INDUSTRY REVIEW
Indian infrastructure companies had a mixed bag of results in the year ending March
2023. On the one hand, they saw strong growth in the domestic market, driven by government
spending on infrastructure projects. This led to increased revenue and profits for many
companies. On the other hand, Indian infrastructure companies faced challenges in the
foreign market. The global economy slowed in 2023, and this led to a decline in demand for
infrastructure projects in some countries. This, in turn, led to delays and cancellations
of some projects, and it also hurt the profitability of Indian companies that were
operating in these markets.
Despite these challenges, the long-term outlook for Indian infrastructure companies
remains positive. The Indian government is committed to investing in infrastructure, and
this will create opportunities for Indian companies in the coming years. In addition, the
Indian market is growing rapidly, and this will also create opportunities for Indian
companies.
Here are some of the key trends that are shaping the Indian infrastructure industry in
2023:
• The focus on public-private partnerships: The Indian government is increasingly
looking to public-private partnerships (PPPs) to finance infrastructure projects. This is
because PPPs can help to attract private investment into the infrastructure sector, and
they can also help to reduce the financial burden on the government.
• The rise of green infrastructure: There is a growing demand for green
infrastructure in India, as the government is committed to reducing the countrys carbon
emissions. This is creating opportunities for Indian companies that are involved in the
development of green infrastructure projects.
• The adoption of new technologies: New technologies, such as 3D printing, drones,
and artificial intelligence, are being used to improve the efficiency and effectiveness of
infrastructure projects. These technologies are helping to reduce costs, improve safety,
and speed up construction times.
Overall, the Indian infrastructure industry is facing a number of challenges in 2023.
However, the long-term outlook for the industry remains positive, as there is strong
demand for infrastructure projects in India.
BUSINESS STRATEGY
The infrastructure sector plays a pivotal role in driving the Indian economy forward.
It serves as a crucial catalyst for overall development and receives significant attention
from the Government, which is committed to implementing policies aimed at creating
top-notch infrastructure within specific timelines.
Engaging in a joint venture, your company undertook a contract to establish a
2-megawatt hydro power project for Uttarakhand Jal Vidyut Nigam Ltd (UJVNL), where it held
the lead position with a substantial 90% ownership. Unfortunately, issues arose during
project execution, resulting in contract termination. To recoup incurred expenses and
projected profits lost due to termination, your company initiated arbitration against
UJVNL. This legal process concluded favorably in April 2022, with an awarded verdict in
the joint ventures favor. However, UJVNL contested the decision, leading to an ongoing
appeal before the Additional District Judge in Dehradun. As of now, the matter remains
subjudice, with hearings continuing to determine the final resolution of the dispute.
The hotel business segment of our Company has sustained its performance and accounted
for more than half of our total revenue from operations. Recognizing its potential for
further growth, we are actively exploring investment options to enhance our hotel
business. Our plans include renovating the hotel premises, upgrading facilities, and
investing in modern amenities to elevate the guest experience.
Your Company is actively bidding for construction contracts and exploring new
opportunities in the sector. We are optimistic about taking up new projects in the near
future, contributing to the industrys growth and delivering exceptional results.
SWOT ANALYSIS
• Strength:
Your Company is an integrated infrastructure company with inherent strengths of
experienced management team. Over the years, our company has undertaken a wide array of
diverse construction projects, which has established a strong brand awareness and
reputation in the industry. This esteemed recognition serves as a valuable asset,
bolstering our business strategies and enhancing our execution capabilities.
The expertise of our Company in efficiently managing large civil and electrical
construction projects, coupled with our successful venture in the hotel business, gives us
a distinct advantage. With ample land available for expanding our hotel facilities, we are
poised for substantial growth in this segment. Moreover, our highly skilled and qualified
teams bring a wealth of experience to the table, overseeing and executing all aspects of
project development.
• Weaknesses:
The availability of liquidity remains a significant challenge for our Company. A
substantial portion of our liquidity is tied up in project disputes, hindering our
financial flexibility. To address this issue, we are actively pursuing out-of-court
settlements for various litigated awards, aiming to avoid prolonged litigation at
different forums. Additionally, we recognize the need to overhaul our ageing fleet of
equipment to maintain competitiveness in the market. Emphasizing continuous technological
upgrades, we strive to stay ahead in the industry. However, it is crucial to acknowledge
that changes in macroeconomic variables, such as GDP growth, interest rates, inflation,
tax policies, trade regulations, and monetary policies, may exert adverse effects on our
business, profitability, and overall financial condition. As a result, we remain vigilant
and agile, ready to adapt to dynamic economic scenarios to sustain our growth and success.
• Opportunities:
The infrastructure sector continues to receive unwavering attention from the
government, indicating substantial growth opportunities for the industry. Leveraging our
Companys strength and extensive experience in this field, we are confident in our ability
to convert these opportunities into profitable project ventures. Although we acknowledge
and actively address our key weaknesses, our management remains optimistic about
undertaking new projects successfully. With infrastructure development being a primary
focus for the government, the potential for growth is immense, providing us ample
opportunities to capitalize on. Our track record of successful project execution adds
credibility, enabling us to competitively bid for infrastructure projects. Engaging in
discussions for new ventures, we are determined to propel the Company back on a path of
growth and prosperity.
