Small Cap Spotlight sat down with Gaurav Gupta, MD of Suntech Infra, to trace the company’s journey from equipment rentals to a growing force in infrastructure solutions. As the company heads toward a public listing, he shares insights into their expansion strategy, sectoral strengths, and vision for the future.
Sheryll D’Souza: Welcome to this very special edition of SmallCap Spotlight with Sheryl D’Souza. Today, we will speak to the management of Suntech Infra to understand how the early years were for the company and what it means to be in the big infra space in India. We’re joined by Gaurav Gupta, who is the managing director and the chairman of the company.
Thank you so much for joining us. Let’s talk about your journey. It began all the way back in 1999.
If you could help us understand what were those early years like? How did Suntech actually evolve from an equipment rental business into an infra solutions company?
Gaurav Gupta: First of all, Cheryl, thank you very much for having us here and giving us the opportunity to share about us. So in 1999, we bought one equipment and then we started renting that equipment. So that was on and off.
And gradually, we understood the business and in 2009, we started formally, we formed a company and then from there we started. So, 1999 to 2009 was just a gestation period wherein we were just, I was too young and just exploring the industry and market. So, not much to do, but yes, I understood the market that time.
So, this is the journey from 1999 to 2009.
Sheryll D’Souza: So, the company was incorporated in 2009, like you mentioned, and now it is heading for a public listing. So, what were the turning points that actually led you to actually go ahead and take this step or take this big plunge today?
Gaurav Gupta: See, 2009, we started with one equipment again.
And gradually, we started working all over India. And thereafter, we started our two more verticals. One, we are into first into rental of equipment.
Second, we started turnkey civil contracts. And third, foundation business. So now, seeing the demand in the industry and our USP is that, God has been kind that we get repeat orders from our customers to meet the requirements of the industry and the trust what customers have on us.
So, we thought that why not to fulfill their requirement and the industry’s requirement. That is why we thought that we should go public and expand ourselves across India. So, this is one of the reasons of why we wanted to go public.
Because see, our market share is maybe 2 or 3% with every customer. For example, you’re working for L&T and some international clients. The only reason of this percentage is because we were missing on some resources.
And if we have that resources, we can definitely catch up more in the market. And a small tweak can change the entire game. So, that is one of the areas.
Sheryll D’Souza: Right. So, your company operates in both construction, execution, as well as in heavy equipment rental, right? So, what’s the business model today? And if you could help us understand actually, how do these two verticals support each other?
Gaurav Gupta: Yeah. So, basically, as I said that we are into two verticals.
One, we are into renting of construction equipments. And these equipments are heavy equipments like big cranes and big hammers and piling rigs and other concrete equipments. Second, we are into turnkey civil contracts where we are doing foundation business as well as civil foundation, civil structure buildings as well.
So, how both complement is that first our customer base is same. So, the same customer is taking equipments on rental from us. And from the same customer, we are getting a business for doing civil infrastructure services what we are providing to them.
Second, we are a heavy equipment based company, heavy asset based company, wherein we use our own equipments for doing the job and obviously for rentals. So, it’s a very complementing business because we are using our own fleet for taking our civil jobs as well. So, and we are meeting the requirements of the customer.
So, in and we want to meet the requirement in all the ways, whatever is the demand and whatever is the asking of the customer or the industry in terms of adding new services as well. So, for example, we started civil structure only because when we were doing the piling job or foundation job for the customer, they were quite happy with our work. So, they offered us that why don’t you work do a civil structure for us.
And that is how we started doing civil structure. So, these 2-3 things I am into and if I have to tell you about my customer base. So, we are working with Reliance, we are working with Adani, we are working with Lassen & Toubro, we are doing good major job for Larsen & Toubro plus our client base is lot of international companies.
So, we are working for Italian companies like Technimont, Toyo and American companies like McDermott, Airproduct, Technim. So, yeah. So, let’s talk about your company.
Sheryll D’Souza: If you could help us understand which industries now currently drive your order book and also how do you navigate such diverse sectors like power, cement, refineries and steel. I believe you have exposure in these as well, right?
Gaurav Gupta: See, basically we are providing them civil services and civil solutions as well, infra solutions. So, mostly currently we are working with refineries you can say and process plants wherein we talk about green PVC plants are coming up in India.
So, we are working for them and semiconductor plants are coming. So, we are working for them. So, to be precise in last 2-3 years, we are more with refinery works because yeah.
So, we got the opportunity working in the refineries. So, at one time maybe last year, we were doing 7 projects back to back for the same refinery inside the refinery for different various customers. A lot of expansion is going in refinery plus we worked for metros also earlier.
Now, the time is for industries like semiconductors and cement plants and refineries and green PVC plants.
Sheryll D’Souza: Right. So, your equipment fleet, that’s your big strength like the way you mentioned as well.
So, how has owning your own rigs and cranes actually helped in terms of speed or control?
Gaurav Gupta: Let’s talk about cost efficiency especially on projects. See, we can do better equipment utilization first of all when we have our own equipments and with our own equipments, we have full control on the equipment and the operators that what speed we want and how much how much working we want from an equipment. So, definitely it is a big add-on to our company when we are operating with our own equipments.
So, whatever money is coming in is for the equipment and we are not giving any rentals outside the company. So, this has given us a big boost. So, first, we can improve on mobilization because it is our own equipment.
We know when to mobilize, from where to mobilize, from there how to operate and how to train the operators to understand our need and customers need. Whereas, if we rent the equipment from outside, then we are fully dependent on the third party. So, now there is no dependency.
