Docstoc

AtoZ Engg-IPO Note-081210

Document Sample
AtoZ Engg-IPO Note-081210 Powered By Docstoc
					                                                                                                             IPO Note | Capital Goods
                                                                                                                           December 8, 2010



 A2Z Maintenance & Engg. Services                                                            AVOID
                                                                                             Issue opens: December 8, 2010
 High on Valuations                                                                          Target price: December 10, 2010

 A2Z Maintenance & Engineering Services Ltd. (A2Z) was incorporated in January               Issu e D etails
 2002 as a facility management services (FMS) provider. The company was                      Face Value: `10
 acquired by Mr. Amit Mittal during FY2003–04. In 2006, the company ventured                 Present Eq. Paid up Capital: `57.3cr
 into power distribution EPC and executed projects involving the installation of             Offer Size: 2.10cr-2.14cr Shares*
 distribution line infrastructure, construction of substations, system strengthening         Post Eq. Paid up Capital*: `73.7cr-74.1cr
 and rural electrification projects. The acquisition of a transmission EPC company           Issue size (amount): `857-862cr
 during 2008 marked the entry of A2Z into the power transmission segment.                    Price Band: `400-410

 Foray into unrelated business: During 2008, A2Z ventured into the municipal                 Promoters holding Pre-Issue: 55.81%
 solid waste (MSW) management business and bagged contracts to set up                        Promoters holding Post-Issue: 41.29% - 41.52%
 integrated resource recovery facility (IRRF) on a BOOT basis, with an aggregate             Note:*at Lower and Upper price band respectively

 MSW capacity of 3,800 tonnes/day in six cities. Having established its presence in
 the EPC and MSW space, A2Z has recently forayed into the power generation                   B ook B u ildin g
 business, choosing renewable energy sources of fuel such as biomass, agro waste             QIBs                            At least 50%

 and refuse-derived fuel (RDF) generated from its MSW projects. The company                  Non-Institutional               At least 15%

 would be setting up a number of cogeneration and biomass-based power                        Retail                          At least 35%

 generation projects totaling 235MW in Uttar Pradesh, Rajasthan and Punjab.
 Most of the above projects are expected to be completed by FY2012.                          Post Issu e Sh areh oldin g Pattern
                                                                                             Promoters Group                                41.29%
 Key concerns                                                                                MF/Banks/Indian
                                                                                             FIs/FIIs/Public & Others                       58.71%
 High working capital requirements: The EPC business requires significant amount             **at lower price band of ` 400/share.
 of working capital, which varies according to the nature of the project. Large
 amount of working capital gets tied up to finance the purchase of materials and
 the performance of engineering, construction and other work on projects before
 payment is received from clients.

 Lack of experience in MSW or power generation: A2Z’s promoters do not have
 prior experience in the development and operation of power generation projects
 or the MSW business. The deployment of large amount of the IPO proceeds in
 these unrelated businesses where the company has no prior experience may
 further strain the financial position of its profitable EPC division. It is pertinent to
 note that despite being highly profitable, the EPC business has been reporting
 negative cash flows.

 Outlook and valuation: Currently, A2Z derives its revenue and profitability from
 the power EPC business; the MSW and power generation projects are expected to
                                                                                            John Perinchery
 contribute meaningfully from FY2013. Since FY2011 and FY2012 revenue would
                                                                                            +91 22 4040 3800 Ext: 347
 largely be dominated by the power distribution EPC business, the appropriate
                                                                                            john.perinchery@angelbroking.com
 peer comparison would be with Jyoti Structures, KEC International and Kalpataru
 Power Transmission Ltd. Even at the lower price band of `400, A2Z would trade
 at a P/E multiple of 23x FY2010 earnings, while its peers are currently trading at         Hemang Thaker
 an average P/E of 12.5x their TTM earnings, thus placing the scrip relatively              +91 22 4040 3800 Ext: 342
 expensive. Hence, we recommend Avoid on the IPO.                                           hemang.thaker@angelbroking.com




Please refer to important disclosures at the end of this report                                                                                 1
                                                                                                 A2Z Maintenance & Engg. | IPO Note



                                                     Company background
                                                     A2Z was originally incorporated in January 2002. The company was acquired by
                                                     the current promoter, Mr. Amit Mittal, during FY2003–04. Commencing its
                                                     operations as an FMS provider in 2002, the company gradually ventured into
                                                     power distribution EPC during 2006. A2Z has executed various projects involving
                                                     the installation of distribution line infrastructure, construction of substations, system
                                                     strengthening and rural electrification projects. The acquisition of a transmission
                                                     EPC company during 2008 marked the entry of A2Z into the power transmission
                                                     segment. A2Z‘s power transmission portfolio includes the construction of EHV
                                                     substations of up to 400kV and EHV transmission lines of up to 765kV.

