CaseStudy-04

Case Study - 04

Industry
Activity
About the Company Challenges Faced by the Company
Transaction Target
VGro Assignment
Result
Summary of the Transaction

Industry

Services [EPC Contractor]

Activity

Civil Construction

About the Company

It’s a 30-years-old company, managed by the second generation. The company is involved in civil contracting for State and Central Government projects, as well as project exports funded by the Indian Government.

Challenges Faced by the Company

The company had been enjoying working capital facilities from a traditional PSU lender for more than 25 years under a sole banking arrangement with 100% plus security cover for limits exceeding 100 crores.

Transaction Target

To advise on additional fund raise with the available securities and to release the securities to be settled under family partition.

VGro Assignment

To onboard multiple banking facility with better sanction terms.

Phase I : Release of few PGs and securities by reducing the limits.
Phase II: Advising and raising additional limits from released securities.
Phase III: Consolidation of Banking with additional facility [5 to 3 lenders]
Phase IV: Additional limits for project exports.

Result

With the permission of the company, VGro approached their existing lender for the first refusal, but the bank did not agree to the same. VGRO proposed the client that takeover will not encourage the new lenders to release the BG nor the 3 rd party securities, instead we will do the partial reduction of limits stage wise and will release the collaterals to the extent of limits reduced post that with the released securities additional exposure will be arranged from the new lenders. Thus, the only way out was to gradually reduce the limits from the existing lender and request the release of securities by bringing in a new lender. This process went smoothly; VGro brought in a project-specific lender and successfully released the properties and waived the PGs.

However, considering the growth opportunities of the company and the promoters' vision to expand in export orders, the company needed SBLC limits. VGro planned wisely and brought in two new private lenders who could offer SBLC at better terms, thereby replacing the existing traditional lenders.

Now, the company has onboarded 4 lenders, comprising two private and two prime PSU lenders.

Summary of the Transaction

VGro played an effective problem-solving and corporate advisory role for a 30-year-old company. The collateral securities offered by the company were streamlined over a period to secure higher limits with the addition of new banks and the release of third-party collaterals. VGro further assisted with the induction of new bankers, both private and PSU banks, to meet the requirement of SBLC limits for the company's export orders.

Additionally, VGro advised the company to attain an investible grade ECR from a top-notch rating agency.

Case Study

CASE STUDY 1

VGRO facilitated the procurement of ₹250 Crore in working capital limits from a leading bank for a renowned South Indian conglomerate's civil engineering firm, unlocking cash margins and ensuring seamless project execution for government contracts.

CASE STUDY 2

VGro facilitated the transition of a 50-year-old EPC company from sole to multiple banking arrangements, securing over ₹650 Crore in working capital limits and an "A" credit rating, enabling participation in high-value projects and projecting revenues of ₹1,400 Crore in FY25.

CASE STUDY 3

VGro facilitated the transformation of a 15-year-old family-run civil contracting firm, led by two brothers and partners, from low-value projects to high-value endeavors by securing project- specific working capital limits and subsequently amplifying them to ₹60 crore, catalyzing a revenue surge to ₹200+ Crore in FY24.

CASE STUDY 4

VGro facilitated the gradual reduction of limits with the existing lender, enabling the release of collaterals for new lenders, ultimately onboarding four lenders, including private and PSU banks, to secure higher limits and SBLC facilities for a 30-year- old civil contracting company.

CASE STUDY 5

VGro facilitated the onboarding of banking channels without collateral security for a 30-year leader in auto finance, securing ₹25 crore limits from a private and PSU lender. This assistance led a 40+ year-old NBFC to double its AUM from ₹48+ crore to ₹100+ crore by resolving overdue/security issues and obtaining facilities from both private and PSU bankers.

CASE STUDY 6

VGro facilitated structured finance of over 100 Crore for a startup warehouse construction company, leveraging the promoter's real estate expertise, without requiring collateral. Through strategic planning and research, VGro secured initial disbursement of ₹30 Crore, enabling progress toward the project's completion.

CASE STUDY 7

VGRO facilitated fund acquisition under MBA, enabling a leading system integrator to reduce banking costs and collateral requirements. By closing the Consortium limit and transitioning to MBA, the company achieved lower interest rates, decreased BG margins, and improved ROE, while completing security perfection and reducing interest burden.

CASE STUDY 8

VGRO facilitated funds for a leading psychiatric hospital's expansion from 67 to 180 beds, overcoming challenges of non-conventional industry and new lender reluctance. Additionally, VGRO assisted in securing margin money for the promoter individually, after a two- year pursuit for project funding.

CASE STUDY 9

VGRO facilitated reduced BG margin from 25% to 15% and collateral coverage from 50% to 35% for a civil construction company, saving nearly 5 Crores in BG margin while reducing ROI and BG commission. Despite a 15-month struggle for additional working capital, VGRO enabled smoother project execution, alleviating cash crunch concerns.