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Capacite Infraprojects Ltd.

BSE: 540710 Sector: Infrastructure
NSE: CAPACITE ISIN Code: INE264T01014
BSE 00:00 | 16 Jul 268.95 -3.30
(-1.21%)
OPEN

272.30

HIGH

274.80

LOW

268.00

NSE 00:00 | 16 Jul 270.15 -3.00
(-1.10%)
OPEN

274.00

HIGH

275.65

LOW

269.70

OPEN 272.30
PREVIOUS CLOSE 272.25
VOLUME 8097
52-Week high 437.40
52-Week low 256.50
P/E 23.19
Mkt Cap.(Rs cr) 1,826
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 272.30
CLOSE 272.25
VOLUME 8097
52-Week high 437.40
52-Week low 256.50
P/E 23.19
Mkt Cap.(Rs cr) 1,826
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Capacite Infraprojects Ltd. (CAPACITE) - Chairman Speech

Company chairman speech

Rahul Katyal

Managing Director

Dear Shareholder

India‘s construction industry is expected to log materially faster growth fuelledby spends in road irrigation rail and urban infrastructure projects over 2016-17 to2020-21. Total spending in the period is expected to be in the range of ' 23-24 trilliontranslating into a CAGR of 10-12% way faster than a 2-4% rate observed between 2012-13and 2014-15 when an economic slowdown and attendant sluggish demand had stalledIndia‘s investment cycle. Over the next five years infrastructure projects willprovide the maximum construction opportunity at almost 92% of overall construction spendowing to the central government's continued focus on roads urban infrastructure andrailways. Conversely spend on industrial projects is expected to be lower as companiesdealing in metals petrochemicals and cement slow expansion plans amid low utilisationlevels and muted demand. (Source: CRISIL Research)

KEY DRIVERS OF CONSTRUCTION INDUSTRY:

Affordable Housing

While RBI defines the segment based on the overall ticket size and the size of the homeloan MHUPA defines the segment based on the area of apartments. As per the RBIaffordable housing is defined as houses of values up to ' 6.5 million located in the sixmajor cities namely Mumbai New Delhi Chennai Kolkata Bengaluru and Hyderabad andhouses of values upto ' 5 million located in cities other than the above six major cities.On the other hand MHUPA defines affordable housing as houses having carpet area of 21-27

sq. m. for EWS or carpet area of 28-60 sq. m. for LIG and having a price range of amaximum

of 5 times the annual income of the

household.

PRADHAN MANTRIAWAS YOJANA- HOUSING FOR ALL BY2022

Housing for All by 2022 also known as the Pradhan Mantri Awas Yojana("PMAY") was launched on 25th June 2015 in New Delhi. It envisages theconstruction of about two crore houses in the country from 2015 to 2022 for the homelessand for people belonging to the economically weaker section ("EWS") andlow-income group ("LIG") categories.

The scheme will be implemented in three phases:

Phase 1 - April 2015 to March 2017 to cover 100 cities selected from states/urbanterritories Phase 2 - April 2017 to March 2019 to cover additional 200 cities Phase 3 -April 2019 to March 2022 to cover all other remaining cities SMART CITIES MISSION

In June 2015 MoUD laid down the operational guidelines for formulation approval andexecution of projects under the Smart Cities Mission. The mission aims at driving economicgrowth and improving the quality of life of people by enabling local area development andharnessing technology. The core infrastructure elements in a smart city would includeadequate water supply assured electricity sanitation efficient public transportaffordable housing robust IT connectivity and digitisation etc. The mission will cover100 cities (distributed 55 among states and union territories) over five years (2015-16 to2019-20). Central assistance for the mission will be used only for infrastructure projectsthat have larger public benefit.

As of December 2016 the government has announced 60 cities under the scheme fordevelopment of which 13 cities are to be developed on fast track basis. Implementation tostart from fiscal 2017 investments worth ' 760 billion are lined up in the first 33 smartcities. Construction based activities to consume major share of funding. Projects likereal estate development roads water supply and sanitation are the major parts ofdevelopment in these cities.