                                                     During 2008, A2Z ventured into the MSW management service business, where it
                                                     bagged contracts to set up IRRF on a BOOT basis with an aggregate MSW
                                                     capacity of 3,800tonnes/day in six cities. Recently, A2Z forayed into the power
                                                     generation business choosing renewable energy sources of fuel such as biomass,
                                                     agro waste and RDF generated from its MSW projects.

                                                     A2Z operates in five business segments: EPC, FMS, MSW management, renewable
                                                     energy generation and power IT solutions. The businesses are carried out by group
                                                     companies of A2Z Maintenance and Engineering Services.



Exhibit 1: Group Structure




Source: Company RHP; Note: *Company holds an equity interest of 51% in CNCS through Imatek, a wholly owned subsidiary of the company.




December 8, 2010                                                                                                                            2
                                                            A2Z Maintenance & Engg. | IPO Note



                   Business segments
                   EPC: In the EPC segment, the company mainly focuses on the power distribution
                   sector, providing services such as the installation of distribution line infrastructure
                   with capacities of up to 33kV, the construction of substations of up to 33kV and
                   participation in system strengthening projects and rural electrification projects.
                   In the power transmission sector, A2Z undertakes select projects involving the
                   construction of extra high voltage (EHV) substations of up to 400kV and EHV
                   transmission lines of up to 765kV.

                   Since FY2006, the company has been receiving EPC contracts to install
                   ~21,000ckm of HT distribution line, 19,500cKm of LT distribution line, 1,200cKm
                   of transmission line, 5,800km of aerial bunched cable, 124,000 transformers,
                   930,000 poles and 735 substations of different capacities up to 220kV; and to
                   provide connections to approximately 1,200,000 below-poverty-line households.
                   As of July 31, 2010, the company’s outstanding order book in the EPC business
                   (T&D) stood at ~ `1,292cr.

                   FMS: In this segment, A2Z provides services such as engineering maintenance,
                   energy saving solutions and security services to public and private sector clients.
                   The company also provides specialised services to Indian Railways under various
                   schemes in 11 out of 16 railway zones.

                   MSW management services: In this segment, A2Z involves in the collection,
                   transportation, processing, disposal and treatment of MSW across various cities in
                   India. The company has been awarded various contracts for setting up IRRFs on a
                   BOOT basis with an aggregate MSW capacity of 3,800tonnes/day in six cities. The
                   company has also bagged contracts for the collection and transportation of MSW
                   for an aggregate capacity of 910TPD in two cities and the processing and disposal
                   of MSW for an aggregate capacity of 855TPD in 12 cities in India.

                   Renewable energy generation: The company recently forayed into the power
                   generation business through renewable energy sources of fuel such as biomass,
                   agro waste and RDF generated from its own MSW projects. The company would
                   be setting up a number of cogeneration and biomass-based power generation
                   projects totaling 235MW in Uttar Pradesh, Rajasthan and Punjab. Most of the
                   above projects are expected to be completed by FY2012.

                   Power IT solutions: A2Z has recently diversified into the power IT solutions
                   business, wherein it would be executing projects as a systems integrator by
                   developing solutions for AT&C loss reduction. The company along with its
                   consortium partner, Sterlite Technologies Ltd., has been empanelled by Power
                   Finance Corporation of India Ltd. as a system integrator to provide IT applications
                   for reduction in AT&C losses.




December 8, 2010                                                                                        3
                                                                                                     A2Z Maintenance & Engg. | IPO Note



                                                      IPO details
                                                      IPO details: A2Z will be accessing the capital market with an initial public offering
                                                      (IPO) of 2.1cr equity shares of `10 each at a price band of `400–410/share.
                                                      The IPO comprises fresh issue of up to 1.65cr equity shares and an offer for sale
                                                      of 0.46cr equity shares by existing shareholders. The issue opened on December
                                                      8, 2010, and closes on December 10, 2010. The issue proceeds would be utilised
                                                      to fund the company’s forays into biomass-based power generation and MSW
                                                      management projects in addition to funding its working capital requirements and
                                                      for general corporate purpose.