Sheryll D’Souza: So, there is no dependency, less cost and more production. So, let’s talk more in detail or in depth about your projects. If you could help us understand what kind of projects are you currently executing and also if you can help us understand what does your order book look like as of now.
Gaurav Gupta: So, currently our order book is close to around 160 crores which is supposed to be completed in next three months. So, basically our orders are generally for three months, four months, six months or nine months. So, this is the first quarter of the year and already we have 160 crore rupees of order book which we have to complete in next three to four months.
We are also working for HCL also, HCL IT Park in Lucknow. So, let’s shift focus.
Sheryll D’Souza: Let’s talk about the IPO, right? A portion of the IPO funds, as mentioned, is going to into buying more equipment or meeting the working capital needs as well.
So, how will this actually help you expand your execution capacity?
Gaurav Gupta: See, as I told you that our customers are willing to give us work but due to limitation in resources, we could not, you know, ever take that big jobs which you were looking for. So, now adding on equipments as per the requirement definitely help us in growing our rental business as well as our turnkey contracts what we are doing. And obviously, we need working capital because now we have started working with material.
Now we are doing work with cement and RMC and steel. So, which definitely will, which is an add-on to our bottom line and top line both. So, with our margins will increase and obviously, we have to, we need working capital for that.
Sheryll D’Souza: So, let’s talk financials then. You reported a healthy return profile, right? You have an ROE of over 24 percent. So, what’s driving this financial strength and how sustainable do you think this will be going forward?
Gaurav Gupta: See, this is definitely sustainable because as I said that what is driving our finances and the ROE is, one, we are using our own equipments which is helping us.
Second, we work with our entire in-house team. So, we don’t have any contractual team for any particular job. So, our team is intact.
Our people are intact. We are using our own equipments. Third, we have started working in brownfield.
Brownfield is already, for example, a refinery. So, refinery is a brownfield because already the refinery is running and in that running refinery, we are able to get better rates because it’s a challenging area and we have that expertise. We have gained the expertise to work in that area.
Plus, as I told you that we are working with MNCs. So, working with MNCs is not easy. So, we have to, you know, fulfill all the requirements related to their safety, quality.
So, qualification in MNCs is not easy. So, God has been kind. We have fulfilled that also and in MNC, you get definitely better margins.
So, it’s a combination of three, four things. One, our own equipments. Second, our own team.
On that, we can work on costings and production. Costings can go down, productions can go up. Third, we are working now, started working with material wherein cement and steel is involved.
So, it can help in growing our margins. Fourth, we are working for MNC companies as well and we have taken up some refinery works and all which are brownfield areas where now we think that we have expertise into these things, into these areas where we can demand or a little bit command a better margin because we are delivering.
Sheryll D’Souza: So, company Suntech Infra is now about 25 years in the making. If you could help us understand, who are the key leaders driving the company and what defines the execution culture on ground for your company?
Gaurav Gupta: See, the market is vast for sure. So, we have different verticals and we have different heads on different verticals. So, for example, we have a technical head in the company who is looking after all the technical matters with the customer at site while taking any orders and any issues at site.
We have an operational director in the company who is taking care of all the operations. We have the entire process team in the office. So, every site has one process coordinator who is the bridge between the company and the site.
So, when we have started, we are now on ERP as well. So, we were adding on new things, new factors so that how we can maximize our output. And as I said that our USP is taking repeat orders.
So, we have a mission and vision statement in the company. So, we are working only on one mission that we strive for the second order. So, how will we get the second order is by executing well the first order.
So, we give our 100% to make that first order and obviously upcoming orders a successful site for the customer and for us. So, repeat order is our strength. So, mainly I think 80-90% of clients we are working with, we are doing repeat works for them.
So, this keeps us a little bit at the edge or differentiate from others, I would rather say.
Sheryll D’Souza: So, looking ahead, what’s your long-term vision for SunTech, Mr. Gupta? Is it going to be scale? Is it going to be diversification? Is it going to be national footprint or some deeper specialization?
Gaurav Gupta: Very, very nice question you’ve asked Cheryl. So, we want to expand holistically in all the ways.
We are now providing three services to the customer and as per the customer’s requirement and demand, we are willing to open two more verticals. We have been thinking it was all in our mind and planning but we could not execute earlier. So, we will be starting two more verticals.
We will be adding our services whereas the customer and client base is same. So, that is number one. Obviously, numbers, we were limited because of resources and equipment.
Now, IPO coming inside, we’ll get that leverage wherein we can add on resources and machineries which can help us taking orders from the same customers and new customers. I mean, order means big orders from them. Third, I have explored UAE market last 20 days back.
So, we intend to start some operations in UAE maybe in next two months. So, this is on papers as of now. So, I’m very optimistic, not by just saying, seeing the market, seeing the response, seeing the customer response.
So, basically, we have quoted for 600 crore rupees of work. We’ve already quoted right now which may close maybe next one month and we expect that we may get around 30-35% of the share. So, let’s see how it goes.
Sheryll D’Souza: And lastly, since you’re going public, any message for your shareholders or investors who are looking at your company very closely?
Gaurav Gupta: We would just like our investors to know that we are striving for bottom line and we would like to be one of the most honest and deliverable company, dependable company in India. So, our intent is great and we want to do good work for the customers and the only indication for this is that getting repeat orders from them. So, we look forward for going ahead together.
Sheryll D’Souza: All right. With that, Mr. Gupta, thank you so much for joining us on this very special edition of SmallCap Spotlight. It was great talking to you and interacting with you, especially about your company, Suntech Infra.