OVERVIEW
GLOBAL ECONOMIC OUTLOOK
The outlook for the global economy took a positive turn early in
the year. Inflationary pressures began to ease, with global energy prices back at levels
last seen prior to the invasion of Ukraine. However, domestic inflationary pressures
remain relatively elevated in a number of economies, in particular those with tighter
labour markets, although even their inflation probably already passed its peak around the
second half of last year with headline inflation expected to continue falling this year,
and potentially reaching central banks targets by 2024.
The global economy has been through a series of significant shocks over
the past three years – the Covid-19 pandemic and the Russia Ukraine conflict –
and saw a major expansion to government debt and a significant hike in policy interest
rates by central banks.
The outlook for the next two years will depend on how this geopolitical
conflict evolves. According to research reports, the baseline forecast is for growth to
fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in
2024. Advanced economies are expected to see an especially pronounced growth slowdown,
from 2.7 percent in 2022 to 1.3 percent in 2023.
The baseline forecast is for growth to fall from 3.4 percent in 2022 to
2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are
expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3
percent in 2023. In a plausible alternative scenario with further financial sector stress,
global growth declines to about 2.5 percent in 2023 with advanced economy growth falling
below 1 percent. Global headline inflation in the baseline is set to fall from 8.7 percent
in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core)
inflation is likely to decline more slowly. Inflations return to target is unlikely
before 2025 in most cases.
INDIAN ECONOMIC OVERVIEW
The Indian economy witnessed muted growth of 4.4% in Q4 2022
compared to 6.3% in Q3 2022, with sluggish private consumption and export. The
countrys real GDP growth in the fiscal year 2022-23 is estimated at 7.0% in
comparison to 9.1% in the prior year. The efforts of the Union Budget 2023-24 to improve
the disposable income of taxpayers in
the country is expected to boost consumption via an increase in
discretionary spending. The efforts of the Union Budget 2023-24 to improve the disposable
income of taxpayers in the country is expected to boost consumption via an increase in
discretionary spending. In addition, the strong capital expenditure push provided by the
Union Budget, with an increased outlay of 37.4% in comparison to the fiscal year 2022-23,
is expected to drive growth, investments, and job creation and further RBI projects
inflation at 6.5% for 2022-23 and 5.3% for 2023-24.
INDIAN CONSTRUCTION INDUSTRY
The Indian construction industry is the engine of the Indian
economy. The Indian construction sector is responsible for propelling the countrys
overall development as good infrastructure is the basis for all other projects, and it
enjoys prime attention from the government. Construction industry in India is expected to
grow by 12.0% to reach INR 45,907 billion in 2023. Despite near-term challenges in certain
construction sectors, medium to long term growth story in India remains intact. The
construction industry in India is expected to grow steadily over the next four quarters.
The growth momentum is expected to continue over the forecast period, recording a CAGR of
9.9% during 2023-2027. The construction output in the country is expected to reach INR
66,954.8 billion by 2027.
Despite the surge in construction costs, government spending on
infrastructure projects has remained strong in 2022, and the trend is projected to further
continue in 2023. This along with the spending on commercial projects, including the
construction of new data centers across the country, will keep supporting the growth of
the construction industry over the next three to four years.
Furthermore, the demand for residential units is also driving the
residential construction market in India. Despite the surge in construction costs and rate
hikes announced by the Reserve Bank of India, the growing residential sales volume has led
to a recovery in the real estate market.
The growth has been led by mid-range, premium, and luxury segments in
2022. However, the trend might slow down in 2023, owing to recessionary fears and a
further increase in rate hikes projected to be announced by the Reserve Bank.
The government has announced a strong pipeline of infrastructure
projects across different sectors. The spending on these projects is projected to keep
assisting the growth of the overall construction industry in India over the next
three to four years. To fund the infrastructure construction projects,
the government has also entered into loan agreements with the Asia Development Bank.
In January 2023, the Finance Ministry announced that the Indian
government entered into a loan agreement worth US$1.2 billion for funding infrastructure
development in India. The loan agreement is expected to cover the development activities
of highways in the Northeastern state of Assam and Tripura, among other projects.
GROWTH DRIVERS FOR THE INDIAN CONSTRUCTION INDUSTRY / BUSINESS OVERVIEW
INDUSTRY SCENARIO
The construction Industry in India is expected to reach $1.4 Tn by
2025.
- Cities Driving Growth - Urban population to contribute 75% of GDP (63% present), and
68 cities will have a population of more than 1 Mn.
- The construction industry market in India works across 250 sub-sectors with linkages
across sectors.
- Residential- By 2030, more than 40% of the population is expected to live in urban
India (33% today), creating a demand for 25 Mn additional mid-end and affordable units.
- Under NIP, India has an investment budget of $1.4 Tn on infrastructure - 24% on
renewable energy, 18% on roads & highways, 17% on urban infrastructure, and 12% on
railways.