Exhibit 2: Shareholding pattern
                                                                        Pre-issue                                          Post-issue
                                                     No. of equity shares       % of equity shares         No. of equity shares   % of equity shares
A) Promoters:
Mr. Amit Mittal                                              27,578,735                      48.13                 26,328,735                 35.49
Total holding of the promoter                                27,578,735                      48.13                 26,328,735                 35.49


Promoter group :
Mrs. Dipali Mittal                                             1,170,000                      2.04                   1,170,000                  1.58
Shiv Swaroop Gupta HUF                                         1,935,802                      3.38                   1,835,802                  2.47
Mrs. Babita Shiv Swaroop Gupta                                 1,285,710                      2.24                   1,285,710                  1.73
Ms. Priya Goel                                                    10,382                      0.02                      10,382                  0.01
Sub-total                                                      4,401,894                      7.68                   4,301,894                  5.80


Total (Promoters)                                            31,980,629                      55.81                 30,630,629                 41.29


B) Others: Other than promoter
and promoter group
Mr. Rakesh R. Jhunjunwala                                    12,051,125                      21.03                 11,551,125                 15.57
Beacon                                                         6,897,490                     12.04                   4,291,297                  5.79
Lexington                                                      4,393,085                      7.67                   4,393,085                  5.92
Employees and others                                           1,978,796                      3.45                   1,878,796                  2.53
Total (Non promoters)                                        25,320,496                      44.19                 22,114,303                 29.81


Total pre-issue                                              57,301,125                      100.0                 52,744,932                 71.11


C) Public (Pursuant to the issue)*                                                                                 21,431,193                 28.89


Total post-issue                                                                                                   74,176,125                 100.0
Source: Company RHP; Note: Fresh equity offering calculated at lower price band of `400/share. Includes 45.56 lakh shares offered for sale by existing
shareholders.




December 8, 2010                                                                                                                                    4
                                                                                                   A2Z Maintenance & Engg. | IPO Note




Exhibit 3: Objects of the issue                                                                                                           (` cr)
                                                                                                                                 Total amt. to be
                                                                                   Estimated         Exp. incurred as of
     Particulars                                                                                                              financed from the
                                                                                        total        October 25, 2010
                                                                                                                           proceeds of the issue
1.   Investment in three biomass (bagasse)-based power cogeneration                   246.0                        49.7                      68.0
     projects of 15MW each in Punjab
2.   Investment in five biomass-based power generation projects of                    400.0                          2.7                  120.0
     15MW each in Rajasthan
3.   Investment in subsidiaries:
          (i) Share capital in A2Z Infrastructure for the 15MW                          85.0                       16.4                     25.0
               biomass-based power generation project in Kanpur
         (ii) Share capital in A2Z Infrastructure and its subsidiaries                238.4                        34.5                     42.3
               for certain MSW projects
         (iii) Share capital in Mansi Bijlee Private Ltd. (Mansi Bijlee),             102.3                          1.8                  102.3
               the subsidiary that will implement one rice mill and
               associated rice husk-based biomass power generation
               project in Punjab
4.   Repayment of loan granted by L&T Infrastructure Finance to the                     41.7                           -                    41.7
     company
5.   Working capital requirements                                                     125.0                            -                  125.0
6.   General corporate purposes                                                             -                          -                        -

Source: Company RHP

                                                       Order book: Order backlog in the EPC segment (T&D) stood at ~ `1,292cr as
                                                       on July 31, 2010. Notable orders won include the HVDS project from
                                                       Uttar Haryana Bijli Vitran Nigam Ltd. for the conversion of existing LT lines to new
                                                       11kV lines along with pole-mounted dedicated distribution transformers with
                                                       capacities ranging from 6.3kVA to 40kVA. The company has also received
                                                       contracts worth `26.7cr from the Rural Electrification Agency, Uganda, to construct
                                                       power lines and associated power networks of Government Priority Rural
                                                       Electrification Projects in Uganda.

