Supreme Infrastructure India Ltd - Rs 58.00

Incorporated in 1983, Supreme Infrastructure India Ltd (SIIL) is predominantly engaged in construction of roads, highways and other allied projects for clients like NHAI, MCGM, MMRDA, MSRDC, MUTP, PWD, BMC, AAI, BPT, TMC and also private agencies like Hiranandani, K. Raheja, Pratibha Ind, RCF, BARC, Sadbhav Eng, Mundra Port etc. Its area of operation is mainly concentrated in Mumbai region and few parts of Maharashtra & Bangalore. Although company’s core competency lies in construction/widening of roads & highways etc it also undertakes other infrastructure projects like integrated nallah development, drainage work, laying of railway tracks, construction of minor bridges, development of IT Park, residential tower, RCC building, strengthening of sea wall and laying of tetra pods etc. As SIIL is registered with PWD & BMC, it is eligible to bid for their tenders without any restriction in terms of value. Infact company is also eligible to bid for tenders of construction of runways at airports, for jobs related to tidal area projects, construction of small jetties and port connectivities which require special skills. Remarkably, till now no penalties have been levied on the company for any of the projects due to any delay in completion on its part. For executing all types of civil works, company even possesses various latest machinery like vibratory rollers, sensor pavers, excavators, road rollers, paver finishers, tippers, motor grader, compressors, weigh bridge, concrete pumps etc.

Notably SIIL is among the few companies of its size having its own captive ready mix concrete plant, asphalt mix plant, quarrying and crushing unit & paver block manufacturing unit. Apart from consuming these for its own projects, company also produces & supplies to other contractors as per order. Brief summary of the plants are:

· Asphalt Mix plant: SIIL has three asphalt plants spread across Powai (Mumbai), Padgha (Thane) & Chitradurga (Bangalore) with a combined production capacity of 330 MT per hour. The plants are equipped with machineries from Lingtech, Linoff & Apollo.

· Ready Mix Concrete (RMC) plant: Company has four RMC plants each located at Powai, Padgha, Chitradurga & Thane. These plants have total capacity to produce 180 CUM of concrete per hour. Incidentally two of the plants are capable of producing concrete as well as wet mix macadam

· Wet Mix Plant: Company possesses a Unicon make wet mix macadam plant at Powai, Mumbai with a production capacity of 180 MT per hour.

· Quarrying & Crushing unit: SIIL boast of having four crushing plants – two at Padgha and one each at Powai and Chitradurga having total installed crushing capacity of 470 MT per hour.

· Paver Block unit: Though the concept of paver block is very old its usefulness has been realized recently and hence the manufacturing of paver blocks seems to be a new industry in India. SIIL has set up a paver block manufacturing unit at Padgha and is manufacturing nearly 10,000 sq. mtrs of paver blocks per month for the roads of varying thickness as 60 mm, 80 mm & 100 mm in unipaver shape in grey cement shade and in red colour. It also makes lacquer coated 60 mm paver blocks for the footpaths for which its monthly production capacity is 5,000 sq. mtrs.

Importantly, all the above units have adequate infrastructure in terms of manpower, material handling equipment, machinery/equipment required for transportation of products to various sites, power connection and water. This enables mobilization of the finished products to the various sites in and around Mumbai in a very convenient manner. Couple of months ago company has bagged three projects to the tune of Rs 225 cr with two work orders for road and bridge construction in marine conditions at Thane and the third contract involves construction of flyover in Jaipur in consortium with Petron Engineering. With this, SIIL’s order book stands at more than Rs 600 cr. Further, company is exploring the possibility of new orders in the range of Rs. 500~800 cr from the Indian railways and also for building construction contracts from private sector players. To cater the increasing demand for RMC, company is contemplating to almost double its RMC capacity to 300 cum. per hour by adding two new RMC plants in Mumbai and other city.

After spending 25 years of focus on road, SIIL is now using its experience and expertise to enter into the entire gamut of infrastructure services. To begin with it is betting high on railway projects and real estate development. Recently, SIIL reported decent set of nos for the March’09 quarter. Its revenue zoomed up 180% to Rs 145 cr, whereas operating profit jumped up 85% to Rs 19.50 cr. However due to high interest cost and major tax provisioning in the last quarter, its report a decline of 15% in PAT to Rs 4.80 cr. Despite this, for the full fiscal its bottomline has increased by impressive 40% to Rs 27 cr on 145% higher sales of Rs 383 cr thereby posting an EPS of Rs 19.50 on current equity of Rs 13.90 cr. Thus scrip is currently trading at a P/E ratio of merely 3x times. On the dividend front company is expected to declare 20% for FY09 against 15% last year. To funds its working capital and other project cost, SIIL has decided to raise capital by issue of 20 lakh convertible warrants on preferential basis. Although company should have tried to place the shares at much higher price but it seems they may fix the conversion at Rs 40~50 per share which is quite low. During Oct’07 company had raised round about Rs 40 cr thru IPO route @ Rs 108 per share. Considering the market condition and other factors, investors are advised to accumulate this scrip at sharp declines to get 50% return within 12 months.

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