nila infrastructures ltd Management discussions
THE ECONOMIC SCENARIO:
In general, global economic shocks in the past were severe but spaced out in time. This changed in the third decade of this millennium. At least three shocks have hit the global economy since 2020. It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronised policy rate hikes to curb inflation. The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies. In FY2023, the global economy has experienced a number of turbulent challenges. Normalization of monetary and fiscal policies that delivered unprecedented support during the pandemic is cooling demand as policymakers aim to lower inflation back to target. But a growing share of economies are in a growth slowdown or outright contraction. Global growth has slowed from 3.2 percent in 2022 to 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies: a US GDP contraction in the H1-2022, a euro area contraction in the H2-2022, and prolonged COVID-19 outbreaks and lockdowns in China with a growing property sector crisis. About a third of the world economy faces two consecutive quarters of negative growth. Global inflation is forecast to decline from 8.8 percent in 2022 to 6.5 percent in 2023 and to 4.1 percent by 2024. Upside inflation surprises have been most widespread among advanced economies, with greater variability in emerging market and developing economies. Risks to the outlook remain unusually large and to the downside. Monetary policy could miscalculate the right stance to reduce inflation. Policy paths in the largest economies could continue to diverge, leading to further US dollar appreciation and cross-border tensions. More energy and food price shocks might cause inflation to persist for longer. Global tightening in financing conditions could trigger widespread emerging market debt distress. Halting gas supplies by Russia could depress output in Europe. A resurgence of COVID-19 or new global health scares might further stunt growth. A worsening of Chinas property sector crisis could spill over to the domestic banking sector and weigh heavily on the countrys growth, with negative cross-border effects. And geopolitical fragmentation could impede trade and capital flows, further hindering climate policy cooperation.
The FY2023 commenced with the Indian economy facing headwinds in the form of inflationary pressures due to rising energy and food prices. Supply chain bottlenecks also remained a major constraint due to the protracted war in Europe and the accompanying global sanctions. Despite a challenging start, the Indian economy has displayed resilience and grew 7.2 percent in FY2023, aided by sound macroeconomic fundamentals and improved high-frequency indicators. Sustained efforts taken by the central bank to rein in inflation by increasing the repo rate by 250 bps over the past year have been reasonably successful. The Governments continued thrust on infrastructure-driven, capex-led economic growth, together with signs of a revival of private sector investment in manufacturing and an improvement in capacity utilisation, has maintained the growth momentum. The Governments push for growth through larger infrastructure spends continues in FY2024. The private capex continues to provide tailwinds to the growth momentum. Buoyancy in tax collections supports the capex-led growth aspirations. A healthy balance sheet of private players, improving consumer confidence and investment activity, as well as growing demand conditions, will provide support to economic growth in the near term. It is expected that the prolonged geopolitical conflict in Europe could continue to impact supply chain dynamics and keep commodity prices volatile for a longer period. Rising interest rates across the world could also influence capital flows into the country. Finally, India, due to the structural reforms and the infrastructure-strengthening efforts of the Government and the monetary support from the RBI, is in a better position to counter the challenges and sustain its growth agenda. In this scenario, localisation trends, possible rearrangement of the global supply chain and the consequent shift in export hubs and de-carbonisation objectives are all factors which are working in favour of India to become the worlds third-largest economy by 2030.
The Indian economy, however, appears to have moved on after its encounter with the pandemic, staging a full recovery ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY2023. Measures taken by the government and RBI to control inflation, along with the easing of global commodity prices, have finally managed to bring retail inflation below the RBI upper tolerance target. However, the challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the US Fed. The widening of the CAD may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong. The loss of export stimulus is further possible as the slowing world growth and trade shrinks the global market size in the second half of the current year. Despite these, agencies worldwide continue to project India as the fastest-growing major economy. These optimistic growth forecasts stem in part from the resilience of the Indian economy seen in the rebound of private consumption seamlessly replacing the export stimuli as the leading driver of growth. The uptick in private consumption has also given a boost to production activity resulting in an increase in capacity utilisation across sectors. The rebound in consumption was engineered by the near-universal vaccination coverage overseen by the government that brought people back to the streets to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, among others. The worlds second-largest vaccination drive involving more than 2 billion doses also served to lift consumer sentiments that may prolong the rebound in consumption. Vaccinations have facilitated the return of migrant workers to cities to work in construction sites as the rebound in consumption spilled over into the housing market. This is evident in the housing market witnessing a significant decline in inventory overhang to 33 months in Q3-FY2023 from 42 months last year. The Capital Expenditure of the central government, which increased by 63.4 per cent in the first eight months of FY2023, was another growth driver of the Indian economy.
FY2024 looks to be a challenging year for the global economy. Persistent inflationary pressures, and recent financial sector problems in the United States and Europe, are injecting additional uncertainty into an already complex economic landscape. Against this somber backdrop, Asia-Pacific remains a dynamic region. Despite weakening external demand - such as the downturn in demand for tech exports toward the end of 2022—and monetary tightening, domestic demand has so far remained strong, with Chinas reopening providing fresh impetus. Growth in Asia and the Pacific is projected to increase in 2023 to 4.6 percent, from 3.8 percent in 2022. This means the region would contribute around 70 percent of global growth. Asias dynamism will be driven primarily by the recovery in China and resilient growth in India, while growth in the rest of Asia is expected to bottom out in 2023, in line with other regions. The pressures from diminished global demand will weigh on the outlook. Headline inflation has been easing, but remains above targets in most countries, while core inflation has proven to be sticky. Although spillovers from turmoil in the European and US banking sectors have been limited thus far, vulnerabilities to global financial tightening and volatile market conditions, especially in the corporate and household sectors, remain elevated. Risks to the outlook are to the downside, reflecting the possibility of stickier global and regional price pressures, the disconnect between markets anticipation of monetary policy paths and major central banks communications, additional turmoil in global financial markets, adverse spillovers to the region from Chinas medium-term growth slowdown, and deeper geo-economic fragmentation. Elevated public debt and rising interest costs call for continued—and, in some cases, accelerated—fiscal consolidation, which can also support the battle against inflation, while protecting the vulnerable through targeted measures.
The slowing demand will likely push down global commodity prices and improve Indias CAD in FY2024. However, a downside risk to the Current Account Balance stems from a swift recovery driven mainly by domestic demand and, to a lesser extent, by exports. The CAD needs to be closely monitored as the growth momentum of the current year spills over into the next. Growth is expected to be brisk in FY2024 as a vigorous credit disbursal, and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors. Further support to economic growth will come from the expansion of public digital platforms and path-breaking measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output.
THE INDUSTRY SCENARIO:
Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. In other words, 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.
Strong economic growth in the first quarter of FY2023 helped India overcome the UK to become the fifth-largest economy after it recovered from repeated waves of COVID-19 pandemic shock. Rising employment and substantially increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months. Future capital spending of the government in the economy is expected to be supported by factors such as tax buoyancy, the streamlined tax system with low rates, a thorough assessment and rationalisation of the tariff structure, and the digitization of tax filing. In the medium run, increased capital spending on infrastructure and asset-building projects is set to increase growth multipliers, and with the revival in monsoon and the Kharif sowing, agriculture is also picking up momentum. The contact-based services sector has largely demonstrated promise to boost growth by unleashing the pent-up demand. The sectors success is being captured by a number of HFIs (High-Frequency Indicators) that are performing well, indicating the beginnings of a comeback. India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, several investments and developments have been made across various sectors of the economy. Over the years, the Indian government has introduced many initiatives to strengthen the nations economy. The Indian government has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financial stability but also for the overall growth of the economy. Over recent decades, Indias rapid economic growth has led to a substantial increase in its demand for exports. Besides this, a number of the governments flagship programmes, including Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, are aimed at creating immense opportunities in India.
Infrastructure
Any highly-populated country needs a robust infrastructure and India is no exception to the rule. A key driver of the economy, Infrastructure is highly responsible for propelling Indias overall development. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. It is a major contributor towards Indias GDP, both directly and indirectly.
GDP from Construction in India averaged 2,36,771 crore from 2011 until 2023, reaching an all-time high of 3,91,811 crore in the Q1-FY2023 and a record low of 1,34,682 crore in the Q2-FY2020. In the long-term, the India GDP from Construction is projected to trend around 3,33,700 crore in 2024 and 3,46,700 crore in 2025.
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 recording a CAGR of 9.9% during 2023-2027.
Despite the surge in construction costs, government spending on infrastructure projects has remained strong, and the trend is projected to further continue. 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. However, the trend might slow down, owing to recessionary fears and a further increase in rate hikes projected to be announced by the Reserve Bank. Increasing spending by the government on infrastructure projects to support industry growth in India. 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 USD1.2 billion for funding infrastructure development in India. The government plans to use USD 300 million for the upgrade of 300 kilometers of state highways and district roads. Furthermore, USD 350 million will be deployed to improve the connectivity of the metro rail system.
As the national government continues to prioritize the development of infrastructure, the government is projected to enter into more such agreements over the next three to four years. This will keep driving investment in the sector, thereby supporting the growth of the construction industry in India.
Construction reported impressive growth in both revenue as well as net income with 45 per cent and 53 per cent, rise respectively in revenue. It employs 5,500 lakh people, and any improvements in the construction sector affect a number of associated industries such as cement, steel, technology, skill-enhancement, etc. Low entry and technology barriers make the industry highly fragmented. While low fixed costs narrow the entry barriers, uncertainties on payments drives up working capital requirements. Entities in a contracting process of infrastructure and industrial projects include the owner (project implementer), contractors, consultants, process licensors and suppliers of raw materials and equipment. The industry is regulated and implemented by different apex authorities of the various segments. It encompasses different types of contracts (PPP, EPC, EPCM, BOT, BOOT, etc.), depending on the nature of project. Each contract has certain features which draw interest of players and aim at enhancing overall efficiency. Revenues in construction contract are recognised as per Ind-AS 115 i.e. the revenue is recognised to depict the transfer of goods or services to customers at an amount that is expected to be entitled to in exchange for those goods or services. Contract costs that meet certain criteria will be capitalised as an asset and get amortised as revenue is recognised.
Infrastructure accounts for nearly 40% of Indias industrial output. Hence, it enjoys intense focus from the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. To prevent lack of infrastructure becoming a binding constraint on the growth of Indian economy that aspires to become a USD 5 trillion by 2024-25, the country needs to spend about USD 1.4 trillion on infrastructure. India is witnessing significant interest from international investors in the infrastructure space with many MNCs keen to collaborate on infrastructure, high speed trains, renewable energy, developing smart cities, etc. The construction sector of India is one of the most important sectors of the nations economy. FDI in Construction Sectors of India is permitted 100% under the automatic route. It is allowed for projects that are completed for operating and managing townships, shopping centres and business constructions. FDI in Construction Development sector (townships, housing, built up infrastructure and construction development projects) stood at USD 2,622 crore at June 2022.
To meet Indias aim of reaching a USD 5 trillion economy by 2025, infrastructure development is the need of the hour.
The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India and the production-linked incentives (PLI) scheme to augment the growth of infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water& irrigation. While these sectors still remain the key focus, the government has also started to focus on other sectors as Indias environment and demographics are evolving. There is a compelling need for enhanced and improved delivery across the whole infrastructure spectrum, from housing provision to water and sanitation services to digital and transportation demands, which will assure economic growth, increase quality of life, and boost sectoral competitiveness.
Indias high growth imperative in FY2024 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a USD 25 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The USD 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. Infrastructure support to nations manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical. The "Smart Cities Mission" and "Housing for All" programmes have benefited from these initiatives. Saudi Arabia seeks to spend up to USD 100 billion in India in energy, petrochemicals, refinery, infrastructure, agriculture, minerals, and mining. In Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to 10 lakh crore, which would be 3.3 per cent of GDP. As per the Union Budget 2023-24, a capital outlay of 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013-14. Started with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors. Under the initiative, 2476 projects are under development phase with nearly half of the under-development projects are in the transportation sector, and 3,906 in the roads and bridges sub-sector. Indias logistics market is estimated to reach USD 556.97 billion by 2027, growing at a CAGR of 6.28%. India intends to raise its ranking in the Logistics Performance Index to 25 and bring down the logistics cost from 14% to 8% of GDP, leading to a reduction of approximately 40%, within the next five years. AAI and other Airport Developers have targeted capital outlay of approximately 98,000 crore in airport sector in the next five years for expansion and modification of existing terminals, new terminals and strengthening of runways, among other activities. India currently has the fifth-largest metro network in the world and will soon overtake advanced economies such as Japan and South Korea to become the third-largest network. Metro rail network reached 810 kms and is operational in 20 cities. At almost 20 kms, Mumbai monorail is the third largest route in the world after China with 98 kms and Japan with 28 kms.