                                                       Exhibit 4: Order backlog

                                                                                           1,390             1,384
                                                                    1,400                                                     1,292

                                                                    1,120

                                                                     840
                                                           (` cr)




                                                                            561
                                                                     560

                                                                     280

                                                                       0
                                                                            FY08            FY09              FY10           31-Jul-10


                                                        Source: Company RHP




December 8, 2010                                                                                                                                5
                                                                                          A2Z Maintenance & Engg. | IPO Note



                                               Industry overview
                                               Engineering, procurement and construction (EPC): Demand for EPC services in the
                                               power transmission lines and power distribution businesses is largely dependent on
                                               the development, demand and new investments in the power generation,
                                               transmission and distribution sectors. India has traditionally focused on investment
                                               into power generation and, in the process, the T&D segment has attracted
                                               significantly less investment. Given the fact that India's electricity generation
                                               resources are distributed unevenly, there is a critical requirement for a reliable
                                               transmission system. As more and more investments get committed towards
                                               expansion of power generation capacities, there would be an urgency to
                                               facilitate the rapid development of the regional transmission network and
                                               inter-regional capacities.

                                               Transmission: In India, the T&D system is a three-tier structure comprising
                                               distribution networks, state grids and regional grids. These networks are primarily
                                               owned and operated by respective SEBs or State Governments (through state
                                               electricity departments). Most of the inter-state transmission links are owned and
                                               operated by PGCIL, though some are jointly owned by the concerned SEBs.
                                               In addition, PGCIL owns and operates many inter-regional transmission lines
                                               (forming part of the national grid) to facilitate the transfer of power from a region
                                               of surplus to one with deficit.



Exhibit 5: Transmission lines ckm
At the end of                             400kV Transmission lines                                 220kV Transmission lines
                                Central         State    JV/Pvt (1)           Total      Central          State    JV/Pvt(1)        Total
 th
6 FYP                            1,831        4,198              -           6,029        1,641        44,364             -       46,005
7th FYP                         13,068        6,756              -          19,824        4,560        55,071             -       59,631
 th
8 FYP                           23,001       13,141              -          36,142        6,564        73,036             -       79,600
 th
9 FYP                           29,345       20,033              -          49,378        8,687        88,306             -       96,993
10th FYP                        50,992       24,730              -          75,722        9,444       105,185             -      114,629
11th FYP (up to June 2010)      66,094       28,987          3682           98,763       10,285       118,694          383       129,362
Source: Company RHP.




Exhibit 6: Sub-stations (MVA)
At the end of                                400kV Transmission lines                              220kV Transmission lines
                                 Central        State      JV/Pvt (1)          Total   Central            State      JV/Pvt(1)    Total
 th
6 FYP                                 715        8,615                  -     9,330        500         36,791             -       37,291
7th FYP                              6,760      14,820                  -    21,580      1,881         51,861             -       53,742
 th
8 FYP                               17,340      23,525                  -    40,865      2,566         81,611             -       84,177
 th
9 FYP                               23,575      36,805                  -    60,380      2,866       113,497              -      116,363
10th FYP                            40,455      52,487                  -    92,942      4,276       152,221              -      156,497
      th
11 FYP (up to June 2010)            58,595      60,352                  - 118,947        5,076       184,299          1440       190,815
Source: Company RHP




December 8, 2010                                                                                                                          6
                                                                   A2Z Maintenance & Engg. | IPO Note



                   Distribution: After the unbundling of state electricity boards, most of the states have
                   separate distribution corporations engaged in the business of electricity
                   distribution. Distribution is considered as the weakest link in the power sector due
                   to large energy losses occurring at the distribution end. In order to accelerate and
                   upgrade the Indian T&D infrastructure, the Government of India consolidated
                   various distribution schemes during the Xth Five-Year Plan (FYP), including
                   Accelerated Power Development and Reforms Programme (APDRP) and Rajiv
                   Gandhi Grameen Vidyutikaran Yojana (RGGVY).

                   APDRP

                   APDRP targets the densely populated urban areas. The main objective of the
                   programme is to cut losses in the system and bring the total AT&C losses to 15% in
                   all towns. Although the programme led to some loss reduction, the target of 15% is
                   not yet achieved. In FY2009, the Government of India revised the scheme and
                   renamed it as Restructured Accelerated Power Development and Reforms
                   Programme (R-APDRP). The funds received under the R-APDRP scheme are being
                   utilised to upgrade and modernise the sub-transmission and distribution (below
                   33kV or 66kV) networks. The plan is to cover towns/cities with population of more
                   than 30,000. The plan’s targets include an annual reduction of 3% in AT&C losses
                   for utilities that have greater than 30% losses. It also targets an annual 1.5% AT&C
                   loss reduction for utilities with less than 30% losses.

                   RGGVY

                   The RGGVY aims at electrifying all villages and habitations, providing access to
                   electricity to all rural households, providing electricity connections to below-
                   poverty-line families free of charge, establishment of rural electricity distribution
                   backbone (REDB), with 33/11kV (or 66/11kV) sub-stations of adequate capacity in
                   blocks where these do not exist, creation of village electrification infrastructure (VEI)
                   with provision of distribution transformer of appropriate capacity in
                   villages/habitations and decentralised distributed generation (DDG) systems based
                   on conventional and non-conventional energy sources where grid supply is not
                   feasible or cost effective. Under the programme, 90% grant is provided by the
                   Government of India and 10% as loan by Rural Electrification Corporation (REC) to
                   state governments.



                   Exhibit 7: Committed spend under RGGVY for the periods indicated
                                                                            Xth FYP    XIth FYP       Total
                   Projects                                                   235         338          573
                   Un-electrified villages                                 68,763      49,736     118,499
                   Intensive electrification of electrified villages      111,936     243,261     355,197
                   BPL* households (cr)                                       0.83       1.63             2
                   Awarded cost (cr)                                       12,815      18,766       31,580
                   Total amount released (` cr)                            11,198     114,782     125,979
                   Source: Company RHP; Note: *Below poverty line.




December 8, 2010                                                                                          7
                                                              A2Z Maintenance & Engg. | IPO Note



                   MSW management
                   MSW predominantly includes household waste and commercial wastes collected by
                   a municipality within a given area. The rapid increase in the volume and types of
                   solid and hazardous waste as a result of continuous economic growth,
                   urbanisation and industrialisation is becoming a burgeoning problem for national
                   and local governments to ensure effective and sustainable waste management.
                   About 100,000MT of MSW is generated daily in the country and per capita waste
                   generation in major cities ranges from 0.20kg to 0.60kg. The collection efficiency
                   ranges from 70% to 90% in major metro cities and below 50% in some smaller
                   cities. Urban local bodies spend about `500–1,500/tonne on solid waste for
                   collection, transportation, treatment and disposal.

                   The problems of collection, transportation, proper use and disposal have become
                   a huge task, straining both financial resources of the civic bodies and their physical
                   capabilities, in addition to the problem of availability of disposal sites. Landfill sites
                   have not yet been identified by many municipalities and, in several municipalities,
                   landfill sites have been exhausted and the respective local bodies do not have
                   resources to acquire new land.

                   Renewable energy in India

                   Renewable energy-based power capacities have registered the highest pace of
                   growth in the overall capacity additions in India as compared to non-renewable
                   energy sources. The share of renewable energy-based power capacities has been
                   increasing from 2% in FY2003 to around 10% in FY2010. Nonetheless,
                   contribution from renewable energy sources towards overall generation has been
                   low at around 3% due to low plant load factors of renewable capacities. Capacity
                   addition of around 49,000MW in the aggregate is envisaged for the XIIth and XIIIth
                   FYPs. According to the Planning Commission, renewable power capacity by the
                   end of the XIIIth FYP period is projected to reach 53,000MW, comprising
                   39,000MW of wind power, 7,500MW of biomass power and 6,500MW of mini
                   hydroelectric power.

