kap chem ltd Management discussions

1. FINANCIAL AND OPERATIONAL PERFORMANCE

PARTICULARS	2022-2023	2021-2022
Total Income	1,426.97	700.64
PBT	571.85	43.03
PAT	454.91	30.15

2. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Companys Internal Financial Control framework is commensurate with the size and the nature of its operations. These have been designed to provide reasonable assurance about recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance of Corporate Policies.

3. BUSINESS OUTLOOK

Despite the three shocks of COVID-19, Russian-Ukraine conflict and the Central Banks across economies led by Federal Reserve responding with synchronised policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening of the Current Account Deficits (CAD) in net importing economies, agencies worldwide continue to project India as the fastest-growing major economy.

In FY22-23, The Indian economys growth stood at 7.2%, as compared to a 9.1% rise in the previous fiscal year. Since Q3 of FY22-23, however, there have been signs of moderation, the overall growth momentum remains robust.

Indias high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Our Prime Minister Shri. Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors. The infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure and construction development projects. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway.

In order to meet Indias aim of reaching a US$ 5 trillion economy by 2025, infrastructure development is the need of the hour making Karnataka and Maharashtraas the most attractive locations in India for such future investments. As a land of immense opportunity and innovation both Karnataka and Maharashtra are ideally positioned to make the future happen today.

The State Government of Karnataka has decided to develop five Tier-2 cities beyond Bengaluru and set up an industrial township in Mysore. As part of the Beyond Bengaluru proposal, the government wants to push for industrialisation in Mysore, Mangalore, Hubballi-Dharwad, Belagavi and Kalaburagi. Mysore plays a vital role in industrialisation attracting huge investments. The Mysore district is well established in promoting industry & tourism in Karnataka. The Mysore city development is moving fast in terms of establishing manufacturing and service enterprises. The newly constructed Bengaluru-Mysuru Expressway is expected to have a major impact on the economic growth of the region. By reducing the travel time between Bengaluru and Mysuru, it will provide a lot of possibilities for the logistical, transportation sector, tourism and hospitality sectors. This will be a game-changer for industrial sector growth.

The State of Maharashtra is the largest contributor of GDP accounting to 14% of Indias GDP and has the highest value of exports in the country accounting to 20% of Indias export. The Real estate sector is witnessing a new era of growth and innovation. The governments visionary policies, schemes, and announcements are shaping the industry and propelling it towards a brighter future. Mumbai being the capital of the state has been the major port in Maharashtra with flourishing trade and industrial development. The state of Maharashtra has become a vibrant investment landscape creating limitless opportunities attracting investors around the globe. With booming real estate ventures and game-changing infrastructure projects, the state offers a mosaic of prime investment prospects. The real estate and infrastructure projects in Maharashtra will unlock unprecedented growth and create pathways to prosperity to Investors.

OUR PROJECTS

Our Company has ventured into several projects in Karnataka and Maharashtra. A brief note on the projects given below:

JCK INDUSTRIAL PARK, MYSORE

With the above background, JCK Infrastructure Development Limited (Developer) is currently developing a world class industrial area/estate at the campus of KIADB Belagola Industrial Area, Mysore which is spread over approximately 68 acres with cross-functional sector experience in developing and maintaining projects across the country. The Company has successfully completed Phase I project and Phase II projects. In addition to these, the Company has commenced Phase III project. With the quality of the infrastructure being developed, it is regarded as a model industrial area through private sector participation. The said land is ideal for development of small and medium enterprises as it is part of the pre-existing and well established Belagola Industrial area.

INNER CIRCLE, ALIBAUG

JCK in partnership with SILA group and Top Notch Realty has launched the first ever gated villa and condo project in Alibaug. Within 3 years of launching, the project marked a record with 95% inventory sold before project completion. Spread across 7 acres at Saral, Alibaug, and a short 10-minute drive from the Mandwa Jetty, Inner Circle offers a contemporary sense of community living with the convenience of comprehensive facility management. Owing to the demand and viability of Alibaug as an area, a new phase of the Inner Circle project it set to launch by 2023.

JCK COMMERCIAL PARK, MYSORE

JCK Commercial Park is an upcoming project in the foothills of the hill temple of Sri Chamundeshwari, Mysore. Spread across 7 acres in heart of the city, the project aims to cater to retailers, traders and businesses alike. The Company has received all the necessary approvals for the project from the statutory authorities and the development activity has commenced from the first quarter of the financial year 2023-24.

4. RISK CONCERNS AND THREATS

The following risks are faced by the Company:

Capital Intensive Model

The Company focuses on joint development business model effectively sharing the associated risks and benefits attached to the industrial development projects, thus achieving capital rationing across multiple projects.

Selective distressed opportunities which are evaluated for outright purchases.

Dealing with Multi Government Bodies for approvals.

The Company has full-time-best-in-class legal and liaison team and is also associated with expert consultants to obtain all the necessary approvals/licenses and comply with all the regulatory requirements in the shortest possible time.

Access to skilled and unskilled labour.

The Company focuses on industrial area development in close proximity to residential catchment areas leading to easing labour availability.

Natural and man-made disasters

Natural disasters include earthquakes, fires, droughts and floods and man-made disasters include acts of terrorism and war.

Land related risks

For any infrastructure development Company, land is a primary input and non-availability of an appropriate parcel of land at a strategic place at a reasonable price can lead to an increase in its prices. Such a situation with its resultant increase in the price of land can have an adverse impact on the companys performance. Further, availability of land, its use and development are subject to approvals by various local authorities under applicable local laws and regulations. This makes the price of land volatile. A drop in land prices may erode the book value carrying the cost of land. This in turn could effect a companys profitability.

5. ENVIRONMENTAL PROTECTION AND SUSTAINABILITY

Environmental Protection is also one of the key areas which the Company focuses upon. The Company has obtained necessary consent/approvals from Karnataka State Pollution Control Board, Department of Forest, Department of Ecology and Environment as applicable.

Ensuring a healthy and safe work environment involves developing safe, high quality and environment friendly processes, working practices and activities that prevent or reduce the risk of harm for the people working in that environment. This also involves complying with environmental regulations such as managing waste or air emissions for reducing the Companys carbon footprint

6. CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make significant difference to the Companys Operations. These include climatic and economic conditions affecting demand and supply, government regulations, taxation and natural calamities over which the Company does not have any direct control.