SLUM REHABILITATION

The Slum Rehabilitation Act 1995 was passed by the government of the Indian stateMaharashtra to protect the rights of slum dwellers and promote the development of slumareas. Slum rehabilitation projects are classified into (i) in-situ slum redevelopmentprojects (ii) in-situ slum upgradation projects and (iii) slum resettlement projects.Slum redevelopment and upgradation projects involve redevelopment or improvement ofexisting slum areas by providing proper access dwelling units open spaces and otherbasic services to the slum dwellers on land on which the slum exists. Resettlementprojects involve relocation and settlement of slum dwellers from the existing slums toalternative sites with provision of dwelling space basic civic and infrastructuralservices.

IMPLEMENTATION OF REAL ESTATE (REGULATION & DEVELOPMENT) ACT 2016 ("RERD ACT")

Your Company believes that the implementation of the RERD Act will have far reachingconsequences on the construction industry in India including the Residential buildingsegment. Some of the key impacts that we believe will arise from the implementation of theRERD Act include:

• reduction in risks arising due to delays in obtaining clearances during theconstruction phase as under the RERD Act statutory clearances for a project are requiredto be in place prior to commencement of construction;

• increase in the speed and security of payments due to us on account of themandatory deposit of 70% of the proceeds of a construction project in an escrow account

• emphasis on timely delivery of construction services;

• emphasis on demand for quality and durability of construction.

HIGHLIGHTS OF FY 2017

During the year your Company focussed on consolidating business strengths andimproving internal efficiencies your Company delivered yet another year of consistentperformance for the period under review. The Company's Income from Operations for FY2016-17 stood at ' 1157.04 crore against ' 851.43 crore recorded in the previous yearrecording a growth of 35.90 % as compared to previous Financial Year. The Company's EBITDAstood at ' 166.89 crore in FY 2016-17 compared to ' 115.55 crore recorded in FY 2015-16.This constitutes a growth of 44.43%. The increase in EBITDA was driven by optimising theutilisation of resources. The PAT for FY 2016-17 grew to ' 696 Million compared to ' 434Million recorded in the previous year this constitutes a growth of 60.36%.

FUND INFUSION :

A sum of ' 60 Crores has been invested in the Company as Private Investment duringFY17 to meet the growth capital requirement. This fund infusion has further enabled instrengthening of your Company's financial position and helped us to end the year with adebt: equity ratio of about 1: 0.51.

DIVIDEND:

The Company declared and paid interim dividend of ' 0.50 (5%) per Equity share of FaceValue of ' 10 each and ' 3.50 (5%) per Preference share of Face Value of ' 20 each duringthe year under review

STRONG ORDER BOOK

Our Order book has grown from ' 2896 crore as on March 312016 to ' 4336 crore as onMarch 312017with projects spread across major cities in India including the MMR NCRPune Hyderabad Bengaluru Chennai and Kochi.

GOING PUBLIC:

It gives me pleasure to announce that your Company has filed its Draft Red HerringProspectus with SEBI. Your Company plans to raise about ' 400 crore through initialpublic offer of equity. The objects of the issue include utilisation of IPO proceeds forfunding working capital to the extent of ' 250 crore purchase of capital assets to theextent of about ' 50 crore and balance for general corporate purposes and issueexpenses.

WAY FORWARD:

Looking at the huge potential in Construction Industry your Company intends to

• Expand in the mass housing segment

• Expand our presence in cities with high growth potential

• Undertake projects on a design - build basis

• Increase our focus on and execute greater number of projects on a lock-and-keybasis

• Bid for and undertake projects in the public sector

• Capitalise on changes in the construction industry that will arise on account ofthe implementation of the RERD Act

I am confident that your Company would continue to grow further in the year ahead withyour support and cooperation. I express my gratitude towards customers and businessassociates for their relentless support. I also take this opportunity to place on recordsincere appreciation for the co-operation and assistance the Company has received fromBanks and various Government Departments. I also place my sincere appreciation for thededication commitment and hard-work put in by our employees at all levels and lookforward to receive their trust support and encouragement as we head for anotherchallenging & exciting year. We sincerely thank all our shareholders for theircontinued belief in us.

Rahul Katyal

Managing Director