Logistics:
In recent times the warehousing sector has achieved new benchmarks on demand, supply and investments. Further, these have also been backed by graduating value-chain of the logistics eco-system i.e. improvement in quality. The coveted status of "Infrastructure" has further catalysed the growth of this segment.
The presence of a robust logistics-related infrastructure and an effective logistics management system facilitates seamless movement of goods from the point of origin to that of consumption, and aids an economys movement to prosperity. The progress of logistics sector holds an immense value for India as well; as such advancement would increase exports, generate employment and give the country a significant place in the global supply chain. Indian logistics industry is a sunshine sector. The Indian logistics sector provides livelihood to about 220 lakh people. Improving the sector would facilitate a 10% decrease in indirect logistics cost, leading to a growth of 5-8 per cent in exports.
The industrial warehousing segment in India is highly fragmented, with the unorganised players have aggregated about 90 per cent share of the total warehousing space. As a consequence, there is severe price competition among players. The industrial warehousing segment witnesses intense competition on account of unorganized nature of the industry. The other challenges hindering its growth include high cost, underdeveloped material handling infrastructure, fragmented warehousing, presence of multiple regulatory and policy making entities, lack of seamless movement of goods across modes, and poor integration with modern information technology. These challenges, particularly the ones pertaining to procedural complexities, redundant documentations and involvement of several agencies at our ports and borders, severely dent our performance in international trade, resulting into about 70 per cent of the delays.
There are several policies aimed at encouraging investment in the sector, including free trade warehousing zones and logistics parks. Selecting the right location, optimal usage of storage facilities, providing value-added services, and achieving scale are the key success factors for the warehousing industry. The government has laid an emphasis on infrastructure growth with plans to develop highways, railways and rural roads, and revive unused airstrips and airports. The government has prepared a blue-print of the Maritime India Vision 2030 (MIV 2030) alongwith revival the Sagarmala project for port modernisation and port automation, development of multimodal logistics parks, and dedicated freight corridors. The successful and timely completion of these proposed projects can help ensure cost effectiveness and operational efficiencies.
The GST implementation in 2017 has since brought efficiency in supply chain e.g. it has expedited the freight movement at interstate borders due to dismantling of check posts by upto 20 per cent. The rollout of GST has improved supply-chain effectiveness and reduction in consolidation costs by promoting hub-and-spoke model (have a large warehouse in a strategic location instead of numerous small ones) resulting in a reorganised industry. The government has set a target to reduce logistics costs by as much as five percentage points over the next four-five years to about 8 per cent of GDP.
Indias Logistics & Industrial sector has hit the ground running in 2023 after being resilient during the pandemic.
Uplifted by the 3PL and consumption-based sectors and the expansion of the Indian manufacturing market, the logistics & industrial segment emerged as one of the most attractive investment propositions for institutional investors in 2023.The sector has gained significant momentum and has hit an all-time high net absorption of 41 mn sq ft across the top 8 cities of India. Interestingly, more than 68 per cent of this net demand has been observed in Grade A space showing a shift in tenants preference towards quality spaces with high operational and cost efficiency.
The industrial warehousing segment is driving growth, led by the organised segment (largely third-party logistics players i.e. 3PL) fuelled by value-added services. The growth of logistics is two sided led by demand and supply. The demand-led growth is mainly strengthened with the economic recovery, and implementation of GST. The supply-led growth drivers include improvement in logistics infrastructure, integrated logistics and birth of numerous logistics start-ups, especially tech led start-ups. Such significant development is reflected in improvement in the global rankings i.e. 38th out of 167 countries in World Banks Logistics Performance Index (LPI) 2023.
The warehousing stock in the top eight cities of India has reached ~330 mn sq ft and is projected to cross 470 mn sq ft by 2025. Major global funds have invested with warehousing developers and operators to expand their reach and regional footprint, being the key differentiator in the sector. This has increased the good quality supply in the market, with Grade A taking centre stage, contributing 161 mn sq ft of stock.
The average Grade A and Grade B rents increased at 9 per cent and 7 per cent y-o-y growth rates, respectively the highest in the last five years. This growth is driven by the increasing demand for technically specialised facilities from 3PL, Ecommerce, Retail, and specialised manufacturing sectors. As top international and domestic occupiers favour Grade A spaces, the rent growth of Grade A is higher than Grade B.
The Indian government has launched the Gati Shakti NMP in October 2021, which will reduce logistics costs and improve infrastructure efficiency. The intention is to devise the most cost-effective method to transport goods by the year 2035. The policy aims at preparing a proper integrated logistics plan. It is also encouraging tech-enabled start-ups in the logistics sector as they will be able to provide seamless movement of goods across the country. The post-COVID-19 economic transition has boosted the growth while accelerating a digital transformation across the logistics chain — from warehousing to supply chain management right to the last mile delivery. 3PL will be at the forefront for warehouse demand; however the largest occupier will be e-Commerce. With accelerated institutionalisation of warehousing segment, the footprint shall expand in the smaller cities, too.
Backed by a technology-driven transformation, the logistics sector has in recent years emerged as a leading contributor to the economy as well as a major employment generator. As per an assessment by the National Skill Development Corporation (NSDC) last year, logistics was among the five top employment generating sectors in the post COVID economy in India.
The future for the Indian logistics industry is going to shine even brighter. It will enhance our trade competitiveness, create jobs, shoot up countrys performance in global rankings and pave the way for India to become a logistics hub. Such measures will also contribute to creation of a New India.
NILA:
As a pure-play Urban Infrastructure contractor/developer, your Company works on AH Infrastructure and urban infrastructure projects by leveraging its core competency. The management is optimistic about the growth of our economy in general and construction sector in particular. Your Company has since secured meaningful Affordable Housing development orders to the tune of the highest order-book in the history of your Company and providing a visibility of a multi-year growth. Hence, it envisages that on back of enhanced pre-qualifications/ bidding capacities, its business will grow sustainably. Also, the COVID-19 pandemic had compelled people to stay at home as a precautionary measure to abate further spread. While, there are lakhs of people in India who do not have a home of their own, inducing the government to plan more aggressively to provide houses to these people who dont have housing at this point of time.
Your Company has also built significant PPP based order-book where the remuneration is superior for a long- term sustainable growth. Your Company is now a sort of a Specialist in AH Infrastructure and pure-play Urban Infrastructure player.
Strategic Focus of NILA:
Unique Business Model Diversified and Flexible:
Your company has developed a unique business model of construction contracts on EPC/LSTK, EPC+PPP and PPP mode for AH projects as well as Urban Infrastructure Projects. Your Company has successfully leveraged the construction expertise to grow into construction contracts from government authorities and reputed corporates. Your Company holds commercial properties in the prime location of Ahmedabad and such lease rent ensures continues revenue.
This diversified business model for Transforming Lives has shown great strength in the past years of challenging business environment. Leasing ensures steady cash flow income while construction contracts of Government assure timely and confirmed recovery of dues, whereas the PPP projects ensure better profitability margins. Your Company has developed in-house expertise in the entire gamut of construction and execution including design, planning & estimation, project preparation, project execution, interior designing, integration of project management.
Project Selection and Execution:
Your Companys comprehensive evaluation of opportunities in infrastructure projects includes the following parameters:
• Principal: Constitution, financial strength, bureaucratic structure, involvement of any bilateral/multilateral agency, track record on other projects, contract management strength, appropriateness of design for local market, etc.
• Pre-development: Financing flexibility to fund the early design work, community/political participation/ opposition, government stability over the life of the project, environmental problems, site selection and regulatory approval delays, land acquisition, etc.
• Finance: Commercial viability of the project, capacity of the lender to evaluate and speed in providing the credit lines, repayment mechanism, credit availability on viable terms, etc.
• Construction: Viability of the design/technology, availability of labour and raw-material, outlook of raw-material cost, contractor failure, developers access to funds on a timely basis for construction, etc.
• Market: Local economic conditions, demand-supply outlook, interest/inflation rate scenario, etc.
Throughout this process, your Company has to identify and mitigate inherent risks that can adversely affect the project. It is broadly evaluated in three parts:
1) preliminary considerations, market analysis, financial analysis, and strategic marketing; 2) site selection and due diligence, land acquisition, deal structure, entitlements, permissions, etc.; and 3) planning and design, construction management, operations and property management. Hence, with sufficient due-diligence the project is selected and execution is carried-out accordingly by your Company. Your Companys Quality Management System is ISO 9001 : 2015 accredited by INTERCERT that include Project Management, Site Development and Construction activities for Infrastructure, Industrial, Residential and Commercial projects.
Project Management and Monitoring:
Your Company has adopted an integrated system for planning, scheduling, monitoring and control of the approved project under implementation. To coordinate and synchronise all the support function of Project Management it relies on an Integrated Project Management Control System which integrates its project management, contract management and control function addressing all stages of project implementation from concept to commissioning. All projects have project monitoring centres which facilitate monitoring of key project milestones and also act as a Decision Support System for the management. It is used as integrated web based collaborative system to facilitate consolidation of project related issues and its timely resolution. Various features for information delivery of ERP facilitate project tracking, issues resolution and management interventions on a regular basis. Integrated ERP platform for monitoring and controlling of critical project activities spread across various functions projects, contracts, finance and execution. This helps in decision support through timely identification of critical input and provides a holistic approach towards project implementation and major project milestones.
Financial Resources:
The foremost source of finance of your Company has traditionally been internal accruals and borrowings from banks. Your Company has made financial arrangement with banks and financial institutions for its various long- term and working capital requirements. During the year your Company has not only successfully contracted/ renewed substantial credit limits at competitive terms, but also pertinently tuned the requisite credit limits. Such measures will enhance the overall financial flexibility.
Joint Ventures:
In order to share risk and cost, experience and expertise your Company develops certain projects in association with other renowned corporates and has formed associates and joint ventures. This provides a larger scale to your Company to work on specific operations. In such a scenario, the construction work is invariably carried- out by your Company. Your Company looks upon them as partners in its progress and shares with them the rewards of growth. It is your Companys endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and cooperation with each other, consistent with consumer interests.
Opportunities and Outlook:
Gujarat The Growth Engine of India:
The organisation of "Vibrant Gujarat" at every two-years has been instrumental to make Gujarat a corporate hub with the entry of national and multinational companies which has led to rising employment. Gujarat is one of the leading industrialised states in India. As of August 2022, Gujarat had a total installed power generation capacity of 44,930 megawatt (MW). Gujarat is considered the petroleum capital of India due to presence of large refining capacity set up by private and public sector companies with total refining capacity of 102 MMTPA, accounting for 40% of the countrys capacity. The state is the worlds largest producer of processed diamonds, accounting for 72% of the worlds processed diamond share and 80% of Indias diamond exports. With a contribution of 65 to 70% to Indias denim production, Gujarat is the largest manufacturer of denim in the country and the third largest in the world. There are 46 ports, 18 domestic airports and one international airport. There are 106 product clusters and 25 notified special economic zones (SEZs). Large scale investment is expected in Gujarat as part of the USD 9,000 crore DMIC.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), during 2019 to 2022 Gujarat has received cumulative FDI of USD 3,039 crore i.e. 19% of the total equity inflows. Total exports from the state stood at USD 6,525 crore in FY2023. Hence, your Company foresees ample opportunities in infrastructural development. The rapid urbanisation is likely to boost metaphorical growth in years to come. All these would ultimately generate a demand to develop infrastructure that shall offer opportunity to the developers to grow in years to come. The envisaged opportunities are discussed further. Your Company is favourably placed to participate in the opportunities arising from the home-state that is considered the "Growth Engine of India".
