arss infrastructure projects ltd share price Management discussions


1.1 Global Economy

The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices decreased about 6.5% in 2022, the highest in four decades.

Gross FDI inflows – equity, reinvested earnings and other capital – declined 8.4% to $55.3 billion in April-December. The decline was even sharper in the case of FDI inflows as equity: these fell 15% to $36.75 billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023).

The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022.

Performance of major economies

United States: Reported GDP growth of 2.1% compared to 5.9% in 2021 China: GDP growth was 3% in 2022 compared to 8.1% in 2021

United Kingdom: GDP grew by 4.1% in 2022 compared to 7.6% in 2021

Japan: GDP grew 1.7% in 2022 compared to 1.6% in 2021

Germany: GDP grew 1.8% compared to 2.6% in 2021

[Source: PWC report, EY report, IMF data, OECD data]

Global Outlook

The global economy is expected to grow by 2.8% in 2023, primarily influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7% during the same year. Notably, the largest economies such as China, the US, the European Union, India, Japan, the UK, and South Korea are not in a recession. Global inflation is further expected to decline to 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.

(Source: IMF).

Indian economy Overview:

Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth is at 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation.

(Source: IMF, World Bank)

Growth of the Indian economy

FY20 FY21 FY22 FY23
Real GDP growth(%) 3.7 (6.6) 8.7 7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

Q1FY23 Q2FY23 Q3Y23 Q4FY23
Real GDP growth(%) 13.1 6.3 4.4 6.1

(Source: Budget FY24; Economy Projections, RBI projections)

Indias auto industry grew 21% in FY23; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 million units in FY23, crossing 3.2 million units in FY19. The commercial vehicles segment grew 33%. Two-wheeler sales fell to a seven year low; the three-wheeler category grew 84%.

Till Q3 FY23, Indias current account deficit, a crucial indicator of the countrys balance of payments position, decreased to $18.2 billion, or 2.2% of GDP. Indias fiscal deficit was estimated in nominal terms at ~ H17.55 lakh crore and 6.4% of GDP for the year ending March 31, 2023. (Source: Ministry of Trade & Commerce)

Indias headline foreign direct investment (FDI) numbers rose from US$74.01 billion in 2021 to a record $84.8 billion in 2021-22, a 14% Y-o-Y increase, till Q3FY23. India recorded a robust $36.75 billion of FDI. In 2022-23, the government was estimated to have addressed 77% of its disinvestment target (H50,000 crore against a target of H65,000 crore).

The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months.

India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. As of March 2023, Indias unemployment rate was 7.8 percent.

In 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1 percent Y-o-Y in RE 2022-23.

The total gross collection for FY23 was H18.10 lakh crore, an average of H1.51 lakh a month and up 22% from FY22, Indias monthly goods and services tax (GST) collections hit the second highest ever in March 2023 to H1.6 lakh crore.

Per capita income almost doubled in nine years to H172,000 during the year under review, a rise of 15.8 percent over the previous year. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3 percent in 2022-23.

Indian Outlook

There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and appreciable decline in consumer price index inflation to less than 5 per cent in April 2023. India is expected to grow around 6-6.5 per cent (as per various sources) in FY2024, catalysed in no small measure by the governments 35% capital expenditure growth by the government. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in 2022-23 was 10,993 kilometres; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year.

(Source: IMF).

The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade.

Union Budget FY 2023-24 provisions

The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to H10 lakh crores, equivalent to 3.3% of GDP and almost three times the 2019-20 outlay, through various projects like PM Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of H5.94 lakh crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly H20,000 crores was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector.

Indias infrastructure sector

The infrastructure sector is a key driver for the Indian economy. In order to achieve its economic growth target of reaching US$ 5 trillion by 2025, India must focus on enhancing its infrastructure. Under Budget 2023-24 the capital investment outlay for infrastructure is set to increase by 33%, reaching H10 lakh crore (equivalent to US$ 122 billion). This represents a significant increase, almost three times the outlay in 2019-20, and will amount to 3.3% of Indias GDP.

