INDIAN ECONOMY
The FY 2022-23 commenced with the Indian economy facing headwinds in the form of
inflationary pressures. Despite a challenging start, the Indian economy has displayed
resilience and grew 7.2% in FY 2022-23, aided by sound macroeconomic fundamentals and
improved high frequency indicators. Sustained efforts taken by the Reserve Bank of India
(RBI) to rein in inflation by increasing the repo rate by 250 basis points (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 FY
2023-24. Indias GDP growth is expected to remain robust in FY24. GDP forecast for FY24 to
be in the range of 6.5% as per RBI in its latest Monetary Policy Statement. Recovering
from pandemic-induced contraction, Russian-Ukraine conflict and inflation, the Indian
economy is staging a broad-based recovery across sectors, positioning to ascend to the
pre-pandemic growth path in FY23. The private capex continues to provide tailwinds to the
growth momentum. 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. 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.
INFRASTRUCTURE AND CONSTRUCTION SECTOR OVERVIEW
This sector is a key driver for the Indian economy, and contributes to Indias overall
development. Despite the surge in construction costs, government spending on
infrastructure projects has remained strong in 2022-23, and the trend is projected to
further continue in 2023-24. 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 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.
We shall continue to explore new opportunities in construction of various EPC based
project in different geography. Currently, the Company is evaluating a few proposals and
is looking forward to add some value-accretive projects to its portfolio in financial year
2023-24.
GOVERNMENT INFRASTRUCTURE (HOSPITALITY SECTOR)
The hospitality sector in India encompasses a wide range of services, including hotels,
resorts, restaurants, event venues, and recreational parks. Indias tourism industry has
been growing steadily, both in terms of domestic and international travelers, which has a
direct impact on the hospitality sector.
Recreational parks that offer various activities such as amusement rides, water rides,
adventure sports, and entertainment have also been evolving after easing of COVID related
restrictions.
This segment is really lucrative with people going out with their family and friends
without any hassle. Our findings suggest that if this trend continues, then this segment
will create boom in the market.
We shall continue to explore new opportunities in this segment. Currently, the Company
is evaluating a few proposals and is looking forward to add some value addition to its
portfolio in financial year 2023-24.
OPERATIONAL OVERVIEW
Shashijit is an established name in industrial and infrastructural Contracting
headquartered at Vapi, Gujarat. The company is in to Civil Project Management as well as
Constructs, Designs, Procurements, Builds and Develops Industrial, Commercial,
Residential, Public Utility Building & Infrastructure Development Projects.
In Industrial and Civil Construction sector, which is the groups forte Shashijit
Infraprojects Ltd offers services in general contracting, pre-construction management and
turnkey development. Today Shashijit Infraprojects Limited has diversified into various
sectors like they offers its commendable expertise in building and developing Residential
and Commercial complexes, and turnkey Industrial projects.
The Company has second segment of business which is to manage Government Infrastructure
taken on lease and provide various recreational activity at lake property. The Company is
equipped with a sound team of professionals and logistics support for executing of any
such projects. We are also open to foray into newer geographies for any such opportunity
coming our way. The Company has extensive experience in construction management and has
inherent skills and resources to develop and deliver any type of Real estate projects.
STRENGTHS AND OPPORTUNITIES
1) Strong execution track record and demonstrated ability to grow competitively and
profitably.
2) Experienced management team including engineers, project managers and technical
staffs with strong understanding of the business complexities.
3) A proven track record of successfully completed projects enhances the companys
reputation and builds client trust. Experience demonstrates the ability to handle
challenges and deliver results.
4) As a veteran in the industry, Company is having potential in getting more
projects in the industrial and especially textile sector.
5) Higher budgetary allocation for infrastructure sector
6) As the education sector expands, theres a need for constructing schools,
colleges, universities, and training centers across the country.
7) The tourism and hospitality sector in India continues to expand. Opportunities
exist for constructing hotels, resorts, convention centers, and other facilities to cater
to both domestic and international tourists.
8) The Indian governments "Smart Cities Mission" involves transforming
existing cities and building new smart cities with advanced infrastructure and technology.
Construction companies can participate in projects related to smart infrastructure, waste
management, efficient transportation, and more.
9) The Company will continue to explore opportunities to add prudent EPC projects
to its order book.