ADVANTAGES
| High economic growth and industrial development | • One of the most industrially developed states. Contributes about a quarter of Indias goods export. |
| • At current prices, Gujarats Gross State Domestic Product (GSDP) is estimated at Rs. 22,03,062 crore (US$ 288.73 billion) in FY23, an increase of 13.3% YoY. | |
| Adequate power generation capacity | • The State Government has framed policies in almost all key sectors such as industry, power, ports, roads, agriculture and minerals. |
| Rich labour pool | • Good educational infrastructure with premier institutes in management, fashion, design, infrastructure planning and pharmaceuticals. |
| • Industrial training institutes in each district to train manpower for the shop floor level. | |
| Facilitating infrastructure . | • The state has developed 46 ports, 10 domestic airports and one international airport |
| • 2,200 kms gas grid supplies gas to industrial areas. |
KEY GOVERNMENT POLICIES AND OBJECTIVES
| Gujarat New Industrial Policy 2020 | Garment and Apparel Policy 2017 | Solar Power Policy 2015 | Electric Vehicles (EV] Policy | Jal Jeevan Mission |
| Promote entrepreneurship & innovation in the state | Creation of 100,000 jobs in the state. | Promote power generation of green and clean power in the state using solar energy and reduce the cost of generating renewable energy. | In June 2021, the Gujarat government introduced the electric vehicles (EV) policy with the aim to roll out 200,000 EVs over the next four years. | Union Government allocated Rs. 3,411 crore (US$ 471 29 million), a 4x increase in fund allocation YoY, to Gujarat for FY22. |
GOVERNMENT VISION FOR THE STATE
| Energy | Agriculture | Tourism | Education |
| Universal access to affordable, adequate, reliable, modem and sustainable energy. | Increase the productivity and processing in agriculture sector to double farmers income by adopting modem and sustainable agricultural practices; and ensure food security for all | Position Gujarat as a vibrant tourist destination with an emphasis on visitor experience, livelihood linkages, environmental concerns and investment opportunities | Knowledge and skill-based society with modem and quality educational system and infrastructure to prepare people for competing at international and national events. |
Rajasthan The Sunrise State for Urban Infrastructure:
Rajasthan is Indias largest state by area and it is bordered by the other important Indian states: Punjab to the north; Haryana and Uttar Pradesh to the northeast; Madhya Pradesh to the southeast; and Gujarat to the southwest. Thus it is a natural corridor between the wealthy northern and the prosperous western states, making it an important trade and commerce centre.
The population of Rajasthan stands at about 782 lakh (Aadhar Statistics 2021-22), making it the eighth most populated state in India (~5% of the countrys population). Globally, the urban areas are becoming centres of economic growth. Due to the rapid growth and urbanization, there has been an increased pressure on the urban infrastructure facilities.
Meanwhile, the Urban infrastructure and Public Services for Rajasthans burgeoning urban population is inadequate. On a conservative basis, an investment to the tune of 10,000 crore would be required in the next 10 years to adequately address the infrastructure needs of various urban centres in Rajasthan.
The natural resources, policy incentives, strategic location and infrastructure in the state are favourably suited for investments in sectors such as cement, IT and IteS, ceramics, tourism, automotive and agro-based industries. Rajasthan is the largest producer of oilseeds, seed spices and coarse cereals in India. Tremendous opportunities exist in the areas of organic and contract farming as well as in infrastructure developments. Rajasthan is among the largest mineral-producing states in India. Around 81 varieties of minerals are available in the state and 57 minerals are produced on a commercial scale. Rajasthan accounts for 26% of the total cement grade limestone reserves in India and is one of the largest cement producers with 27 major cement plants having a total capacity of 55 MTPA.
The state has undertaken a series of labour and industry reforms in recent past. It has also opened many sectors for PPP; earning favourable response from residents, activists and industrialists. The GoR is committed to providing a significantly better and more prosperous life to all the citizens of the State. For people of Rajasthan to realise their dream of a much better life for themselves and their children, it is creating an entire ecosystem of opportunities including a slew of measures, which gets reflected as Rajasthan ranked 6th in the latest EODB and reforms implementation as per a study by the World Bank and KPMG. Hence, your Company foresees ample opportunities in infrastructural development and has built a propitious order-book (as detailed further).
ADVANTAGES
| High economic growth and stable political environment | • Between 2015-16 and 2022-23, the states GSDP increased at a CAGR (in Rs.) of 10.07% |
| • Stable political environment. Government committed towards creating a progressive business environment. | |
| Rich labour pool and infrastructure support | • Rajasthan has renowned higher education institutions in various disciplines, producing thousands of skilled and proficient young individuals every year. |
| • State developing sector specific infrastructure, such as special purpose industrial parks and special economic zones for export of handicrafts, IT and electronic goods | |
| Abundant mineral resources and location advantage | • Rajasthan offers a variety of unexploited agricultural and mineral resources. |
| • Rajasthan is a natural corridor between the wealthy northern and the prosperous western states. | |
| Policy and institutional support | • Provides several incentives and concessions for investment. |
| • Rajasthan has a favourable industrial relations environment. The law & order situation in the state ensures a good working environment. |
KEY GOVERNMENT POLICIES AND OBJECTIVES
| Rajasthan Start-up and Innovation Policy, 2019 | Rajasthan Solar Energy Policy, 2019 | Rajasthan Investment Promotion Scheme, 2019 | One Nation One Ration Card System Reform | Urban Local Bodies (ULB) Reforms |
| Establish 10 incubators, support 2,000 innovative start-ups, mobilize US$ 14.31 million of Angel and Venture Capital and develop an innovation culture in the state. | Develop a global hub of solar power of 50GW capacity in next 5-6 years to meet energy requirement of Rajasthan and India. | Promote investment in the state and generate employment opportunities through such investment. | In February 2021, Rajasthan became the 12th state in the country to successfully undertake One Nation One Ration Card System reforms. | In January 2021, Rajasthan became the fifth state in the country to successfully undertake Urban Local Bodies (ULB) reforms. |
GOVERNMENT VISION FOR THE STATE
| Infrastructure | Agriculture | Economy | Education | Human development | Community | Governance |
| To develop good quality roads, proper traffic management systems and appropriate water policy. | To create network of canals, develop five international level research labs and address soil fertility. | To promote region wide economic balance and develop efficient economic infrastructure. | To make education compulsory up to 10th standard, support higher education & research and provide computer literacy. | To eliminate poverty and generate employment opportunities for all and develop a comprehensive Economic Inclusion Policy. | To develop a coherent social environment and execute poverty elimination: plans. | To make minimum education & work experience must for politicians, provide freedom to bureaucrats and implement fairs advanced taxation system. |
Infrastructure:
Affordable Housing:
Right to adequate housing is a basic human right as shelter is a basic human need. Provision of adequate housing is emerging as a major thrust area for Government and the government accords a very high priority to this task. With all round increase in the cost of land, building materials, labour and infrastructure, affordable housing has become a distant dream for the economically weaker, low income groups, and middle income groups. Hence, the role and intervention of the Government has become all the more important. Sustainable human development cannot be achieved without adequate & affordable housing. Affordable shelter for the masses or creation of productive and responsive housing for all is not a simple technological issue or a mere problem of finance. It is a complex amalgam of a host of factors, which need to be tackled at all levels and in a synchronised manner. Due to rapid pace of urbanisation, increasing rural to urban migration and the gap between demand and supply, there is a growing requirement for shelter and related infrastructure in urban areas of the country.
The mission of the MoHUA i.e. "Pradhan Mantri Awas Yojana" offers a considerable opportunity. It aims to address urban housing shortage of about 112 lakh among the EWS/LIG and MIG categories including the slum dwellers by ensuring a pucca house to all eligible urban households across the length and breadth of the country for EWS, ST, SC, and women (irrespective of caste and religion). HFA alongwith the "100 Smart Cities" is a major game changer for the industry. While, the most coveted "Infrastructure" tag to AH has already provided righteous benefits. A combination of factors such as: 1) government financial and policy thrust, 2) regulatory support, 3) rising urbanisation, 4) increasing nuclearisation of families, and 5) increasing affordability is converting latent demand into a commercially lucrative business opportunity. Increased impetus to the creation of affordable housing mission, along with quicker approvals and other supportive policy changes offers a considerable opportunity. On operating cost metrics, the new entrants with their pan-India ambitions would need to build scale quickly to compete with the incumbents whose regional-focussed models have helped maintain tight opex ratios in addition to their cost of fund advantage. This entails building up the order-book at a rapid pace. This in turn would necessitate having the right ‘people (who have seen various cycles and scale) and the right ‘processes (building a scalable and robust platform) while getting the ‘pricing (risk and opex adjusted spreads) right. These are the key differentiators. As your Company has already become a sort of a Specialist in AH space, it is quite favourably placed to participate in such opportunity as discussed further.
PMAY (U) is active in 702 cities of Gujarat and 861 cities of Rajasthan, wherein the latest progress of PMAY (U) - HFA is furnished below:
| Physical Progress (Nos) | Financial Progress ( in Crores) | ||||||
| State | Project Proposal Considered | Sanctioned | Grounded | Completed/ Delivered | Investment | Central Assistance | |
| Sanctioned | Released | ||||||
| Gujarat | 1,857 | 10,54,868 | 9,83,978 | 8,81,711 | 1,08,975 | 21,702 | 19,351 |
| Rajasthan | 821 | 2,89,446 | 2,54,168 | 1,74,085 | 23,579 | 5,437 | 4,140 |
| Total | 2,678 | 13,44,314 | 12,38,146 | 10,55,796 | 1,32,554 | 27,139 | 23,491 |
| PAN India | 29,908 | 1,18,90,000 | 1,13,01,000 | 76,11,000 | 8,19,000 | 2,00,000 | 1,48,000 |
* Including incomplete houses of earlier JnNURM
It can be gathered from the above table that your Company is already operating in states that offer about 9% in numbers and 16% amountwise opportunity. Also, about 87% Central assistance is already released in Gujarat (89%) and Rajasthan (76%) combined together, wherein it is 74% for Pan India. Out of the Houses Sanctioned, about 79% is completed in Gujarat (84%) and Rajasthan (60%) combined together, wherein it is 64% for Pan India.
Slum Redevelopment in PPP:
According to the GoGs UDUHD, about 7,00,000 families reside in slums in the urban areas of Gujarat. State Government aims to accord priority to rehabilitate such slum dweller families in-situ. Eligible slum dwellers families will be provided houses of minimum 25 sq. mtr. Carpet area with basic civic amenities free of cost in lieu of their hutments with main objectives being:
• In-situ rehabilitation of the slums situated on public land in urban areas of the State
• Provision of pucca houses with basic amenities having two rooms, kitchen, bath room and latrine for slum dwellers families
• Ownership rights of the house to the beneficiaries after 15 years
• Provision of hygienic and healthy life style especially for urban poor
• Qualitative improvement in socio-economic and environmental conditions of towns and cities of Gujarat
• Attracting private investment by PPP for this purpose
Simple and transparent policy framework to rehabilitate slums in-situ on public land through PPP
The beneficiaries get basic civic facilities of drinking water, sewerage line, electricity connections, Anganwadi/ Health Centre. The beneficiaries are responsible for payment of operational and maintenance cost, property tax and any other tax levied by LSG. The beneficiaries will be initially granted lease-hold rights for the houses allotted to them for first 15 years and thereafter will be granted ownership rights. However, the ownership of the land will remain with the LSG. The developer gets certain incentives including additional FSI, TDRs, free-hold rights on balance vacant land for development and free sale, exemption on developmental charges, relaxation in construction. Private developer is selected through established, open and transparent procedures.
Urban Infrastructure:
Your Company has, over a period of time, developed a niche for itself by executing unique and pioneering projects e.g. BRTS bus-shelters, Multi-level parking facility, Slum Rehabilitation and Redevelopment, Medical college campus, etc. Through execution of such projects, your Company has built proprietary knowledge and it places your Company favourably with employers of such projects. Your Company expects that number of large sized urban infrastructure projects in Gujarat will start taking shape on the basis of investments committed vide 28,360 MoUs executed during the latest Vibrant Gujarat. In the backdrop of the announcement of GIFT, MEGA, Dholera SIR, Mega cities, Million plus cities, etc., your Company is favourably poised to replicate such experience. Apart from this, there are also other opportunities that your Company can participate into, such as:
• Transportation infrastructure for better mobility through public transport, improved walkability, parking
• Sewerage, drainage and water supply
• Solid waste management
• Social infrastructures such as parks, playgrounds and leisure spaces
• Preservation of heritage precincts
• Community Halls
Your Company is confident to benefit from this.
Bus Ports in PPP
A typical SRTC is a state owned corporation for passenger transport providing bus services both interstate and intra-state. As part of this endeavour, various SRTCs have decided to develop state-of-the-art Bus Terminals with an iconic structure and design as well as modern facilities. To improve the urban transport infrastructure, SRTC will undertake development and operation & maintenance of bus terminals with commercial facilities on DBFOT basis.
SRTC normally adopts a single stage three step online tendering process for selection of the Concessionaire for award of the Project(s). GoIs guidelines for qualification of bidders seeking to acquire stakes in any public sector enterprise through the process of disinvestment apply mutatis mutandis. The selected bidder i.e. the Concessionaire is responsible for designing, engineering, financing, procurement, construction, operation and maintenance of the Project(s) under and in accordance with the provisions of a long term Concession Agreement to be entered into between the Concessionaire and SRTC.
