Forward looking statement - Statements in this Management
Discussion and Analysis of Financial
Condition and Results of Operations of the Company describing the
Companys objectives, expectations or predictions may be forward looking within the
meaning of applicable securities laws and regulations. Forward looking statements are
based on certain assumptions and expectations of future events.
The Company cannot guarantee that these assumptions and expectations
are accurate or will be realized. The Company assumes no responsibility to publicly amend,
modify or revise forward looking statements, on the basis of any subsequent developments,
information or events. Actual results may differ materially from those expressed in the
statement. Important factors that could influence the Companys operations include
changes in government regulations, tax laws, economic developments within the country and
such other factors globally.
Pursuant to Regulation 34 of the SEBI (Listing Obligations and
Disclosures Requirements) Regulations, 2015 the Listed Companies are required to furnish
Management Discussion and Analysis Report
(MDAR) as a part of Directors Report to the Shareholders.
As per Schedule V of SEBI (Listing Obligations and Disclosures
Requirements), Regulations, 2015, Annual Report shall contain the below points in the
Management Discussion and Analysis Report (MDAR): ? Industry Structure and developments. ?
Opportunities and Threats. ? Segment- Wise or Product- wise performance. ? Outlook. ? Risk
and Concern. ? Internal Control System and their adequacy. ? Discussion on Financial
performance with respect to operational performance. ? Material developments in Human
Resources/ Industrial Relations front, including number of people employed.
1. ECONOMIC ENVIRONMENT - AN OVERVIEW
Global Economy
The global economy grappled with several headwinds, including the war
in Ukraine, rising inflation, and tighter monetary policy in major economies. These
challenges are expected to weigh on economic growth in the coming months and years.
The war in Ukraine has disrupted global supply chains and led to higher
energy prices. This has contributed to rising inflation, which is now at a multi-decade
high in many countries. Rising inflation is also forcing central banks to raise interest
rates. This is expected to slow economic growth, as it will make it more expensive for
businesses to borrow money and invest. The International Monetary Fund (IMF) has
downgraded its forecast for global economic growth in 2023 to 3.6%, down from 3.8% in
2022. The IMF said that the war in Ukraine and the associated sanctions are the main
reasons for the downgrade.
The IMF also warned that the global economy is facing a number of other
risks, including a sharp slowdown in China, a renewed COVID-19 outbreak, and a global
financial crisis.
INDIAN ECONOMY
Indias growth continues to be resilient despite some signs of
moderation in growth, says the World Bank in its latest India Development Update, the
World Bank Indias biannual flagship publication.
The year 2023 started with concerns about potential recessions due to
factors such as inflation, policy rate hikes, and high commodity prices. However, as we
reach the halfway point of the year, the likelihood of a recession seems to have
diminished. Despite ongoing global uncertainties, labor markets in advanced countries are
tight, and the United States is witnessing a recovery in consumer confidence and spending.
Risk spreads are decreasing after the recent banking crisis in the US.
Interestingly, India is currently experiencing what could be described
as a Goldilocks moment. The countrys economic activity is picking up momentum amid the
ongoing global uncertainties. The GDP data from the last quarter was positively
surprising, contributing to a full-year GDP growth for FY2022 23 of 7.2%, which is 200
basis points higher than the earlier estimate. The recently released Annual Economic
Review for May 2023 highlights that post-pandemic consumption and investment trajectories
have exceeded pre-pandemic levels.
Economists and analysts are expressing optimism about the Indian
economy. While growth forecasts for FY2023 24 remain consistent with earlier projections,
the higher-than-expected growth in FY2022 23 has elevated the baseline for comparison.
This positive trend has led to an upward adjustment of the lower limit of the growth
range. It is projected that India will achieve a growth rate between 6% and 6.3% for
FY2023 24, with a more robust outlook beyond that period. If global uncertainties subside,
it is expected that growth could surpass 7% over the next couple of years.
The Update notes that although significant challenges remain in the
global environment, India was one of the fastest growing economies in the world. The
overall growth remains robust and is estimated to be 6.9 percent for the full year with
real GDP growing 7.7 percent year-on-year during the first three quarters of fiscal year
2022/23. There were some signs of moderation in the second half of FY 22/23. Growth was
underpinned by strong investment activity bolstered by the governments capex push
and buoyant private consumption, particularly among higher income earners. Inflation
remained high, averaging around 6.7 percent in FY22/23 but the current-account deficit
narrowed in Q3 on the back of strong growth in service exports and easing global commodity
prices.