                   The key drivers for the renewable energy sector in India include:

                   (i)   The demand-supply gap, especially as population increases

                   (ii) Regulatory incentives and the availability of CDM benefits and/or Indian
                        renewable energy certificates (RECs), when fully implemented by the Indian
                        government

                   (iii) A large untapped potential

                   (iv) Environmental concerns regarding the use of fossil fuels

                   (v) The desire to strengthen India’s energy security

                   (vi) A viable solution for rural electrification




December 8, 2010                                                                                           8
                                                          A2Z Maintenance & Engg. | IPO Note



                   Business strategy
                   Strengthen presence in the power sector

                   A2Z would be focusing on consolidating its presence across various segments in
                   the power sector. In the EPC business, the company expects to consolidate its
                   presence in power distribution projects and would seek to increase its participation
                   in larger projects, including the transmission segment on a BOOT basis, as well as
                   enter into distribution franchise arrangements with power utilities. The company is
                   also mulling on opportunities to participate in transmission line projects for
                   REC/PFC on BOOT basis through a tariff-based competitive bidding process in
                   consortium with other parties. A2Z also intends to expand its renewable energy
                   generation business by exploring opportunities in other energy sources and
                   entering into fuel linkages with its MSW projects and other third parties.


                   Continued expansions across existing businesses

                       A2Z plans to diversify its EPC business by providing EPC services to other
                       infrastructure sectors such as road, telecommunications and water
                       infrastructure. The company intends to participate in Provision of Urban
                       Amenities in Rural Areas (PURA) projects and has submitted bids for certain
                       projects.

                       In the MSW business, A2Z intends to expand its offering of integrated waste
                       management solutions using innovative engineering practices, strengthening
                       the MSW off-take value chain by establishing better sales channels for the
                       byproducts generated and focusing on award of projects on a cluster-based
                       approach.

                       In the renewable energy generation business, the company plans to
                       significantly increase its power generation capacity through various sources of
                       renewable energy. A2Z expects the BOOT projects in MSW business and the
                       renewable energy generation business to generate long-term sources of
                       revenue and cash flow stability and would be focusing on obtaining more
                       BOOT contracts.

                       In its FMS business, A2Z would 1) focus on large customers, 2) offer multiple
                       services under long-term contracts, 3) increase its range of services to include
                       maintenance of telecommunication towers and industrial/plant maintenance
                       and 4) continue to provide energy savings solutions.




December 8, 2010                                                                                     9
                                                                                                        A2Z Maintenance & Engg. | IPO Note



                                                       Key concerns
                                                       High working capital requirements: The EPC business requires significant amount
                                                       of working capital, which varies according to the nature of the project. Large
                                                       amount of working capital gets tied up to finance the purchase of materials and
                                                       the performance of engineering, construction and other work on projects before
                                                       payment is received from clients. In addition, retention monies, which may range
                                                       up to 40%, are withheld by the client and released upon the testing of the product
                                                       or the supply date or the commissioning of the project.

                                                       Lack of experience in MSW or power generation: The promoters do not have prior
                                                       experience in the development and operation of power generation projects or the
                                                       MSW business. The deployment of large amount of the IPO proceeds in these
                                                       unrelated businesses where the company has no prior experience may further
                                                       strain the financial position of the its profitable EPC division. It is pertinent to note
                                                       that despite being highly profitable, the EPC business has been reporting negative
                                                       cash flows.

                                                       Non-availability of fuel stock to impact profits: In the renewable energy segment,
                                                       the sourcing of fuel stock at competitive prices is likely to be a key concern going
                                                       forward. Projects that are dependent on bagaase and other crop residues would
                                                       need to source alternative feedstock in the off-season. Delays or failure in the
                                                       timely sourcing of fuel stock could negatively impact the optimum utilisation and
                                                       reduce the profitability of these projects.

                                                       Outlook and valuation: Currently, A2Z derives its revenue and profitability from
                                                       the power EPC business; the MSW and power generation projects are expected to
                                                       contribute meaningfully from FY2013. Since FY2011 and FY2012 revenue would
                                                       largely be dominated by the power distribution EPC business, the appropriate peer
                                                       comparison would be with Jyoti Structures, KEC International and Kalpataru Power
                                                       Transmission Ltd. Even at the lower price band of `400, A2Z would trade at a P/E
                                                       multiple of 23x FY2010 earnings, while its peers are currently trading at an
                                                       average P/E of 12.5x their TTM earnings, thus placing the scrip relatively
                                                       expensive. Hence, we recommend Avoid on the IPO.



