Union Budget 2010-11 Key Highlights

The key points to note are as follows:

Income-tax:

o Income-tax slabs revised – For general category, no tax upto Rs 1.6 lakh; 10% from Rs 1.6 lakh to Rs 5 lakh; 20% from Rs 5 lakh to Rs 8 lakh; 30% above Rs 8 lakh.

o Deduction of Rs 20,000 permissible over and above existing limit of Rs 1 lakh, for investment in infrastructure bonds.

o SARAL-II form for income-tax returns to be notified, for individual salaried taxpayers.

o Surcharge on domestic companies reduced to 7.5%; Minimum Alternate Tax (MAT) increased to 18%.

o Direct Tax code to be implemented from April 1, 2011.

Excise duty:

o Excise duty (on all non-petroleum products) increased from 8% to 10%.

o Excise duty on large cars, MUV, SUV increased to 22%.

o Duty on petrol and diesel increased by Re 1 per litre each.

o Excise duty impact increased on cigarettes, TVs, ACs, gold and silver.

· Service tax rate remains the same. New services to be brought in within the purview of service tax.

· GST to be implemented by April 2011.

· Govt to raise Rs 25,000 crore through disinvestment. Key companies to be divested are Oil India, NHPC, NTPC and REC.

· Nutrient based subsidy policy for fertilizer sector to be effective from April 1, 2010.

· Rs 1,73,552 crore allocated for infrastructure development; accounts for 46% of plan allocation.

· Fiscal deficit for BE 2010-11 at 5.5% of GDP; Revised estimates of 2009-10 peg fiscal deficit at 6.9%.

· Advance estimates for GDP growth for 2009-10 pegged at 7.2%.

Union Budget 2010

IPO Analysis ARSS Infrastructure Projects Ltd.

Registered Office AddressPlot No. 38, Sector –A, Zone- D, Mancheswar Industrial Estate, Bhubaneswar-751 010 (Orissa)Phone91-674-258 8554Fax91-674-258 5074Emailipo@arssgroup.inWebsitehttp://www.arssgroup.inIssue Open08-Feb-2010Issue Close11-Feb-2010Issue SizeRs. 10,300 LacsIssue TypeBook BuildingFace ValueRs.10/-Price RangeRs. 410/- to Rs. 450/-Tick SizeRe.1/-Market LotMinimum Order Qty15Listing Stock ExchangeBSE, NSERegistrar To The IssueBigshare Services Pvt. Ltd.Book Running Lead ManagersIDBI Capital Market Services Ltd., SBI Capital Markets Ltd. Analysis

Company Background

• ARSS Infrastructure Projects Ltd. (ARSS) was originally incorporated as ARSS Stones Private Ltd. in 2000. However, the company got converted into public limited company and the name changed to present in 2005.
• ARSS Infrastructure is one of the largest infrastructure companies in the eastern zone and is engaged in the business of construction of railway lines, highways, irrigation and building projects. ARSS has crusher plants at six locations in various districts of Orissa and necessary equipment required for quarrying and crushing granite stone to produce required sizes of rock products for railway track ballast or highway work or any other civil construction work.
• As on January 10, 2010, ARSS had an Order Book of Rs. 2,87,753.11 lacs which is 4.60 times of the FY09 sales. As on January 12, 2010 the composition of Order Book is as follows:

Particulars	Amount (Rs. lacs)	%
Railway work	1,18,414	41.15
Road work	1,16,405	40.45
Irrigation	7270	2.53
Other work	45,664	15.87
Total	2,87,753.11	100.00

• Clients of ARSS include Ministry of Railways, State Government of Orissa; Rail Vikas Nigam Ltd., RITES Ltd. Vendata, Nalco, Jindal Steel & Power, IRCON International Ltd., National Thermal Power Corporation, Hindustan Steel Corporation Ltd., PWD – Orissa, IOCL and the National Highway Authority of India.
• Some of the standalone and joint venture projects currently being executed include the Rs 208 crore Cuttak-Paradeep Road construction and widening project, Rs 261-crore rail infrastructure work for Jindal Steel & Power's Angul project, and construction of roadbed including minor & major bridges, facilities and general electrification works on the Haridaspur-Paradeep new broad-gauge (BG) line.
• Post issue promoter and promoter group’s shareholding will reduce to 54.43-55.24% from the current ownership of 65.32%.