SEGMENT-WISE PERFORMANCEL:
| Segment |
FY 23 (In Lakhs) |
Contribution (%) |
FY 22 (In Lakhs) |
Contribution (%) |
YoY growth (%) |
| Construction and Development of Immovable Properties |
3506.58 |
99.22% |
2815.59 |
98.89% |
+24.54% |
| Operate and maintain Government Infrastructure |
27.43 |
0.78% |
31.62 |
1.11% |
-13.25% |
CONSTRUCTION AND DEVELOPMENT OF IMMOVABLE PROPERTIES:
The Companys business of Civil Project Management as well as business of construction
of residential and industrial immovable properties, infrastructure facilities, driveways,
public utilities, powerhouse buildings, factories and other Infrastructure Development
Projects. This segment grew by 24.54% and contributed 99.22% to the total revenue
comparing to last financial year.
The Company serve to a vast range of clients Heavy & Light Engineering Industry,
Textile, Chemical, Healthcare & Pharma, Paper & Packaging, Hospitality, and
Educational Institutions & Residential Premises. In this segment Company has taken
several initiatives. This category is a key growth driver for the Company as it continues
to expand its geographical reach and have been focusing on venturing into new foray of
Infrastructural development viz. Roads and rail infrastructure, bridges, dams and other
government contracting related activities.
OPERATE AND MAINTAIN GOVERNMENT INFRASTRUCTURE:
The Companys has started running the business of operation and maintenance of lakes
taken on lease from Government where Company has started various recreational activities
for the general public for the entertainment during the year under review but since the
execution of the lease agreement, many of the basic facilities as mentioned in the tender
and as per the lease agreements of Chala, Lakhamdev and Dungra Lake were not being
provided by the lessor which was agreed by them at the time of execution of the lease
agreements and which has impacted the revenue growth.
In the absence of basic facilities, as stipulated in our lease agreement with the
lessor, has begun to significantly impact our ability to operate effectively in that
segment and provide a satisfactory experience to our customers. The lessor is responsible
for providing certain basic facilities that are integral to our recreational activities.
Unfortunately, despite multiple attempts to address the issue, the lessor has not
fulfilled their obligation to provide these facilities. The absence of these facilities is
directly affecting our operational efficiency, customer satisfaction, and revenue
generation and due to that this segment has contributed only 0.78% of the total revenue
during the financial year under review.
We have made diligent efforts to engage in constructive communication with the lessor
by submitting various intimation letters and by conducting meetings from time to time,
bringing to their attention the urgency of the matter and the repercussions it is having
on our business and your Company is trying their best to resolve the issue and work
towards earning more from this segment.
OUTLOOK:
The Indian economy has risen from being 10th to the 5th largest
economy globally. The per capita income has doubled and increased to 1.97 lakh in 9 years.
Indian economy is expected to grow by 6.5% in FY 2023 24 and by an average rate of 6.1%
over the next five years. The economy has been on a recovery path after the impact of the
pandemic.
In the Financial year 2023-24, India has budgeted the capital investment outlay for
infrastructure sector to 10 lakh crores, which would be 3.3% of GDP and almost three times
the outlay in 2019-20. Infrastructure Finance Secretariat is being established to enhance
opportunities for private investment in infrastructure that will assist all stakeholders
for more private investment in infrastructure, including railways, roads, urban
infrastructure, and power. This depicts the upward trajectory of the Indian infrastructure
space which is on the rise. Also, India has to enhance its infrastructure to reach its
2025 economic growth target of US$ 5 trillion. The economy boost is only possible with the
infra development at the forefront.
Looking at the various opportunity in government projects, Company is in a process to
apply for registered as Government Contractor. Going forward, the Company remains
confident that with the turnaround in economic activity, it is well positioned to sustain
its growth momentum over the next few years. Company is driven by an experienced
management team with deep understanding of business complexities and is well positioned to
capitalize on the countrys significant growth potential. With strong future growth
prediction our Company is confident of its ability to tide over the challenges arising
from subdued demand and executional challenges through its customer centric approach,
construction expertise and technology leadership in the industry.
THREATS/RISKS AND CONCERNS
The Companys Risk Management Framework incorporates leading risk management standards
and practices. In developing the Risk Management Framework, the focus has been to design a
process that addresses the Companys business needs while being simple and pragmatic. The
Risk Management Framework outlines the series of activities that will be used in
identifying, assessing, managing and reporting risks.
The Company works in an environment which is affected by various factors, some of which
are controllable while some are outside the control of the Company. At SIPL, we have
developed a robust risk management framework that reduces the volatility due to
unfavorable internal and external events, facilitates risk assessment and mitigation
procedure, lays down reporting procedure and enables timely reviews by the management.