The scope of work broadly include rehabilitation, demolition of existing bus terminals with designing, financing, construction of new bus terminals along with associated amenities & facilities, development and construction of commercial facilities and the operation and maintenance thereof of bus terminal and commercial facilities. The commercial facilities to be developed by the Concessionaire shall be available on a long-term lease basis. Your Company has already got a couple of orders directly as well as in joint venture with other reputed corporates for Amreli and Modasa Bus Ports at Gujarat. Your Company is confident to gain positively from execution of such projects.
Office/Commercial Complex
Your Company has already executed 8,00,000 sq ft bua for a reputed corporate at Gujarat. Your Company is confident to gain positively from execution of such projects.
Health and Medical
Your Company has already executed 3,00,000 sq ft bua facility of a Medical College campus for 100 MBBS admission annually as per applicable MCI norms at Barmer, Rajasthan. This Project will provide additional opportunities to your Company into Medical and Health related construction business, which has abundant prospect moreso post COVID-19 pandemic. Your Company is confident to gain positively from execution of such project.
Industrial and Logistics:
The logistics value chain comprises three units transportation, warehousing and administration. Transportation involves the end to end movement of freight from the manufacturer/retailer to the customer. This transfer can span across borders and across different modes of transport. Warehousing is the intermediate storage of goods that happens during a products journey from the factory to the consumer. Administration is supply chain management.
Logistics entails a lot of coordination and integration, which is made efficient through supply chain management. It plays an indispensable role in the transportation of goods across the country. There is a target to reduce the logistics cost in India by as much as five percentage points over the next four-five years to about 8% of GDP. At present it is higher as compared to 6-9% in developed countries such as the US, Hong Kong and France. Much of the higher cost could be attributed to absence of efficient intermodal and multimodal transport systems. Moreover, warehousing which approximately accounts for 25% of the logistics cost has also been facing major challenges. This further added to the logistics cost borne by the end users and other stakeholders.
Indian Government has increased thrust to improve the logistics sector. Promising and futuristic Policy and Infrastructure environment for the Logistic sector exists in India today, and is creating the most encouraging impact in revolutionizing the logistics sector and taking it to the next level of evolutionary phase. The country is gradually improving its logistics positioning as seen in the LPI, wherein Indias rank has improved as mentioned earlier also attributable to reforms undertaken by the government like the introduction of the SWIFT in the Customs Department.
The sector indeed has a potential to embrace lot more positive changes and has a long way to go. With the Logistics Sector getting Infrastructure status, the access to credit on long term basis is at competitive rates from financial institution and access to funds as ECB, as well as access long tenure funds from insurance and pension funds. Further, the implementation of GST has made way for cost and operationally efficient Hub & Spoke
Model of warehousing and has shifted the end user demand and developer supply from inefficient, low quality redundant warehouses to large box, good quality Grade "A" warehouses. Strong demand and investment are foreseen in short to medium term.
A warehouse is a fundamental part of business infrastructure and is one of the key enablers in the global supply chain. It is the fulcrum for procurement, manufacturing and distribution services which collectively build robust economies. Earlier, the incentives to enter Indias warehousing sector was minimal for organised players as the occupiers themselves were content to engage with fringe partners offering low cost options with a network of small storage facilities near consumption centres. Multiple state and central level taxes made it sensible for companies to maintain smaller warehouses in each state. Further, this limited the focus on automation and higher throughput. This attitude of occupiers of preferring to save on costs as their sole objective is changing. There has been a gradual transition in the mind-set of occupiers to use the services offered by organised segments. A plethora of factors are driving this wave of change such as: requirement from compliance regulators (in case of the pharmaceutical industry), quality consistency assurance required by clients/ regulators, statutory penalties on non-complaint warehousing facilities, economies of scale being achieved through larger warehouses, safety and security of goods, efficiency in operations, quicker turnarounds, need for efficient warehousing designs and the advent of e-commerce and other multinational businesses that prefer to occupy only complaint facilities. This shift was further accentuated by the implementation of the GST. The warehousing market in India is highly fragmented as majority of the warehouses measure less than 10,000 square feet. Further, almost 90% of the warehousing space is controlled by unorganised players and comprises small-size warehouses with limited mechanisation. The present warehousing market in India can be categorised into three lower stratum, middle stratum and higher stratum. The lower stratum is just godowns of the past converted into warehouses. These are old buildings, mostly Reinforced Cement Concrete (RCC) structures and their only utility is storage. The middle stratum warehouses comprise similar structures as in the lower stratum, but these are built with pre-engineered slabs and are known as pre-engineered building (PEB) structures. Their planning and functioning is very basic, like that of the lower strata, but their buildings are in a comparatively better condition. Higher stratum warehouses are the modern and massive structures that perform a lot of supply chain functions along with storage. Another practice in Indian warehousing market is the lack of attention to warehouse designing. This ignorance stems from lack of awareness and/or lack of willingness on the part of landowners and developers to cater to the requirements of end users. Most warehouses are built keeping in mind the developers perspective and not that of the end user. Hence, the focus is to save cost which results in the construction of a very basic structure for a warehouse. Such warehouses do not adhere to market standards and therefore, end users are frequently plagued with issues like lack of basic amenities and sub standard infrastructure with lower longevity. Warehouses today take different forms fulfilment centres, distribution centres, return centres, and even showrooms. Your Company, thus, focuses on the concept of Built to Suit (BTS) warehouse incorporating the designing and end user centric facilities/ amenities. Demand for large warehousing spaces is likely to see steady increase as occupiers now prefer to move out of their smaller warehouses and consolidate their activities in larger facilities, which are presently in short supply compared to the demand. This demand-supply gap is visible in the current premium commanded by organised players owning these assets.
Such opportunity has attracted global corporations in Indian warehousing sector. The governments thrust to the sector such as giving infrastructure status to the logistics sector, "Make in India", "Digital India", "Skill India", India Brand Equity Foundation Trust, Multi-modal logistics parks, Dedicated Freight Corridors, signing of FTA/PTA, etc.; and initiatives to set up industrial corridors like DMIC, Delhi Kolkata Industrial Corridor and logistics parks have propelled the cause. Over the past few years, the government has undertaken several reforms to promote and provide an exit route to real estate investors via the REITs. Currently the market for REITs in India is at a very nascent stage and it would take time to evolve. Once the market for REITs matures, the institutional investors would be able to get a credible exit avenue to gain from their warehousing investments by listing their warehousing assets through REITs. These initiatives would go a long way in leveraging the true potential of the sector and bring down the overall costs linked to warehousing and logistics as well give credible exit opportunities to investors. As more and more companies streamline their logistics networks, it would be observed that unorganised players or smaller organized players would consolidate or sell their assets to larger ones. The industry is expected to witness a structural shift over the next 3 5 years. The warehousing aspect in the logistics supply chain globally is going through a transformation. From being a mere storage space provider for goods, the segment is offering an array of value added services such as packaging, small scale manufacturing, cross docking, automation, algorithm based demand forecasting and distribution centres. This transition would only happen if economies of scale come into play and companies are able to consolidate their spaces and move into larger warehouses. The Indian warehousing industry, which was lagging behind its global counterparts due to its fragmented structure, would now enter the same league. Your Company is favourably located, being in the economically most vibrant state of India i.e. Gujarat, to participate in developing/constructing the industrial infrastructure. The MOU with the Kataria Group of Ahmedabad to work jointly for acquiring land and developing industrial and logistics parks, units, sheds, plots, residential colonies, and allied infrastructure at various locations situated near the upcoming automobile hub at Bechraji about 90 kms from Ahmedabad at Gujarat; offers your Company a strategic advantage. Your
Company has already delivered five (5) dormitories, commercial complex, and a couple of sizeable logistic warehouses under this initiative. Your Company is favourably placed to take the advantage of the expected spur in construction/development of new industrial facilities e.g. industrial park, warehouse/logistics Park, etc.
Risk, Challenges, and Threats:
As is typical in expanding business activities your Company has become a subject to a variety of risks, challenges, and threats. It is recognised that risks are not only inherent to any business but are also dynamic in nature. Further, the Company is susceptible to certain risks arising out of various activities undertaken in the normal course of business.
There are many constraints affecting the smooth functioning of the industry in which your Company operates. The table below provides a brief overview of the most significant risks and your companys approach to managing them.
| Risk | Explanation | Mitigation approach |
| Pandemic risk | Any epidemic/pandemic can cause interruption/disruption in the execution and business | Your Company categorises Project sites into High, Medium and Low based on perception of such risk and the sites are mandated to be operated with strict adherence to the government/HSE guidelines. Your Company focuses to ensure the health and safety of all employees, labourers, suppliers and channel partners, while initiating stringent measures to control costs and strengthen cash flows. |
| Health and Safety at projects | Any employee, labour, worker is hurt or killed by an accident at work. | Apart from the QMS, project execution policy/processes, loss prevention programmes, insurance, etc. your Company ensures to initiate development and construction of the Project, only post identifying, defining and addressing all such risk propositions and dynamics. Your Company also ensure to share sufficient knowledge about such risks and imparts adequate training to all the employees, labourers, workers, so as to tackle such risks. Zero accident programs supported by proactive near miss reporting aims at the avoidance of all workplace accidents. |
| Health and Safety related to your Companys construction | Person or persons are hurt or injured as a result of your Companys construction failure or defect. Stability/ sturdiness of the structure is compromised. | Your Company follows strict design and validation rules for all projects, and fully adheres to Principal/client/NBC specific requirements for safety and structural sturdiness. Your Company ensures implementation of detailed instructions of the Project Principal/client, Architect, Structural Engineer, PMC, etc. to ensure the fulfilment of Principal/clients requirements and your Companys quality standards. Your Companys overall approach to quality management assures conformance and performance to the highest level. |
| Interest rate risk | Your Companys interest costs are impacted by market rates. | Your Companys liquidity and borrowing are managed by professional at Senior management level. The interest rate exposure of your Company is reduced by matching the duration of investments and borrowings. |
| Credit risk | Your Companys Principals ability to pay can have an impact on the financial result. | As per your Companys policy only well-established institutions/ corporates are approved as counterparties. Exposure per counterparty is continuously monitored. |
| Liquidity risk | Acceptable liquidity levels are required in order to achieve desired financial results. | In addition to its own liquidity, your Company enjoys credit facilities with the largest Bank of the country as well as other banks/financial institutions of high-standing and good repute. |
| Competitor risk | Competitors find ways to bid at dramatically lower cost or bid to construct with better functioning/ latest technologies. | Your Company aims to be the cost and value leader, meaning striving to innovate and bring new and increased value through the innovation to our customers while at the same time working to assure that your Companys operations are world class in terms of efficiency, cost and waste avoidance. Your Company has developed proprietary knowledge to construct with different technologies, while the management provides highest importance to the Quality perspective to ensure long- term sustainable growth. |
| Economic downturn | Your Companys customers could be impacted by a major economic downturn resulting in lower demand for their respective projects. | Your Company has a highly diversified and well balanced customer base. The risk is therefore spread very widely on customer, regional and industrial sector/segment perspective. Your Companys flexible business model is capable to set operational priorities in the face of changing economic scenario. Your Company uses market data intelligence to follow and anticipate developments - allowing proactive management of changing market conditions. |
| Execution risk | It depends on various factors e.g. labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities, weather conditions, and absence of contingencies such as litigation. | Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and repute contractors. |
| Input cost fluctuations | Significant changes in raw material costs can impact the profitability. | Your Company has established a proficient supply chain which assures raw materials are purchased in a highly competitive manner. Raw material cost indexes could also be included in contractor/supplier agreements. |
| Supply chain disruption | External factors such as fires, extreme weather events, natural disasters, water stress, war or pandemic illness to mention a few, could result in disruption of supply and impact on revenue and profit. | Your Company has intentionally set up a flexible supply chain and works to avoid dependence on a single source or production location. The supply chain tracks issues e.g. extreme weather events, natural disasters, water stress, war or pandemic illness, etc. as these may impact the supply. In addition your Company focuses on working with suppliers that have adequate insurance for both production and transports. |
