VASCON ENGINEERS Ltd.

An introduction to companys business, strength & strategy

PRESENTED BY:
Kunal mandalaywala, CP0712 Akansha Rathi, CP1012 Shridhar Nayak, CP0812 Arpana Roy, CP1112 Arjun Patel, CP0912 Romil Sagar, CP1212

OVERVIEW
VASCON are an engineering, procurement and construction services and real estate development company with operations in a number of states and union territories in India. According to a survey conducted by the Construction World publication in June 2007, they are among the top ten builders in India, based on parameters such as size, brand or image, quality of construction, goodwill, innovative product offerings, social obligations and commitments, use of technology and best business practices. They provide EPC services and develop real estate directly or indirectly through our Subsidiaries and the Other Development Entities. Subsidiaries and the Other Development Entities engage Company to provide EPC services for the development of their projects and Company also provides EPC services independently to third parties

OVERVIEW
MISSION: They believe in providing high quality and innovative projects on a timely basis. The Company commenced operations primarily as an EPC services company in 1986. Operations span across all aspects of real estate development, from identification and acquisition of land to providing EPC services and sales and marketing of their projects to operation of their completed projects .

OVERVIEW
As of December 31, 2009, they had completed an aggregate of 181 EPC Contracts, with a total contract value of Rs. 8,888.70 million. Third party EPC clients include well-known Indian and multi-national companies such as Cipla Limited, Kirloskar Brothers Limited and Symbiosis. For the six months period ended September 30, 2009, they had consolidated total income of Rs. 3,620.39 million and consolidated net profit, as restated, of Rs. 232.31 million and for the fiscal year 2009, they had consolidated total income of Rs. 5,247.57 million and consolidated net profit, as restated, of Rs. 306.41 million.

Strengths:
1. Significant experience and strong track record. 2. Diversified portfolio of business and diverse revenue streams. 3. Quality and strength of execution. 4. Emphasis on innovative and theme based developments. 5. Qualified and proven project teams and experienced management. 6. Established brand name. 7. Effective development structure to optimise resources.

Strategy:
1. Diversify geographically into new locations. 2. Optimise business mix. 3. Continue to grow our real estate development projects. 4. Maintain and upgrade high standards of quality and reliability.

PRESENTATION OVERVIEW
SUMMARY OF BUSINESS, STRENGTHS AND STRATEGY SUMMARY FINANCIAL INFORMATION THE ISSUE GENERAL INFORMATION CAPITAL STRUCTURE OBJECTS OF THE ISSUE BASIS FOR ISSUE PRICE STATEMENT OF TAX BENEFITS

22-Aug-13

VASCON ENGINEERS LTD.

SUMMARY FINANCIAL INFORMATION

Financial year ends on 31st March. They have given consolidated as well as unconsolidated financial statements.

Financial statement

22-Aug-13

VASCON ENGINEERS LTD.

EQUITY SHARE OFFERED:

Issued by the company:1,08,00,000

Employee reservation :1,00,000
QIB Portion 64,20,000 Non- institutional portion 10,70,000

Net issue : 1,07,00,000

Retail portion 32,10,000

General information:
They were originally incorporated on January 1, 1986 as a private limited company under the provisions of the Companies Act, 1956 as Vascon Engineers Private Limited. They became a deemed public company by virtue of Section 43A of the Companies Act with effect from August 25, 1997 and were renamed as Vascon Engineers Limited. Consequent to the amendment of Section 43A of the Companies Act, became a private limited company with effect from January 16, 2001. Pursuant to a resolution of shareholders on December 7, 2006, they were converted to a public limited company with effect from December 7, 2006. Company Identification Number: U70100MH1986PLC038511

Board of director of the issuer:

R. Vasudevan Managing Director and Non-Independent K.G. Krishnamurthy Non-Executive Director and Non-Independent Nominee director of HDFC Ventures Trustee Company Limited acting in its capacity of trustee of HDFC Property Fund V. Mohan Chairman and Independent director Ameet Hariani Non-Executive Director and Non-Independent R. Kannan Independent Director

 Refund Banker
HDFC Bank
5th, Atur Chambers, Moledina Road, Campus, Pune

Bankers to the Company

HDFC Bank Limited
HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013

State Bank of India

Industrial Finance Br., Pune, Tara Chambers, Mumbai-Pune Road, Pune 411 003

Auditors
Anand Mehta & Associates
Chartered Accountants Mulratna, First Floor, 334, Narshi Natha Street, Masjid (West), Mumbai 400 009

 Monitoring Agency
There is no requirement for a monitoring agency for the Issue pursuant to Regulation 16 of the SEBI ICDR Regulations.

IPO Grading Agency

CRISIL Limited
1061, Solitaire Corporate Park, 151 Andheri Kurla Road, Andheri (E), Mumbai 400093

List of Responsibilities between the Book Running Lead Managers

 Even if many of these activities will be handled by other intermediaries, the BRLMs shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the Company.

 Credit Rating
As this is an Issue of Equity Shares, there is no credit rating for this Issue.

