PSP Projects Limited, a leading construction company, has reported a significant decline in its financial performance for the first quarter, while simultaneously announcing major changes in its ownership structure and management.

Financial Performance

The company's Q1 results show a substantial downturn across key financial metrics:

• Revenue dropped by 16% to Rs. 513.00 crores from Rs. 612.00 crores year-on-year.
• EBITDA fell sharply by 67% to Rs. 24.00 crores from Rs. 73.00 crores.
• Net profit declined dramatically to Rs. 0.13 crores from Rs. 34.00 crores in the same quarter last year.

PSP Projects attributed this decline primarily to a 37% labor shortfall during April-May, which has since improved to 19%. Additionally, employee costs increased to 6.8% from the usual 4-5% range due to new hires for Adani projects.

The company incurred additional expenses of Rs. 4.50 crores on UP projects and made ECL provisions of Rs. 8.68 crores. Despite these challenges, PSP Projects maintains a robust order book of Rs. 6,514.00 crores, showing an 11% year-on-year growth.

Strategic Partnership with Adani Infra

In a significant development, Adani Infra (India) Limited has acquired a 34.41% stake in PSP Projects Limited. This acquisition was completed through two transactions:

1. Acquisition of 44,86,193 equity shares (11.32%) from public shareholders through a mandatory open offer.
2. Purchase of 91,53,779 equity shares (23.09%) from Mr. Prahaladbhai S Patel, a promoter of the company.

As a result, Adani Infra has become a promoter of PSP Projects and has acquired joint control of the company along with existing promoters.

Management Changes

Following these developments, PSP Projects has announced several key management changes:

1. Mr. Kattunga Srinivasa Rao has been appointed as an Additional Non-Executive Non-Independent Director, representing Adani Infra.

2. Ms. Pooja P. Patel has resigned from her position as Whole-Time Director but will take on the role of Chief Executive Officer effective August 6.

3. Mr. Prahaladbhai S Patel's designation has changed from 'Chairman, Managing Director and Chief Executive Officer' to 'Chairman and Managing Director'.

Future Outlook

Despite the current setbacks, PSP Projects remains optimistic about its future prospects. The company expects new order inflows of Rs. 7,000.00-8,000.00 crores from the Adani Group, including significant projects such as:

• Residential colonies at Mundra (Rs. 1,250.00 crores)
• Township at Mundra (Rs. 2,300.00 crores)
• Dharavi residential project (Rs. 830.00 crores)

Management anticipates EBITDA margins to normalize to the 8-9% range from Q2 onwards. The strategic partnership with Adani Infra is expected to open up new growth opportunities for PSP Projects in the coming years.

As the construction sector navigates through labor challenges and project delays, PSP Projects' ability to leverage its new partnership and robust order book will be crucial in determining its performance in the upcoming quarters.

PSP Projects Limited has undergone a significant change in its ownership structure as Adani Infra (India) Limited successfully acquired a 34.41% stake in the construction company. This strategic acquisition has resulted in Adani Infra gaining joint control of PSP Projects, alongside the existing promoters.

Acquisition Details

The acquisition was executed through a combination of a share purchase agreement (SPA) and a mandatory open offer to public shareholders. Here's a breakdown of the transaction:

• Adani Infra acquired 91,53,779 equity shares (23.09% stake) from Mr. Prahaladbhai S Patel, a promoter of PSP Projects, through the SPA.
• An additional 44,86,193 equity shares (11.32% stake) were acquired from public shareholders through the mandatory open offer.
• In total, Adani Infra now holds 1,36,39,972 equity shares, representing a 34.41% stake in PSP Projects.

Changes in Corporate Structure

Following the acquisition, several key changes have been implemented in PSP Projects' corporate structure:

1. New Promoter Status: Adani Infra has been classified as one of the promoters of PSP Projects, alongside the existing promoters.

2. Board Appointment: Mr. Kattunga Srinivasa Rao has been appointed as an Additional Non-Executive Non-Independent Director, representing Adani Infra on the board.

3. Leadership Transition:

   • Ms. Pooja P. Patel has resigned from her position as Whole-Time Director.
   • She has been appointed as the new Chief Executive Officer (CEO) of PSP Projects.

4. Change in Chairman's Designation: Mr. Prahaladbhai S Patel's designation has been changed from 'Chairman, Managing Director and Chief Executive Officer' to 'Chairman and Managing Director'.

5. Articles of Association: The company's Articles of Association will be amended to incorporate relevant terms of the shareholders' agreement, subject to shareholder approval.

Implications and Outlook

This acquisition represents a strategic move for both Adani Infra and PSP Projects. For Adani Infra, it provides an opportunity to expand its presence in the construction and infrastructure sector. For PSP Projects, the partnership with a major player like Adani could potentially open up new growth avenues and synergies.

The transition in leadership, with Ms. Pooja P. Patel moving from a board position to the role of CEO, indicates a focus on operational excellence and hands-on management. This change, coupled with Adani Infra's entry as a joint controller, may signal a new phase of growth and strategic direction for PSP Projects.

As the construction and infrastructure sectors continue to play a crucial role in India's economic development, this partnership between Adani Infra and PSP Projects could have significant implications for future projects and market dynamics in the industry.