- Schemes such as the revolutionary Smart City Mission (target 100 cities) are
expected to improve quality of life through modernized/ technology driven urban planning.
- 54 global innovative construction technologies identified under a Technology Sub-Mission
of PMAY- U to start a new era in Indian construction technology sector.
- Over 3,500 cities have certified as ODF+ and 1,191 cities as ODF++ under SBM-U.
- 35 Multimodal Logistics Parks (MMLPs) to be developed at a total capital cost of $ 6.1
Bn, will cater to 50% of the freight movement.
Union Budget 2023 Highlights:
- INR 10 Lakh Crore: 33% Increase in capital Investment Outlay
- The outlay for PM Awas Yojana is being enhanced by 66 % to over 79,000 cr
- Urban Infrastructure Development Fund: INR 10,000 Cr Outlay per year to create urban
infrastructure in tier 2 & 3 cities
Introduction
Ahluwalia Contracts (India) Ltd (‘ACIL or
‘Company) is engaged in the engineering and construction of large building
infrastructure projects, many of which are of national importance. It is one of the oldest
Construction companies in India, founded by Late Sh. Karam Chand Ahluwalia father of Mr.
Bikramjit Ahluwalia in 1965. ACIL develops and executes civil engineering technically
complex, high-value projects that span across diverse segments such as transportation,
Building Projects, irrigation and water supply, special buildings and industrial plants.
ACILs projects are hallmarks of quality, excellence, and precision; the Company has
delivered numerous engineering marvels within each of its respective segments.
The megatrends shaping the business landscape include AIIMS and
Institutional Projects, like All India Medical Sciences in India, Institutional Building,
Railway Stations, Universitys, Data Centres becoming more commitment works,
demanding and aspirational. There is a clear preference for brands of trust and
reliability as well as those ensuring deep engagement with timely delivery of the
projects.
FINANCIAL PERFORMANCE
(Rs. in Lakhs)
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Gross Order Book |
13,93,067 |
13,03,361 |
| Income from Operations |
2,83,839.33 |
2,69,246.91 |
| EBITDA |
30,417.40 |
25,660.45 |
| PAT |
19,416.23 |
15,525.90 |
| Earnings Per Share (in) |
28.98 |
23.18 |
KEY FINANCIAL RATIOS AND THEIR DEVELOPMENT
(Rs. in Lakhs)
| Particulars |
FY 2022-23 |
FY 2021-22 |
Change in % |
| Debtors Turnover |
5.41 |
6.59 |
-17.89% |
| Inventory Turnover |
11.68 |
9.99 |
16.95% |
| Interest Rate Coverage Ratio |
8.02 |
5.10 |
57.25 |
| Current Ratio |
1.80 |
1.77 |
1.62% |
| Debt Equity Ratio |
NIL |
NIL |
NIL |
| Operating Profit (EBITDA) Margin (%) |
10.72 |
9.53 |
12.49 |
| Net Profit Margin (%) |
6.84 |
5.77 |
18.63 |
| Return on Net Worth (%) |
17.13 |
16.20 |
5.75 |
Ensuring safe working environment: Health, Safety and Environment (HSE)
are key enablers for our suppliers/ contractors to be able to deliver and meet the
contractual commitments without putting its employees at risk. Towards this objective, for
each of the large contracts that have significant people impact, a dedicated HSE policy,
guideline and governance mechanism is defined, agreed and put in place. Each operating
asset or a project has a structured governance review on defined HSE metrics and any
violation is reviewed and appropriate action is taken through effective contractual terms
and conditions and in compliance with all applicable requirements.
LIST OF ACIL AWARDS
WORKMEN SAFETY
The Company takes adequate measures to assess environmental risks
and manage them by studying various reports and adopt various safety measures to minimise
accidents. Also, the Company has emergency response plans in place to deal with a
situation that affects the environment. It advocates proactively improving its management
systems, to minimise health and safety hazards, thereby ensuring compliance in all
operational activities.
Ahluwalia Contracts (India) Ltd – ACIL is committed to prevent ill
Health & Injury to its Employees, Contractors and Visitors and Environmental Pollution
associated with all its activities and services through:
- Establishing, implementing and maintaining Environmental and Occupational Health &
Safety Management Systems in compliance with International Standards.
- Continually improving the Health, Safety & Environmental performance by setting and
reviewing relevant objectives and targets.
- Complying with applicable EHS legal and other requirements.
