06 November 2007
CRISIL IPO grade 3/5 assigned to
the IPO of Tecpro Systems Ltd.

Proposed public issue of 7,300,000 equity shares targeted at an issues size in the range of Rs 1,000 to Rs 2,000 million.

CRISIL has assigned a CRISIL IPO Grade '3/5' (pronounced 'three on five') to the proposed initial public offer of Tecpro Systems Ltd (TSL). This grade indicates that the fundamentals of the issue are average, in relation to other listed equity securities in India.

The grading reflects the sound operational and strategic abilities of TSL's promoters in the material handling business. This is seen in the company's emergence as a serious player in the Indian material handling market over the last 5 years to compete with well-established players like McNally Bharat Engineering Company Ltd and Tata Robbins Fraser Ltd. The company has bagged repeat orders from many large clients and the promoters have been able to enter into technical tie-ups with global manufacturers to enhance TSL's manufacturing footprint in the material handling business. The grading is constrained by uncertainties associated with the company's plans in other business areas such as engineering procurement and construction (EPC) for small power plants, making fuel from municipal waste and running bio-mass plants given that TSL's performance so far reflects their extensive operational involvement. The grading also reflects the company's rather complicated corporate structure that is characterised by the presence of separate corporate entities to carry out different activities in the same value chain. One instance is a promoter owned entity that carries out on-site erection activities, thereby creating a potential conflict of interest for the promoters. The grading also reflects the moderate corporate governance practices at TSL.

About the company
TSL was incorporated on November 7 1990, as a private limited company by Mr Amul Gabrani and Ms Manju Sapra. The company did not conduct any business till 2001. Meanwhile, Mr Gabrani started a proprietary firm Tecpro Systems for the manufacture and supply of material handling equipment. In 2003, TSL took over the proprietary business from Mr Amul Gabrani and on April 01 2004, Mr Ajay Kumar Bishnoi joined the company. TSL was converted into a public limited company on July 10 2006.

The company is engaged in turnkey projects of material handling systems for mainly coal and limestone, used in power, cement, steel and other metallurgical plants. TSL has entered into technical tie-ups with global manufacturers to enhance its manufacturing footprint in the material handling components business. Over the last five years, the company has moved from being a material handling component supplier to a specialist in designing material handling equipments and supply.

For the year ended March 2007, TSL's reported a net profit of Rs 204.4 million on a turnover of Rs 2,313.1 million. This is as compared to net profits of Rs 97.6 million and revenues of Rs 1032.5 million in 2005-06.

About CRISIL IPO Grading
CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security.

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Ajay Dwivedi
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Sudhir Nair
Head, CRISIL Research
Phone: +91-22-6691 3526
Email : snair@crisil.com
Client Servicing
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November 06, 2007