IPO Grading / Rating CARE has assigned an IPO Grade 2 to ARSS’s IPO indicating below average fundamentals. CARE assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. Objects of the Issue

Sr. No.	Particulars	Fund Requirement (Rs. lacs)
1	Investment in joint ventures.	500
2	Funding long term working capital requirements	8,600
Total		10,300

Strength

• Project management expertise and track record The company has successfully executed over 86 projects involving construction of approximately 300 km of roads and highways, 200 km of rail tracks, 10 minor and major bridges and other general civil engineering works over the span of 9 years.
• Long-term relationship with reputed clients Majority of the contracts are received from Government, Public Sector Undertakings and other Government agencies, which reduces the risk of default and delayed payment. As on January 10, 2010 the percentage of work order from Government and Government entities was 87.50%. The client-oriented approach enables the company to receive repeat orders from them. As of January 10, 2010, 73% of Order Book comprised of repeat order. Clients from whom ARSS has received repeat orders include State Government of Orissa, Railways Department, Rail Vikas Nigam Ltd. and RITES.

Weakness

• ARSS had negative cash flows in recent fiscals

  (Rs. Lacs)

  Particulars	9 months period ending on December 2009	FY 2009	FY 2008
  Net cash from Operating Activities	(5382.22)	1,018.96	(1,643.46)
  Net cash from Investing Activities	(6997.43)	(7,421.77)	(5,428.92)

• Limited geographical diversification More than 54.28% of the Order Book as on January 10, 2010 and more than 44.26% of the revenues for FY09 are attributable to projects located in the State of Orissa. In the event that demand for infrastructure activities in general and roads / highways / bridges construction in particular, reduces or stops by any reason including political strife or instability or change in policies of State / Central Government, then the financial condition and results of operations will be materially and adversely affected.
• Pending litigations against the company and/or the promoters There are a number of pending litigations against the company and/or the promoters and group companies, including a criminal case.
• Some of the group companies have incurred a loss

  (Rs. Lacs)

  Particulars	FY 2009	FY 2008	FY 2007
  ARSS Engineering Ltd.	(0.09)	--	--
  ARSS Biofuel Private Ltd.	28.35	(8.78)	(21.71)

Financials The operating income of the company has grown from Rs. 2,957.77 lacs in FY05 to Rs. 62,437.52 lacs in FY09 at a CAGR of 84%. PAT has grown from Rs. 150.71 lacs in FY05 to Rs. 5,104.33 lacs in the in FY09 at a CAGR of 102%. The following table sets forth contract income of ARSS from different sections, i.e., road, railway and other projects for the periods.

(Rs. In lacs)

Particulars	FY 09		FY 08		FY 07
	Amount	%	Amount	%	Amount	%
Railway work	16,884.75	27.04	10195.75	32.50	7626.42	57.34
Road work	29,126.60	46.65	10479.51	33.41	3141.84	23.62
Irrigation	2,995.50	4.80	2122.53	6.77	-	-
Other work	13,430.68	21.51	8,569.30	27.32	2531.88	19.04
Total contract income	62,437.52	100.00	31,367.09	100.00	13300.14	100.00

For the period of 9 months ending on December 2009, the company had operating income and PAT of Rs 2,067.8 lacs and Rs 160.2 lacs.

