ACI Infocom Ltd Management Discussions.

Management Discussion & Analysis:

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. There is a rapid increase in Indian infrastructure and construction industry in last decade. Though, in the recent past, the industry witnessed a slow down. But due to speedy urbanization , 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, construction remains a top priority for addressing developmental gaps as it is considered invincible with potential of lifting economy. The Indias Constructions sector is expected to grow at 7-8 percent each year over the next decade. To boost urban infrastructure across the country, the government has initiated multiple measures to lift the infrastructure and construction sectors and has also created a special act known as Real Estate (Regulation and Development) Act, 2016 (RERA).

Risks and Concerns:

Construction industry is highly risk prone, with complex and dynamic project environments creating an atmosphere of high uncertainty and risk. The industry is easily affected by various technical, sociopolitical and business risks-errors caused on account of adoption of improper methodology of construction, carrying out improper market survey, improper data input, and extraordinary hike in the cost of construction materials, improper assessment of the locational hazards and assessment of taxes /duties in the operation of the contract. 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
2019 2018
Net Sales/Income 399.23 365.65
Construction cost/Cost of Technical cont. 279.88 295.68
Employee Benefit 24.09 22.86
Other expenditure 13.71 14.78
Other income 55.16 58.96
Finance cost 0.10 0.00
Depreciation 0.00 0.00
Profit before tax 0.43 30.73
Tax -0.09 14.78
Profit after tax 0.53 15.96

During the year under review, the Company‘s revenue from operations stood at Rs. 399.23 Lacs as against Rs. 365.65Lacs in the previous year. The Company has earned a Net profit before tax of Rs. 0.43 Lacs as compared to the Profit before tax of Rs. 30.73 Lacs 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. During the year, the company was engaged in another sector alsoi.e construction sector and sale of IT products.

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.