| Material source or type compliance risks | Your Company aims to avoid the use of hazardous substances in its products and processes; your company also strives to avoid negative social impacts within the extended supply chain. Legislations have been and are being introduced in these aspects, failure to meet with direct or customer requirements of these legislations could result in costs as well as loss of business for your Company. | Your Companys majority Principal/client are government bodies and the material used by your Company is subject to stipulations of the client, BIS specifications, laboratory checks, inspection by independent third-party e.g. Project Management Consultant, etc. Hence, environment, health and safety risks have already been considered while deciding such stipulations. |
| Labour disputes | Industrial disputes lead to industrial action with impacts your Companys ability to meet Principal/client demands. | Your Company maintains an open and positive relationship with all the employees, sub-contractors, workers, etc.; as exemplified by not a single instance of any such dispute so far. |
| Loss of a major project site | Fire, flood or natural disaster could result in the temporary loss of a construction operation, in addition to the reconstruction and remediation costs; this could put time schedule, cost and revenues at risk. | Your Companys Quality Management System is ISO 9001 : 2015 accredited by INTERCERT that include Project Management, Site Development and Construction activities for Infrastructure, Industrial, Residential and Commercial projects. |
| Your Companys construction strategy aims to assure adequate insurance, so that your Company is not financially affected. While, the loss prevention programmes, protect your Companys tangible and intangible assets through active risk management. | ||
| Your Company is operating on about 19 projects across Gujarat and Rajasthan. Hence, if one project is taken out of action, others could provide support. | ||
| Major incident at a project | A major incident during which a significant amount of local environmental damage occurs leading to fines, loss of reputation, etc. | Your Companys Quality Management System is certified to ISO 9001 : 2015 and works to assure that all such material risks are identified and effective counter-measures are implemented in order to mitigate them. This includes actions to mitigate the risk as well as emergency response plans to assure the impacts of any incident are minimised. |
| Climate change risks - extreme weather events | Extreme weather events disrupt project execution. | Requirements for emergency response plans at all sites include flood risks etc. See also mitigations mentioned hereinabove. |
| Corrupt or fraudulent actions carried out by your Companys representatives | Your Companys employee or employees fail to adhere to your Companys Code of Conduct and related policies and requirements and act in a fraudulent or corrupt manner leading to financial penalties and reputation damage. | Your Company takes a proactive approach to assure awareness of demanded ethical standards by education, compliance programmes including anti-corruption, antifraud and antitrust. The work to follow up adherence is facilitated by the whistle blower function and a risk-and incident based audit system. |
| Non-compliance with applicable Laws | The diverse nature of your Companys business and operations means that your Company is required to adhere to numerous laws and regulations related to all aspects of its activities. Failure to meet these requirements could lead to legal and financial consequences as well as damage to your Companys reputation. | Your Company has put in place comprehensive and robust compliance programme which is based on your Companys Code of Conduct. The compliance programme is put in place to ensure that applicable laws and regulations are identified, understood and adhered to. |
| Legal risks relating to our business activities | In connection with the revenue of your Company and in the purchase of materials and services from our suppliers, consultants, etc. large potential liabilities may occur in case of e.g. late delivery, delivery of defective products, unfulfilled service commitments and incorrect advice. Therefore, it is important that all such risks are identified, that risk decisions are taken on the appropriate level and that carefully worded contractual provisions aiming at reducing your Companys liabilities are included in contracts. | Your Company has put in place policies, procedures and training programs in order to make sure that legal risk relating to our business activities are identified and that risk decisions are taken on the appropriate level. In addition, independent professional legal counsels support your Company in identifying and handling legal risks. The legal counsels work closely with the Senior management and provide contract drafting and negotiation support, claim and litigation management, support, training and general advice. |
Your Company is operating in a business which is cyclic in nature. Timely supply of raw material like cement, steel, bricks are essential for timely completion of the projects. Shortage of labour and raw material may delay the execution of projects of your Company. The infrastructure projects are capital intensive in nature. Your Companys business requires long-term commitment of capital to meet the financial requirement of long-term projects. Further, timely availability of skilled and technical personnel is also one of the key challenges. Infrastructure projects are mainly dependent on the economic scenarios and any adverse events affecting the whole economy may deteriorate the industry as well. Any significant change in government policy in promoting Affordable Housing and/or Urban Infrastructure could pose a threat. Further, the approval process and time for projects are generally uncertain which may delay the execution and thereby affect financials.
Your Company has in place an effective risk management mechanism to identify potential risk and its timely mitigation.
Corporate Governance:
Your Companys Corporate Governance philosophy is based on the total transparency, integrity, fairness, equity, accountability and commitments to the values. Your Company is committed to the best governance practices that create long term sustainable shareholder value. With the object of your Company to conduct its business in a highly professional manner and thereby enhance trust and confidence of all its stakeholders, your Company has devised a complete compliance of Corporate Governance norms. Your Company firmly believes that definite Corporate Governance leads to the optimal utilization of resources and enhances the value of the enterprise and an ethical behavior of the enterprise leads to honoring and protecting the rights of all the stakeholders. Sound Corporate Governance practices and ethical business conduct always remain at the core of your Companys value system.
The Annual Return for the FY2023 is available at the website of your Company at www.nilainfra.com under the investor segment. A separate report on Corporate Governance is provided together with a Certificate from the Practicing Company Secretary of your Company regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations. A Certificate of the CEO and CFO of your Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is part of this Annual Report.
Work Culture and Human Resources:
The management believes in team work and a corporate environment which is self-motivating. Your Company has successfully developed a work force of people over a period of time i.e. 37 Nos. at 31 March 2023. The top management is acting as the governing force in creating and maintaining the corporate work culture. The businesses that your Company engages in are primarily people-driven. Our Vision is to raise our own benchmarks with every successive endeavour and it is possible only by making every employee a fully engaged and aligned team member. Your Company continues to remain focused on reinforcing the key thrust areas i.e. being the employer of choice, building an inclusive culture, building a strong talent pipeline, building capabilities in the organization and continuing to focus on progressive employee relations policies. Accordingly, our HR policies are centered around the creation of an environment that attracts, nurtures and rewards high-caliber talent. Young engineers gain the opportunity to operate on the frontlines of technology and associate with projects of scale and complexity. We drive sustainable growth and have been instrumental in bringing in thought leadership in building strong employee relations. There is no material development in HR. Your Company continued to build on the Diversity and Inclusion agenda through building leadership capability and recognizing line managers who provide a simple, flexible and respectful work environment for their teams. Your Company is developing future leaders and having the best people practices. A structured leadership development initiative has helped to build a robust talent pipeline at all levels. Our HR organisation is well-geared towards attraction and retention of qualified/ potent talent in an ecosystem that provides long-cycle professional development opportunities in various facets of civil urban infrastructure and caters to career building aspirations of talent at all levels.
Internal Control System:
The Corporate Governance Policy guides the conduct of affairs of your Company and clearly delineates the roles, responsibilities and authorities at each level of its three-tiered governance structure and key functionaries involved in governance. The Code of Conduct commits management to financial and accounting policies, systems and processes. The Corporate Governance Policy and the Code of Conduct stand widely communicated across your
Company at all times, and, together with the ‘Strategy of Organisation, Planning & Review Processes and the Risk Management Framework provide the foundation for Internal Financial Controls with reference to your Companys Financial Statements. Such Financial Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by management and approved by the Audit Committee and the Board. These Policies are supported by the Corporate Accounting and Systems Policies that apply to the entity as a whole to implement the tenets of Corporate Governance and the Significant Accounting Policies uniformly across your Company. The Accounting Policies are reviewed and updated from time to time. These, in turn are supported by a set of divisional policies and SOPs that have been established for individual businesses. Your Company uses ERP System as a business enabler and also to maintain its Books of Account. The SOPs in tandem with transactional controls built into the ERP Systems ensure appropriate segregation of duties, tiered approval mechanisms and maintenance of supporting records. The Information Management Policy reinforces the control environment. The systems, SOPs and controls are reviewed by divisional management and audited by Internal Audit whose findings and recommendations are reviewed by the Audit Committee and tracked through to implementation. Your Company has in place adequate internal financial controls with reference to the Financial Statements. Such controls have been tested during the year and no reportable material weakness in the design or operation was observed. Nonetheless your Company recognises that any internal financial control framework, no matter how well designed, has inherent limitations and accordingly, regular audit and review processes ensure that such systems are reinforced on an on- going basis. Your Company has also put in place comprehensive systems and procedural guidelines concerning other areas of business, too, like budgeting, execution, material management, quality, safety, procurement, asset management, human resources etc., which are adequate and necessary considering the size and level of operations of your Company. The management has been making constant efforts to review and upgrade existing systems and processes to gear up and meet the changing needs of the business.
Business Overview:
A. Infrastructure
During FY2023, your Company has completed and/or handed-over certain projects the details are furnished below.
AH-EPC/PPP Projects
| Bank of Baroda Society na Chhapra, Paldi 1 | The Project envisages rehabilitation of about 91 slum-dwelling families living at Bank of Baroda Society na Chhapra, Paldi. The project is since completed. |
| Urban Improvement Trust (UIT) Bhilwara | Urban Improvement Trust, Bhilwara has awarded a contract for the construction of affordable housing flats on turnkey basis under the Chief Ministers Jan Awas Yojana 2015 corresponding to the Memorandum of Understanding under the latest "Resurgent Rajasthan Partnership Summit - 2015". The large scale affordable housing schemes for EWS (325-350 sq. ft.) and LIG (500-550 sq. ft.) categories envisage overall construction of approx. 300,000 sq. ft. super built-up area on the Government land at Harni Khurd village, Bhilwara. The Project will be constructed on 75% of the land area and remaining 25% will be allotted to your Company, free of cost to subsidize the ceiling rate. The project is since completed. |
Currently, your Company is executing various projects on PPP basis as detailed further.
AH- EPC/PPP Projects
| Harivan na Chhapra, Sabarmati | The Project envisages rehabilitation of about 2,198 slum-dwelling families living at Harivan na Chhapra, Sabarmati. The slum redevelopment is to be completed in 24 months. The project has since commenced. |
| Sonaria Block, Rakhiyal-Asarwa, AMC | AMC has awarded an order that envisages overall construction of 760 Dwelling Units (DU) and 18 shops. The Company has also agreed to develop 80 DU towards creation of additional AH stock as premium to AMC. The redevelopment is to be completed in 24 months. The project has since commenced. |
| Khokhara Old Slum Quarters, AMC2 | AMC has awarded an order that envisages overall construction of 448 Dwelling Units (DU) and 14 shops. The redevelopment is to be completed in 24 months. The project has since commenced. |
| India Colony, Vijay Mill Municipal Health Quarters, AMC2 | AMC has awarded an order that envisages overall construction of 348 Dwelling Units (DU). The redevelopment is to be completed in 24 months. The project has since commenced. |
| Rabari na Chhapra, Gulbai-Tekra 1 | The Project envisages rehabilitation of about 89 slum-dwelling families living at Rabari na Chhapra, Gulbai-Tekra. The slum redevelopment is to be completed in 18 months. The project has since commenced. |
| Labalavi ni Chali, Behrampura 1 | The Project envisages rehabilitation of about 105 slum-dwelling families living at Labalavi ni Chali, Behrampura. The slum redevelopment is to be completed in 18 months. The project is to commence soon. |
| Jodhpur Development Authority - Jodhpur | JoDA has since revised the contract for construction of EWS and LIG Houses with G+3 pattern and internal Development as per Model No. 4A (i) of Chief Minister Jan Awas Yojana 2015 at Khasra No. 88, Village Barli, District Jodhpur. The township / complex / campus will comprise total 1,216 residential units i.e. total ~470,000 sft will be constructed by NILA. Work will be completed in stipulated time. Your Company will also get the balance vacant land of 3.37 acres towards part-remuneration, once the project reaches 50% completion. |
AH- EPC/PPP Projects
| Kheda Jaganathpura Jaipur Development Authority | JDA has awarded a contract for the construction of affordable housing EWS flats on turnkey basis as per Model No. 4A (i) of Chief Ministers Jan Awas Yojana 2015 at Kheda Jaganathpura, Jaipur to be completed within 30 months. The campus will comprise total 384 residential units i.e. total ~172,422 sft. |
| Anand Vihar Plot 1 & 2 Jaipur Development Authority | JDA has awarded a contract for the construction of affordable housing EWS flats on turnkey basis as per Model No. 4A (i) of Chief Ministers Jan Awas Yojana 2015 at Anand Vihar Plot No. 1 & 2, Jaipur to be completed within 30 months. The campus will comprise total 236 residential units i.e. total ~107,542 sft. |
1 The contract was awarded by AMC for the Integrated Slum In-situ Development for P.P.P. Project at Ahmedabad under Urban Development & Urban Housing Department, Government of Gujarats Slum Rehabilitation and Redevelopment Policy-2013. As remuneration, the Company gets the balance vacant land and/or the TDRs to be used within the development plan of the Ahmedabad City. These offer financial and operational flexibility as has a long-term validity for monetization by selling it to other real-estate developer/s, depending on the market trends.