Type of risks are as under;
1) Margin erosion due to higher costs:
Risk: Exposure to price volatility can impact the costs, leading to margin erosion.
The Company focus on timely pricing actions.
Mitigation Plan: Constant monitoring of competitor price in the market has been
taken up by the Company.
2) Execution Risk
Risk: Construction projects are subject to various execution risks like regulatory
hurdles, delay in receipt of approvals, availability of labour and raw material, etc. Any
such delay may result in cost overruns and impact the Companys operations unfavorably.
Mitigation Plan: For that The Company deploys a well-defined standard operating
procedure from project planning to delivery and adheres to internal checks and balances
with regard to every project. Extensive diligence is carried out.
3) Skilled/Unskilled Labour Shortage:
Risk: Companys main business is labour centric business and any shortage in
skilled/unskilled labour can slow down the construction activity.
Mitigation Plan: The Company is planning for additional machinery purchase to
overcome shortage of skilled/unskilled labour and reduce the dependency of the labour.
4) Project delay risk
Risk: If projects are not finished on time, then the company is susceptible to
increased cost and loss of reputation which can hurt the order book.
Mitigation Plan: The Company has processes, systems and strong human capital which
continuously improves the project management capabilities of the organization and engages
in careful bid preparation to avoid any over utilization of resources.
5) Environment, Health, and Safety
Risk: EHS incidents can impact business continuity. It can also hinder the
abilities and morale of employees, associates and business partners.
Mitigation Plan: The Company has adopted an EHS compliance framework, where
adequate preventive measures for fire safety, electrical safety and working on heights are
in place at all sites.
6) Geopolitical events impacting supply
Risk: Supply disruptions due to geopolitical events may impact input costs and
supply chain. Focus is placed on
Mitigation Plan: Planning well ahead in advance to stock the necessary materials.
7) Liquidity Risk
Risk: Liquidity crunch has been prevailing in the infrastructure market, and many
owners / developers are financially stressed.
Mitigation Plan: To avoid any liquidity risk, robust screening of customer
profiles, proper due diligence and their liquidity position is undertaken before bidding
for any construction contract as well as during execution.
8) Dispute with Vapi Nagar Palika
Risk: Any dispute with Vapi Nagar Palika can be impacted negatively and can impact
on the revenue generation of the Company from that segment where as of now Company is
generating less than 1% of total revenue.
Mitigation Plan: To avoid any dispute risk, Company has already made various
submissions to Vapi Nagar Palika to prove the stand time to time and already exploring
legal ways to resolve the dispute if required.
Our projects are exposed to various implementation and other risks and uncertainties.
We may be further subject to regulatory risks, financing risks and the risks that these
projects may ultimately prove to be unprofitable.
INTERNAL CONTROL SYSTEMS & ADEQUACY
The Company has Internal Control Systems commensurate with the nature of its business,
size, and complexities which is integrated with Company policies. The key objective of the
internal control systems is to manage business risks, enhance shareholder value and
safeguarding of the assets. This helps in identifying, assessing and mitigating the risk
that could impact the Companys performance and achievement of its business objectives.
The risks are reviewed on an ongoing basis by respective business heads and functional
heads across the organization.
The internal financial controls for all the significant processes have been identified
based on the risk evaluation in the business process and same have been embedded/
implemented in the business processes. These processes and controls have been documented.
Professional internal audit firms review the systems and processes of the Company and
provide independent and professional opinion on the internal control systems. The Audit
Committee of the Board reviews the internal audit reports, adequacy of internal controls
and risk management framework periodically. These systems provide reasonable assurance
that our internal financial controls are designed effectively and are operating as
intended.
The internal control commensurate with the activities is supplemented by continuous
review by the management.
The internal control system is designed to ensure that every aspect of the companys
activity is properly monitored.
Further, the Statutory Auditors of the Company also carried out audit of the Internal
Financial Controls over Financial Reporting of the Company as on March 31, 2023 and issued
their report which forms part of the Independent Auditors report.
FINANCIAL PERFORMANCE
Your Company recorded Net Revenue from Operations of Rs. 3534.01 Lakhs on standalone
basis, for the Financial Year ended March 31, 2023. Revenue grew by 24.12% compared to Rs.
