MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated
under the Listing Regulations, is as under:
Results of Operations and the State of Companys Affairs
During the year, the Company earned revenue from operations of Rs. 6518.80 lakh, as
compared to Rs. 5431.40 lakh in the previous year.
Income from product transportation services increased from Rs. 3274.36 lakh to Rs.
3405.51 lakh on a year-on-year basis. Income from operating construction machinery on hire
increased from Rs. 440.32 lakh to Rs. 1260.03 lakh on a year-on-year basis. Income from
other support services increased from Rs. 1716.72 lakh to Rs. 1853.26 lakh on a
year-on-year basis. Net profit during the year was Rs. 755.73 lakh as compared to Rs.
770.09 lakh during the previous year.
The Company continues to provide infrastructural facilities and support services,
namely, transportation of petroleum products and raw water through pipelines, operating
construction machinery on hire and other support services to Reliance Industries Limited
and its group companies with a substantial portion provided to Reliance Industries
Limited.
Resources and Liquidity
The Companys net worth as on March 31, 2022 stood at Rs. 30347.82 lakh, with
accumulated reserves and surplus of Rs. 28837.82 lakh. Details of significant changes
(i.e. change of 25% or more as compared to the immediately previous financial year) in key
financial ratios and change in Return on Net Worth, along with detailed explanation is
given below:
• Trade Receivables turnover ratio increased to 3.63 in FY 202122 as against 2.46
in the previous year due to increase in revenue from operations;
• Current ratio increased to 7.81 in FY 2021-22 as against 4.00 in the previous
year due to increase in investments;
• Net profit margin reduced to 11.59% in FY 2021-22 as against 14.18% in the
previous year majorly due to increase in Operating Expenses;
• Net Capital Turnover Ratio reduced to 0.51 in FY 2021-22 as against 0.91 in
previous year due to increase in working capital;
• Trade Payables Turnover Ratio increased to 3.16 in FY 2021-22 as against 1.99 in
the previous year due to increase in other expenses; and
• Return on Net worth is reduced to 2.50% in FY 2021-22 as against 2.58% in the
previous year due to lower profit.
The Company continues to maintain its conservative financial profile and funds its
requirements largely through internal cash generation.
Industry Structure, Developments, Opportunities and Outlook
Infrastructure sector is an essential driver for the Indian economy. The sector is
responsible for driving Indias overall development and enjoys substantial 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 October 2021, the Union Cabinet of India approved the PM GatiShakti National Master
Plan including implementation, monitoring and support mechanism for providing multi-modal
connectivity. As a part of the GatiShakti National Master Plan, the government is planning
to launch geospatial digital platform to facilitate planning and monitoring of projects
ranging from telecom networks, gas pipelines to road and railways.
As per research reports, the Indian construction industry recorded growth of 17.1% in
2021, which was supported by relaxation of restrictions and improving construction
activity in the road and highways sector. Between 2023 and 2026, the construction industry
is expected to register an average annual growth of 6.2%, supported by investment under
the Pradhan Mantri Gati Shakti Master Plan. The industrys output will also be supported
by investment of Rs. 111 trillion ($1.5 trillion) underthe National Infrastructure
Pipeline (NIP), between the fiscal year FY 2020 and FY 2025 (April 2019 to March 2025).
In December 2021, the Ministry of Road Transport and Flighways of India (MoRTFI)
announced investment worth Rs. 7 trillion ($92.4 billion) for infrastructure projectsto be
spent overthe next 2-3 years. The industrys growth will also be supported by the
governments plan to significantly increase the stock of affordable housing units for low
and middle income cohorts, under the Flousing for All program by 2022.
Challenges, Risks and Concerns
Key risks of infrastructure sector primarily include increasing cost of inputs,
complexities of structures and shortage of skilled labour. Even though the Government has
undertaken several key reforms to ease challenges faced by this sector, changing
regulatory environment, sustainability and delays in project completion leading to cost
and time overruns further amplify difficulties faced by this sector.
The Company prioritizes adhering to budgeted costs while ensuring timely completion of
projects thus successfully achieving stipulated targets. The Company has always deployed
state-of- the-art technology, latest machineries and equipment with highly trained experts
and professionals in its product transportation and construction machinery hiring
business.
Although the Company over the years has been primarily serving a single largest
customer with no expansion plans on the anvil, it has always been proactive in mitigating
business risks with appropriate risk management framework and conservative financial
profile backed by prudent business practices. The Company is well positioned to manage the
risks with its strong financials and robust past track record.
Human Resource Development
The Company has a team of able and experienced professionals. The Company believes that
the quality of its employees is the key in the long run. The Company continues to have
cordial relations with its employees. The Company provides personal development
opportunities and all round exposure to its employees.
Internal Controls
The Company has robust internal control systems and procedures commensurate with its
nature of business which meets the following objectives:
• providing assurance regarding the effectiveness and efficiency of operations;
• efficient use and safeguarding of resources;
• compliance with policies, procedures and applicable laws and regulations; and
• transactions being accurately recorded and promptly reported.
The Company continues to have periodical internal audits conducted of all its functions
and activities to ensure that systems and processes are followed across all areas.
The Audit Committee of the Board of Directors of the Company regularly reviews the
adequacy of internal control systems through such audits. The Internal Auditor reports
directly to the Audit Committee.
The Company also has a robust budgetary control system to monitor expenditure against
approved budgets on an ongoing basis.
Internal Financial Controls
Internal Financial Controls are an integral part of the risk management framework and
process that address financial and financial reporting risks. The key internal financial
controls have been documented, automated wherever possible and embedded in the business
process. The Company has in place adequate internal financial controls with reference to
Financial Statement.
Assurance on the effectiveness of internal financial controls is obtained through
management reviews and self-assessment, continuous control monitoring by functional
experts as well as testing of the internal financial control systems by the Statutory
Auditors and Internal Auditors during the course of their audits.
The Company believes that these systems provide reasonable assurance that the Companys
internal financial controls are adequate and are operating effectively as intended.
Risk Management
The Company has in place a Risk Management Policy which provides for a robust risk
management framework to identify and assess risks such as safety, health and environment,
operational, strategic, financial, security, property, regulatory, reputational and other
risks and put in place an adequate risk management infrastructure capable of addressing
these risks. The Risk Management Committee has been constituted to identify, monitor and
report on the potential risks associated with the Companys business and periodically
keeps the Board of Directors apprised of such risks and the measures taken by the Company
to mitigate such risks.
Given below are significant potential risks of the Company and measures in place to
mitigate them:
Operational Risk:
Disruptions in operating the Companys pipelines and equipment may arise due to natural
calamities, equipment failures or other unexpected or unforeseen interruptions. The
Company consistently works towards monitoring the health of the pipelines through internal
checks and external audit assurance and maintaining or improving operational efficiencies.
Safety, Health and Environment Risks:
The Companys activities of transporting petroleum products through its pipelines are
inherently hazardous. Any accident, explosion, leakages or acts of terrorism may cause
property damage or bodily injury and adversely impact surrounding communities and
environment which may result in litigations and disruption of operations. The Company has
structured inspections of its operating facilities for identifying and mapping operational
hazards, investigating root cause analysis and to eliminate any such occurrence by
developing mitigation plans.
Further, there is a comprehensive insurance plan in place to cover the above risks.
+91-9892691696