2 The contract is awarded by AMC on PPP Basis under "Redevelopment of Public Housing Scheme 2016" of Urban Development & Urban Housing Department, Government of Gujarat for development of Integrated Group Housing Facility alongwith common amenities, infrastructure & development works of the entire site, and SITC of Roof Top Solar PV System covering atleast 50% of roof-area.
| Anand Vihar Plot 5 & 6 Jaipur Development Authority | JDA has awarded a contract for the construction of affordable housing EWS flats on turnkey basis as per Model No. 4A (i) of Chief Ministers Jan Awas Yojana 2015 at Anand Vihar Plot No. 5 & 6, Jaipur to be completed within 30 months. The campus will comprise total 316 residential units i.e. total ~140,325 sft. |
| Surya Nagar Plot A2 to A6 Jaipur Development Authority | JDA has awarded a contract for the construction of affordable housing EWS flats on turnkey basis as per Model No. 4A (i) of Chief Ministers Jan Awas Yojana 2015 at Surya Nagar Plot No. A2 to A6, Jaipur to be completed within 30 months. The campus will comprise total 256 residential units i.e. total ~114,948 sft. |
| Amraiwadi Rakhiyal AMC | AMC has awarded an order that envisages overall construction of 672 Dwelling Units (DU) and 16 shops. The redevelopment is to be completed in 24 months. The project has since commenced. |
| Mehnatpura Paldi ward West Zone AMC2 | AMC has awarded an order that envisages overall construction of 658 Dwelling Units (DU) and 30 shops. The redevelopment is to be completed in 24 months. The project has since commenced. |
CUI Projects-EPC
| GSRTC Bus Ports at Amreli and Modasa | To improve the urban transport infrastructure, GSRTC has awarded a contract to develop and operate state-of-the-art BTF with an iconic structure and design as well as modern facilities that integrate CF on DBFOT Basis. The BTF construction work envisages development of the latest infrastructure including bus bays, administrative area, operating area, works/repairs area, passenger amenities, etc. The SPV of your Company will have to maintain certain basic BTF facility for 30 years, while the core operating and depot facility will be maintained by GSRTC. In consideration, your Company will get the right to develop, design, finance, construct, operate and maintain the CF (shops, offices, restaurants, hospitals, multiplex, parking lots, etc.) to be leased upto period of 90 (ninety) years. |
CUI Projects-EPC
| At Amreli, out of the total area of 17,095 square meters, the BTF facility will be constructed in 7,719 square meter built-up area incorporating 12 (twelve) boarding/ alighting bays and six (6) idle bays. In consideration the SPV will get right to monetise CF of about 12,800 square meters. | |
| While, at Modasa, out of the total area of 30,212 square meters, the BTF facility will be constructed in 6,279 square meter incorporating 11 (eleven) boarding/alighting bays and seven (7) idle bays. In consideration the SPV will get right to monetise CF of about 39,000 square meters. | |
| While the Amreli BTF facility is awarded individually to your Company, the Modasa BTF is awarded in Consortium with Vyapti Infrabuild Pvt Ltd (wherein your Companys share is 34%). | |
| The execution is going on. |
Summary of movement in your Companys order-book for last eight (8) years is furnished below:
( in lakhs)
| Particulars | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 |
| Opening Order-book | 20,955 | 20,259 | 40,761 | 51,784 | 64,747 | 53,451 | 55,584 | 65,926 |
| Add: Work started on new orders | 15,050 | 39,758 | 35,053 | 40,276 | 27,061 | 18,601 | 19,561 | 14,354 |
| Less: | - | - | *2,919 | @6,508 | @19,354 | @6,397 | - | @498 |
| Less: Work executed | 15,746 | 19,256 | 21,111 | #22,278 | #19,003 | #10,071 | 9,219 | 11,383 |
| Confirmed unexecuted Order- book | 20,259 | 40,761 | 51,784 | 64,747 | ^53,451 | ^55,584 | ^65,926 | ^68,399 |
* Executed by the SPV : # Including value of proportionate land : @ Tender value reduction post allocation and/or orders terminated by your Company
^ In order to reflect the realistic unexecuted value of the specific work-order, as an optimal prudence, your Company declares the practically executable order-book - duly derived by considering the intricate dynamics of the respective work-orders. This ensures the absolute reconciliation of execution vis-?-vis Revenue with the books of accounts.
Your Company is glad to share that this is the highest order-book in the history of your Company and providing a visibility of a multi-year growth. The composition of the existing order-book of your Company is quite affirmative. The summary of the existing unexecuted order-book is furnished further.
( in lakhs)
| Activity | Gujarat (A) | Rajasthan (B) | Total (A+B) | % |
| Affordable Housing (A) | 56,128 | 7,495 | 63,623 | 93% |
| Urban Infra (B) | 4,776 | - | 4,776 | 7% |
| Total (A+B) | 60,904 | 7,495 | 68,399 | |
| % | 89% | 11% | 100% |
Geographically the state of Gujarat accounts for 89% orders ( 60,904 lakh), and Principal wise AMC and GoR are the largest government clients. The other orders mainly include orders from your Companys associate/JV/ subsidiary/related parties. Your Company continues to focus on its core competence of "Affordable Housing" with 93% orders ( 63,623 lakh) i.e. about 9,934 units, while PPP is the major tributary with 93% orders ( 63,623 lakh). Detailed information on the order-book is given in the subsequent part to this report.
B. Leasing
Your Company holds 88,000 sq ft of commercial properties at the prime location in Ahmedabad, which your Company leases to earn rental income.
C. Share of Profit
Your Company has made certain strategic investments in JV/associates/subsidiaries and earns its share of profit, which is detailed further.
Financial Discussion and Analysis
Your Company is consistently EMPOWERING LIVES by developing urban infrastructure. The continual improvement in business profile of your Company has continued primarily due to focusing the available resources only on developing urban infrastructure business. Your Company has since been able to broad-base its offerings as well as expanded scale of operations in urban infrastructure activities. The summarized analysis of financial statements viz. Profit and Loss Account, Balance Sheet and Cash Flow are furnished further in the form of Financial Discussion & Analysis in detail as a part of MDA Report.
Total Revenue
( in lakhs : % change)
| Particulars | For FY2023 | For FY2022 | YoY change | % change |
| Revenue from Operations on: (Refer Note 23) | 11,383 | 9,219 | 2,164 | 23% |
| Rental income | 125 |
157 |
(32) |
(20%) |
| Share of Profit/(Loss) from LLP | -66 |
-41 |
(25) |
61% |
| Total Operating Income (TOI) (A) | 11,442 | 9,335 | 2,107 | 23% |
| Other income (B) (Refer Not 24) | 1,378 | 1,279 | 99 | 8% |
| Total Revenue (A + B) | 12,820 | 10,614 | 2,206 | 21% |
The revenue of your Company comprises income from construction and development of Urban Infrastructure projects as well as certain income from rental, and share of profit from LLPs; while Other Income mainly comprises interest earned on investments such as term deposits with banks, and on loans given.
The overall revenue from operations during FY2023 increased by 2,107 lakh (23%) as compared to the FY2022. As your Company has since swayed towards execution of higher margin PPP projects, the revenue from PPP basis projects has since increased by 112% during FY2023 as compared to FY2022, while the revenue from EPC basis projects has reduced by 101% during FY2023 as compared to FY2022. Geography wise, the revenue contribution from Gujarat has increased with corresponding reduction for Rajasthan as the earlier projects at Rajasthan were completed while the newer ones were yet in planning/initial phase. The total income for FY2023 is 12,820 lakh as against 10,614 lakh in the previous year registering an increase of 21%. Each element of total revenue is discussed further.
Infrastructure Projects
Your Company undertakes construction and development of Urban Infrastructure projects for government/ semi-government agencies/departments as well as private entities of repute. Construction and development of Infrastructure project is carried-out pursuant to work order issued by/Agreement entered into with the client. Revenue of your Company from construction and development of Infrastructure project is driven by the success in selecting the right order (nature as well as size), executing it proficiently and building sufficient order-book.
On April 1, 2022, your Company had an unexecuted order-book of construction and development of Infrastructure projects worth 65,926 lakh. During FY2023, your Company secured (net) work-orders amounting to 14,354 lakh.
The market dynamics are since in favour of the organized players like your Company. The outlook of government spending in urban infrastructure is absolutely positive in short, medium and long-term. Be it PMs "Housing for All Mission" or "Smart Cities" the scales here are very promising and additionally the Fiscal and Monetary ecosystems are also galvanized. Moreso, the COVID-19 pandemic has since established the conclusive importance of staying in home, maintaining distance from others as the prime remedy. Observing health, safety, and hygiene guidelines at home are the supreme fortification from getting infected and to abate the spread. The new PPP Policy for AH with central assistance may open door for additional revenue stream for your Company. While, extension of CLSS benefits for one (1) more year shall provide the needed relief in execution of extant projects by certain extent.
Your Company is absolutely convinced about the Affordable Housing sector, more so, as ?fi?ff?f ?f??fe AfUf?f ?f???ff "Housing for All" with thrust from the PMO (e.g. Affordable Housing since officially classified as "Infrastructure"). Currently your Company is executing about 8,700+ units under EWS, LIG and MIG categories (Affordable Houses). Your Company is very favorably placed to seize the endless possibilities in the area of its core competence as the governments focus is on creating more affordable houses with an enhanced focus on Slum Rehabilitation and Redevelopment Projects on PPP basis. Your Company has since secured meaningful orders in the state of Gujarat and Rajasthan under the schemes of Affordable Housing and envisages that, on back of enhanced pre-qualifications/bidding capacities, it will grow in natural/normal course of business. Considering the funding dynamics, it well fits into your Companys strategy of executing urban infrastructure projects where the cash flows are expected to be steady. Your Company is also executing certain unique Bus Port projects at Amreli and Modasa for GSRTC.
So far as the "Smart Cities" are concerned, your Company is in sweet-spot and very favorably placed to partake in the opportunities as it is already active in all the important facets of "Smart City" concept that is in Social Infrastructure, your Company is qualified to construct infrastructure for education, healthcare, entertainment, sports, childrens parks and gardens, Slum rehabilitation, etc. In Physical Infrastructure, your Company has already executed urban utility projects like BRTS Bus Stations, Multilevel Parking, the housing stock, sanitation facilities, etc. For Economic Infrastructure, your Company has requisite experience and expertise to undertake construction of office complex, industrial parks, logistic parks, community hall, etc.
Rental
Your Company owns prime commercial office space of 88,000 sq ft in an upmarket locality of Ahmedabad. In order to generate regular sustainable income, your Company has leased certain prime commercial office space to reputed corporates on long-term basis. Income from rental for FY2023 is 125 lakh that is 20% ( 32 lakh) lower as compared to FY2022 as certain office space has since been vacated during FY2023. Meanwhile, your Company is looking-out for the new lessee with good credentials and is confident to find lessee/s in due-course for the remaining space.
Share of Profit/(Loss) from LLP
During FY2023, your Company has booked share of its loss from a JV i.e. Kent Residential and Industrial Park LLP of 66 lakh, which is higher by 25 lakh from 41 lakh loss during FY2022.
Other Income
Other income mainly comprises interest income from bank deposits and others, liabilities written back, and miscellaneous income. Other income in FY2023 is 1,378 lakh that is 8% ( 99 lakh) higher as compared to FY2022s 1,279 lakh. The break-up of other income is furnished further.
( in lakhs)
| Particulars | For FY2023 | For FY2022 | YoY change | % change |
| Interest income: (Refer Note 24) | 1378 | 1,086 | 292 | 27% |
| From loan | 1344 | 1043 | 301 | 29% |
| On Bank Deposits | 34 | 43 | (9) | (20%) |
| Liabilities no longer required to be paid written back | - | 160 | (160) | (100%) |
| Bad debt recovered | - | 32 | (32) | (100%) |
| Total Other Income | 1,378 | 1,279 | 99 | 8% |
The increment in interest income from other parties to the extent of 300 lakh is from the advances extended mainly to JVs and subsidiary companies. It may be mentioned that such advances are given in the routine course of business and it carry interest not lesser than the weighted average cost of your Companys funds. Interest income from bank deposits for FY2023 has decreased by 9 lakh owing to certain Security Deposit as cash-margin towards utilization of bank-guarantee limits got matured. Overall interest income during FY2023 has increased by 27% i.e. by 292 lakh as compared to FY2022.
