VVIP Infra Tech IPO: Is it a High-Risk Gamble Disguised as Accurate Growth?

VVIP Infra Tech Introduction

VVIP Infratech Limited, originally known as Vibhor Builders Private Limited, is an infrastructure company established in 2001. The company is primarily involved in developing, constructing, and managing residential and commercial properties. They operate mainly in Uttar Pradesh, Uttarakhand, NCR Delhi, and other northern parts of India

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Brief about VVIP Infra tech

Summary of the business of VVIP Infra tech

“VVIP Infratech Limited” (Formerly known as “Vibhor Vaibhav Infra Private Limited”) is a Class “A” civil and Electrical contractor. “VVIPL” is engaged in the business of execution and construction of infrastructure projects such as Sewer, Sewer Treatment Plants, Water Tanks, Water Treatment Plants, Sector Development work, Electrical Distribution and Sub Stations upto 33 KVA, Jal Jeewan Mission work etc. “VVIPL” has constructed two 56 MLD STPs using Sequential Batch Reactor (SBR) technology in the year 2013.

History of VVIP Infra tech

Company was incorporated in year 2001. It was originally incorporated as Vibhor Builders Private Limited vide certificate dated August 10, 2001 having CIN as U45201DL2001PTC111999 and registered office at S-551 School Block Shakarpur, New Delhi – 110092, India. Consequent upon special resolution passed by members in Extra-Ordinary General Meeting held on October 12, 2007, the name of company was changed to Vibhor Vaibhav Infra Private Limited vide certificate dated December 17, 2007.

Further, the members in Extra-Ordinary General Meeting held on December 21, 2015 decided to alter the object clause of the Company. Thereafter, on January 02, 2016 object clause of our company was changed vide certificate issued by Registrar of Companies, Delhi.
Furthermore, company has shifted its registered office from State of Delhi to State of Uttar Pradesh vide certificate issued by Registrar of Companies, Kanpur dated October 26, 2020 pursuant to order of Regional Director dated July 13, 2020. Pursuant to shareholders approval in general meeting dated October 18, 2023, name of our company was changed from “Vibhor Vaibhav Infra Private Limited to VVIP Infratech Private Limited” vide certificate dated November 01, 2023

Thereafter, Company was converted from private limited to public limited, pursuant to special resolution passed by the shareholders of the Company at the Extraordinary general meeting held on November 28, 2023 and the name of our Company was changed from VVIP Infratech Private Limited to VVIP Infratech Limited vide fresh certificate of incorporation dated January 04, 2024 issued by the Registrar of Companies, Kanpur. The Corporate identification number of our Company is U45201UP2001PLC136919.

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Company has spread business operations in field of Infrastructure, Real Estate, Electrical and Civil work. Mr. Praveen Tyagi, one of our Promoter founded the company. Later upon Vibhor Tyagi and Vaibhav Tyagi, sons of Praveen Tyagi joined the company in the year 2007. Since then, our company has achieved remarkable projects and are working on such projects. Our Promoters has vast experience in the field of infrastructure and real estate.

Promoters & Board of Directors of VVIP Infra tech

• Praveen Tyagi, Vibhor Tyagi and Vaibhav Tyagi are the Promoters of our Company.

Board of directors of VVIP Infra tech

Share Holding pattern of VVIP Infra tech

Qualitative Factors VVIP Infra tech

• Strong order book of projects across India;
• Strong high-quality work, on-time delivery, and competitive pricing;
• Experienced and qualified engineers and technicians;
• Track record of operating and financial performance and growth;

Strength VVIP Infra tech

• Strong order book of projects
  • Our company has Outstanding orders as on January 31, 2024 as of Rs. 47762 Lakhs.
• Strong high-quality work, on-time delivery, and competitive pricing
• Experienced and qualified engineers and technicians

Industry Outlook

Infrastructure Sector

India’s high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a US $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Mr. Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors.

The government’s focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Infrastructure support to nation’s manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical.

The “Smart Cities Mission” and “Housing for All” programmes have benefited from these initiatives. Saudi Arabia seeks to spend up to US$ 100 billion in India in energy, petrochemicals, refinery, infrastructure, agriculture, minerals, and mining.

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Market Size

In 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 per cent of GDP. As per the Union Budget 2023-24, a capital outlay of Rs. 2.40 lakh crore (US$ 29 billion) has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013-14. Started with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub- sectors, as per news reports. Under the initiative, 2476 projects are under development phase with an estimated investment of US$ 1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 in the roads and bridges sub-sector.

