Indian Economic Overview
The Indian economy reported an attractive recovery in FY 2021-22, its GDP rebounding
from a de-growth of 7.3% in FY 2020-21 to a growth of 8.7% in FY 2021-22 By the close of
FY
2021-22, India was among the six largest global economies, its economic growth rate was
the fastest among major economies (save China), its market size at around USD 1.40 billion
the second most populous in the world and its rural underconsumed population arguably the
largest in the world.
Y-o-Y growth of the Indian economy:
|
FY 19 |
FY 20 |
FY 21 |
FY 22 |
| Real GDP growth (%) |
6.1 |
42 |
(7.3) |
8.7 |
The Indian economy was affected by the second wave of the pandemic that affected
economic growth towards the fag end of the previous financial year and across the first
quarter of the financial year under review. The result is that after a growth of 1.6% in
the last quarter of FY 2020-21, the Indian economy grew 20.1% in the first quarter of FY
2021-22 due to the relatively small economic base during the corresponding period of the
previous year.
Indias monsoon was abundant in FY 2020-21 as the country received 99.32% of a normal
monsoon, lower than in the previous year. The estimated production of rice and pulses
recorded volumes of 127.93 Million Tons and 26.96 Million Tons respectively. The total
oilseeds production of the country recorded a volume of 371.47 Million Tons. Moreover,
based on the spatial and temporal distribution of the 2021 monsoon rainfall, the
agricultural gross value added (GVA) growth in FY 2021-22 is anticipated to be 3-3.5%. The
countrys manufacturing sector grew an estimated 12.5%, the agriculture sector 3.9%,
mining and quarrying by 14.3%, construction by 10.7% and electricity, gas and water supply
by 8.5% in FY 2021-22.
Indian economic reforms and Union Budget 2022- 23 provisions
The Union Budget FY 2022-23 seeks to lay the foundation of the Indian economy over the
Amrit Kaal period of the next 25 years leading to 100 years of independence in 2047. The
government is emphasizing the role of PM Gati Shakti, Inclusive Development, Productivity
Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action,
as well as Financing of Investments.
The capital expenditure target of the Indian government expanded by 35.4% from Rs. 5.54
Lakh Crore to Rs. 7.50 Lakh Crore. The effective capital expenditure for FY 2022-23 is
seen at Rs. 10.7 Lakh Crore. An outlay of Rs. 5.25 Lakh Crore was made to the Ministry of
Defence, which is 13.31% of the total budget outlay. A boost was provided to Indias
electric vehicle policy Scheme for Faster Adoption and Manufacturing of (Hybrid and)
Electric Vehicle in India. An announcement of nearly Rs. 20,000 Crore was made for the PM
Gati Shakti National Master Plan to catalyse the infrastructure sector. An expansion of
25,000 Km was initiated for FY 2022-23 for the national highways network. To boost the
agricultural sector, an allocation of Rs. 237 Lakh Crore was made towards the procurement
of wheat and paddy under MSP operations. An outlay of Rs. 1.97 Lakh Crore was announced
for the Production Linked Incentive (PLI) schemes across 13 sectors.
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. A huge employment opportunity exists for Indias youth in
construction, operation and maintenance of infrastructure. As a result, the National Skill
Development Agency is also maintaining its thrust on infrastructure-focused skill
development opportunities.
Outlook
Indias infrastructure sector is rapidly evolving and the key trends demonstrate
positivity and optimism The Government of India is also progressively stepping up its
infrastructure spending through Budgetary and non-Budgetary support. The roadmap
for the sector over the next few years appears to be firmly in place. However, much will
depend on proper allocation of funds, achievement of targeted short-term goals and the
execution mechanism being put in place.
Indian Infrastructure Industry
For a developing economy like India, with a high aspirational population,
infrastructure creation is the critical need of the hour. It is the broad foundation of
the economy, which support all other sectors. The infrastructure sector, as a whole, spans
a wide range of sub-groups such as power, roads, ports, railways, airports,
telecommunication, and so on. In spite of challenges posed by the pandemic since 2020,
India continues to rank among the fastest growing economies of the world, with a vision to
accomplish the US$ 5 trillion mark in the foreseeable future.
The key driver for the Indian economy is infrastructure sector. The India government
increased the National Infrastructure Pipeline (NIP) to 7,400 projects in FY 2020-21, even
as ~217 projects worth H 1.10 Lakh Crore (USD 15.09 billion) were completed in FY 2019-20.
