ACI Infocom Ltd Management Discussions.

Annexure-4

• Industry structure and developments, opportunities and threats:

The real estate sector in India is comprised of 4 sub-sector i.e. housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. There is a rapid increase in Indian infrastructure and construction industry in last decade. The Indian construction industry is expected to register a growth of 13% in real terms in 2021, following a decline of 12.4% in 2020. However, the outbreak of the Coronavirus (COVID-19) pandemic and subsequent lockdown restrictions weighed on the industrys output last year. he novel Coronavirus pandemic, beginning its impact from mid-March 2020, had adversely affected economic activities and home buyer sentiment on the demand side, and led to stoppages and delays in construction activities and project completions, respectively, on the supply side. Therefore, the construction industry of the country suffered a significant deal during the year 2021.

Though, in the recent past, the industry witnessed a slow down. But due to speedy urbanization ,softening of interest rates on home loans , Reduction in stamp duty on registration of properties in various states, favorable government policies and initiatives like development of smart cities, Real Estate (Regulation and Development) Act, 2016 (RERA) etc, growth in real estate sector is expected to be on rise due to increase in urban housing and commercial space demand. This will create a great opportunities for the construction industry in affordable housing and commercial space.

ACI Infocom Ltd is all set to target the rising demand of affordable housing and commercial space in small- medium cities of India where the size of project in terms of capital investment are relatively low as compared to medium - big cities/ metros. This will give a steady and safe growth to the company. The company is also focusing on redevelopment projects, construction contracts and development projects.

The Company is having excellent team and network of contractors to support and achieve its vision.

• Internal control and their adequacy:

ACI Infocom Ltd has an effective system of accounting and administrative controls supported by an internal audit system with proper and adequate system of internal check and controls to ensure safety and proper recording of all assets of the Company and their proper and authorised utilization.

As part of the effort to evaluate the effectiveness of the internal control systems, our Companys internal audit committee reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate.

• Outlook:

In the existing scenario, the Indian construction industry is expected to recover to an annual average growth of 7.4% between 2021-2024, supported by the governments focus on boosting infrastructure investments to revive the economy.

The Honble Prime Minister announced that INR111 trillion (US$1.5 trillion) will be invested on 7,000 projects across various sectors during FY2020-2025, which will enable the faster revival of the economy and aid in boosting employment. The industrys growth will also be supported by the governments focus on boosting local manufacturing sector to become self-reliant and reduce dependency on imports. In addition, the governments targets to construct 10 million affordable houses

by 2022 and increase the share of renewable energy in total installed power capacity to 60% by 2030 will support the industrys growth over the medium and long term.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 Housing for All program by 2022.

• Risks and Concerns:

Construction industry is highly risk prone, The industry is easily affected by various risks such as Construction risk, Design risk, Environmental risk, Financial risk, Sub-Contractors risk, Procurement risk, Legal risk etc. To overcome the challenging business environment, the Company has proactively undertaken the steps and mitigation procedures/plans are being formulated and monitored to reduce, if not totally eliminate, the risks associated with the above.

• Discussion on financial performance with respect to operational performance, segment wise performance:

(Rs. In lakhs)

Particulars Financial year
2021 2020
Net Sales/Income 5.00 103.58
Construction cost/Cost of Technical cont. 0 0
Employee Benefit 19.20 13.94
Other expenditure 11.06 29.34
Other income 49.83 50.05
Finance cost 0.00 1.07
Depreciation 0.00 0
Profit before tax 24.56 (3.42)
Tax 6.10 (0.87)
Profit after tax 18.46 (2.55)

During the year under review, the Company„s revenue from operations stood at Rs. 5.00 Lakhs as against Rs. 103.58Lacs in the previous year. The Company has earned a Net Profit before tax of Rs. 24.56 Lakhs as compared to the Loss before tax of Rs.3.42 Lakhs during the previous accounting year. The sale of Flats were under tremendous pressure due to poor demand but expected to be on rise in next fiscal.

• Material developments in human resources / industrial relations front, including number of people employed:

Our people are our most important asset and we value their talent, integrity and dedication. Our responsibilities towards our people, who are instrumental to our success with their devotion and relentless support covers a quantum part of the company strategy. We believe that training is essential to build skill sets in growing organization. The focus has been to create an environment where performance is rewarded, individuals are respected and associates get opportunities to realize their potential.As in the past, industrial relations continued to remain cordial in the Company. There was no strike or labour unrest during the period under review.