About ArisInfra Solutions Limited

Business Overview

ArisInfra Solutions is a B2B technology-enabled company streamlining the procurement of construction materials through digital solutions and human expertise. Operating in a high-growth, fragmented market, the company minimizes the role of intermediaries, offering a cost-effective and efficient alternative for real estate and infrastructure developers.

Between April 1, 2021, and March 31, 2024, the company delivered 10.35 million metric tonnes (MT) of construction materials, including aggregates, ready-mix concrete (RMC), steel, cement, construction chemicals, and walling solutions, serving 2,133 customers across 963 pin codes. The vendor network expanded to 1,458 suppliers, reflecting a scalable business model.

Key customers include Capacit’e Infraprojects, J Kumar Infraprojects, Afcons Infrastructure, EMS Limited, S P Singla Constructions, Wadhwa Group, and Puranik Builders. Vendors include Guardian Casting, G S Ispat, Swarajya – Stones LLP, Sun-x Concrete, Bigbloc Building Elements, and Normet India. The volume of materials delivered rose from 2.32 million MT in Fiscal 2022 to 4.02 million MT in Fiscal 2024, while daily dispatches increased from 282 to 484.

Through its subsidiary, ArisUnitern Re Solutions, the company offers value-added services, including advisory, consultancy, marketing, and sales support tailored for real estate developers. These services enhance revenue streams, strengthen client relationships, and position ArisInfra as a trusted industry partner.

As of July 31, 2024, the Company had 187 permanent employees. The Bankers to the Company are The Hongkong and Shanghai Banking Corporation Limited, India, IndusInd Bank Limited, Axis Bank Limited and HDFC Bank Limited.

Industry Analysis

Construction Material Supply Market: A Deep Dive into Total Addressable Market (TAM)

In 2023, the industrial B2B market saw 45% to 50% of total spending (USD 265 billion to USD 285 billion) directed toward infrastructure and real estate construction. This highlights the sector’s significant role in India's economic landscape.

Infrastructure Market in India

The B2B infrastructure market in India was valued at USD 100 billion to USD 110 billion in 2023 and is projected to grow at a 10% to 12% CAGR, reaching USD 170 billion to USD 195 billion by 2028. This sector primarily consists of capital expenditures across:

• Energy: Power, renewable energy, atomic energy, petroleum, and natural gas.
• Transport Infrastructure: Roads, bridges, railways, airports, and ports.
• Urban & Rural Infrastructure: Waste management, water pipelines, sewage systems, and drainage networks.
• Irrigation: Dams, channels, and embankments.
• Social Infrastructure: Investments in education, healthcare, sports, and tourism.
• Digital Communication: Fixed networks and telecommunications towers.

Notably, energy and transport infrastructure contribute approximately 60% to 65% of the total infrastructure market.

Real Estate Construction Market

The B2B real estate construction market—which includes both residential and commercial sectors—was valued at USD 165 billion to USD 175 billion in 2023. It is expected to expand at a 6% to 8% CAGR, reaching USD 230 billion to USD 250 billion by 2028.

• Residential Real Estate: Includes housing projects developed by large builders and small individual contractors.
• Commercial Real Estate: Covers office spaces, shopping malls, entertainment centers, and industrial facilities like warehouses, manufacturing units, data centers, hotels, and hospitals.

Beyond infrastructure and real estate, the remaining industrial B2B market includes segments such as auto components, defense manufacturing, mining, and quarrying.

Market Segmentation in Construction

The construction market is broadly categorized into:

1. Raw Materials (RM): Steel, cement, concrete, aggregates, bricks/AAC blocks, construction chemicals, and other essential materials.
2. Finished Goods (FG): Paints, electricals, flooring, plumbing, sanitaryware, wood panels, roofing, doors, windows, glass, and hardware.
3. Value-Added Services (VAS): Additional services that enhance project efficiency and quality.

Growth of the Construction Materials Market

The raw materials segment alone was valued at USD 230 billion to USD 280 billion in 2023, with a projected growth rate of 5% to 8% CAGR, reaching USD 290 billion to USD 340 billion by 2028. Cement, steel, and other metals account for 60% to 70% of total raw material costs, making them the key cost drivers in the construction sector.

Economic Contribution

As per India’s First Advance Estimates for Budget Fiscal 2024, the construction industry contributes approximately 9% to the country’s GDP. The sector’s steady growth trajectory (5% to 8% CAGR from 2023 to 2028) positions it as a crucial pillar of India’s economic development.