Nonetheless, there are several potential risks to these forecasts.
Among them, the actions taken by major economies central banks and the movements in oil
prices during the past quarter stand out as significant factors. This edition of our
report delves into the importance of these developments and their potential implications
for Indias economic trajectory. As we navigate through these dynamic times, understanding
and analyzing these factors will be crucial for informed decision-making.
FACILITY MANAGEMENT
The Facilities Management Services sector, mainly consisting of
security, housekeeping and engineering, faced problems on account of the closure of
offices, commercial establishments, and several other facilities that require support
services. The industry is expected to grow at a faster pace on account of continued
urbanisation and industrialisation.
The Indian economy is divided into several sectors, with facility
management accounting for a sizeable portion of GDP. Facility Management (FM) refers to
the tools and services that support the functionality, safety, and sustainability of
buildings, grounds, infrastructure, and real estate. There is tremendous potential in the
FM industry for employment, education, and raising the overall standard of living in the
economy.
Facility management services refers to the use of third-party service
providers for the maintenance of the building facility or outsourcing the management of
entire facilities to an organization for the professional delivery of services. It
comprises of hard services or building operation and maintenance and soft services or
support services, and energy management services. Hard services include electrical,
electromechanical, mechanical, water management and energy management. Soft services
include housekeeping, security, catering, transportation, and horticulture and
landscaping. It is gaining huge acceptance among the customers in Commercial sector as it
helps the companies in the hassle-free management of its facilities in a professional
manner.
2. OPPORTUNITY & THREATS
Opportunity:
The growth of the facility management market is being driven by the
increasing trend of outsourcing building management activities. Organizations are opting
to outsource services like HVAC, catering, security, and other support services, allowing
them to focus on their core business activities. This is particularly evident in end-user
segments like healthcare, infrastructure, and retail, where outsourcing facility
management services can help reduce training and operational costs, leading to enhanced
profitability.
Technological advancements are also playing a pivotal role in shaping
the facility management landscape. The integration of technology is opening up new avenues
for providers to streamline their operations and enhance their offerings. Intelligent
security monitoring systems, advanced building control systems, and robotics are key
technological trends that are anticipated to significantly influence the markets
trajectory.
However, challenges persist. Employee attrition and the lack of proper
training are hindrances in the markets growth. The shortage of skilled and semi-skilled
workers, especially those with technical expertise, poses difficulties in providing
facility management services that require specialized knowledge. This issue limits
supplier options and impacts labor retention.
The Indian real estate sector is undergoing significant growth, largely
driven by changing preferences towards safe and secure environments. Green building
concepts and the enactment of regulations like the Real Estate (Regulation and
Development) Act (RERA) 2016 are bolstering the real estate sector, consequently boosting
demand for facility management services. The rise of the IT sector and e-commerce
platforms is also contributing to the need for organized spaces and infrastructure.
The utilization of technologies like Artificial Intelligence (AI) and
the Internet of Things (IoT) for energy efficiency audits is a growing trend. The Indian
governments Smart Cities Mission is further promoting the need for professional facility
management services, as investments in the infrastructure sector increase.
Post-pandemic considerations, including hybrid workspaces and
return-to-work strategies, are driving demand for facility management services. The focus
on safety, health, and productivity in the workplace is spurring the demand for
comprehensive facility management solutions.
In summary, the facility management market in India is evolving in
response to a range of factors, including outsourcing trends, technological advancements,
real estate growth, regulatory changes, and post-pandemic dynamics. The industry is
adapting to these changes and leveraging them to provide enhanced services and support to
various sectors across the country.
Threats:
The current state of the industry is marked by a range of challenges
& threats that have emerged in the wake of the post-pandemic world.
Safe Return to the Office: With the majority of organizations
transitioning back to physical workspaces after an extended period of remote work,
ensuring a safe and secure environment is of paramount importance. Establishing and
maintaining stringent health and safety protocols is a critical necessity. In addition to
preparing COVID safety measures and improving hygiene practices, there is the complex task
of assessing the condition and functionality of equipment that has been dormant during the
pandemic.