Expenses
Total expenses in FY2023 is 12,532 lakh as compared to 10,248 lakh in FY2022 i.e. increase of 22% ( 2,283 lakh), which is commensurate to 21% ( 2,206 lakh) increase in total revenue. The breakup of the said expenses is furnished further.
( in lakhs)
| Particulars | For FY2023 | For FY2022 | YoY change | % change |
| Cost of material consumed and project expenses (Refer Note 25) and Changes in inventories (Refer Note 26) | 10,169 | 7,950 | 2,219 | 28% |
| Employee benefit expenses (Refer Note 27) | 372 | 337 | 34 | 10% |
| Finance costs (Refer Note 28) | 1,133 | 1,484 | (351) | (24%) |
| Depreciation and amortization expense (Refer Note 4, 5 & 6) | 149 | 187 | (38) | (20%) |
| CSR Expense (Refer Note 29A) | 39 | 39 | 0 | 0% |
| Other Expenses (Refer Note 29) | 670 | 251 | 418 | 166% |
| Total Expenses | 12,532 | 10,248 | 2,284 | 22% |
Cost of material consumed and project expenses (Refer Note 25) and Changes in inventories (Refer Note 26)
The expenditure incurred on projects for FY2023 has increased to 10,169 lakh, higher than the increase in revenue from operations, by 28% over the previous years expenditure of 7,950 lakh. However, the proportion of increase in revenue from operations is lower at 23%, while it is higher at 28% for cost of material consumed and project expenses. The prime contributor to the net increase of 2,219 lakh is raw-material cost which is 1,632 lakh for FY2023 with an increase by 294% over the previous years expenditure of 554 lakh.
There has been increment in land-bank by 15% i.e. 508 lakh during FY2023 to 3,851 lakh.
Both these have collectively increased the costs for FY2023 by 2,219 lakh i.e. by 28% over the previous years expenditure.
Employee benefits expenses (Refer Note 27)
Employee benefits expenses include salaries, allowances, bonus, Contribution to provident and other funds, Remuneration and perquisites to Directors, and Staff welfare expenses.
Total No. of employees at 31 March 2023 is 36, which is net increase as compared to 34 employees at 31 March 2022. This expense has increased by 10% ( 34 lakh) i.e. from 338 lakh in FY2022 to 372 lakh in FY2023. There is no variable component of remuneration availed by the Directors except fixed pay of monthly salary and sitting fees as applicable, which is in conformity of the Remuneration Policy of your Company.
Finance costs (Refer Note 28)
Your Company does not inventorise any finance cost. The finance costs for FY2023 is 1,133 lakh in comparison to 1,484 lakh during FY2022. Interest on borrowings has reduced by 351 lakh over previous financial year as your Company has reduced its overall debt and also successfully re-negotiated the RoI with the lenders for debt and has lowered the finance cost. The weighted average cost of borrowing has reduced.
The ‘Other borrowing cost has increased by 13% from 83 lakh in FY2022 to 94 lakh in FY2023, as during FY2023 your Company has paid higher bank charges (including pre-payment charges) by 12 lakh (13% increment) - as compared to FY2022.
Depreciation and amortisation expense (Refer Note 4, 5 & 6)
The depreciation and amortisation expense charged to the profit and loss account during FY2023 is 149 lakh as compared to 187 lakh in FY2022 i.e. reduction of 20%. During FY2023, your Company sold certain worn-out Plant & Machinery, office equipment, vehicles aggregating 154 lakh; while there has been a net addition of office equipment/computers/vehicles by 8 lakh. The combined net-block of PPE and Investment properties has reduced by 235 lakh at 31 March 2023 as compared to 31 March 2022.
CSR Expense (Refer Note 29A)
As an ideal corporate citizen, your Company has undertaken activities of CSR in accordance with the policy. An aggregate amount of 38.97 lakh is spent on such CSR activities during the year, well satisfying the statutory stipulations. The detail of CSR policy, program, activities and spending are given in Annexure to the Board Report.
Other expenses (excluding CSR Expense) (Refer Note 29)
Other expenses majorly comprise Legal and professional charges, Power and fuel expenses, Repairs and Maintenance expenses, Travelling and conveyance, Insurance, Rent. Collectively other expenses (excluding CSR Expense) have increased by 418 lakh i.e. 670 lakh in FY2023 from 252 lakh in FY2022 mainly owing towards Bad Debt Written Off by 149 lakh, Provision for loss allowance on Trade Receivables by 112 lakh, Legal and Professional charges by 69 lakh, Rates & Taxes by 53 lakh.
Profitability
( in lakhs)
| Particulars | For FY 2023 | For FY 2022 | YoY change | % change |
| Revenue from Operations | 11,442 | 9,335 | 2,107 | 23% |
| Less: Operational Expenses | 11,250 | 8,578 | 2,672 | 31% |
| EBITDA | 192 | 757 | (565) | (75%) |
| EBITDA % to Revenue from operation | 2% | 8% | ||
| Add: Other Income | 1,378 | 1,279 | 99 | 8% |
| Less: Finance Costs | 1,133 | 1,484 | (351) | (24%) |
| Less: Depreciation and amortisation expenses | 149 | 187 | (38) | (20%) |
| Pro t Before Tax (PBT) | 288 | 365 | (77) | (21%) |
| PBT % to Total Revenue | 2% | 3% | ||
| Tax Expenses | 111 | 114 | (3) | (3%) |
| Pro t After Tax | 177 | 251 | (74) | (30%) |
| PAT % to Total Income | 1.38% | 2.37% |
Total expenses in FY2023 is 12,532 lakh as compared to 10,248 lakh in FY2022 i.e. an increase of 22% ( 2,283 lakh), which is marginally higher in comparison of 21% ( 2,206 lakh) growth of revenue. While your Company has saved on the Finance cost, and Depreciation; the increment in the RM/Project cost, Employee benefits, CSR and other expenses have reduced your Companys profitability. The EBIDTA has reduced from 757 lakh i.e. 8% of revenue from operations for FY2022 to 192 lakh i.e. 2% for FY2023. During FY2023, your Company implemented certain cost-cutting measures as well as reduced the finance cost, which provided certain cushion at PBT level. Your Company provides for current tax and deferred tax based on the computation in accordance with provisions of Income Tax Act, 1961. The net tax payable for FY2023 is 111 lakh that is reduction by 3% ( 3 lakh) over FY2022s 114 lakh. PAT for FY2023 has reduced to 177 lakh (1.38% of Total Income), as against 251 lakh (2.37% of Total Income) for FY2022.
The Board of Directors of your Company has thought it prudent to not propose declaration of any dividend and plough-back the entire profit instead as retained earnings to ably support growth of your Company.
Non-current Assets
The non-current assets at 31 March 2023 and 31 March 2022 with detail of changes therein during the financial year are as follows:
( in lakhs)
| Particulars | At 31 March 2023 | At 31 March 2022 | YoY change | % change |
| a. Property, plant and equipment (Refer Note 4) | 285 | 440 | (154) | (35%) |
| b. Investment properties (Refer Note 5) | 3,101 | 3,181 | (80) | (3%) |
| c. Intangible assets (Refer Note 6) | 1 | 2 | (1) | (48%) |
| d. Financial assets: | ||||
| i. Investments (Refer Note 7) | 9,435 | 8,516 | 919 | 11% |
| ii. Loans (Refer Note 8) | 3,050 | 4,224 | (1,174) | (28%) |
| iii. Other financial assets (Refer Note 9) | 1,548 | 1,851 | (303) | (16%) |
| e. Other tax assets net (Refer Note 11) | 367 | 334 | 33 | 10% |
| f. Other non-current non-financial assets (Refer Note 10) | 137 | 10 | 127 | 1222% |
| Total | 17,924 | 18,559 | (635) | (3%) |
During FY2022, your Company purchased new PPE amounting 8 lakh to support the operations, while it sold certain vehicles, worn-out Plant & Machinery, furniture & fixtures, office equipment/computer, aggregating 154 lakh i.e. post depreciation the reduced balance is 285 lakh at 31 March 2023. The Investment Property post depreciation has reduced to 3,101 lakh at 31 March 2023.
The primary reason of net increment in Investment during FY2023 is to provide further support to JV/associate viz. Kent Residential and Industrial Park LLP with incremental 919 lakh (including loss of 66 lakh). Meanwhile, your Company has received back net loans aggregating 1,176 lakh from its subsidiary/associate/JV entities. These entities are established to address specific business opportunities. Such investments as well as loans/advances are extended in normal course of business in order to pursue the specific objective for which it is formed. Loans and Advances to related parties at 31 March 2023 are 3,037 lakh as against 4,214 lakh at 31 March 2022.
Security Deposit has reduced by net 44 lakh to 1,107 lakh at 31 March 2023 from 1,151 lakh at 31 March 2022 mainly due to release of SD on completion of certain project sites. Certain stipulated amount is normally deposited towards utility, other infra connections, etc. The margin money deposited with bank has reduced by 265 lakh at 31 March 2023 from 656 lakh at 31 March 2022 mainly due to lower utilization of bank-guarantee limits. It may be noted that such interest bearing fixed deposits are kept with bank for the purpose of issuing bank guarantee in order to participate in various tenders. These have collectively reduced the Other financial assets by 303 lakh to 1,548 lakh at 31 March 2023 from 1,851 lakh at 31 March 2022.
The other tax assets have increased by 33 lakh from 334 lakh at 31 March 2022 to 367 lakh at 31 March 2023.
During FY2023, your Company has tendered advance towards certain PPE and higher prepaid expenses with an aggregate balance of 137 lakh at 31 March 2023 as compared to 10 lakh at 31 March 2022.
Hence, overall Non-current Assets have reduced by net 635 lakh i.e. 3% from 18,559 lakh at 31 March 2022 to 17,924 lakh at 31 March 2023 mainly due to reduction in Loans recovered from the subsidiary, associate and JV entities of your Company as well as reduction in Other financial assets and PPE.
Current Assets:
The detail of Current Assets at 31 March 2023 and 31 March 2022 with changes therein during the year is furnished further.
( in lakhs)
| Particulars | At 31 March 2023 | At 31 March 2022 | YoY change | % change |
| a. Inventories (Refer Note 12) | 3,851 | 3,344 | 508 | 15% |
| b. Financial Assets | ||||
| i. Trade receivables (Refer Note 13) | 1,970 | 3,746 | (1,777) | (47%) |
| ii. Cash and cash equivalents (Refer Note 14) | 165 | 29 | 136 | 462% |
| iii. Bank balances other than (ii) above (Refer Note 14) | 149 | 40 | 109 | 272% |
| iv. Loans (Refer Note 8) | 2,089 | 120 | 1,970 | 1646% |
| v. Other current financial assets (Refer Note 9) | 7 | 4 | 3 | 86% |
| c. Other current non-financial assets (Refer Note 10) | 54,731 | 15,083 | 39,649 | 263% |
| Total | 62,963 | 22,365 | 40,597 | 182% |
Total increment of 508 lakh in inventories during FY2023 is mainly attributable to increment in land by 508 lakh i.e. 3,851 lakh at 31 March 2023 from 3,344 lakh at 31 March 2022, while RM+WIP has not changed. This fructified as a result of your Companys conscious and focused efforts to rationalize the inventory carrying as well as graduated efficiency of purchase function.
There is an overall reduction in the level of Trade Receivables by 1,777 lakh i.e. from 3,746 lakh at 31 March 2022 to 1,970 lakh at 31 March 2023. This is mainly attributable to your Companys continued rigorous follow-up with all the debtors. The collective cash and bank balance at 31 March 2023 is 314 lakh as compared to 69 lakh at 31 March 2022. Loans comprise the portion that is expected to be realized within a period of 12 months from the Balance Sheet Date. At 31 March 2023 it is 2,089 lakh as against 120 lakh at 31 March 2022 depicting an increment by 1,970 lakh mainly extended to subsidiary and JV companies. During FY2023, your Company has earned interest to the tune of 1,329 lakh from Loans to Related Parties.
The other financial assets amount to 7 lakh at 31 March 2023 i.e. an increment by 3 lakh during FY2023. The other current non-financial assets have increased by 39,649 lakh to 54,731 lakh at 31 March 2023 as against 15,083 lakh at 31 March 2022 mainly on account of increment in Gross value of Sale of Contract Assets by 31,596 lakh and Land rights and TDRs by 9,386 lakh as well as balance with government authorities (GST receivables) by 227 lakh. These have been curtailed by some extent with the reduction in unbilled revenue vide Ind AS 11 and Ind AS 18 by 1,123 lakh to 1,122 lakh at 31 March 2023 as against 2,245 lakh at 31 March 2022. It may be noted that such contract assets are booked in normal course of business and would be converted to receivables in due course of time. Prepaid expenses reduced by 2 lakh to 50 lakh at 31 March 2023 as against 52 lakh at 31 March 2022, while Advance to Vendors reduced by 435 lakh to 450 lakh at 31 March 2023 as against 885 lakh at 31 March 2022.
