Arisinfra Solutions IPO

Arisinfra Solutions claims to leverage advanced technology, including artificial intelligence (AI) and machine learning (ML) to streamline the procurement and supply chain for construction materials.

The company claims to have digitised over 36,000 deal-related documents, including delivery challans and weighbridge slips, during FY23 and FY24.

Arisinfra Solutions has developed its proprietary delivery management system, ArisDelivery, which it claims enables seamless daily deliveries with real-time updates, better operational efficiency and improved customer coordination.

The company has expanded its network to serve 2,133 customers through 1,458 vendors across 963 pin codes by March 31, 2024.

The company claims to use a strong credit risk analysis framework, evaluating customer GST filings and financial statements, while monitoring real-time payments and order data to mitigate financial risks and optimise decision-making.

Arisinfra Solutions claims to have a scalable technology infrastructure that supports high transaction volumes and facilitates entry into new geographies, enabling seamless onboarding of customers and vendors.

The company’s revenue is dependent on the sales of aggregates, ready-mix-concrete and steel. Aggregates contributed Rs 217.32 crore (31.19%), Rs 181.92 crore (24.38%) and Rs 103.97 crore (22.98%) to the revenue from operations in FY24, FY23 and FY22 respectively. RMC is also one of the major contributors and accounted for Rs 147.15 crore (21.12%), Rs 150.02 crore (20.11%) and Rs 79.52 crore (17.58%) of the revenue from operations in FY24, FY23 and FY22, respectively. Steel contributed Rs 116.61 crore (16.73%), Rs 244.39 crore (32.76%) and Rs 223.46 crore (49.40%) to the revenue from operations in FY24, FY23 and FY22 respectively. Any decrease in the demand for these particular construction products could adversely affect the company’s operations and financial performance.

A major portion of the company’s revenue is dependent on a few clients. Arisinfra Solutions’ top 10 customers contributed Rs 315.28 crore (45.24%) in FY24, Rs 291.50 crore (39.07%) in FY23, and Rs 213.45 crore (47.19%) in FY22 to the revenue from operations. Any failure to retain these key customers, expand the customer base, or a loss of business from these clients could adversely affect the company’s business and financial standing.

As of May 31, 2024, Arisinfra Solutions had a total financial indebtedness of Rs 283.51 crore. Any failure to service or repay these loans could hurt the company’s operations and financial position.

A substantial portion of the company’s revenue comes from Maharashtra, Karnataka and Tamil Nadu. These states contributed Rs 564.81 crore (81.05%), Rs 634.44 crore (85.04%) and Rs 416.87 crore (92.15%) to the revenue from operations in FY24, FY23 and FY22, respectively. Any adverse business or economic developments in these regions could negatively impact the company.

The company recently started engaging some third-party manufacturers for the manufacturing of certain construction products. The revenue generated from the sales of third-party manufactured products accounted for Rs 122.44 crore (17.57%) in FY24 and Rs 18.40 crore (2.47%) in FY23. Any loss of these manufacturers, a delay in the production of the construction materials or a decline in the quality of the produced products could hit the company’s finances and operations.

The company has experienced losses in the past few years. The loss after tax figures were Rs 6.49 crore, Rs 15.39 crore, and Rs 17.30 crore in FY22, FY23, and FY24, respectively. There has been an increase in the loss over these years. The company states that these losses were due to expenses related to fair value loss on derivatives and employee-share-based payment expenses. Any such losses in the future could be harmful to the company.

The company and its subsidiaries are involved in several legal proceedings. Any adverse judgments in any of these cases could be detrimental to the company’s business prospects.