Sectors such as railways (12%), roads (18%), energy (24%) and urban development (17%), approximated ~71% of the projected infrastructure investments. India is expected to attract USD 100 billion foreign direct investment (FDI) in 2022-23.


Roads: India road network is the second largest in the world, spanning 6.3 Million Km, covering over 90% of passenger traffic and 64.5% of freight traffic. The pace of construction of national highways in the country had reached a record high of 37 km per day in FY 2020-21, but had subsequently slowed down to 30.11 km per day in FY 2022-23.

In the Union Budget 2023-24, government proposed increased allocation for the central road fund by 19% to H2,95,150 crores (US$ 38.86 million). The government aims to construct 23 new national highways by 2025. National Highway Authority of India (NHAI) is expected to generate H1 lakh crore (US$ 14.30 billion) annually from toll and other sources in five years.


Railways: Indian Railways is the fourth-largest network worldwide, comprising 75,439 miles of total track spanning 67,368 km.

In FY 2022-23, 5,243 km of new lines, doubling and gauge conversion were achieved, compared to 2,909 km in FY 2021- 22.

Indian Railways electrified 58,812 Route Kilometers (RKMs) till March 31, 2023, about 90% of the total broad-gauge network (65,300 RKMs) of Indian Railways. Out of a total of 58,812 Route Kilometers (RKMs), the Central Organization for Railway Electrification (CORE) carried out the electrification of 45,912 Route Kilometers (RKMs) or roughly 78% of the electrification work of the entire Indian Railways.

The Indian Railways has planned to undertake 58 super critical and 68 critical projects worth more than H115,000 crore (US$ 15.44 billion) over the next few years. As of now, 29 super critical projects, spanning 1,044 km and costing H11,588 crore (US$ 1.5 billion), have been commissioned. While four projects worth H1,408 crore (US$ 189.05 million) have been completed, remaining projects are scheduled to be completed by March 2024.

Roads and bridges: In the Union Budget FY 2023-24, H17,296.84 Crore was allocated for track renewals, H4,600 Crore for gauge conversion and H30,749 Crore for track doubling. H31,850 Crore was allocated for the construction of new railway lines. (Source:

Company overview

The flagship company of the ARSS Group is ARSS Infrastructure Projects Limited. The Company carries out civil and infrastructure projects, Railways, Highways, flyovers, Irrigation works etc. However the company is undergoing financial stressed and the lenders initiated the Corporate Insolvency Resolution Process (CIRP) against the Company. Mr. Uday Narayan Mitra has been appointed as Resolution Professional w.e.f. 30th November, 2021 since then the power of the Board has been suspended and vested with Resolution Professional. He is managing the affairs of the company. During the financial year 2022-23, one new work order has been awarded to the company during the CIRP and also the existing work has been continue in full force, the CIRP has not affect the execution of the work.


The Company has secured the following contracts (work order) during the financial year 2022-23:

At Paradip: Temporary Rail connectivity to MMLP Paradip which is awarded in favour of your Company by Dy. General Manager /Engg., Container Corporation of India Limited, New Delhi on 6th April, 2022 with a Contract Value of INR 2.20 Crores.

Segment wise performance

The Company is engaged in only one segment viz. Construction Business and as such there is no separate reportable segments as per IND AS -108 "Operating Segment."

Financial performance with respect to operational performance

In spite of Company under CIRP, it has shown a remarkable growth and turnaround the loss into a profit of INR 7.57 cr. as compared to INR (-) 108.34 crores for the previous financial year with a remarkable growth of 106.98%.

The turnover of the Company in the year is INR 402.52 crores as compared to INR 288.81 crores in the previous

financial year with a remarkable growth of 39.37% in sales even during CIRP.

