Management Discussion and Analysis
Directors' Report & Management Discussion and Analysis
Your Directors are pleased to present the Twenty Third Annual Report together with theAudited Accounts of your Company for the financial year ended 31st March, 2013. Thesummarised standalone and consolidated financial performance of your Company is as under:
|Particulars || |
| ||Year Ended 31st March, 2013 ||Year Ended 31st March, 2012 ||Year Ended 31st March, 2013 ||Year Ended 31st March, 2012 |
|Total Income ||11714 ||12487 ||16217 ||16506 |
|Earning Before Interest, ||2274 ||2000 ||5287 ||5125 |
|Depreciation, Tax and || || || || |
|Amortization (EBIDTA) || || || || |
|Less: Finance Cost ||1884 ||1533 ||4967 ||4528 |
|Earning Before Depreciation, Tax & Amortization (EBDTA) ||390 ||467 ||320 ||597 |
|Less: Depreciation & Amortization ||29 ||37 ||70 ||88 |
|Profit before extra ordinary items and tax ||361 ||430 ||250 ||509 |
|Less: Goodwill written ||- ||200 ||- ||200 |
|off/extra ordinary items || || || || |
|Profit Before Tax (PBT) ||361 ||230 ||250 ||309 |
|Provision for: || || || || |
|Income Tax ||117 ||143 ||126 ||173 |
|DeferredTax Liability ||2 ||4 ||3 ||8 |
|Earlier Year ||- ||- ||(1) ||4 |
|ProfitAfterTax(PAT) ||242 ||83 ||122 ||124 |
|Less: Minority Interest ||- ||- || || |
|Balance broughtforward from previous year ||140 ||559 ||310 ||935 |
|Amount available for ||382 ||642 ||432 ||1059 |
|appropriation || || || || |
|Appropriations || || || || |
|Transfer to General Reserve ||- ||- ||- ||(29) |
|Proposed Dividend ||(56) ||(44) ||(56) ||(45) |
|Dividend Tax ||(9) ||(7) ||(9) ||(7) |
|Earlier Year Adjustment ||(1) ||(451) ||2 ||(668) |
|Balance carried to Balance Sheet ||316 ||140 ||369 ||310 |
|(being amount transferred to Reserve & Surplus) || || || || |
Shristi is one of the leading construction and infrastructure development companies inIndia with a Pan-India presence. Shristi is operating in three main verticals,Infrastructure Construction, Infrastructure Development and Infrastructure Consultancy.
1. Infrastructure Construction
In the Infrastructure Construction vertical, your Company is focusing on executingpower projects on EPC basis. Further, since investments in the transmission sector willincrease with the increase of generation capacity over the next few years, your companyhas developed capacity and is well poised to utilize the opportunities available in theassociated transmission and sub stations sector in a big way.
One of the notable achievements in the previous year has been the commissioning of thefirst power plant for the client which the Company took on EPC basis at Dishergarh, (WestBengal). Infrastructure construction projects in other sectors like Housing, Hospitality,SEZ etc. are also being executed satisfactorily.
2. Infrastructure Development
In the Infrastructure Development vertical, your Company continues to focus ondeveloping green integrated townships, integrated industrial parks & logistic hubs.Your Company has launched a new Integrated Green Township in Guwahati, the Gateway of theNorth East, with a built up area in excess of 13.5 million sq. ft. It is spread across 250acres of sprawling greenery and set against the backdrop of the magnificent Brahmaputrariver and the majestic hills. It is going to be the first integrated township with worldclass living & leisure options in a fully gated community in the North East. Theprogress of work on various projects is satisfactory but a few projects are going slow dueto uncertainty in regulatory environment. Shristi's one more Retail Mall of approximately2.5 lacs square feet become fully operational at Asansol with many leading brands startingtheir operations during the year.
The business of infrastructure development division is poised for sustained growth andthe outlook is bright. The Company is confident to achieve better quotient of customer'ssatisfaction and to achieve higher growth
coupled with optimization of the resource utilization.