• Threats
Several threats loom beyond the control of our infrastructure company, including
industry slowdowns during difficult economic times. While we are confident in identifying
and seizing opportunities, we encounter various challenges such as unforeseen project
approval delays, the growth of auxiliary infrastructure facilities, etc. The Indian real
estate sectors unorganized nature, with intermediaries and subdued demand, adds
complexity, and rising prices of raw materials and reduced trade credit intensify project
costs and squeeze profit margins. The prolonged sanction procedure, varying from days to
years due to the lack of a single-window clearance option, results in time and cost
escalations. Moreover, the liquidity crisis or adverse shifts in real estate lending
policies by banks can significantly impact project execution and borrowing costs. At the
company level, threats arise from overturning litigation awards, adverse tax litigation
orders, and prolonged appeals processes that lock liquidity. To address these challenges,
we actively pursue amicable out-of-court settlements while engaging highly skilled legal
professionals to handle various cases.
DISCUSSION ON FINANCIAL PERFORMANCE OF THE COMPANY
Revenue
For the financial year ended 31st March 2023, our Companys revenue witnessed
significant growth, reaching Rs. 109.86 Lakhs compared to Rs. 16.28 Lakhs in the previous
year.
Expenditure
For the year ended 31st March 2023, your Companys total expenditure, encompassing
contract & site expenses, employee benefit costs, depreciation, material consumed, and
other expenses, amounted to Rs. 273.70 Lakhs. In comparison, the total expenditure in the
previous year was Rs. 261.77 Lakhs.
Interest
During the year ended 31st March 2023, the Companys interest expenses amounted to Rs.
60.68 Lakhs, while in the previous year, it was Rs. 58.39 Lakhs.
Profit before Tax (PBT)
In the current financial year ended 31st March 2023, the Companys Profit Before Tax
(PBT) was Rs. (163.83) Lakhs, compared to the previous year PBT which was Rs. 46.14 Lakhs.
Profit after tax (PAT)
For the year ended March 31, 2023, your Companys Profit After Tax was Rs. (177.71)
Lakhs compared to the previous year PAT of Rs. 6.33 Lakhs.
Earnings Per Share (EPS)
The earnings per share for the current year is Rs. (0.51) as compared to 0.02 per
equity share in the previous year.
Consolidated Financial Statements
The Consolidated Financial Statements of the Company are prepared in accordance with
the relevant Indian Accounting Standards issued by the Institute of Chartered Accountants
of India and forms an integral part of this Report. In accordance with Section 129(3) of
the Companies Act, 2013, and Rule 5 of the Companies (Accounts) Rules, 2014, a statement
encompassing the significant features of the financial statements of Subsidiaries,
Associate Companies, and Joint Ventures is provided in Form AOC-1, which is an integral
part of this Report.
The Companys results are consolidated with its subsidiaries, step-down subsidiary,
associates and Joint Venture.
Human Resources
Your Company places utmost importance on its Human Resources, recognizing them as the
most critical assets within the organization. We are committed to continuously improving
the efficiency and effectiveness of our workforce, leveraging their potential to maintain
a competitive advantage. Fair and equitable treatment of our employees is a fundamental
principle we adhere to, and we consistently invest in their welfare. Our work environment
fosters cordiality and informality, encouraging collaboration and empowering individuals.
We believe in a decentralized approach, delegating authority at all levels and promoting
leadership development across the organizational structure. Remuneration is aligned with
industry standards, ensuring that our employees are fairly compensated. Moreover, we
actively support their professional growth by encouraging skill enhancement training and
participation in external seminars relevant to their areas of expertise. As a result of
our peoplecentric approach, we have achieved a low attrition rate and boast a highly
skilled and motivated workforce.
Other Disclosures
During the financial year, in a subjudice matter, the Enforcement Directorate took
action to attach specific bank accounts of the company, invoking the provisions of the
Prevention of Money Laundering Act, 2002. The Adjudicating Authority had confirmed the
said attachment. In response to this, the company, exercising its legal rights, initiated
an appeal before the Appellate Tribunal to challenge the Adjudicating Authoritys decision
to confirm the attachment.
As of now, the matter remains under judicial consideration with the Appellate Tribunal
as the legal proceedings unfold.
Cautionary Statement
The Management Discussion and Analysis section of the report contains forward-looking
statements that describe the Companys objectives, expectations, or predictions, as
permitted by applicable securities law and regulations. It is important to note that
actual results may differ significantly from what is expressed in these statements.
Several factors could impact the Companys operations, including intense competition
leading to price reductions, fluctuations in prices of key inputs such as steel, cement,
building materials, and petroleum products, changes in government regulations and tax
laws, economic developments within the country, and other variables like litigation and
industrial relations. The Company acknowledges the inherent uncertainties and risks
associated with these factors and remains committed to addressing them proactively to
ensure the continued success and growth of the organization.
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