The performance during the year ended 31st March, 2023 has been as under:









Profit before Depreciation, Interest and Tax




Less : Depreciation









Share of net profit or associates and joint ventures

accounted using equity method




Profit Before Tax




Less : Tax Expenses

a) Current Year





b) Earlier Year





c) Deferred Tax




Profit/Loss After Tax




Balance brought forward from previous year




Add :Re-measurement of defined employee benefit plans

through OCI




Amount Available for Appropriation





a) Dividend





b) Tax on Dividend





c) Transfer to General Reserve




Balance Carried to Balance Sheet




Earnings per Share (In INR) (Weighted) Basic (Equity Shares of face value of INR 10/- each)




Earnings per Share (In INR) (Weighted) Diluted (Equity Shares of face value of INR 10/- each)





(INR In Crores)

Standalone Consolidated

Key Financial Ratio : Pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015], the details of changes in key financial ratio as compared to previous year are stated below:

Particulars 2022-23 2021-22 % change as compared to PY
Debtors Turnover 32.93 28.77 14.46
Inventory Turnover 10.81 8.41 28.54
Interest Coverage Ratio 15.60 (74.82) 120.85
Current ratio 0.17 0.16 6.25
Debt Equity Ratio (13.64) (13.09) (4.20)
Operating profit Margin (%) 2.09% (37.25%) 39.34
Net Profit Margin (%) 1.34% (38.36%) 39.70
Return on Net worth (4.55%) (89.09%) 84.54

Statutory Reports MDA Report

Debtors turnover ratio- increased primarily account of decrease in receivables due to revenue booking in the last month of the FY i.e. March 2023. Further there is increase in turnover as compared to previous year.

Inventory turnover ratio – Increased primarily on account of increase in Cost of goods sold.

Interest coverage ratio – Increased primarily on account of higher operating profits and lower interest.

Current ratio – Increased primarily on account of increase in current assets.

Debt equity ratio – Increased primarily on account of movement of long term borrowing and Increase in Net Worth.

Operating profit margin – Increased on account of higher operating profit.

Net profit margin – Increased on account of higher net profit.

Return on net worth – Increase primarily on account of higher net profit to networth as compared to previous


Human Resources Development and Industrial Relations:

In 2022-23, with ARSS growing its order book, resource mobilization for new projects became a key HR imperative. With the growing number of projects, hiring was also done at the leadership levels in the areas of operations, engineering and design to strengthen the quality of project execution. New talent was also inducted at the middle and junior levels. While adequate number of people were hired for effective execution, there were strong budget controls imposed to effectively balance the twin objectives of growth and cost control.

New employee induction and training for the existing employees continued to remain focused on functional, technical and behavioral areas. Safety related training also remained an important area of intervention. With new projects getting awarded and many project managers being new to the ARSS system, an exhaustive induction program covering all functions and processes was developed and implemented. However, the objective of furthering operational efficiencies remained a common thread through these activities. The Company is actively working on developing a culture driven by the collective spirit of experience. Assignment, empowerment and accountability will be the cornerstone of the people led processes.

Since 2022-23 was a year of consolidation, the remuneration and benefits mostly remained unaltered. However, ground work started on rationalizing the compensation structure to make it more employees friendly and with a plan to implement the same in coming financial year. Safety related training also remained as one of the primary focus areas. In the area of Project Management, self and immediate superiors assessments were completed with an objective to roll out appropriate training programmes for the next financial year with special focus on project risk assessment and mitigation.

At ARSS, we provide employees a secure and supportive work environment. To enhance skills, we organize training programmes. As on March 31, 2023, we had 573 full time employees.

Labor relations at all work sites and at the headquarters of the Company continued to remain cordial throughout the year. There was no industrial dispute during the year under review.

