SRM Contractors Limited IPO – Get Date, Price, Review and Details

In this article, we will dicuss:

• About the company
• Objects of the Offer
• Key Strengths and Opportunities
• Risks
• Financial Snapshot

Incorporated in 2008, SRM Contractors Limited is an engineering construction and development company engaged primarily in the construction of roads (including bridges), tunnels, slope stabilisation works and other miscellaneous civil construction activities in the Union Territories of Jammu & Kashmir and Ladakh. It undertakes construction works both as an EPC contractor and on an item rate basis for infrastructure projects. The company also undertakes sub-contracting assignments of infrastructure construction projects.

Since incorporation, the Company, independently and through project-specific joint ventures, has completed thirty-eight (38) infrastructure construction projects having an aggregate contract value of ₹1,41,165.62 lakhs which includes thirty-two (32) roads projects, three (3) tunnel projects, one (1) slope stabilisation works and two (2) other miscellaneous civil construction activities.

Objects of the Offer:

The company intends to utilize the net proceeds from the fresh issue towards the following objects:

• Funding capital expenditure requirements for the purchase of equipment/machineries;
• Full or part repayment and/or prepayment of certain outstanding secured borrowings availed by the Company;
• Funding the working capital requirements of the Company;
• Investment in Project Specific Joint Venture Projects; and
• General Corporate Purposes.

Key Strengths and Opportunities:

• Proven track record of efficient execution of roads, tunnels and slope stabilisation works in the difficult terrain of union territory of Jammu and Kashmir: SRM Contractors Ltd. is an engineering construction and development company engaged in construction of road (including bridges), tunnels, slope stabilization works and other civil construction activities in the difficult terrain of Union Territories of Jammu & Kashmir and Ladakh. It has also been awadred with a contract for slope stabilization work in the state of Uttrakhand. The company has a proven track record of successful execution of road, tunnel projects and slope stabilization work in the difficult terrain of Jammu and Kashmir and Ladakh. As on January 31, 2024, it has completed thirty-eight (38) projects having an aggregate contract value of ₹1,41,165.62 Lakhs which includes thirty-two (32) roads projects, three (3) tunnel projects, one (1) slope stabilisation works and two (2) other miscellaneous civil construction activities.
  
  
• Business model of selecting and clustering of our projects in the union territories of Jammu & Kashmir and Ladakh: The company’s growth is largely attributable to our business model of focusing, selecting and clustering of our projects in the Union Territory of Jammu and Kashmir and Ladakh. This model has facilitated it with maximum efficiency and profitability as it leverages its expertise and know-how to undertake infrastructure construction projects in the difficult terrain of the Union Territory of Jammu and Kashmir which provides it the competitive advantage. It carefully selects its contracts, usually with a focus on EPC projects, by taking into consideration key factors such as the potential for project clustering.
  
  
• Continuous Focus on equipment ownership: Equipment asset management is a critical element of timely delivery of quality infrastructure development and construction projects. SRM Contractors own a large fleet of sophisticated construction equipment which enables it to be less dependent on third party equipment providers and to efficiently manage its project execution schedules. It also provides a competitive advantage over other infrastructure development and construction companies that outsource their construction activities to external contractors. Easy access to and high availability of its modern equipment fleet has enabled it to undertake complex and challenging projects and complete its projects efficiently and profitably.
  
  
• Experienced Promoters with strong management team: The promoters of the company have more than 14 years of experience in the construction industry with strong operational knowledge, good relationships with the clients and a successful track record of executing infrastructure projects. The key management and senior management team includes qualified, experienced and skilled professionals who possess requisite experience across various division of our business. The stability of its management team and the industry experience brought on by our individual promoters will enable it to continue to take advantage of future market opportunities.

Risks:

• The business of SRM Contractors Ltd. is concentrated in the Union Territory of Jammu & Kashmir and Ladakh. The concentration of its business exposes it to various risks, including but not limited to regional civil unrest, political instability, regional militancy and terrorism, regional slowdown in construction activities or reduction in infrastructure projects, vulnerability to change in laws, policies and regulations of the political and economic environment, interruptions on account of adverse climatic conditions, etc.  The concentration of its operations in the Union Territory of Jammu & Kashmir and Ladakh may adversely affect its business prospects, financial conditions and results of operations.
  
  
• SRM Contractors revenue is majorly concentrated from projects undertaken or awarded by government authorities in Union Territory of Jammu & Kashmir and Ladakh. Any adverse changes in the central or policies in the Union Territory of Jammu & Kashmir and Ladakh may lead to its contracts being foreclosed, terminated, restructured or renegotiated, which may have a material effect on the business and results of operations.
  
  
• The company derives a significant portion of its revenues from a limited number of clients. It derives nearly 81% and 98% revenue from its top 5 and top 10 clients respectively. The loss of any significant clients may have an adverse effect on the business, financial condition, results of operations, and prospects.
  
  
• The business of SRM Contractors is working capital intensive involving relatively long implementation periods and requires substantial financing for the business operations. The indebtedness and the conditions and restrictions imposed on the company via its financing arrangements could adversely affect the ability to conduct its business.

Financial Snapshot: