Taking The Risk To Go Beyond

ARSS Infrastructure Projects is ranked No. 3 in the Heavyweights category (Rs 1,000- 4,999 crore), thanks to a 104 per cent average annual growth during FY06-FY10, with revenues shooting up from Rs 61 crore in FY06 to Rs 1,006 crore in FY10.

The company, earlier called ARSS Stones as it had a stone crusher unit in Orissa, became a public limited company in 2006 and changed its name to reflect its status as a full-fledged infrastructure company undertaking earthwork, rock excavation, and building bridges and roadways. In February 2010, it came out with an  initial public offering.

Now the company specialises in turnkey railway projects including track linking, electrification, track signalling and telecommunications.

"We hit the turning point when we executed numerous railway and bridge construction projects in Orissa, which many other big players from within and outside the state failed to execute," says Sunil Agarwal, the company's CEO. ARSS Infrastructure boasts of completing the critical Tomka-Keonjhar track in the Maoist-infested area of Orissa. It also did projects for Hindustan Steelworks Construction and RITES (Rail India Technical and Economic Services). Some of its signature projects outside the eastern zone are the Jaipur BRT corridor and Kaushaliya Dam project in Haryana — the first earthen dam in Panchkula.

Though the company has done majority of its projects in Orissa, Chhattisgarh, West Bengal, Bihar, Mizoram and Assam, with projects in Orissa contributing nearly 45 per cent to its top line, significant contributions have also come from Rajasthan, Jharkhand, Haryana and Tamil Nadu, where it has won multiple big projects. "We believe that our experience, among other factors, enables us to pre-qualify for a greater number of potentially higher-margin projects," says Agarwal.

ARSS's success can also be attributed to the fact that its client base consists mainly of government agencies and public sector units, which reduces the risk of default and delayed payment. Add to that its expansion into diversified areas such as irrigation and canal construction that helps mitigate risk in case of a slowdown, and its success mantra becomes evident.

ARSS has completed over 80 projects across India including 300 km of roads and highways, 200 km of rail tracks and 10 major bridges. It is now executing projects worth Rs 5,000 crore.

"They are foraying into road projects, which needs a lot of project management capabilities and financing. Their skill-set will be tested now," says Elara Capital analyst Abhinav Bhandari.

(This story was published in Businessworld Issue Dated 23-05-2011)