MBL is in an enviable position to enhance stakeholder value in a sustainable way
The Working Capital Consortium Agreements and other documents for the implementation of the Resolution Plan of MBL Infrastructure Limited under IBC, 2016 by banks have been executed. With this, the non-fund-based facilities (bank guarantees/ letter of credits) will now be made available to the Company. What the Company had been pursuing with a singular attention for years is now completed and resolved.

MBL possesses unique advantages – no contingent liability from the past coupled with a rich experience track record. The Company finds itself at a sweet spot and is at the cusp of a long growth runway in India’s infrastructure sector with growing scope and relevance to enhance stakeholder value in a sustainable way.

Strategically positioned and attractively placed
MBL possesses an enviable position in a competitive sector. MBL possesses adequate liquidity to initiate operations. The Company is attractively placed to accelerate project progress and completion.

The Company is at the right place at the right time with the right credentials. India has entered the golden age of infrastructure building. There is a premium on companies possessing experience, a track record of having completed challenging projects, enjoying existing relationships with large nodal organisations, net cash on the Balance Sheet and access to long term financial resources. The Company is possesses these credentials and attractively positioned with adequate resources available for sustainable growth.

MBL addresses a vast upside in terms of the quantum and accelerated inflow of road and other infrastructure projects. MBL expects to carve away an attractive share of road and other infrastructure projects across the foreseeable future.

MBL will bid for select projects within its profitability guardrails, stick to infrastructure building as a business focus, strengthen its Board with Directors of pedigree, derisk the Company with low cost long-term growth capital and deepen its talent capital.

The promoters’ shareholding was increased to 74.01%. The promoters possess adequate skin in the game and their interests are completely aligned with that of other stakeholders.

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 maximise 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. The earnings of the Company will be reinvested in building scale and catching up with lost time.

The Company is attractively placed to generate sustainable growth across the long-term.

Optimism
There are several reasons why we remain optimistic of our prospects.

One, the Indian infrastructure sector – led largely by its road building sector – is likely to emerge as the fastest growing in the world in percentage terms among major economies and one of the largest by quantum anywhere. This represents an opportunity of a magnitude that is likely to translate into an adequate infrastructure order book.

Two, a large gap has emerged between the demand for infrastructure creation and the ability to service it. During the last few years, infrastructure companies went out of business as they could not protect their Balance Sheet and repay debt. Following this industry shakeout, there is now a premium on companies possessing multi decade sectorial experience. By the virtue of surviving the most challenging phase in its sector during the last few years, MBL finds itself attractively placed to capitalise on the industry churn.

Three, MBL is being structured around governance, marked by a commitment to grow the business without taking recourse to debt; it comprise credible practices, respect for the interest of minority shareholders and other practices directed to enhance stakeholder trust.

Four, MBL’s Resolution Plan provides a buffer to maximise the use of cash flows for reinvestment during one of the most vigorous growth phases of India’s infrastructure sector.

Five, MBL continues to remain an operationally lean infrastructure construction company. This leanness should translate into targeted revenues given the existing national infrastructure building momentum.

Six, MBL’s approved resolution plan is under implementation (after three rounds of litigation upto Supreme Court, with favourable orders passed at each stage). Working capital consortium agreements and other documents for the implementation of the resolution plan by the banks were executed. Non-fundbased facilities of Rs. 303.63 crores from working capital consortium banks are now available to MBL. The Company possesses the permission to raise additional fund-based facilities of H100 crores and non-fund-based facilities of Rs. 250 crores for new contracts against specific charge on receivables/stocks of such contracts. All bank accounts of MBL have been directed to be upgraded to ‘Standard’. The receivables/claims of MBL are sufficient to repay the entire debt in terms of the approved Resolution Plan.

Seven, by the virtue of surviving the most challenging phase in its existence, MBL is attractively placed to capitalise on a widening industry opportunity.

Conclusion
MBL will now bid for projects within its defined profitability priorities, reinvest, build larger pre-qualification credentials, bid for even larger projects and accelerate its business sustainably.


Anjanee Kumar Lakhotia
Chairman