Exhibit 8: Peer valuation
                                                 CMP       Market cap    Sales*    EBITDA*     PAT*     EBITDA PAT      P/E    EV/EBITDA     EV/Sales
Company
                                                  (`)           (` cr)    (` cr)      (` cr)   (` cr)       (%) (%)      (x)           (x)         (x)
KEC                                              446           2,292     4,151         407      184         9.8 4.4    12.5           7.3        0.7
Jyoti Structures                                  124           1,020    2,167         259      100       12.0   4.6   10.2           5.2         0.6
Kalpataru                                         165           2,530    2,766         359      180       13.0   6.5   14.1           9.7         1.1
Source: Company, Angel Research. Note: *TTM figures.




December 8, 2010                                                                                                                                   10
                                                                 A2Z Maintenance & Engg. | IPO Note



                   Profit and loss statement (Consolidated)
                   Y/E March (` cr)                          FY2007 FY2008 FY2009 FY2010 *July 31, 2010
                   Income from operations:
                   Engineering services                         170     454    664    1,123        366
                    % of sales                                 94.0     94.2   91.8    91.6        87.5
                   Facility management services                  10      25     50      91           45
                    % sales                                     5.6      5.3    6.9     7.4        10.7
                   C&T of MSW                                     0       0      0       5            4
                    % of sales                                     -       -   0.03     0.4         0.9
                   Sales - Compost                                0       0      0       0            1
                    % sales                                        -       -      -       -         0.3
                   Consultancy fees                               0       0      1       1            0
                    % sales                                        -       -   0.14    0.07        0.00
                   Total                                        181     479    716    1,219        416
                   Other operating income                         1       2      8       6            3
                    % sales                                     0.3      0.5    1.1     0.5         0.6
                   Total operating income                       181     481    724    1,225        418
                    % chg                                          -   165.5   50.4    69.3       (65.9)
                   Raw Materials                                138     341    468     833         254
                   Personnel                                     11      29     66     109           55
                   Admin. and selling expenses                   12      21     55      77           33
                   Total Expenditure                            161     391    589    1,019        341
                   EBDITA                                        21      91    135     207           77
                    % sales                                    11.4     18.8   18.7    16.9        18.4
                   Depreciation/amortisation                      0       1      2       4            3
                   EBIT                                          20      89    133     203           74
                    % sales                                    11.2     18.6   18.4    16.6        17.8
                   Interest                                       2      12     39      49           19
                   Recurring PBT                                 18      77     94     154           55
                   Extra. Ordinary items                          0       0      0       0            9
                   PBT (Reported)                                18      77     94     154           46
                   Current tax                                    7      27     36      58           21
                   Deferred tax charge/(credit)                  (1)     (0)    (1)     (2)          (1)
                   Fringe benefit tax                             0       0      1       0            0
                   Net profit before MI                          11      50     59      98           26
                   Less: minority interest                        0       0      0       0           (0)
                   Net Profit (as restated)                      11      50     59      98           26
                    % sales                                     6.2     10.4    8.2     8.0         6.2
                   Note:* Four months ending July 31, 2010




December 8, 2010                                                                                     11
                                                                A2Z Maintenance & Engg. | IPO Note



                   Balance sheet (Consolidated)
                   Y/E March (` cr)                          FY2007 FY2008 FY2009 FY2010 *July 31, 2010
                    SOURCES OF FUNDS
                    Share Capital
                    Equity Share Capital                          2     19      22      57          57
                    Preference Capital                            0     75       0       0           0
                    Warrants                                      2      0       0       0           0
                    Reserves & Surplus                           35     70     202     357         370
                    Shareholders’ Funds                          39    164     223     414         428
                    Minority Interest                             0      0       0       2           3
                    Total Loans                                  50    125     264     405         572
                    Total Liabilities                            89    289     488     822        1,002
                    APPLICATION OF FUNDS
                    Gross Block                                   5     14      25      62         102
                    Less: Acc. Depreciation                       0      2       4       8          10
                    Net Block                                     4     12      22      55          91
                    Capital Work-in-Progress                      0      0      14      85          55
                    Investments                                   0      0       0       0           0
                    Deferred Tax Assets (net)                     1      1       2       5          10
                    Current Assets                              168    473     758   1,209        1,235
                       Cash                                      15     47      71      99          97
                       Loans & Advances                          17     45      79     103         145
                       Others                                   137    381     608   1,007         993
                    Current liabilities & Provisions             84    198     308     531         390
                    Net Current Assets                           84    276     450     678         845
                    Total Assets                                 89    289     488     822        1,002
                   Note:* Four months ending July 31, 2010