3. Infrastructure Consultancy
In the Infrastructure Consultancy vertical, Shristi provides consultancy services inthe field of construction, development & allied activities. Its expertise lies inarchitectural space and it outsources part of the work to external agencies to providefull-fledged service to its clients. Shristi draws upon HUDCO's (its JV partner) immensetechnical knowledge related to Housing & Urban Infrastructure, City Planning, TourismDevelopment, Landscaping, Development of Heritage, Redevelopment of Walled Cities &other Environmental & Social Projects, for providing consultancy to its clientele.Recently, your Company has completed City Development plans for ten towns in MadhyaPradesh which involved studying & analyzing gaps & deficiencies in various utility& social sectors and designing projects to raise the overall urban standards and alsoa Pilot project for slum development in Haridwar under Rajiv Gandhi Awas Yojana of GoIwhich involved resettlement of 1400 families living in slums to various locations atHaridwar to a planned neighbourhood designed by Shristi. Presently, it is executing manyprojects including a prestigious project of Madhya Pradesh Forest Department involvingThird Party Quality Assurance for building/ renovating forest training institutes at fourlocations in the state which is being funded by Japan International Co-operation Agency.
The year under review continued to be challenging for the Company because of increasedcosts, challenging business environment and sluggish industry volumes. On standalonebasis, your Company earned EBIDTA of Rs 2274 lacs against previous year's figure of Rs2000 lacs and on consolidated basis your company has earned EBIDTA of Rs 5287 lacs againstlast year's figure of Rs 5125 lacs. Your Company has taken many measures to contain costsand has judiciously allocated its resources to improve its cashflows, which has resultedin better profitability on standalone basis.
In continued pursuit of distributing profits to shareholders, your Directors haverecommended equity dividend of Rs 0.25 per share for the Financial Year 2012-13 (FinancialYear 2011-12 : Rs 0.20). The dividend, if approved at the 23rd Annual General Meeting bythe members, will be paid to all those equity shareholders whose names appear in theregister of members as on September 14, 2013. The Dividend for the financial year 2012-13shall be subject to tax on dividend to be paid by your Company but will be tax free in thehands of the shareholders.
INDUSTRY STRUCTURE AND DEVELOPMENTS, OPPORTUNITIES, THREATS AND OUTLOOK
Global economic activity remains passive amidst signs of diverging growth paths acrossmajor economies. In the United States, a slow recovery is taking hold, driven byimprovements in the housing sector and employment opportunities. However, the pace ofrecovery remains weak which will slowly gain pace in the months ahead.
In the Euro area, economy remains mired in recession, characterized by decline inindustrial production, weak exports and low domestic demand. This makes the globalenvironment in the coming years more uncertain and exporters might find it morechallenging. A clear industrial policy with special emphasis on manufacturingcompetitiveness and infrastructure spending will be the key requirement of revival ofdemand in markets like UK.
The Emerging Market & Developing Economies, as a group saw a market decline ingrowth rates, from 6.4% in 2011 to 5.1% in 2012, with the major constituents viz. China,India, Brazil, Russia all recording significant deceleration.
According to the forecasts of the International Monetary Fund, the World GDP isexpected to grow by 3.3% in 2013 with advanced economies growing by 1.2% and the emergingand developing economies growing by a much faster rate of 5.3%; while the Euro areacontinues to contract mildly by 0.3%.
India witnessed an economic slowdown with GDP growth of 5% in Financial Year 2012-13 -a 10 year low. The key issues for this downturn include the cumulative effect of highinflation levels in the economy which led to RBI adopting a tight monetary policy, lack ofpolitical consensus on policy reforms, a marked slowdown in the rate of capital formationand weak investor sentiments under the backdrop of a sluggish global economy as discussedearlier.
Better quality of physical infrastructure is a prerogative for the Indian economy tocontinue at the high rates established over the last decade. But infrastructuredevelopment in the last two years has been slow due to numerous challenges being faced bythe sector. Some of the challenges are complex but cohesive solutions oriented approach byall concerned stakeholders can go a long way in helping the sector realize its immensepotential.
The current state of the economy makes it necessary for the Government to put in placea robust and implementable plan of action for its revival. The economy has experienced aconsistent fall in the quarterly GDP growth since 2011, alarmingly high levels of twindeficits viz. Current Account Deficit (CAD) and Fiscal Deficit as well as worryingvolatility in the inflow of foreign investments. Though inflationary pressure has recededin the last quarter of 2012 but other worrying economic indicators has put the Indianeconomy in a challenging pathway on the short term. Further, sharp decline of Rupeeagainst the US dollar is a major cause of concern as it can undermine the recent gains ininflation and also depress badly the much needed capital inflows. The Government hasannounced several regulatory reforms and policy measures including the setting up ofCabinet Committee on Investments to ensure expeditious clearance and implementation of bigticket infrastructure projects and it is expected that same would yield results.
As per RBI estimates, the Indian economy is expected to grow by 5.7% during 2013-14representing only a modest improvement over the previous year.
