EMS Ltd. will use the proceeds from its recently announced qualified institutional placement to fund its working capital requirements, said the company's Founder and Managing Director, Ashish Tomar.
The water and sewage infrastructure company's board, on Sept. 19, approved a proposal to raise funds of up to Rs 400 crore at a face value of Rs 10 per share through a QIP.
Speaking to NDTV Profit, Tomar said that a sharp spike in the company's turnover created a need for the QIP.
“We plan to use the proceeds as working capital. The fundraising was needed because of an unexpected growth we experienced in the last financial year from almost Rs 450 crore to a turnover of around Rs 720 crore and further this year also we expect a growth of 30%,” he said.
Tomar added that the company experienced a working capital crunch because of the nature of its business.
“The nature of our business is such that 10–15% of our working capital is stuck with the employer as retention, which is government bodies in our case. To fund growth and encash opportunities in the market, we will have to raise this capital,” he said.
The top executive claimed that the company is nearly debt-free and the only debt of Rs 50 crore was raised for funding a hybrid annuity mode project.
The New Delhi-based EPC company recently secured an order worth Rs 681.49 crore from the Kolkata Municipal Corp. for undertaking pollution abatement work for rejuvenating the Adi Ganga Project.
Talking about the project, Ashish Tomar said that it will be completed in a single phase over the next three years.
“Currently our bidding pipeline is at Rs 3,000 crore and Rs 1,000 crore worth of projects have been opened and out of which we have been able to convert this KMC project into an order,” he added.
Tomar projected great potential in India's water sector with nearly Rs 8–9 lakh crore worth of projects to be executed in the urban areas.
“I think there's a huge potential for the water sector going forward and considering the targets given out by the government I think this work will be carried out in the next 8–10 years,” he concluded.
EMS Bags Rs 681 Crore Adi Ganga Project | Watch
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