The government had invested USD 1.4 trillion in infrastructure development through the
National Infrastructure Pipeline as of July, 2021. Sectors such as roads, urban
development, railways and energy approximated ~71% of the projected infrastructure
investments. In FY 2020-21, India attracted USD 81.72 billion through infrastructure
sector
Roads: India possesses the second largest road network in the world spanning 6.4
Million Km, covering over 90% of passenger traffic and 64.5% of freight traffic. For the
past few years, road transportation connectivity has improved. Despite the pandemic
restrictions, India constructed 13,298 Km of highways in FY 2020-21; highway construction
between 2016 to 2021 reported a CAGR of 21.44%.
The Government of India had launched major initiatives to upgrade and strengthen
National Highways through various phases of the National Highways Development Project
("NHDP"). It is taking the initiative forward through the umbrella programme of
Bharatmala Pariyojna, Phase-I and other schemes and projects.
The Bharatmala Pariyojana envisages 60% projects under the Hybrid Annuity Mode
("HAM"), 10% projects on BOT ("Toll") Mode and 30% projects on the
Engineering, Procurement and Construction ("EPC") mode. A total of 604 of road
projects with an aggregate length of 20,965 km have been approved and awarded under the
Bharatmala Pariyojana (including 131 of residual NHDP works of aggregate length of 5,529
kms) with a cumulative capital cost of 6,41,713 Crores. Of the total approved 604
projects, 389 of projects, covering an aggregate length of 11,710 kms have been approved
on the EPC mode, 209 projects covering an aggregate length of 8,781 kms on HAM mode and 6
projects covering an aggregate length of 473 kms on BOT (Toll) mode.
GatiShakti Master Plan
The PM Gati Shakti National Master Plan was launched to break departmental silos and
brought 16 Ministries including Railways and Roadways together for integrated planning and
coordinated implementation of infrastructure connectivity projects. The plan is expected
to incorporate the infrastructure schemes of various Ministries and State Governments like
Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN etc. Economic Zones like
textile clusters, pharmaceutical clusters, defence corridors, electronic parks, industrial
corridors, fishing clusters, agri zones to improve connectivity and make Indian businesses
more competitive.
Railways: The Indian Railways network is one of the largest railway systems in the
world.
The route length of Indian railways is 67,956 Km. In spite of the pandemic, Indian
Railways commissioned 1,793 Km length of new lines, gauge conversion and doubling. Railway
Electrification across 3003 route Km and track renewal across 4,099 Km was carried out.
The Indian government announced investments in track doubling, gauge conversion and
electrification. The Union Budget FY 2022-23 allocated H 1,40,367.13 Crore for the
upgradation of the Indian railway infrastructure, gauge conversion of 2,200 Km by 2023 at
an annual cost of USD 2 Billion, 33,000 Km to be electrified by 2023 at a cost of USD 2
Billion annually and USD 17 Billion investments for 35 bullet trains by 2022 (Source:
finandalexpress.com, investindia.gov). Besides, the Indian government announced PM Gati
Shakti master plan under which the national highway network will be expanded by 25,000 Km
in FY 2022-23. In FY 2021-22, the Ministry of Road Transport and Highways constructed
national highways extending 4,450 Km compared with 4,956 Km in FY 2020-21. The Western
route 0awaharlal Nehru Port to Dadri) and the Eastern route (Ludhiana to Dankuni)
of dedicated freight corridors have been fast-tracked. The Indian Railways has set the
target to eliminate 2,429 manned level crossings by March 2025.
Company Overview
During the year under review Company has made a turnover of Rs. 56,94,96,000/- and a
profit after tax of Rs. 51,44,000/-.
The Cash Flow summary for the financial year 2021-22 under indirect cash flow method is
as follows:
(Amount in Rs.)
| Sr. No. Particulars |
2021-2022 |
| 1. Operational Cash Outflow |
5,55,73,139 |
| 2. Investing Cash Inflow |
70,95,060 |
| 3. Financing Cash Outflow |
(6,26,72,328.87) |
Opportunities,
The Indian government made an announcement on larger outlays for infrastructure
development. For FY 2022-23, the government announced Rs. 1.3 Lakh Crore for the Indian
Railways to improve infrastructure
Risk Management
Construction industry is highly risk prone, with complex and dynamic project
environments creating an atmosphere of high uncertainty and risk. The industry is
vulnerable to various technical, socio-political and business risks- errors caused on
account of adoption of improper methodology of construction, carrying out improper market
survey, improper data input, extraordinary hike in the cost of construction materials,
fluctuation in the exchange rates involving transactions in foreign currency, improper
assessment of the locational hazards and assessment of taxes/duties in the operation of
the contract are being independently assessed/analyzed by various Cells - like tendering,
operations, procurement, finance, banking, HR and IT Cells and mitigation procedures/
plans are being formulated and monitored to reduce, if not totally eliminate, the risks
associated with the above.