With rising infrastructure investments and expanding real estate development, the construction material supply market remains a key growth driver for the industrial B2B sector in India.

Business Strengths

1. Technology-Driven Supply Chain Optimization
A B2B technology-enabled platform streamlining construction material procurement using AI and machine learning, eliminating intermediaries for a seamless and efficient supply chain.

2. Scalable and Market-Ready Business Model
A scalable technology-driven approach enables rapid market expansion with lower incremental costs, ensuring efficiency in onboarding customers and vendors across geographies.

3. Expansion into Third-Party Manufactured Materials
Entered the fragmented construction materials market with third-party manufacturing of aggregates, RMC, and aerated concrete blocks, ensuring quality control, better margins, and higher revenue.

4. Strong Network Effects for Sustained Growth
A growing ecosystem of customers and vendors creates a self-reinforcing demand cycle, enhancing material availability, data-driven decision-making, and compliance with verified transactions.

5. Technology-Enabled Credit Risk Assessment
A robust credit risk framework analyzes GST filings, financial data, and transaction history to assess new and existing customers, enabling real-time risk monitoring and strategic decision-making.

6. Experienced Leadership Driving Growth
Led by Ronak Kishor Morbia (Chairman & MD) with 13+ years in construction material supply, and Bhavik Jayesh Khara (Whole-time Director) overseeing finance and operations with 6+ years of expertise

Business Strategies

1. Optimizing Product Mix for Higher Margins
Diversifying construction material offerings to align with market demand and customer preferences, focusing on high-margin products to enhance financial performance.

2. Strategic Partnerships for Supply Chain Strength & Portfolio Expansion
Collaborating with third-party manufacturers to leverage underutilized capacities, ensuring better production control, quality assurance, and higher margins while minimizing capital expenditure.

3. Partnerships to Drive Demand and Revenue Growth
Expanding sales by forming alliances with key industry players, tapping into real estate and infrastructure networks, and gaining insights into active projects for informed credit risk management.

4. Enhancing Working Capital Efficiency
Optimizing cash flow through better vendor payment terms, invoice discounting, and supply chain financing, ensuring immediate capital access and operational liquidity.

5. Expanding Market Penetration & Increasing Wallet Share
Reaching new micro-markets while strengthening relationships with developers and contractors, increasing the sale of construction materials to existing and new projects.

6. Leveraging Technology for Operational Optimization
Implementing demand-supply auto-syndication, credit-linked pricing, and advanced hardware deployment to automate order processing, optimize pricing strategies, and improve inventory management

Business Risk Factors and Concerns

1. Dependence on Key Revenue Sources
A significant portion of revenue comes from aggregates (31.19%), ready-mix concrete (21.12%), and steel (16.13%). Any decline in demand for these materials due to market downturns, competition, or macroeconomic factors can negatively impact financial performance.

2. Geographical Revenue Concentration
Operations are highly concentrated in Maharashtra, Karnataka, and Tamil Nadu, contributing 81.05% of revenue in Fiscal 2024. Any adverse economic, political, or environmental developments in these states could disrupt business and financial stability.

3. Reliance on Third-Party Manufacturers
Third-party manufactured materials contributed 17.57% of revenue in Fiscal 2024. Dependence on external manufacturers poses risks related to supply chain disruptions, quality control, and production delays.

4. Vendor Dependency Risks
The top 10 vendors accounted for 38.25% of total purchases in Fiscal 2024. Lack of long-term agreements with vendors increases the risk of supply shortages, price fluctuations, and disruptions in operations.

5. Industry-Specific Demand Volatility
Business performance is directly linked to housing, infrastructure, and commercial real estate sectors. Any downturn in these industries due to economic slowdowns or policy shifts may adversely affect revenue growth.

6. Uncertainty in Value-Added Services Growth
Value-added services through ArisUnitern Re Solutions Private Limited contributed 3.56% of revenue in Fiscal 2024. Market fluctuations, regulatory changes, and economic downturns could impact demand, affecting financial stability and client retention.

ArisInfra Solutions is highly dependent on key materials like aggregates, ready-mix concrete, and steel, making it vulnerable to market shifts. Its geographical concentration in Maharashtra, Karnataka, and Tamil Nadu (81.05% of revenue) adds regional risks. Reliance on third-party manufacturers (17.57% of revenue) and top vendors (38.25% of purchases) creates supply chain uncertainties. The company’s growth is also tied to real estate and infrastructure sectors, and its value-added services (3.56% of revenue) face demand fluctuations.