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VKS Projects IPO: CRISIL’s rating speaks enough!
29 Jun 2012, 11:24 AM
By VS Fernando, IPO Analyst at India Aarthik Research

VKS Projects: CRISILs rating speaks enough!



Concerns

-Promoters new to investors and non-dividend paying company asking for a hefty share premium

-Yet to place orders for the entire construction equipment and key machinery aggregating to Rs.22.64 crore and yet to identify the office spaces estimated to cost Rs.10 cr

-Negative cash flows from operations for the past five years

-Low order book constraints revenue visibility and the company is unable to win large repeat orders

-Exposed to high concentration risk as orders from two new clients reportedly accounted for 97% of the order book.

-Shifting away from core competency - large portion of order book related to civil constructions

-Largely promoter-driven company and dependence on promoter-director is very high

-CEO does not have any experience in construction or engineering activity

-Co-promoter (main promoters wife) is reportedly not actively involved in the business and lacks technical experience yet draws unjustifiable remuneration from the company

-Promoters cost of holding is less than one-sixth of the IPO price

-Pathetic track record of the IPOs handled by the investment banker

 
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