The Indian Railways expects to complete total revenue from traffic of Rs. 2,64,600 crore (US$ 32.17 billion) for FY24.

India’s logistics market is estimated to reach US$ 410.75 billion in 2022 and is expected to reach US$
556.97 billion by 2027, growing at a CAGR of 6.28%. India intends to raise its ranking in the Logistics Performance Index to 25 and bring down the logistics cost from 14% to 8% of GDP, leading to a reduction of approximately 40%, within the next five years.

India Water & Wastewater Treatment Market Analysis

The India Water and Wastewater Treatment Technologies Market size is expected to grow from USD 0.92 billion in 2023 to USD 1.54 billion by 2028, at a CAGR of 10.78% during the forecast period (2023-2028).
The COVID-19 outbreak negatively affected the Indian economy and the operations of several end-user industries of the market studied. It reduced the outflow of industrial wastewater. The COVID-19 pandemic resulted in a massive drop in oil demand. As a result, the industry’s need for water treatment technologies declined. In the food and beverage industry, labor shortages and the shutdown of plants reduced the food production levels in 2020. Furthermore, in the pulp and paper industry, major consumers’ reduced imports of packaging material resulted in a domestic oversupply of pulp and paper products in the manufacturing countries. This oversupply issue is negatively affecting the growth of the industry.
In the medium term, the rapidly diminishing freshwater resources and growing wastewater complexities will likely drive the demand for water and wastewater treatment technologies in India.
The high cost of water treatment plants is expected to hinder the growth of the market studied. Innovations in water treatment technologies are anticipated to act as an opportunity for the market studied.

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Indian Road and Highway Industry Outlook

• India has the second largest road network in the world, spanning about 63.73 lakh kilometres, which includes national highways, state highways, district roads, and rural roads. This extensive network ensures connectivity across various regions of the country.
• National Highways (NH) play a very important role in the economic and social development of the country by enabling efficient movement of freight and passengers and improving access to market. They account for 2% of the total road network and carry over 40% of total traffic. The pace of NH construction has increased consistently due to the systematic push through corridor-based National Highway development approach, from about 12 km/ day in 2014-15 to about 29 km/ day in 2021-22.
• The Indian Government has been actively investing in the development of road infrastructure. Major initiatives like the Bharatmala Pariyojana aim to upgrade and expand the road network, including the construction of expressways, economic corridors, and feeder routes. The first phase of the programme will develop 34,800 km of highways, including 27 Greenfield corridors and India’s largest expressway (a 1,386 km long Delhi-Mumbai Expressway). Under the Pariyojana, 60% projects have been envisaged on Hybrid Annuity Mode (HAM), 10% projects on BOT (Toll) Mode, and 30% projects on EPC mode.
• The roads and highways sector has pioneered several innovative public-private partnership (PPP) models besides having a strong contractual framework compared with other sectors. These factors have led to significant investments from private players in the sector. Several incentives have also been announced by the Government to attract private sector participation and foreign direct investment, which include Government bearing the cost of project feasibility study, land for the right of way and way side amenities, shifting of utilities, environment clearances, etc.
• 100% FDI in roads and highways is allowed under automatic route.

Industry Scenario

• The market for roads and highways in India is projected to exhibit a CAGR of 36.16% during 2016-2025, on account of growing government initiatives to improve transportation infrastructure in the country.
• The highways sector in India has been at the forefront of performance and innovation. The government has successfully rolled out over 60 road projects in India worth over $10 bn based on the Hybrid Annuity Model (HAM). HAM has balanced risk appropriately between private and public partners and boosted PPP activity in the sector.
• Asset recycling, through the toll-operate-transfer (ToT) model has been taken up by the National Highways Authority of India (NHAI) for 100 highways. The first two bundles of 9 highways each were monetized successfully for an investment of over $2 bn.
• NHAI has created Guinness World Record by constructing 75 km continuous Single Lane Bituminous Concrete Road in record time of 105 hours 33 minutes, between Amravati and Akola on NH 53 in Maharashtra.
• NHAI along with Maha Metro achieved the Guinness World Record by constructing longest Double Decker Viaduct (3.14 km) with Highway Flyover & Metro Rail supported on single column in between 3 metro stations in Nagpur
• As one of the biggest reforms in the road transportation industry in India, the NHAI has gone ‘Fully Digital’, with the launch of a unique cloud-based and Artificial Intelligence-powered Big Data Analytics platform – Data Lake and Project Management Software. The entire project management work flow of NHAI is transformed from manual to online portal based, wherein the complete project execution operations including ‘workflow with time lines’ and ‘alert mechanism’ have been configured. All project documentation, contractual decisions and approvals are now being done through portal only.

