Hello Sir,
Hope you are doing well.
Skilled human resource supply is probably inadequate and it’s always good to have companies that can provide expert engineering staffing solutions.
Recently, while screening for investment opportunities, I came across a micro cap company Aarvi Encon Ltd which provides technical staffing solutions.
On the cursory glance, the numbers looked interesting and decided to dig deeper.
Below, we have shared notes from the Jun’23 investor presentation and CRISIL credit rating report of the company. Hope you find the details useful for your own investments or to add the stock to your watch list.
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Aarvi Encon – Notes from Jun’23 investor presentation and CRISIL credit rating report
– General Points
- Aarvi provides engineers /designers/technicians right from conceptualization of the project to Design to Construction to Pre-commissioning & Commissioning to Operations and Maintenance of the plant
- The company has deployed over 30,000 personnel since inception and has a current deployed team strength of more than 5,000 professionals
- It has a large in-house database i.e. more than 800,000 resume data base
- The company targets sectors like oil & gas, power, LNG, PNG, refinery, petrochemical, pipeline, wind power, solar power, offshore, E&P, infrastructure, etc.
- The company has an esteemed clientele list including marquee names like, Larsen & Turbo Industries, Cairn, Reliance Industries Limited, Engineering India Limited, Indian Oil, Technip, etc.
- Promoter’s i.e., Sanghavi family have an experience of over 5 decades in the technical and engineering manpower supply industry
- Operations are managed by Mr. Virendra Sanghavi and his son, Mr. Jaydev Sanghavi
– Business details
- FY 23 Business mix – Manpower outsourcing: 83%, O&M: 17%
- FY 23 Industry wise revenue – Engineering: 35%, Refinery: 24%, Oil & Gas: 15%, Renewable: 8%, Chemicals: 5%, etc.
- Contribution from Renewables and Information Technology sector is expected to increase over the near term
- Company has cash and cash equivalent of Rs 4.38 crore as on March 31, 2023. Company has no material capex plans over the medium term
– Staffing Industry
- Temporary/Flexi staffing firms retain workers & supply temporary workforce to other companies for specific assignments
- Customers signs agreement with flexi staffing companies where the later supplies flexi workforce
- Staffing companies hire workers and send them as flexi workforce to meet client requirements. Staffing companies take care of the salaries and benefits of these workers
- Over the past five years, the industry has grown at a rate of 20-25% per year
- Staffing industry in India essentially provides a platform for recognized employment, work choice, reasonable compensation, annual benefits, and health benefits for the temporary workforce
- The skilled human resource supply industry is highly fragmented due to a low entry barrier, leading to intense competition
- Further, the tender-based nature of operations triggers intense price competition among players
(End)
Disclaimer: This is not a recommendation to buy/sell Aarvi Encon. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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