- Dissemination of this EHS Policy through effective communication and training to
personnel working for and on behalf on of ACIL and be made available to other interested
parties, as required
| Sl. No. |
Certificate Name |
Project / Site Name |
Category |
| 1 |
IBC Awards |
Central Vista |
Office Building |
| 2 |
IBC Awards |
Auditorium, Kolkata |
Infrastructure Project |
| 3 |
IBC Awards |
Cultural canter, Bodhgaya Bihar |
Recreational Scheme |
| 4 |
World Safety Organization, State level OHS&E
Awards |
AIIMS, Jammu |
Workplaces OHSE Excellence Award |
| 5 |
Best Completed project - Delhi by CPWD |
Central Vista Project |
Pre-Engineered Building Complexes at KG Marg and
Africa Avenue, New Delhi - Certificate of Merit |
| 6 |
Civil Engineering & Construction Review
(CE&CR) |
Mr. Bikramjit Ahluwalia |
Life time Achievement Awards |
| 7 |
Institute of Economic Studies |
Mr. Bikramjit Ahluwalia |
Business Icon Awards |
| 8 |
IBC Awards |
100 bedded PICU, Muzaffarpur, Bihar |
Award for excellence in built environment |
| Sl. No. |
Certificate Name |
Project / Site Name |
Category |
| 9 |
Construction Industry Development Council
(Vishwakarma Award 2022) |
ESI, Kolkata |
Corona Warrior |
| 10 |
Construction Industry Development Council
(Vishwakarma Award 2022) |
CNCI, Kolkata |
Best Construction Project |
| 11 |
Construction Industry Development Council
(Vishwakarma Award 2022) |
Bandhan Bank, Kolkata |
Best HSE Practices |
| 12 |
ET NOW Presents Global Real Estate Awards 2022 |
Ahluwalia Contracts India Limited |
Most preferred infrastructure and construction
company |
RISKS AND CONCERNS
Ahluwalia Contracts (India) Ltd (ACIL) acknowledges that every business
has some inherent risks and thus, the Company adopts timely measures to understand the
internal and external environment so that these risks can be identified and adequate
measures can be taken to mitigate them. The Company has in place Enterprise Risk
Management System (ERMS), which decides the possible mitigation plans for all risks and
embeds them in the strategic plans of the Company.
Pursuant to Regulation 21 of Listing Regulations, the Board of
Directors of the Company has constituted a Risk Management Committee on April 26, 2021, to
frame, implement and monitor the risk management plan for the Company. The Committee
comprises of two Executive Directors and one Non-Executive Independent Director.
The Company has established Enterprise Risk Management process to
manage risks with the objective of maximizing shareholders value. The Board of Directors
of the Company has formed a Risk Management Committee to implement and monitor the risk
management Policy of the Company. The development and implementation of the risk
management policy has been covered in the Management Discussion and Analysis, which forms
part of this report.
INFORMATION TECHNOLOGY
Information Technology Services (ITS) Division continued to make
advances, providing high-tech IT enabled services to ACILs mainstream activities by
developing/ implementing IT solutions to deliver better quality services with emphasis on
increased efficiency and improved productivity.
ITS has initiated major steps towards the critical activity of
deperimeterization of activities as well as IT-enabled business continuity in safe and
secure manner. ITS has also adopted and enabled smart platform in seamless
Engineering activity through cutting-edge technology in pursuit of
operational excellence, enhanced productivity & competitive edge. Adoption of
technology at every activity has ushered in new way of doing business in the Company.
ENHANCING WORKMEN EFFICIENCY
Workmen are the key to a project site and their availability and
productivity are significant to the timely completion of the projects. The Company has
implemented digital solutions for mobilising, on boarding and monitoring the productivity
of the workmen.
BOOSTING EMPLOYEE RELATIONS
In the year 2022-23, various efforts towards enhancement of work life
balance for employees were undertaken by your Company. During the ongoing COVID-19
Pandemic period especially during the severe second wave a number of employee welfare
initiatives were undertaken in order to facilitate timely and effective treatment and
ensure optimum medical facilities were extended to ACIL employees and their family
members.
HR GOALS
The Company promotes diversity and is in a constant endeavor to
establish a corporate culture that embodies mutual respect. It allows employees to play
active roles in a workplace that promotes personal and professional growth, diverse values
and conducive work environment that is completely free of discrimination and harassment.
The Companys HR department is fully trained to cater to the needs of the employees
that may arise from time to time. Also, the HR department creates all HR strategies in
consultation with the senior management and Board of Directors of the Company.
The Company has a strong belief that maximizing the potential, skills
and enthusiasm of each employee will help the Company in attaining sustainable growth. The
Company
is committed to providing a healthy and co-operative work environment.
To ensure this, the Company properly listens to individual concerns and addresses the
issues raised by the employees. The Company further empowers employees in a manner that
encourages behavior resulting in better performances and value addition for clients/
customers.
CULTURE OF INCLUSION
ACIL is anti-discrimination and its employment policies and
practices focus on ensuring that all employment processes are free from unlawful
discrimination. Engagement studies
have shown that ACIL is a safe place to work for women. This confidence
has boosted the Companys employment and retention of women. As on March 31, 2023,
the Company had a total of 2,551 Staff on its rolls of which 59 were women.
The Company nurtures multi-generational workforce and grooms
young talent. Its efforts in sustaining a healthy association with top engineering and MBA
institutes led to rich demographic dividend with 72% employees under 45 years of age.
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