Opportunities and Threats, Risks and concerns Opportunities and threats

The Indian government made an announcement on larger outlays for infrastructure development. In the Budget 2023-24, the Indian government announced an outlay of INR 2.4 Lakh Crore for the Indian Railways directed to improve infrastructure. Volatile currency fluctuations in South Africa and Ghana may pose a threat to the margin and also might lead to some mark to market losses. (Source:


The Indian Railways has undertaken several railway station redevelopment projects across the country. The Rail Land Development Authority (RLDA) has been entrusted with the responsibility to upgrade and modernise major railway stations across India.

The Government aims to transform India into a global sporting powerhouse by undertaking mega-sports infrastructure projects that will have a long-term impact on health, education and tourism. The Indian Government has proposed a sports budget of INR 3,397 crore for FY 2023-24. This is an increase of 11% over the previous years budget.

There is increased optimism about the strong revival of the aviation industry. With many major international airports under construction across the country, the handling capacity across airports is expected to increase substantially in the next 2-3 years. Further investments are planned in the second half of FY 2023-24 by the Government and private players to augment the facilities and infrastructure of airports.

The budgetary support for the Roads and Bridges sector has witnessed a steady increase of more than 58% over the last 4 years. Out of the capex announced under the National Infrastructure Pipeline, 18% is earmarked for Roads and Bridges, which augurs well for this business. Over the last 7 years, the length of National Highways has gone up by 50% from 91,287 km (as of April 2014) to 144,634 km (till Jan 2023) and the length of expressways have expanded by 4,068 km during this period. Also, in view of the exponential increase in traffic over the years in urban areas, the Government has shifted its focus on developing many new Elevated Corridor / Flyover projects across major cities, with the primary aim of decongesting urban roads and highways.


The completion of the ongoing real estate projects continues to slow major challenge more particularly in view of the ongoing Corporate Insolvency Resolution Process (CIRP). It is expected that the projects will be completed according to the timelines of new Resolution Plan.

Risks and concerns

Besides the economic, regulatory, taxation and environmental risks and also the investment outlook towards Indian real estate sector, your company is currently exposed to liquidity risk. The banks are reluctant to provide credit to this industry due to rising NPAs and lower profit in property business.

Internal control systems and their adequacy

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

Safeguarding Assets and their usage.

Maintenance of Proper Accounting Records and

Adequacy and Reliability of the information used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows:

Existence of Authority Manuals and periodical updating of the same for all Functions.

Existence of clearly defined organizational structure and authority.

Existence of corporate policies for Financial Reporting and Accounting.

Existence of Management information system updated from time to time as may be required.

Existence of Long Term Business Plans.

Existence of Internal Audit System.

Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake

measures as may be necessary.

ARSS has an adequate system of internal control to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for preparing financial information and other data and for maintaining accountability of assets. The internal control is supplemented by extensive programme of internal audits, review by management, documented policies, guidelines and procedures.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place. The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally the Audit Committee approves all the audit plans and reports for significant issues

raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required. Normal foreseeable risks of the Companys assets are adequately covered by comprehensive insurance. Risk assessments, inspections and safety audits are carried out periodically.

Strategic Initiative:

The Company is well on its course to meet its growth targets despite increase competition. Effective business strategies have allowed the Company executing projects in a timely manner and economies on critical resources though joint venture in large projects.

The foray into high potential business of railways, roads and bridges has been successful during the year and boosted the order in flow. The Company is strengthening its manpower for execution of high value projects and adding assets for development of infrastructures to complete all contracts in time.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the infrastructure sector, significant changes in political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labour relations and interest costs.

For and on behalf of the Board of Directors (suspended during CIRP)

Sd/- Sd/- Sd/-

Place : Bhubaneswar

Subash Agarwal Chairman (DIN:00218066) Rajesh Agarwal Managing Director (DIN: 00217823) (Uday Narayan Mitra) Resolution Professional (IP Reg.No.IBBI/IPA001/
Dated : August 11, 2023 (Suspended during CIRP) (Suspended during CIRP) IP-P00793/2017-18/11360)