IPO Grading
This Issue has been graded by CRISIL Limited and has been assigned a grade of 3 out of a maximum of 5, indicating average fundamentals. The IPO Grading is assigned on a five point scale from 1 to 5, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicating poor undamentals.

 Trustees
As this is an Issue of Equity Shares, the appointment of Trustees is not required.

Project Appraisal
There is no project being appraised.

Book Building Process

Book Building Process refers to the process of collection of Bids, on the basis of the Red Herring Prospectus within the Price Band. The Issue Price is fixed after the Bid Closing Date.

 The principal parties involved in the Book Building Process are:

(a) Our Company; (b) Book Running Lead Managers; (c) Syndicate Members who are intermediaries registered with SEBI or registered as brokers with the Stock Exchanges and eligible to act as underwriters. Syndicate Members are appointed by the BRLMs; (d) Registrar to the Issue; and (e) Escrow Collection Banks.

The Book Building Process is subject to change from time to time and the investors are advised to make their own judgment about investment through this process prior to making a Bid in the Issue.

 Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs. 24 per equity share, issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the bidding centers during the bidding period. The illustrative book below shows the demand for the equity shares of the issuer company at various prices and is collated from bids received from various investors.

CAPITAL STRUCTURE

Changes in the Authorised Share Capital of our Company since Incorporation

 This Issue has been authorized by a resolution of our Board of Directors dated August 27, 2009 and a resolution of our shareholders dated September 22, 2009. The Equity Share capital of our Company after the Issue, assuming full exercise of all outstanding options which have been vested and are yet to be exercised i.e. 333,500 options, under the ESOP 2007,will comprise 90,349,550 Equity Shares.

 The RBI has by a letter dated December 18, 2007 permitted FIIs to subscribe to the present Issue under the portfolio investment scheme in terms of Regulation 1(5) of Schedule 2 to RBI notification no FEMA 20/2000- RB dated May 3, 2000. However it provided that FII investments in any pre-ipo placement would be treated on par with FDI and will have to comply with the guidelines for such FDI such as minimum capitalisation norms and lock in-period and other conditions prescribed vide Press Note 2 (2005) Series.

Requirement and Sources of Funds

Means of finance
The fund requirement and deployment is based on internal management estimates and has not been appraised by any bank or financial institution. The fund requirement below is based on our current business plan. In view of the highly competitive and dynamic nature of the industry in which we operate, we may have to revise our business plan from time to time. Company may also reallocate expenditure to newer projects or those with earlier completion dates in case of delays in our existing projects. Consequently, companys fund requirement may also change accordingly. Any change in companys plans may require rescheduling of our expenditure programs, starting projects which are not currently planned, discontinuing projects currently planned and an increase or decrease in the expenditure for a particular project at the discretion of the management of Company. The objects as mentioned above will be financed from the Net proceeds of the Issue. The remaining balance and in case of any variations in the actual utilization of funds earmarked for the activities set forth below, increased fund deployment for a particular activity will be met from internal accruals of Company. The balance proceeds of the Issue, if any, will be used for growth opportunities and general corporate purposes.

The details of shares to be locked-in for one year are given below

In terms of Regulation 40 of the SEBI ICDR Regulations

The Equity Shares held by persons other than the Promoters prior to the Issue may be transferred to any other person holding the Equity Shares of our Company which are locked-in as per Regulation 37, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable. Equity Shares held by the Promoters may be transferred to and among the Promoter Group or to a new promoter or persons in control of our Company which are locked-in as per Regulation 36, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as applicable.

Top Ten Shareholders

Shareholder HDFC Ventures Dreamz Impex R.Vasudevan* DNA Pharma Premratan Exports Medicreams India Orion Lifesciences Vatsalya Enterprises Lalitha Vasudevan HDFC Ventures Golden Temple Pharma Dreamz Impex DNA Pharma % of share % of Shares 14.66 %Temple Pharma Golden 12.35 % R.Vasudevan* 12.35 % Exports Premratan

Medicreams India
Vatsalya Enterprises

8% 7%
9% 9% 11%

3%

Orion % Lifesciences 11.71 Lalitha Vasudevan 11.32 %

8.4215% % 8.42 % 7.72 % 6.60 % 13% 12% 3.33 % 13%

 Neither the Company, the Promoters, the Directors nor the BRLMs have entered into any buy-back and/or standby arrangements for the purchase of Equity Shares from any person. Except as disclosed in this Red Herring prospectus, there will be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from submission of this Red Herring Prospectus with SEBI until the Equity Shares to be issued pursuant to the Issue have been listed.

 We have not issued any Equity Shares out of revaluation reserves or for consideration other than cash other than the Equity Shares issued through a bonus issue, which was from the free reserves of our Company. The Equity Shares held by our Promoters are not subject to any pledge Over-subscription to the extent of 10% of the Issue can be retained for the purpose of rounding off while finalising the basis of Allotment.

 Our Promoters and members of our Promoter Group will not participate in the Issue. There will be only one denomination of Equity Shares unless otherwise permitted by law and the Company shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time. The Equity Shares will be fully paid up at the time of allotment failing which no allotment shall be made.

