunities
  • Expansion into New Markets: Potential to explore and expand services into emerging markets and sectors.
  • Technological Advancements: Adoption of new technologies can improve efficiency and reduce operational costs.
  • Strategic Partnerships: Collaborations with other companies can enhance service offerings and market reach.
  • Government Initiatives: Leveraging government projects and initiatives in infrastructure development can drive growth.
• Threats
  • Economic Fluctuations: Economic downturns can impact client budgets and reduce demand for services.
  • Regulatory Changes: Changes in regulations and compliance requirements can increase operational costs.
  • Technological Disruptions: Rapid technological changes may require continuous investment in new equipment and training.
  • Environmental Concerns: Increasing focus on sustainability and environmental regulations may impact operations and require adaptation.

Vision Infra Equipment Solutions Business risk factors

• generate a significant percentage of revenue from few clients. The loss of any one or more of major clients would have a material adverse effect on business operations and profitability.
  • During Fiscal 2024, 2023 and 2022 revenue generated from our top ten customers were ₹20,699.7 lakhs, ₹29,169.51 lakhs and ₹24,751.28 lakhs which represented 62.21%, 81.07% and 84.02% respectively of our revenues from operations.
• The construction equipment industry is sensitive to changing economic conditions and various other factors. Any decline in demand for these equipment may adversely impact our business prospects and results of operations.
• The road construction industry is sensitive to the government infrastructure spending or regulatory changes. Any decline in government infrastructure spending may adversely impact our business prospects and results of operations.
• Company is dependent on limited number of suppliers. Any delay or failure on the part of such suppliers to deliver equipment at acceptable prices, may adversely affect business, profitability and reputation.

Vision Infra Equipment Solutions Financials

Vision Infra Equipment Solutions Key Financial Ratios

Vision Infra Equipment Solutions Key Performance Indicators

(Rs. In Lakhs except percentages and ratios)

Vision Infra Equipment Solutions Assets & Liabilities

(Rs. In Lakhs)

Vision Infra Equipment Solutions Profit & Loss

(Rs. In Lakhs except percentages and ratios)

Vision Infra Equipment Solutions Cash Flow

(Rs. In Lakhs)

Vision Infra Equipment Solutions Capital structure

(Rs. In Lakhs except percentages and ratios)

IPO Details

Vision Infra Equipment Solutions IPO Details

Object of the issue

Litigation involved in Vision Infra Equipment Solutions

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