Proposed public issue of 6,000,000 equity shares at a target price of Rs100 per share aggregating Rs600 million

CRISIL has assigned a CRISIL IPO grade "1/5" (pronounced "one on five") to the proposed initial public offer of. (MBL). This grade indicates that the fundamentals of the issue are poor relative to other listed equity securities in India.

The assigned grade reflects MBL''s weak competitive position in the road construction industry, especially the Build Operate and Transfer (BOT) segment; the fact that the company''s management has been a late mover in capturing business opportunities in its area of operation; and the fact that the returns from the company''s planned large investment in the BOT segment would be subject to a lead time of four - five years.

The grading takes into account the company''s good track record in the road maintenance business segment, which would benefit from the current boom in the road construction industry.

However, CRISIL notes that MBL''s fund requirement for the construction contracting and road maintenance parts of its business is much lower than the amount that MBL is planning to raise in the current issue.

Consequently, CRISIL believes that these parts of MBL''s business would not be able to support its enhanced equity base.

About the company
The company, promoted by Ram Gopal Maheshwari and Anjanee Kumar Lakhotia, was incorporated as a public limited company in 1995 as Maheshwari Brothers Ltd. In July 2006, it was renamed as MBL Infrastructures Ltd.

The traditional businesses of the company comprised waste management (slag recycling at steel plants) and steel trading.

In 1993, prior to its incorporation as Maheshwari brothers the company had diversified in to the road construction business as a sub-contractor to Bridge and Roof Ltd. (a government of West Bengal undertaking) for constructing the Snauli-Gorakhpur stretch, 20-km World Bank-aided project).

Subsequently, the company enhanced its focus on road construction (cash contracts and
maintenance). In 2003, the company entered into the roads BOT segment by bagging the Madhya Pradesh state government project of 114-km (Rs68 crores) for Seoni-Balaghat-Gondia (SBG) stretch.

A CRISIL IPO grade represents CRISIL''s overall assessment of the fundamentals of the issue graded in relation to other listed equity securities in India. CRISIL IPO gradings are assigned on a five-point scale from 1 to 5, with a CRISIL IPO grade 5 / 5 indicating strong fundamentals and a CRISIL IPO grade 1 / 5 indicating weak 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.