Hence, overall Current Assets have increased by 40,597 lakh i.e. from 22,365 lakh at 31 March 2022 to 62,963 lakh at 31 March 2023 mainly due to increment in Other current non-financial assets, Loans, and Inventories.
Net Worth
The networth of your Company has been augmenting considerably in past financial years. During FY2023, the net worth of your Company has increased by 180 lakh to 14,829 lakh at 31 March 2023 from 14,649 lakh at 31 March 2022 mainly due to earnings are retained and ploughed-back.
Non-current liabilities
( in lakhs)
| Particulars | At 31 March 2023 | At 31 March 2022 | YoY change | % change |
| a. Financial liabilities | ||||
| i. Borrowings (Refer Note 17) | 2,096 | 8,752 | (6,656) | (76%) |
| ii. Trade payable (Refer Note 21) | - | - | - | - |
| iii. Other financial liabilities (Refer Note 18) | 227 | 111 | 117 | 106% |
| b. Provisions (Refer Note 19) | 75 | 70 | 5 | 7% |
| c. Deferred tax liabilities (Net) (Refer Note 20) | 894 | 888 | 6 | 1% |
| Total | 3,292 | 9,820 | (6,528) | (66%) |
During FY2023, your Company has substantially reduced the long-term Borrowings by 6,656 lakh (76%) to 2,096 lakh at 31 March 2023 from 8,752 lakh at 31 March 2022. This has also reduced the interest/finance cost, while the further effect is expected to continue during FY2024 and onwards.
Your Company has honoured all its financial commitments and the account is Standard with all the lenders. None of the BGs submitted by your Company has ever been invoked by any Principal/Client.
There are no Trade Payable to other than Micro & Small Enterprises (as per the intimation received from vendors) at 31 March 2023.
Other financial liabilities are security deposits that your Company accepts in ordinary course of business from its various vendors and/or contractors. It has increased by 117 lakh i.e. to 227 lakh at 31 March 2023 from 111 lakh at 31 March 2022 owing to incremental holding of retention amount of your Companys contractors for want of successful completion of project and/or achieving stipulated milestones by them.
Provision for employee benefits including gratuity and leave encashment has increased by 5 lakh i.e. 75 lakh at 31 March 2023 from 70 lakh at 31 March 2022 mainly as there has been increment in total Eligible employees during FY2023.
Net deferred tax liability has increased by 6 lakh i.e. 894 lakh at 31 March 2023 from 888 lakh at 31 March 2022 mainly due to time difference in booking and payment of certain expenses.
Hence, overall Non-current Liabilities have reduced by 6,528 lakh (66%) i.e. from 9,820 lakh at 31 March 2022 to 3,292 lakh at 31 March 2023 mainly due to reduction in long-term borrowings.
Current liabilities
( in lakhs)
| Particulars | At 31 March 2023 | At 31 March 2022 | YoY change | % change |
| a. Financial Liabilities | ||||
| i. Borrowings (Refer Note 17) | 4,478 | 2,069 | 2,409 | 116% |
| ii. Trade payables (Refer Note 21) | ||||
| ii a. Due to micro and small enterprises | 1 | - | 1 | - |
| ii b. Due to others | 4,100 | 3,171 | 929 | 29% |
| iii. Other financial liabilities (Refer Note 18) | 82 | 95 | (12) | (13%) |
| b. Other current financial liabilities (Refer Note 22) | 53,977 | 11,021 | 42,956 | 390% |
| c. Provisions (Refer Note 19) | 126 | 98 | 28 | 29% |
| Total | 62,764 | 16,454 | 46,310 | 281% |
Current Borrowings consist of Current maturities of long term borrowings that have increased by 2,850 lakh i.e. from 1,628 lakh at 31 March 2022 to 4,478 lakh at 31 March 2023 as per the repayment schedule of term debt contracted by your Company; and Overdraft bank facility with utilisation of 441 lakh at 31 March 2022 was nil at 31 March 2023 mainly as there was sufficient cash and bank balance were available.
Trade Payables at 31 March 2022 have increased by 930 lakh (29%) i.e. 4,101 lakh at 31 March 2023 as compared to 3,171 lakh at 31 March 2022.
Other financial liabilities of your Company at 31 March 2023 have reduced by 12 lakh (13%) i.e. 82 lakh at 31 March 2023 as compared to 95 lakh at 31 March 2022.
Other Current Financials Liabilities have increased by 42,956 lakh mainly towards the advance from customers to the tune of 42,948 lakh, while the increment has been marginally curtailed by reduction in advance from contractors by 3 lakh to 179 lakh at 31 March 2023 from 182 lakh at 31 March 2022.
Provisions consist of employee benefits including gratuity and leave encashment that have marginally reduced, while provision for defect liability (DL) period has increased by 27 lakh to 112 lakh at 31 March 2023 from 85 lakh at 31 March 2022 due to commencement of the DL period on completion of certain projects.
Hence, overall Current Liabilities have increased by 46,310 lakh (281%) i.e. from 16,454 lakh at 31 March 2022 to 62,764 lakh at 31 March 2023 mainly due to increment in other current financial liabilities, and Current maturities of the Borrowing repayable within a years time.
Key financial ratios: The key financial ratios are stated as following:
| Ratio | FY2023 | FY2022 | Detailed explanation |
| Debtor Turnover Net Credit Sales/ Average Accounts Receivable | 4.00 | 1.82 | The credit policies and collection process of your Company are satisfactory and commensurate to the industry and/ or the segment it operates into. Your Company deals with creditworthy customers. During FY2023, the overall trade receivables as well as the No. of days have reduced as compared to the previous year. |
| Days | 91 | 200 | |
| Inventory Turnover COGS/Average Inventory | 2.83 | 2.55 | As your Company has certain historic land, the inventory turnover is not exactly comparable with industry and/or the segment it operates into. During FY2023, the overall inventory has reduced as compared to the COGS that has marginally disturbed the perspective of No. of days as compared to the previous year. |
| Days | 129 | 143 | |
| Interest Coverage Ratio EBIT/Interest | 1.25 | 1.25 | Your Companys debt:equity, leverage, gearing are commensurate to the industry and/or the segment it operates into. Your Company has tied-up with first-rung banks/NBFCs for its various credit requirements. Your Company has successfully maintained Investment Grade credit rating over a period of years, while the account is Standard with all the lenders. For FY2023, the interest coverage has remained same as of FY2022 as your Company has substantially reduced the overall debt and consequently the interest cost, while the EBIT has increased as compared to the previous year. |
| Current Ratio Current assets/ Current liabilities | 1.00 | 1.36 | The reduction in current ratio of your Company at 31 March 2023 as compared to that of 31 March 2022 is mainly owing to the higher proportion of increment in current liabilities as compared to the increment in current assets during FY2023. However, the current ratio is well above the stipulated level. It could also indicate that your Company has sufficient ability to pay short-term obligations i.e. within one year. Your company has been able to maximize the current assets on its balance sheet to satisfy its current debt and other payables. |
| Debt : Equity Ratio Total debt/Networth | 0.44 | 0.74 | The Debt:Equity ratio of your Company is favourable as compared to the industry and/or the segment it operates into. Your Company has tied-up with first-rung banks/ NBFCs for its various credit requirements. Your Company has successfully maintained Investment Grade credit rating over a period of years, while the account is Standard with all the lenders. During FY2023, while your Company has substantially reduced the overall debt the networth has increased due to plough-back-of-profit. |
| Operating Profit Margin (%) Op Profit/Op Income | 0.38% | 6.06% | For FY2023, due to accounting of impairment loss in contract revenue, your Company has earned lower PAT. Hence, the reduction. |
| Net Profit Margin (%) PAT/Operating income | 1.55% | 2.69% | For FY2023, due to accounting of impairment loss in contract revenue, your Company has earned lower PAT. Hence, the reduction. |
| Return on Networth PAT/Networth | 1.21% | 1.71% | For FY2023, your Company has earned lower PAT. Hence, the reduction. |
| Return on Assets PAT/Total Assets | 0.22% | 0.61% | |
| Return on Capital Employed EBIT/Capital Epmloyed | 5.95% | 6.70% | For FY2023, your Company has earned lower PAT. Hence, the reduction. |
Cashflow
( in lakh)
| Particulars | For FY2023 | For FY2022 |
| Opening cash and cash equivalents | 29 | 1,309 |
| Net cash generated from / (used in) Operating Activities (A) | 5,828 | 5,703 |
| Net cash from / (used in) Investing Activities (B) | (311) | (1,828) |
| Net cash from / (used in) Financing Activities (C) | (5,382) | (5,155) |
| Change in cash and cash equivalent (Total = A+B+C) | 136 | (1,280) |
| Closing cash and cash equivalents | 165 | 29 |
During FY2023, while your Company has utilized cash towards reduction of other assets by 39,657 lakh, trade receivables by 1,515 lakh, inventories by 508 lakh, and other financial assets by 6 lakh; it generated the Net cash from operating activities by 5,828 lakh mainly due to increment in Current Liabilities by 42,956 lakh mainly towards advance received towards monetization of Land and Transferable Development Rights, and trade payables by 930 lakh, and other financial liabilities by 117 lakh.
During FY2023, while your Company has generated cash from Interest income, proceeds from deposits/sale of PPE; your Company has also invested further in the Subsidiaries, Associates and JVs of your Company as well as towards financial assistance provided, which has resulted in net cash utilization towards investing activities of 311 lakh.
During FY2023, your Company has utilized 4,247 lakh towards repayment of borrowings, and 1,135 lakh towards finance cost, which has resulted in net cash utilization towards financing activities of 5,382 lakh.
Hence, while collectively your Company had a nominal cash at the beginning of the year of 29 lakh, during FY2023, your Company generated a considerable 5,828 lakh from Operating Activities, which were utilised towards fresh investment as well as substantial reduction in debt. Accordingly, your Company ensured to have minimal requisite cash at the end of FY2023.
Details of Subsidiaries, Associates and JVs of your Company at 31 March 2023:
( in lakhs)
| Sr. No. | Name of the entity : Project location | NILAs investment in equity | % shareholding | Loans & Advances extended | Profit After Tax shared | Remark |
| 1 | Romanovia Industrial Park Pvt Ltd : (23.480621, 71.974021), Navyani, Gujarat | 1,251* | 50% | 3,037 | - | Industrial and logistics park various structures under execution |
| 2 | Kent Residential and Industrial Park LLP : (23.478515, 72.009447), Sitapur, Gujarat | 7,635 | 50% | - | (66) | |
| 3 | Nila Terminals (Amreli) Pvt Ltd : (21?3611?N 71?1319?E), Amreli, Gujarat | 1 | 100% | 542 | - | Bus-port projects for GSRTC under execution |
| 4 | Vyapnila Terminals (Modasa) Pvt Ltd : (23?28N 73?18E), Modasa, Gujarat | 548* | 34% | 1,416 | - |
* measured at fair value at the date of transition to Ind AS i.e. the deemed cost of such investment for your Company.
None of the Pvt Ltd entities mentioned above have declared any dividend during FY2023. Further, with respect to your Companys strategic investment with the Kataria Group of Ahmedabad to work jointly for acquiring land and developing industrial and logistics parks, units, sheds, plots, residential colonies, and allied infrastructure at various locations situated near the upcoming automobile hub at Bechraji about 90 kms from Ahmedabad at Gujarat, it may be mentioned that the progress is satisfactory and your Company has started to reap benefits as more specifically furnished in detail in other sections of this Annual Report. Your Company has executed a well-thought strategy and is favorably positioned as a first-mover, promoter of industrial eco-system in the region, and fostering infrastructure development.
Your Company has built industrial warehouse structures as well as residential dormitories on BTS basis. Such infrastructure development has already been rented out on long-term lease basis to reputed corporates including MNCs.
There surely lies an opportunity in every crisis and your Company has embarked on a different growth trajectory with the adaptation to the new normal. Your Company is getting ready to bid for new orders and has identified favourable orders in pipeline to be executed across segments and geographies. The long-term outlook of your Company towards the Urban Infrastructure business remains positive.
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ATTENTION INVESTORS
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- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Risk Disclosure on Derivatives
- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
We are ISO 27001:2013 Certified.
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.