Opportunities, Threats & Business Outlook
The demand of Infrastructure is greater than ever before, the Government of India hasset an ambitious target for doubling investment in infrastructure from Rs 20.5 trillion toRs 40.9 trillion during the Twelfth Plan (2012-17). The total investment in infrastructureis proposed to be increased to 10.5% of GDP by the end of the plan period. If even, threefourth of this planned investment is actually realized, it can propel India's economicgrowth back to a higher trajectory and with it, significantly improve the fortunes of theinfrastructure construction and development sector.
While the management is confident of exploiting the opportunities, there are alsochallenges to be met in terms of economic environment, regulatory hurdles, escalatingconstruction costs, sluggish demand for commercial space and non availability of skilledmanpower at all levels. But your Company is confident of managing associated risk anddifficult market conditions through well defined business processes, risk management toolsand a dedicated & experienced senior management team across all segments.
During 2013-14, economic activity is expected to show a modest improvement over lastyear, with a pick-up likely only in the second half of the year.
The outlook remains subdued, with the pipeline of new investment drying up and existingprojects stalled by bottlenecks and implementations gaps, increased cost of funds,difficulty in land acquisition etc. With the global growth unlikely to improvesignificantly from 2012, growth in services, exports, infrastructure development mayremain sluggish for quite some time. It is critical to consolidate and build upon therecent gains in controlling inflation. Sustained revival of growth is not possible withouta revival of investment. But investment sentiment remains inhibited owing to subduedbusiness confidence and dented business profitability. However, the slowdown in the Indianeconomy has not altered the belief in the long term potential of the economy. DomesticConsumption remains one of the key growth engines of the Indian economy. With the largeand growing population, significant additions to the working age population over themedium to long term, rising disposable incomes including in rural areas and theGovernment's increasing spends on the social sector to foster inclusive growth - thestructural drivers for rapid growth in consumption are in place.
Shristi is in a phase of consolidation and is focused on optimizing its strategy andoperations to overcome the present economic and financial challenges to emerge as an evenstronger entity that can best leverage opportunities once the external environment regainsits growth oriented trajectory.
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS
Your Company recognizes Risk Management as an integrated, forward looking and processoriented approach for managing all key business risks and opportunities. Your Company'sbusiness exposure to the normal financial and market risks continue to be monitored,managed and strengthened from time to time by systems and processes commensurate with thevolume of business activities and the perceived risk mitigation requirements. Internalcontrol systems and process level checks and balances are reviewed and updated on acontinuous basis. The internal control is supplemented by an extensive program of internalaudit, reviewed by the Management, documented policies, guidelines and procedures.
Your Company has implemented the ERP systems for better internal controls. The TopManagement and Audit Committee of the Board review the findings evolved during thechecking of system & operation and take steps accordingly.
Shristi firmly believes that its employees are one of the most valuable resources. Onlyhighly motivated employees can enable the Company to meet and exceed the expectations ofvarious stakeholders including customers and investors. Employees are encouraged todevelop their respective individual development plans and continuous learning processeshelp them do better. Your Company creates and maintains a supportive environment, toattract and cultivate the very best talent in this business. Employer Branding of Shristiis maintained and leveraged through a well-knit, winning embrace of Talent Acquisition,Talent Management & Talent Engagement that provides the competitive edge to thecompany in adding agility and ability through continuous capability building mechanismthat imparts sustainable human capital advantage in today's dynamic, turbulent businesslandscape.
In pursuance of Clause 49 of the Listing Agreement entered into with the stockexchanges, a separate section on Corporate Governance has been incorporated in the AnnualReport for the information of the shareholders. A certificate from the Auditors of theCompany regarding compliance of the conditions of Corporate Governance as stipulated underthe said Clause 49 also forms a part of this Annual Report.
Deposits amounting to Rs 56,465/- matured and remained unclaimed by the depositors ason 31st March, 2013 and the said amount is lying in escrow account with HDFC Bank. TheCompany has not accepted any deposits from the public during the financial year endedMarch 31st, 2013.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
During the year under review, your Company has transferred a sum of Rs 50,218/- to theInvestor Education & Protection Fund, the amount which was due & payable andremained unclaimed and unpaid for a period of seven years, as provided in Section 205A(5)of the Companies Act, 1956.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company prepared in accordance withAccounting Standards 21 and 27, issued by the Institute of Chartered Accountants of India,form part of the Annual Report. The group recorded a consolidated Profit Before Tax of Rs250 lacs for the financial year 2012-13 as compared to Rs 309 lacs during the financialyear 2011-12. The statement pursuant to Section 212 of the Companies Act, 1956 containingdetails of Company's subsidiaries form part of the Annual Report.