December 8, 2010                                                                                    12
                                                               A2Z Maintenance & Engg. | IPO Note



                   Cash flow statement (Consolidated)
                   Y/E March (` cr)                                 FY07 FY08 FY09 FY10 *July 31, 2010
                   Net Profit/ (Loss) before tax                     18       77      94    154       55
                   Adjustments                                         6      14      41      56      23
                   Operating (loss)/ profit before changes in WC     24       90    135     210       77
                   Net changes in working capital                   (69) (172) (164) (222)          (134)
                   Cash flow from / (used in) operations            (45)    (82)    (29)    (12)     (57)
                   Direct taxes paid                                  (2)   (16)    (27)    (53)     (32)
                   Net cash generated before extra ordinary items   (47)    (98)    (56)    (65)     (89)
                   Extra ordinary items (gross of tax)                  -       -       -       -    (13)
                   Net cash generated from / (used in) operating
                                                                    (47)    (98)    (56)    (65)    (102)
                   activities
                   Purchase of fixed assets (including CWIP)          (4)     (9)   (25)    (92)     (34)
                   Intercorporate deposit given                         -       -   (0.3)       -       -
                   Intercorporate deposit received back                 -       -       -    0.3        -
                   Proceeds from sale of fixed assets                   -       -    0.1     0.1        -
                   Purchase of investment in subsidiaries               -   (1.0)       -   (2.7)   (0.0)
                   Purchase of investment in business purchase          -       -       -       -   (1.1)
                   Fixed deposits placed                            (18)    (33)    (38)    (36)      (7)
                   Fixed deposits matured                              7       3      21      14       8
                   Interest received                                 0.2       1       4       6       2
                   Net cash generated from / (used in) investing
                                                                    (15)    (40)    (38) (110)       (32)
                   activities
                   Proceeds from issuance of equity share capital       -       -    0.2       1        -
                   Proceeds from issuance of warrants                  2        -       -       -       -
                   Proceeds from issuance of pref. share capital        -     75        -       -       -
                   Proceeds from securities premium                  18        1        -     99        -
                   Proceeds from Minority shareholders                  -       -       -       -       -
                   Dividend paid                                        -       -     (0)       -       -
                   Proceeds from long term borrowings                16        4       3    120       50
                   Repayment of long term borrowings                  (2)   (16)      (2)     (7)     (8)
                   Proceeds from short term borrowings (Net)         31       87    138       22     122
                   Preliminary expenses incurred                        -       -   (0.1)   (0.1)   (0.3)
                   Loan processing fees paid                            -       -       -     (7)    (11)
                   Interest paid                                      (2)   (13)    (38)    (47)     (20)
                   Net cash generated from / (used in) financing
                                                                     62     139     101     182      133
                   activities
                   Net Increase in Cash and Cash Equivalents           0       1       7       6      (1)
                   Cash and cash equivalents at the beginning of
                                                                     0.2       1       2       9      15
                   the year
                   Cash and cash equivalents acquired on
                                                                        -       -       -    0.2        -
                   acquisition of subsidiary
                   Cash and cash equivalents acquired on
                                                                       0     0.1        -       -       -
                   amalgamation
                   Cash and cash equivalents at the end of the
                                                                       1       2       9      15      14
                   year
                   Note:* Four months ending July 31, 2010




December 8, 2010                                                                                      13
                                                                                             A2Z Maintenance & Engg. | IPO Note




  Research Team Tel: 022 - 4040 3800               E-mail: research@angeltrade.com                   Website: www.angeltrade.com

  DISCLAIMER

 This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
 decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
 such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
 referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
 risks of such an investment.

 Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
 investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
 document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

 Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
 trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
 fundamentals.

 The information in this document has been printed on the basis of publicly available information, internal data and other reliable
 sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
 document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
 responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
 Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
 nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
 Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
 compliance, or other reasons that prevent us from doing so.
 This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
 redistributed or passed on, directly or indirectly.

 Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
 other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
 the past.

 Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
 connection with the use of this information.

 Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please
 refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and
 its affiliates may have investment positions in the stocks recommended in this report.




December 8, 2010                                                                                                                          14

				
DOCUMENT INFO
Categories:
Tags:
Stats:
views:152
posted:12/9/2010
language:English
pages:14