The Companys ability to foresee and manage business risks is crucial in achieving
favourable results. While management is positive about the Companys long term outlook, we
are subject to few risks and uncertainties as given below:
Finance Risk: Unable to meet funding requirements for the project may lead to delays in
project execution. The inability to negotiate interest rates in favour of the company may
increase finance costs and lower profitability. To meet its working capital requirements
and to fund its debt, the company constantly monitors its cash flow.
Market price fluctuation: The performance of your company may be affected by the sales
at a price which are driven by prevailing market conditions, the nature and location of
the projects.
Quality Risk: Inability to maintain the quality of products and failure to adhere to
recommended quality standards might adversely impact the Companys reputation as well as
its financial position.
Raw material price risk: The primary construction materials like steel, cement and etc
are subject to price volatility due to general economic conditions, competition,
production levels, transportation costs and domestic and import duties and any adverse
impact of rise in input cost will have impact on the profitability of the Company.
Technology risk: With the advancement of technology there is a growing need to improve
operational efficiency and ensure better customer satisfaction through advanced systems
and processes. The Company relies on advanced technology to build high rise towers, which
helps to increase its operational efficiency. 3
Human Resources Risk: Inability to complete and deliver projects on time due to lack of
skilled labour can result in hefty penalties for the company, leading to a loss of
reputation. The inability to retain or acquire competent and experienced employees may
also hamper its ability to pursue growth strategies effectively. The Company has a
dedicated labour department to look after the deployment and allocation of human resources
within the organization and the project sites.
Economic risk: Any adverse change in any macroeconomic variables like GDP growth,
interest rates, inflation, changes in tax, trade, fiscal and monetary policies etc. may
adversely impact the Companys business, profitability and financial condition.
Health and safety risks: Construction Companies constantly face the risk of injury or
illness to the Companys or third parties construction workers.
Financial Highlights
(Rs. in Lacs)
| Balance Sheet |
As at March 31,2022 |
As at March 31,2021 |
| Share Capital |
1,567.33 |
1,567.33 |
| Reserve & Surplus |
4166.97 |
3,941.47 |
| Non- Current Liabilities |
1591.58 |
1,570.42 |
| Current Liabilities |
5678.22 |
6,409.20 |
| Non- Current Assets |
3072.27 |
2,609.46 |
| Current Assets |
9931.83 |
10,572.53 |
(Rs. in Lacs)
| Profit & Loss Account |
For the year 2021-22 |
For the year 2020-21 |
| Total Revenue |
5694.93 |
5,563.54 |
| Profit (Loss) before interest, depreciation, amortization and taxes (EBITDA) |
873.83 |
1010.05 |
| Depreciation and amortisation |
201.28 |
211.48 |
| Profit after tax |
51.44 |
20.16 |
| Earnings Per Share |
0.33 |
0.13 |
Human Resources
The Company treats its workforce as a precious asset. Employees are the key to achieve
the Companys objectives and strategies. The Company promotes fair HR practices and
employee-friendly policies and processes. The Companys employees possess requisite
qualifications and technical expertise to execute projects across the construction
services domain. The Company supports its employees to develop their capabilities along
with providing them freedom to act and to take responsibilities for the tasks assigned.
The Company strongly believes that its team of capable and committed manpower, which is
its core strength, is the key factor behind its achievements, success and future growth.
The Company has always aimed to create a workplace where every person can achieve their
optimum potential and add value to the organizational growth. Company has really good
relation with industries by which Company can get leads for the Constructions.
Cautionary Statement
Certain statements made in this report on "Management Discussion and
Analysis", describing the Companys objectives, estimations, expectations or
projections, outlook etc., may constitute forward looking statements within the meaning of
the applicable Rules, Laws and Regulations. Actual results may differ from such
expectations, projections and forward-looking statement due to various risk and
uncertainties either it is express or implied. These statements are based on certain
assumptions and expectations of future events over which the Company has no direct control
and the company assumes no responsibility to publicly amend, modify or reverse any of
these statements on the basis of any subsequent development, information or events.
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