Indian Power Industry Outlook

India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 416.59 GW as of April 30, 2023.
As of April 30, 2023, India’s installed renewable energy capacity (including hydro) stood at 172.54 GW, representing 41.4% of the overall installed power capacity. Solar energy contributed 67.07 GW, followed by 42.86 GW from wind power, 10.24 GW from biomass, 4.94 GW from small hydropower, 0.55 from waste to energy, and 46.85 GW from hydropower.
The non-hydro renewable energy capacity addition stood at 4.2 GW for the first three months of FY23 against 2.6 GW for the first three months of FY22.
India’s power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. According to data from the Ministry of Power, India’s power consumption stood at 130.57 BU in April, 2023.
The peak power demand in the country stood at 226.87 GW in April, 2023.
The coal plants registered a PLF of 73.7% for the first nine-months period in FY23 compared to 68.5% in FY22 for the same period.
Thermal power plant load is estimated to improve by 63% in FY24, fuelled by strong demand growth along with subdued capacity addition in the sector.

Business Data

Verticals

• Common Effluent Treatment Plant
• Surface Water Treatment Plant
• Sewage Treatment Plant (STP)

Product wise break-up

Revenue contribution from Geography presence

Customer Dependency

As per standalone restated financial statements, our top ten suppliers contributed 44%, 27.23%, 53.43% and 41.94% of our purchases for the periods September 30, 2023, March 31, 2023, March 31, 2022, and March 31, 2021.

Peer companies comparison

(₹ In Lakhs except percentages and ratios)

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Subsidiary companies

• Vibhor Vaibhav Infrahome Private Limited
• VVIP Style
• VVIP Homes
• VVIP Suites
• VVIP Assets
• VVIP Mangal

Group companies

• Tyag Landscape Private Limited
• Central Himalayan Farms Private Limited
• VVIP Entertainment Private Limited
• VVIP Infrahome Private Limited (Formerly known as Luck Real Properties Private Limited)
• Tyag Readymix Private Limited
• Gzb Cricket Association

Joint Ventures of VVIP Infra tech

Business risk factors

• A significant portion of VVIP Infra tech operational revenue is derived from a select group of top ten suppliers. The loss of business from any or all of these suppliers could negatively impact VVIP Infra tech financial performance.
  • As per standalone restated financial statements, our top ten suppliers contributed 44%, 27.23%, 53.43% and 41.94% of our purchases for the periods September 30, 2023, March 31, 2023, March 31, 2022, and March 31, 2021.
• VVIP Infra tech have had negative cash & cash equivalent generated in the financial year 2021 in the past based on the Restated Summary Information of our Company and may, in the future, experience similar negative cash flows.
• VVIP Infra tech are dependent on our sub-contractors to perform various portions of the contracts awarded to us. Such dependency exposes us to certain risks such as availability and performance of sub-contractors.

Financials

Key Financial Ratios

Key Performance Indicators

(₹ In Lakhs except percentages and ratios)

Balance Sheet

Profit & Loss

(₹ In Lakhs except percentages and ratios)

Cash Flow

Capital structure

(Rs. in lakhs)

SWOT ANALYSIS

• Strength
  • Central and State Governments focus on the Infrastructure Development
  • Growing Urbanisation therefore increasing need of developed Infrastructure
  • Governments focus on the development of Rural Infrastructure like Sewer, Potable Water, Electricity in Rural Areas of India
  • Better Economic Growth Rate in India
  • Availability of Manpower force in India
• Weakness
  • Infrastructure development is based on the Government Policies and Procedure
  • Tendering through competitive bidding
  • Unskilled Manpower
  • Delays in Execution due to local issues and Land availability by Government
• Opportunity
  • Continued Government Spending with increase in every budget
  • Strengthening Real Estate Developments in Urban and Rural India
  • Robust Development in Infrastructure Sector
  • Development in Railway Sector
  • Robust Development in Road Sector
  • Growing focus towards Renewable
  • Energy and Rural Electrification
• Threat
  • Volatility in raw material prices
  • Time and cost overrun due to delay in getting clearances
  • Environment Preservation
  • Quality related challenges
  • Delays due to Natural Disaster and Calamities

IPO Details

VVIP Infratech IPO Details

Object of the issue

Litigation involved

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