Hybrid Work Model and Space Utilization: The adoption of hybrid
work models, combining remote work with office presence, has introduced a new challenge in
terms of optimizing space utilization. As employees divide their time between remote and
on-site work, facilities need to be configured to accommodate flexible occupancy needs.
Reconfiguring workspaces to encourage collaboration while adhering to safety guidelines
presents a unique challenge.
Integration of Workplace Technology: The lockdowns underscored
the importance of technology in managing facilities remotely. Particularly for
organizations with diverse portfolios across multiple locations, facility management
technology tools have become essential for remote management and reporting of
facility-related operations. Implementing and effectively managing these technologies pose
a new set of challenges.
Balancing Cost and Employee Experience: Facility management
plays a direct role in shaping the employee experience and, in turn, impacting employee
retention. Organizations are dedicated to providing top-notch facilities and amenities to
retain their workforce. However, this comes with additional costs. Striking a balance
between providing a high-quality employee experience and adhering to cost optimization
objectives is a complex challenge for facility management organizations.
In navigating these challenges, it is crucial for facility management
professionals to adopt innovative approaches, stay updated on industry best practices,
leverage technology effectively, and collaborate closely with stakeholders to ensure a
safe, efficient, and productive work environment. The evolution of the industry in
response to these challenges will play a pivotal role in shaping the future of facility
management.
3. SEGMENT - WISE OR PRODUCT- WISE PERFORMANCE
We are one of the reputed integrated business services providers
focused on providing integrated hospitality and facility management services (IHFM). We
provide the entire range of hospitality and facility management services including
mechanized housekeeping, guesthouse management, pest control, gardening and security
service, etc. The IHFM segment of our services provide integrated hospitality and facility
management solutions to corporates including MNCs, government organizations like Railways,
Municipal Corporations Public Sector Undertakings (PSUs) and other commercial
establishments.
Our service offerings include the following broad services which are
offered by our Company as indicated below:
4. OUTLOOK
The current landscape of the Indian facility management industry is
primarily dominated by in-house service providers. However, there is a growing trend of
outsourcing these services, contributing to the industrys expansion. The increasing
demand for integrated facility management solutions is a significant driver of this
growth. The integrated sector within the industry is expected to experience further
expansion as the industry transitions toward a more organized structure. Although the
sector is presently characterized by fragmentation, with a prevalence of small,
unorganized operators, larger players are progressively acquiring smaller ones, leading to
increased organization within the sector. Among end-use industries, the commercial sector
holds a prominent position in the Indian market, followed by industrial and other sectors.
Industries such as IT, BPO, and BFSI are increasingly outsourcing their facility
management services, contributing to the growth of the industry. The concentration of the
industry is primarily observed in Tier 1 and metro cities, with Pune and Mumbai expected
to witness significant growth in the coming years.
The Indian facility management market is poised for substantial growth
in the forecast period from 2023 to 2028, with a projected Compound Annual Growth Rate
(CAGR) of 17%.
On a global scale, the facility management industry is experiencing
rapid growth, fueled by the outsourcing trend adopted by companies. The rise of integrated
facility management services is particularly prominent in the Asia Pacific region. This
region, including rapidly growing economies like India and China, is a major contributor
to the global growth of the industry. The Asia Pacific region, characterized by its
burgeoning population, further boosts the markets expansion.
In conclusion, the Indian facility management market is on a trajectory
of rapid growth, driven by factors such as increasing outsourcing, demand for integrated
solutions, and expansion of organized players. Similarly, the global industry is
witnessing accelerated growth, with the Asia Pacific region leading the charge, propelled
by demand for outsourced facility management services and growing economies.
5. RISK AND CONCERN
| Risks |
Risk Mitigation |
| Economic Risk |
The company has been expanding its services
and augmenting its revenues from promising areas to proactively minimize the impact. |
| People Risk |
The company has developed strong recruitment
teams to overcome the attrition risk. |
| Financial Risk |
The company presents a healthy balance sheet
with prudent working capital management. In recent years, the company has offloaded
unviable customer accounts, to reduce debtors outstanding. |
| Competition Risk Covid-19 |
The company has deployed modern practices
and processes to retain its competitive advantage and ensure loyalty among the workforce.