2847.22 Lakhs recorded during the previous Financial Year.
Company has achieved net profit of Rs. 45.07 Lakhs in FY 2022-23 as against net profit
of Rs. 12.84 Lakhs in the previous year and the comprehensive income is Rs. 47.20 Lakhs in
FY 2022-23 as against Rs. 18.04 Lakhs in the previous year.
Earnings per Share (EPS) of the Company is Rs. 0.44 comparing to Earning per Share
(EPS) of the Company of Rs. 0.12 of previous financial year.
Overall, the Company has delivered a strong business performance in a challenging
environment. The Company remains confident that its business built on the edifice of a
strong brand, high quality products, widespread distribution and deep consumer
relationships has the potential to sustain healthy and profitable growth in the years to
come.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES
The Company believes that its capability to preserve and continue its growth depends
largely on its strength of developing, motivating and retaining talent. It firmly believes
that highly motivated and empowered employees are its best assets to maintain a
competitive edge in the market. The management is committed to continuously upgrading
skills and competency at all levels with the aid of extensive training. The Company is
committed to ensure employees safe working conditions and social awareness. The employee
strength of the SIPL consists of 49 permanent employees as on 31st March 2023.
The Companys employees possess requisite qualifications and technical expertise to
execute projects across the construction services domain. The Companys HR continues to
focus on maintaining excellent work culture, employee development and competitive
compensation to ensure a motivated and empowered workforce.
The company continuous to lay emphasis on developing and facilitating optimum human
performance. The Company has maintained excellent relations with its employees across all
levels of the organization during the period under review. All efforts were made to ensure
a high employee satisfaction. Adequate measures were undertaken to enhance the skill sets
of the employees. The Company has always aimed to create a workplace where every person
can achieve their optimum potential and add value to the organizational growth. Company
has really good relation with industries by which Company can get leads for the
Constructions.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND RETURN ON NETWORTH
As per the amendment made under Schedule V to the Listing Regulations read with
Regulation 34(3) of the Listing Regulations, details of significant changes (i.e. change
of 25% or more as compared to the immediately previous financial year) in Key Financial
Ratios and any changes in Return on Net Worth of the Company including explanations
therefor are given below:
| Ratio |
March 31, 2023 |
March 31, 2022 |
% Change |
Reason for Variance |
| Current ratio |
1.19 |
1.39 |
-14.09% |
N.A. |
| Debt - Equity ratio |
1.02 |
0.91 |
11.42% |
N.A. |
| Debt service coverage ratio |
0.18 |
0.20 |
-8.14% |
N.A. |
| Return on equity ratio |
0.04 |
0.01 |
241.05% |
Due to increase in profit Shareholders equity increased |
| Inventory turnover ratio |
1.50 |
1.55 |
-3.20% |
N.A. |
| Trade receivable turnover ratio |
4.47 |
3.96 |
12.66% |
N.A. |
| Trade payable turnover ratio |
1.70 |
1.99 |
-14.51% |
N.A. |
| Net capital turnover ratio |
6.27 |
4.54 |
38.03% |
Due to increase in turnover in the current year. |
| Net profit ratio |
1.28% |
0.45% |
182.74% |
Due to increase in turnover and cost cutting and better management, net profit ratio
increased |
| Return on capital employed |
-0.02 |
-0.04 |
-55.00% |
Due to increase in turnover, cost cutting and better management, Return on capital
employed increased. |
| Return on investment |
0.00 |
19.32% |
100.00% |
There is no sale of Investment property during the year. |
DISCLOSURES BY MANAGEMENT TO THE BOARD
All disclosures relating to financial and commercial transactions where Directors may
have a potential interest are provided to the Board and the interested directors do not
participate in the discussion nor do they vote on such matters.
CAUTIONARY STATEMENT
Forward Looking Statement in this Management Discussion and Analysis of financial
condition and results of operations of the Company describing the Companys objectives,
expectations or predictions may be forward looking within the meaning of applicable
securities laws and regulations. Forward-looking statements are based on certain
assumptions and expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realised. The Company assumes no
responsibility to publicly amend, modify or revise forward-looking statements on the basis
of any subsequent developments, information or events. Actual results may differ
materially from those expressed in the statement. Important factors that could influence
the Companys operations include changes in Government regulations, tax laws, economic
developments within the country and such other factors globally.
For and on behalf of the Board of Directors
Shashijit Infraprojects Limited
|
Sd/- |
|
(Ajit Jain) |
| Place: Vapi |
Chairman & Managing Director |
| Dated: 5th September, 2023 |
DIN: 01846992 |
+91-9892691696
