Sunday, January 24, 2010

Vascon Engineers IPO

Vascon Engineers IPO to open on Jan 27:

Vascon Engineers, an engineering, procurement and construction (EPC) services and real estate development company, is entering the capital market on January 27, 2010, with an initial public offering (IPO) of 10,800,000 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process.

The price band has been fixed between Rs 165 and Rs 185 per equity share. Bids can be made for a minimum of 35 equity shares and in multiples of 35 equity shares thereafter. The issue will close on January 29, 2010.

The issue would constitute 11.95% of the fully diluted post issue paid-up capital of the company and the net issue would constitute 11.84% of the fully diluted post issue paid-up capital of the company.

Promoters' shareholding will be reduced to 38.41% post issue, which includes 13.19% stake of R Vasudevan and Lalitha Vasudevan.

For the year ended March 31, 2009, the company has reported net profit of Rs 31.27 crore on total income of Rs 524.76 crore.

The issue proceeds will be used for construction of EPC contracts & real estate development projects; repayment of debt and general corporate purposes.

CRISIL has assigned IPO Grade 3/5 to the IPO of Vascon Engineers. This grade indicates that the fundamentals of the issue are average relative to other listed equity securities in India.

The book running lead managers to the issue are Kotak Mahindra Capital Company Limited and Enam Securities Private Limited.

Vascon Engineers IPO: Avoid

Premium valuations, and high dependence on related parties for contract revenues make this offer unattractive.
Investors can avoid the initial public offer of Vascon Engineers, a provider of EPC services, for now. Despite a good track record in construction, premium valuations, dependence on related parties for a bulk of the future contract revenues and long gestation of its real-estate projects support our recommendation. At the offer price band of Rs 165-185, the stock is likely to trade at 32-35 times its consolidated annualised earnings for FY-10 on a post-issue equity base. The valuation does appear steep, irrespective of whether it is compared with pure construction contract plays or stocks of established realty companies.

Scaling up of real-estate revenues, winning of significant contracts from external clients or a steep correction in the stock price linked to broader markets can be reasons to take a re-look at this recommendation.

Long drawn:

Vascon Willows Phase2
3 BHK & 3.5 BHK Flats at Baner Balewadi Pune:

Read More:

Vascon Forest Hill: Forest County Phase 1
2 BHK, 3.5 BHK & 4.5 BHK Flats at Kharadi Pune:

Read More:

Vascon Vista
2 BHK, 3 BHK & 3.5 BHK Flats at Indiranagar Nashik:

Read More:

Vascon's projects also appear long-term in nature. For instance, only one-fifth of the EPC projects (external and own projects together) of Rs 3,227 crore are slated for completion over 2010/11. Similarly, of the 55 million square ft. of real-estate projects planned/being developed, less than 10 per cent are due for completion over the next three years ending FY-13. Earnings growth in the near term may, therefore, not keep pace with the valuations sought now.

Further, unlike the Mumbai commercial market, where prices have seen a quick revival, Tier-II cities such as Pune, where the company's commercial projects are concentrated, have not seen any clear demand pick-up as yet. Over the long term though, residential projects, a chunk of it in Pune, dominate the portfolio.

To read more, please, visit Vidya Bala - The Hindu Business Line

Related Stories:

1) Thursday, September 6, 2007
Vascon Engineers, Pune, plans to raise Rs 450 cr via IPO

2) Friday, October 30, 2009
Vascon bags Rs 200 crore HDIL contract

3) Thursday, September 6, 2007
Vascon Engineers, Pune, will invest more than Rs. 600 crore in Coimbatore in a joint venture with the Pricol Property Development

Residential-cum-Commercial Project:

4) Tuesday, January 19, 2010
Most popular blogs of the week - 11Th to 18Th January 2010

5) Wednesday, January 13, 2010
Most popular blogs of the week - 4Th to 11Th January 2010

6) Friday, January 1, 2010
December 2009 - Top 10 popular blogs on Ravi Karandeekar's Pune Real Estate Market News Blog

Top Content - According to Google Analytics:

7) Saturday, January 2, 2010
Ravi Karandeekar's Pune Real Estate Market News Blog - 50 popular blogs of 2009

3,77,132 Thank Yous!

Subscribe for Free!

To receive free emails or free RSS feeds, please, subscribe to Ravi Karandeekar's Pune Real Estate Market News Blog

For my blogs on real estate projects near Hinjewadi, real estate investment, advertising and other related topics, please, visit and join my Ravi Karandeekar's Pune Real Estate Blog Group


  1. Dont Purchase flat in Pune

  2. Hi Ravi

    I wanted to know how Vascon is treating its Pune Customers.

    I am customer at Phase-1 of Vascon Vista Project at Nashik.

    While the overall layout and amenities are good, except for the cracks all over the flats and the floor tiles which came out in many flats, the conduct of Vascon and reponse to complaints is highly disturbing.

    It has collected the corpus fund of Rs 1.76 crores from the flat owners and has shown a total expenses of Rs 45 lacs for just 1.5 years as against interest earning of only 8 lacs. It delayed the first general meeting of the flat owners by 1.5 years. They have raised maintenance bills from 01/04/2012, but first general meeting was held on 09/12/2013. Most of the emails sent to them are unanswered until followed up a lot. Till date they have not even shared the full list of flat owners with contact details to the 9 member provisional committee elected on 09/12/2013 in the first general meeting. They have refused to provide accounts for scrutiny and now disconnecting the services like intercom. They have not asnwered to our 3 letters asking a detailed information regarding the project, flat owners, fund collection, title documents, expense details etc.

    They have sent me maintenance bill since 01/04/2011, whereas I have purchased the flat directly from Vascon in March 2013.
    They have defaulted on the Corporation tax payments for year 2011-12 for more than 1.5 years. There was no information provided on the tax payment when I followed up but after I sent an email to the Dy. Commissioner of Nashik municipal corporation, they claim that they have paid tax. I have not been given a receipt copy for the same and i am unable

    They are avoiding accountability. In fact on 16/02/2013, their staff misbehaved with me and refused to give me information when I went to their office as elected representative to veify the accounts as earlier agreed with Vascon's manager Mr. Vijay Chavhan. They only kept voucher files in front of me, while we had provided a detailed list of the registers, other documents required for audit since December. They refused to part with the detailed information on date wise corpus fund collection, investment, maintenance expense bugeting etc. Since they did not give me documents, I packed my laptop and wanted to leave. Just then two other flat owner committee members joined us. While I narrated why I was leaving, the staff again misbehaved and actually tried to attack me.

    Email sent to the CMD Mr. Vasudevan on 19/02/2013 regarding this behaviour is un-answered.

    We have dozens of pages of communication sent to vascon. In their limited response, they show that their intention is not to explain the facts to the customers and to provide the required information, but to avoid all answers and escape scrutiny.