OBJECTS OF THE ISSUE

The objects of the Issue are to raise funds for: a. Construction of our EPC contracts and real estate development projects b. Repayment of debt c. General corporate purposes and d. Achieve the benefits of listing on the Stock Exchanges

Details of the Object

Construction of our EPC contracts and real estate development projects

We are engaged in construction of our EPC contracts and real estate development projects and intend to deploy Rs. 1,150.00 million

Zenith Project
They propose to deploy Rs. 900.00 million of the net proceeds of the Issue towards meeting construction costs of Zenith Project at Pune, Maharashtra involving construction of a mall. The total amount we intend to deploy for the construction of the project is Rs. 1035.00 million of which Rs. 39.90 million is already incurred.

Details about the land acquisition of the Project

The Company had entered into a joint venture agreement dated February 2, 2005 and the addendum agreement dated August 10, 2006 with Sumangal Enterprises, a partnership firm, Zenith Ventures to jointly acquire the development rights for development of certain lands located at Kharadi, Pune. Under the terms of the addendum agreement, Sumangal Enterprises is entitled to 42.5% of the gross sale proceeds of the shops in the mall to be sold or leased, upon construction. The amount so arrived at will be assumed to be inclusive of the capital contribution made by Sumangal Enterprises for the purchase of the said land. The Company will be entitled to the profit arrived after deducting expenses including statutory liabilities, payment relating to the project and fixed share of profit of Sumangal Enterprises.

Details about the land acquisition of the Project

Zenith Ventures has entered into a development agreement dated November 8, 2005 with Dr. Vijay Tatyarao Dangat, the owner of the land, Ganaraj Developers, a partnership firm, and Suyash Realtors Private Limited as the consenting parties to whom development rights were transferred by the owners, for the development of land admeasuring 3.63 acres located at Kharadi, Pune. Under the said agreement, Dr. Vijay Tatyarao Dangat has transferred development rights in the said property to Zenith Ventures for a lump sum consideration payable to the owner and the consenting parties. As per the work order dated August 8, 2009, Zenith Ventures awarded the contract for construction of the Zenith Project to our Company.

Details of the Cost of the Project

The breakdown of the internal estimated construction cost of the Zenith project is as follows:

Nucleus Belgaum project

We propose to deploy Rs. 250.00 million of the net proceeds of the Issue towards meeting the development and construction costs of our Nucleus Belgaum project at Belgaum, Karnataka involving construction of a mall. The total amount we intend to deploy towards development and construction of the project is Rs. 330.00 million which is excluding the cost of land, which has already been acquired.

Details of the Cost of the Project

Repayment of the loan taken

We have entered into a loan agreement dated November 28, 2008 with Housing Development Finance Corporation Limited under which they are allowed to borrow up to Rs. 500.00 million with an interest payable, at the rate of 14.25% per annum, which is set in accordance with the prevailing HDFC CLPR rate. As on December 31, 2009 the principal outstanding is Rs. 411.68 million. We intend to repay up to Rs. 396.28 million from the Net Proceeds of the Issue during the Fiscal year 2010.

Issue related expenses

The expenses of this Issue include, among others, underwriting and management fees, printing and distribution expenses, legal fees, statutory advertisement expenses, IPO grading expenses and listing fees.

BASIS FOR ISSUE PRICE

The Issue Price will be determined by us in consultation with the BRLMs on the basis of the demand from investors for the Equity Shares through the Book-Building Process. The face value of the Equity Shares is Rs. 10 and the Issue Price is X times the face value at the lower end of the Price Band and X times the face value at the higher end of the Price Band.

BASIS FOR ISSUE PRICE

Qualitative factors:
Significant experience and strong track record; Quality and strength of execution; Emphasis on innovative and theme-based developments; Qualified and proven project teams and experienced management; and Effective development structure to optimize resources.

BASIS FOR ISSUE PRICE

Quantitative factors: The information presented below relating to the Company is based on the restated unconsolidated financial statements of the Company for the six month period ended September 30, 2009 and Fiscal 2009, 2008, 2007 and restated consolidated financial statements of the Company for the six month period ended September 30, 2009 and Fiscal 2009, 2008 and 2007 prepared in accordance with Indian GAAP.

BASIS FOR ISSUE PRICE

Some of the quantitative factors are:
1. Basic and Diluted Earnings per Share (EPS) as per Accounting Standard 20

BASIS FOR ISSUE PRICE

2. Price Earning Ratio (P/E) in relation to the Issue Price of Rs. X per share of Rs. 10 each a. P/E ratio in relation to the Floor Price : X times b. P/E ratio in relation to the Cap Price : X times c. P/E based on EPS for the year ended March 31, 2009 : X times d. P/E based on Weighted average EPS : X times e. Industry P/E* i. Highest :391.2 ii. Lowest : 2.8
iii. Industry Composite : 38.5

* P/E based on trailing twelve month earnings for the entire construction sector

BASIS FOR ISSUE PRICE

3. Average Return on Networth (RoNW)

BASIS FOR ISSUE PRICE

4. Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue EPS for the year ended March 31, 2009 is X 5. Net Asset Value

BASIS FOR ISSUE PRICE

6. Comparison with other listed companies EPS (Rs.) P/E