Ratios

Particulars	FY09	FY08	FY07
EPS (Rs.)	40.66	21.35	9.47
Operating Profit Per Share (Rs.)	80.47	38.71	17.42
Book Value Per Share (Rs.)	118.17	78.68	27.45
Operating Margin (%)	16.17	15.49	14.13
Net Profit Margin (%)	8.12	8.49	7.64
Return On Net Worth (%)	34.41	27.14	34.55
Long Term Debt / Equity	1.50	0.99	1.28
Fixed Assets Turnover Ratio	3.87	3.63	4.22
Current Ratio	2.59	2.29	3.90
Inventory Turnover Ratio	3.32	5.04	18.15
Financial Charges Coverage Ratio	3.88	5.32	5.23

Valuation ARSS’s shares are offered at a price band of Rs. 410 to Rs. 450 per share. Post issue the P/E of the company comes out to 9.25x at the lower price band and 10x at the upper price band. Peer Analysis (results of 9 months period ending on December 2009)

Particulars	Pratibha Industries	C C C Ltd	Tantia Constructions	Simplex Projects	ARSS
Sales (Rs Lacs)	66,298.91	131,378.46	34,606.94	27,628.31	60,525.73
PAT (Rs Lacs)	3,559.00	5,995.30	1,684.29	2,025.52	5,008.53
OPM	13.65%	8.42%	14.36%	11.93%	12.96%
NPM	5.37%	4.56%	4.87%	7.33%	8.28%
P/BV (Times)	2.30	3.14	1.95	1.95	3.11-3.37+
TTM PE (Times)	11.51	20.61	8.21	13.75	9.25-10*

+Post issue *Based on post issue annualized EPS of 9 months period December 2009

IPO Analysis Hathway Cable & Datacom Ltd.

Registered Office Address
Rahejas, 4th Floor, Corner of Main Avenue & V. P. Road, Santa Cruz (West), Mumbai-400054

Phone
+91-022-26001306
Fax
+91-022-26001307

Email
info@hathway.net.
Website
http://www.hathway.com

Issue Open
09-Feb-2010
Issue Close
11-Feb-2010

Issue Size
2,77,50,000 Equity Shares
Issue Type
Book Building

Face Value
Rs. 10
Price Range
Rs. 240/- to Rs. 265/-

Tick Size
Re. 1
Market Lot
25

Minimum Order Qty
25
Listing Stock Exchange
NSE, Mumbai

Registrar To The Issue
Link Intime India Pvt Ltd.

Book Running Lead Managers
Kotak Mahindra Capital Company Ltd., Morgan Stanley India Company Pvt Ltd., UBS Securities India Pvt Ltd.

Market Analysis

Technical Analysis

Nifty tested the crucial 4,700 support level last week after undergoing consolidation for the initial trading sessions. However, it ended the week on a positive note by rebounding from the 4,700 support level and closing above this crucial mark. In the coming week, Nifty is expected to continue its upward move as per the technical indicators. Its RSI has rebounded from the 30 levels and the MACD is about to give a buy signal by crossing above the signal line. Stocks to Watch: 1) Hindalco - Buy 2) United Phosphorus - Buy

Indian Equity Market

Indian benchmarks wrapped the week on a pessimistic note tracking hefty sell-off in equities worldwide on account of fiscal woes in Europe. Sensex and Nifty dropped by over 2.5% to close at 15, 915.65 and 4,757.25 respectively. For week ahead, investors might remain cautious eyeing on any further development on the global front. Market will also await the release of advance estimates of GDP growth for 2009-10.

Global Equity Markets

Global equity market fell during the week as concerns over job market and spreading European credit issues weighed on the markets. The European Central Bank and Bank of England kept interest rates at record lows as financial markets looked for guidance on growing euro-zone debt problems. Also, automotive giant Toyota Motor remained in focus amid its recent recall woes.

Debt Market

The yields on most traded 6.35% CG 2020 bond hardened during the week on concerns of excess supplies after RBI governor said that government borrowing in the next fiscal may exceed this year's record level. The 10-year benchmark bond didn't witness trading on two of five days during the previous week. Further, volumes were too low on other days due to auction of Rs 13,824.23 crore bonds from State governments and RBI.