Ministry of Corporate Affairs, Government of India vide General Circular 2/2011 dated8th February, 2011 has granted general exemption by directing that the provisions ofSection 212(8) of the Companies Act, 1956 shall not apply in relation to subsidiaries andsub subsidiaries of those Companies which fulfill certain conditions mentioned in the saidcircular. Accordingly, by fulfilling the conditions mentioned in the said circular thebalance sheet, profit and loss account and other documents of the said subsidiaries andsub subsidiaries are not attached with the Company's accounts. As required by the saidcircular the financial information of the said subsidiaries and sub subsidiaries are beingdisclosed in the Annual Report and the Annual Report and the detailed accounts of thesubsidiary and sub subsidiaries shall be put on the Company's website www.shristicorp.com. The Company will makeavailable the annual accounts of the said subsidiaries and sub subsidiaries and therelated detailed information to any member of the Company who may be interested inobtaining the same. The annual accounts of subsidiaries will also be kept open forinspection by any shareholder at the Company's Registered Office and that of therespective subsidiaries. The consolidated financial statements presented by the Companyinclude financial results of the said subsidiaries. A statement of holding Company'sinterest in subsidiaries and sub subsidiaries viz., Shristi Housing Development PrivateLimited, Shristi Urban Infrastructure Development Limited, Vivekananda Skyroad Limited,Border Transport Infrastructure Development Limited, Shristi Udaipur Hotels & ResortsPrivate Limited, East Kolkata Infrastructure Development Private Limited, Kanchan JangaIntegrated Infrastructure Development Private Limited, World City Development PrivateLimited, Medi-Net Services Private Limited, Vitthal Hospitality Private Limited, FinetuneEngineering Services Private Limited and Vipani Hotels & Resorts Private Limited arealso furnished.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act, 1956 and the Rulesthere under, in respect of the employees of the Company, is provided in the Annexureforming part of this Report. In terms of Section 219 (1) (b) (iv) of the Act, the Reportand Accounts are being sent to the Members, excluding the aforesaid Annexure. The Annexureis available for inspection by Members at the Registered Office of the Company duringbusiness hours on working days up to the date of the ensuing AGM, and if any Member isinterested in obtaining a copy thereof such Member may write to the Company Secretary,whereupon a copy would be sent.
The website of your Company, www.shristicorp.comcarries a comprehensive database of information of interest to the investors includingthe corporate profile and business activities of your Company and the various projectswhich are handled by your Company.
In accordance with the provisions of the Companies Act, 1956 and your Company'sArticles of Association, Mr. Sakti Prasad Ghosh retires by rotation at the ensuing AnnualGeneral Meeting and being eligible, offers himself for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956, your directorsconfirm :
(i) that in the preparation of the annual accounts for the financial year ended 31stMarch, 2013, the applicable accounting standards have been followed along with properexplanation relating to material departures;
(ii) that the directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year;
(iii) that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;and
(iv) that the directors have prepared the annual accounts for the financial year ended31st March, 2013 on a going concern basis.
M/s. S. S. Kothari & Co., Chartered Accountants, retire as the Auditors of yourCompany at the conclusion of the ensuing Annual General Meeting and have confirmed theireligibility and willingness to accept the office of Auditors, if re-appointed. ACertificate from the Auditors has been received to the effect that their re- appointment,if made, would be within the limits prescribed under Section 224(1B) of the Companies Act,1956. Members are requested to consider their re - appointment for financial year ending31st March, 2013 on remuneration to be decided by the Board of Directors of your Company.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGSAND OUTFLOW
Information in accordance with the provisions of Section 217(1)(e) of the CompaniesAct, 1956, read with the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 regarding conservation of energy and technology absorption are notgiven as the Company has not undertaken any manufacturing activity.
During the year under review, the total foreign exchange expenditure of your Companywas Rs 44.93 lacs (previous year Rs 27.02 lacs).
Your Directors would like to acknowledge and place on record their sincere appreciationfor all stakeholders - Customers, Financial Institutions, Banks, Government Authorities,Stock Exchanges, Suppliers, the Company's valued investors and other business partners fortheir continued co-operation and excellent support received during the year.
Your directors recognize and appreciate the efforts and hard work of all the employeesof the Company and their continued contribution to its progress.
| ||For and on behalf of the Board of Directors |
|Place : Kolkata ||Dipak Kumar Banerjee |
|Date : 27th May, 2013 ||Chairman |