MBL Infrastructure Ltd

Overview

The Resolution Plan of MBL Infrastructure Ltd under IBC, 2016 has attained finality and the working capital consortium banks agreed to implement the Approved Resolution Plan. This is a momentous occasion a prominent Company in one of the fastest-growing sectors in India. This is expected to empower the Company to enhance stakeholder value in a sustainable way.

It would be necessary to comprehend our history to be able to appreciate why the Company is at the cusp of a new growth journey.

MBL performed creditably as an infrastructure builder from 1995 to 2016, most of the Company's revenues derived from capable road construction and other infrastructure projects. This growth was marked by a continuous increase in the Company's bid capacity and prequalification capability. However, for factors beyond its control, MBL was referred to CIRP proceedings under IBC, 2016 by NCLT order dated 30.03.17.

The resolution plan of the Company under IBC, 2016 with the support of 78.50% majority of CoC, was approved by the Hon'ble NCLT by its order dated 18.04.2018. Some banks preferred to file appeals, but these were dismissed by the Hon'ble National Company Law Appellate Tribunal through its order dated August 16, 2019. The Hon'ble Supreme Court, through its order dated January 18, 2022, dismissed the civil appeal no. 8411 of 2019 filed by one of the dissenting banks against the Hon'ble NCLAT order dated August 16, 2019. Orders dated 11.03.2022 and 13.09.2023 were passed by Hon'ble NCLT, Kolkata, orders dated 23.05.2023 and 10.08.2023 were passed by Hon'ble NCLAT and orders dated 04.08.2023 & 25.09.2023 were passed by the Hon'ble Supreme Court. The Resolution Plan attained finality. What the management had been pursuing with a singular attention for years now stands completed, resolved and closed.

There was another corresponding upside from a project perspective. MBL concurrently completed, handed over and received completion certificates for various public interest project. The clearance from projects and non-project perspectives means that the Company has liquidated all its liabilities and is prepared to address new projects and prospects.

Attractive proxy

MBL is now positioned as one of the most attractive proxies of India's road and other infrastructure sectors. There are several factors fermenting into MBL's competitiveness and preparedness for industry growth.

One, the Company is at the right place at the right time. India is passing through an unprecedented road-building phase; the country is committed to build highways and expressways across the next few years. This expressed national intent is most visible in the country's infrastructure outlays in each successive Union Budget across the last few years, increasing from Rs.10,00,000 crore in 2023-24 to Rs.11,11,111crore in the Union Budget of 2024-25. Road building is central to this sharply increased infrastructure outlay, creating a large sectorial opportunity for a focused company like MBL. This national reality has translated into a large throughput of projects for prominent and experienced road builders, creating attractive direct (projects taken under one's own name) and indirect (projects sub-contracted from those allotted direct projects) opportunities.

Two, MBL now possesses adequate opportunities to stay in business, address large projects, reinvest cash flows and repay outstanding liabilities in a staggered manner. The Approved Resolution Plan provided the Company with ample reinvestment possibilities and rebuild faster, making it possible to recover lost ground with speed.

Three, the Company completed all its pending projects in the last few years to the satisfaction of its clients. The result is that by the close of the last financial year, MBL's pipeline of projects had been completely liquidated and there were no historical contingent liabilities. In a sector marked by contingent liabilities, the absence of any historical contingent liability means that our Balance Sheet is clean.

Four, we bring to our business the advantage of nearly three decades of sectorial presence. During the downturn when the approved Resolution Plan was in challenge before various forums, the Company retained its senior management team; the learnings of the previous years remained protected. The result is that MBL continues to possess an insight into projects conducted across different terrains; what would otherwise have taken years to be aggregated afresh is immediately available to the Company.

Five, in the business of infrastructure construction, the extent that one can grow in one's independent capacity while addressing government contracts is defined by pre-qualification credentials. The higher the pre-qualification the larger the projects one can bid for. I am pleased to communicate that MBL possesses attractive pre-qualification credentials related to projects that can be executed directly by the Company. At a time when project sites within the road building sector are getting progressively larger, this pre-qualification size puts us in the right place at the right time.

Six, the Company possesses adequate liquidity to kickstart operations, mobilise additional resources and pay vendors on time, strengthening the eco-system for timely projects progress and completion.

Seven, the Company possesses a fleet of equipment. The availability of this equipment pool will empower the Company to rotate their deployment and capture project value-addition from within.

Strategic direction

At MBL, we intend to address a favourable sectorial environment by bidding for a range of projects and build the order book systematically in a phased manner.

The Company will bid for projects with decent margins to generate adequate resources for the Company to reinvest and reward shareholders.

The promoter and the promoter group hold about 67.40% of the Company's equity, indicating adequate skin in the game. The promoter and the promoters group intend to increase this stake to the maximum permissible limit of 75% over time, indicating a complete commitment to the Company's prospects and faith in the business model.

The Company is committed to growth with urgency. However, the Company recognises the dangers of uncontrolled growth and will seek to grow its order book and corresponding revenues only to the extent that its Balance Sheet can sustain. In view of this, the Company will maintain a prudent head-to-tail ratio, indicating a prudent link between its project addressal capacity on the one hand and order book size on the other. This link is expected to protect the Company's project management competence, complete projects in line with customer requirements, eliminate (or moderate) the incidence of project liabilities and sustain timely cash inflows.

The Company will deepen its governance commitment, marked by a culture of digitised checks, balances and controls. The

Company will strengthen its Board, make complete disclosures in its annual reporting to stakeholders and invest in responsible environment deliveries and compliances.

The Company will seek to grow its business, maximising the use of net worth in business growth. This commitment is expected to protect the Company's financials even during an industry downturn.

The Company will remain operationally lean, controlling overheads at a time of revenue growth, translating into enhanced margins and surplus.

Optimism

I am pleased to communicate that the Indian infrastructure sector (especially its road-building sector) is likely to emerge as the fastest growing in the world in percentage terms among major economies. The opportunity addressed by a company like MBL can provide healthy orders for years. There will be a bigger premium on timely order completion, drawing on the Company's rich experience bandwidth.

During the last few years, several roadbuilding companies went out of business for not being able to manage growth and liquidity. This has created a premium for successful road-building companies at a time when the government is increasing project announcements and awards.

By the virtue of surviving the most challenging phase in its existence, MBL is attractively placed to capitalise on the emerging industry opportunity.

Conclusion

A revived MBL will bid for several projects within its defined profitability priorities, reinvest, build larger pre-qualification credentials, bid for even larger projects and accelerate business sustainability.

Chairman.