We are focusing on pivoting to new areas that have potential for high-growth and away from
low-growth areas. |
| Efficiency Risk |
The company trains its talent to increase
their competence in better discovering and serving market needs |
6. INTERNAL CONTROL SYSTEM
Our company has put in place standard operating procedures that ensure
effective and transparent internal controls for efficient delivery of services. We follow
strict procedures with regard to recording and providing reliable financial and
operational information and complying with all statutory regulations and standards
applicable to our business segments.
We have been refining our management methodologies by way of periodical
reviews so as to realign our tactics to meet the changes on the ground. Thus we hope to
achieve the goals both in the short run and long run. The Companys system of
continuous internal audits ensures that established processes and practices are followed
and complied with and that quality processes are strictly adhered to. Financial discipline
is emphasized at all levels of the business and adherence to quality systems and focus on
customer satisfaction is critical for the Company to retain and attract customers and
business and these are followed rigorously.
7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Your Companys standalone revenue from operations for the
financial year ending 31st March, 2023 stood at Rs. 8,889.78 Lakh as compared to previous
year Rs. 9,642.24 Lakh during the previous financial year. The Company has achieved
Standalone EBIDTA (including other income) of Rs. 928 Lakh during the financial year 2023
as against that of EBIDTA of Rs. (1479) Lakh for the previous financial year 2022. The
Standalone profit before tax for the financial year under review is 301.37 Lakh as
compared to previous year Rs. (2,100.35) Lakh.
8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL
RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.
Your Company firmly believes that its human resources are the key
enablers for the growth of the Company and important asset. Hence, the success of the
Company is closely aligned to the goals of the human resources of the Company. The Company
aims to develop the potential of every individual associated with the Company as a part of
its business goals. The Company focuses on providing individual development and growth in
a work culture that ensures high performance and remains empowering. The Company has
employed over 3500 people (including contractual) strong and dedicated workforce travel
abreast of the latest trends.
- The increasing use of technology: Facility management companies are
increasingly using technology to automate tasks, improve efficiency, and reduce costs.
This has led to a demand for new skills and knowledge among HR professionals, who need to
be able to understand and manage these technologies.
- The changing demographics of the workforce: The workforce is becoming
more diverse, with a growing number of women, minorities, and immigrants. This is putting
pressure on HR professionals to develop more inclusive and equitable policies and
practices.
- The rise of the gig economy: The gig economy is growing, and this is
creating new challenges for HR professionals. They need to find ways to attract and retain
independent contractors, while also ensuring that they are treated fairly.
- The increasing focus on employee well-being: Employee well-being is
becoming a top priority for many companies. This is leading to a demand for HR
professionals who can develop and implement programs that promote employee health and
happiness.
- The need for strategic HR leadership: HR is becoming increasingly
strategic, and HR professionals are being called upon to play a more active role in
shaping the companys overall strategy. This requires HR professionals to have a strong
understanding of the business and to be able to think strategically about how HR can
contribute to the companys success.
- In terms of the number of people employed for facility management
business companies, the Bureau of Labor Statistics (BLS) projects that employment in this
field will grow 7% from 2020 to 2030, about as fast as the average for all occupations.
This growth is expected to be driven by the increasing demand for facility management
services in commercial, industrial, and institutional settings.
- The BLS also projects that the median annual wage for facility
managers will be $95,180 in
2030. This is higher than the median annual wage for all occupations,
which is projected to be $45,760 in 2030.
- The following are some of the factors that are expected to drive
growth in the facility management field:
- The increasing complexity of facilities: Facilities are becoming more
complex, with a wider range of systems and equipment. This requires facility managers to
have a deeper understanding of these systems and equipment in order to maintain them
properly.
- The aging infrastructure: The infrastructure in the United States is
aging, and this is leading to an increased demand for facility management services.
Facility managers are needed to inspect, maintain, and repair this infrastructure.
- The growing focus on sustainability: There is a growing focus on
sustainability in the business world, and this is leading to an increased demand for
facility management services that can help businesses reduce their environmental impact.
Facility managers can help businesses reduce their energy consumption, water usage, and
waste production.
Overall, the outlook for the facility management field is positive. The
demand for facility management services is expected to grow, and this is expected to lead
to job growth and higher wages for facility managers.
+91-9892691696
