MUMBAI: ARSS Infrastructure Projects Ltd’s proposed Rs 120-crore initial public offering has been assigned ‘CARE IPO Grade 2’ by rating agency CARE.
Grade 2 indicates ‘below average fundamentals’. The grading factors in the experience of promoters and management team of the company, healthy and diversified order book position, impressive client portfolio, satisfactory project completion track record, improving financial position & profitability, favourable outlook for the sector and continuous thrust being given by the government for infrastructure development.
SBI, taking active interest in the company by virtue of acquiring an equity stake, also supports the grading. However, the grading is constrained by relatively smaller size of the company, few pending litigations against the company and/or the promoters, limited geographical diversification, high fragmentation in the domestic construction sector leading to intense competition thereby impairing profitability and relatively low level of automation in the sector resulting in labour intensiveness. While the company is, by and large, in compliance with the regulatory requirement pertaining to corporate governance practices, it may be too early to comment on the same in view of company taking major initiative in this regard only in the recent past.
ARSS was incorporated on May 17, 2000 as ARSS Stones Pvt. Ltd. by Subhash Agarwal of Bhubaneswar and his three brothers, for executing construction projects in the railway sector. In the initial years, ARSS operated mainly in Orissa. It gradually expanded operations to other states, but to a limited extent, and diversified its activities to other construction segments such as development and construction of roads, highways, bridges and irrigation projects. The company also has crusher plants at four locations in different districts of Orissa for quarrying and crushing stones to produce various sizes of rock products required for execution of contracts. In January, 2008, SBI took a 7.97 per cent stake in the company.
The company is, by and large, in compliance with the applicable provisions of the listing agreement and clause 49 pertaining to corporate governance, although the entire initiative to this effect has been taken by the company only recently. There are few pending litigations against the company and also a criminal case against one of the promoters.
Grade 2 indicates ‘below average fundamentals’. The grading factors in the experience of promoters and management team of the company, healthy and diversified order book position, impressive client portfolio, satisfactory project completion track record, improving financial position & profitability, favourable outlook for the sector and continuous thrust being given by the government for infrastructure development.
SBI, taking active interest in the company by virtue of acquiring an equity stake, also supports the grading. However, the grading is constrained by relatively smaller size of the company, few pending litigations against the company and/or the promoters, limited geographical diversification, high fragmentation in the domestic construction sector leading to intense competition thereby impairing profitability and relatively low level of automation in the sector resulting in labour intensiveness. While the company is, by and large, in compliance with the regulatory requirement pertaining to corporate governance practices, it may be too early to comment on the same in view of company taking major initiative in this regard only in the recent past.
ARSS was incorporated on May 17, 2000 as ARSS Stones Pvt. Ltd. by Subhash Agarwal of Bhubaneswar and his three brothers, for executing construction projects in the railway sector. In the initial years, ARSS operated mainly in Orissa. It gradually expanded operations to other states, but to a limited extent, and diversified its activities to other construction segments such as development and construction of roads, highways, bridges and irrigation projects. The company also has crusher plants at four locations in different districts of Orissa for quarrying and crushing stones to produce various sizes of rock products required for execution of contracts. In January, 2008, SBI took a 7.97 per cent stake in the company.
The company is, by and large, in compliance with the applicable provisions of the listing agreement and clause 49 pertaining to corporate governance, although the entire initiative to this effect has been taken by the company only recently. There are few pending litigations against the company and also a criminal case against one of the promoters.
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