OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations, and our assessment of the factors that may affect our prospects and performance in future periods, together with our Restated Consolidated Financial Information for Fiscals 2024, 2023 and 2022, including the notes thereto and reports thereon, each included in the Draft Red Herring Prospectus. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscals 2024, 2023 and 2022, included herein is derived from the Restated Consolidated Financial Information, included in the Draft Red Herring Prospectus. For further information, see “Financial Information” on page 279. Our financial year ends on March 31 of each year, and references to a particular year are to the 12 months ended March 31 of that year.
Unless stated otherwise, industry and market data used in the Draft Red Herring Prospectus is derived from the report titled, “Indian Infrastructure Industry” released in July 2024 (“CARE Report”) prepared by CARE Analytics and Advisory Private Limited, appointed by our Company pursuant to an engagement letter dated November 27, 2023 and such CARE Report has been commissioned by and paid for by our Company, exclusively in connection with the Offer. The data included herein includes excerpts from the CARE Report and may have been re-ordered by us for the purposes of presentation. Unless otherwise indicated, financial, operational, industry and other related information derived from the CARE Report and included herein with respect to any particular year refers to such information for the relevant Financial Year. A copy of the CARE Report is available on the website of our Company at https://www.ceigall.com/other-compliance.html. For further information, see “Risk Factors - 53. This Red Herring Prospectus contains information from an industry report, prepared by an independent third-party research agency, CARE Research, which we have commissioned and paid for purposes of confirming our understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks. on page 67. Also see, “Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation - Industry and Market Data” on page 15.
Unless the context otherwise requires, in this section, references to ‘we, ‘us, ‘our refers to Ceigall India Limited along with its Subsidiaries, SPV and Joint Ventures, as applicable, on a consolidated basis and ‘the Company, ‘our Company or ‘Ceigallrefers to Ceigall India Limited, on a standalone basis. Our Order Book represents the estimated contract value of the unexecuted portion of our existing assigned EPC contracts.
OVERVIEW
We are an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. We are one of the fastest growing engineering, procurement and construction (“EPC”) company in terms of three-year revenue CAGR as of Fiscal 2024, among the companies with a turnover of over Rs. 10,000 million in Fiscal 2024 (Source: CARE Report) with over 20 years of experience in the industry. We have achieved one of the highest year-on-year revenue growth of approximately 43.10% in Fiscal 2024 among the peers. We have grown at a CAGR of 50.13% between Fiscals 2021 to 2024 (Source: CARE Report). Over the last two decades, our Company has transitioned from a small construction company to an established EPC player, demonstrating expertise in the design and construction of various road and highway projects including specialised structures across 10 states in India (Source: CARE Report). For further details see “Industry Overview - Benchmarking Based on Financial Parameters (Standalone Performance)” on page 186. Our revenue from operations has increased significantly from Rs. 11,337.88 million in Fiscal 2022 to Rs. 30,293.52 million in Fiscal 2024. Our principal business operations are broadly divided into EPC projects and hybrid annuity model (“HAM”) projects, which are spread over ten states in India.
Our Company was incorporated in July 2002 and since then, we have gradually increased our execution capabilities in terms of size of the projects. One of our initial road projects that we executed for the Punjab Public Works Department, Ludhiana division, was awarded in 2006 with an aggregate project cost of Rs. 62.94 million for 20.42 lane km. In 2014, we were awarded the first four lane highway EPC project from NHAI for 24.08 lane km with a project cost of Rs. 378.10 million and the most recent four lane elevated corridor EPC project, which consists of one of the longest four lane elevated corridor portion of 14.26 kms in India as per CARE Report, was awarded by NHAI with a project cost of Rs. 19,693.90 million and total length of 100.32 lane km. As on the date of this Red Herring Prospectus, we are eligible to bid for single NHAI EPC projects up to a value of Rs. 57,000.00 million and for single NHAI HAM projects up to a value of Rs. 55,000.00 million. As on the date of this Red Herring Prospectus, we have been empanelled to participate with the Delhi Metro Rail Corporation Limited in its upcoming tenders involving inter alia construction of railways, mega bridges and tunnels in India and abroad and also with a public
sector undertaking for highways, bridges and tunnel construction work in north-eastern states of India, and such empanelment is mutually extendable.
As on the date of this Red Herring Prospectus, our Company has completed over 34 projects, including 16 EPC, one HAM project, five O&M and 12 Item Rate Projects, in the roads and highways sector. Currently, our Company has 18 ongoing projects, including 13 EPC projects and five HAM projects which includes elevated corridors, bridges, flyovers, rail over-bridges, tunnels, expressway, runway, metro project and multi-lane highways. In addition to undertaking operation and maintenance (“O&M”) activities in accordance with our contractual obligations under the EPC/HAM concession agreements, we have also undertaken independent O&M projects. Further, we have also undertaken in the past and continue to undertake sub-contracting projects.
Our Order Book, as on June 30, 2024 and Fiscals 2024, 2023 and 2022, amounted to Rs. 94,708.42 million Rs. 92,257.78 million, Rs. 108,090.43 million and Rs. 63,461.30 million, respectively. As on June 30, 2024, projects awarded by NHAI contributed Rs. 76,062.43 million i.e. 80.31% to our Order Book. Our other public sector clients include Indian Railway Construction International Limited (“IRCON”), Military Engineer Services (“MES”) and Bihar State Road Development Corporation Limited (“BSRDCL”). Our Book to Bill Ratio as of Fiscals ended March 31, 2024, March 31, 2023 and March 31, 2022 was 3.05, 5.23 and 5.60 times, respectively.
One of the key drivers for economic growth is the increased infrastructure investment thrust by the Government of India. In the Union Budget for Fiscal 2025, the Government of India continued its focus on infrastructure development with budget estimates of capital expenditure towards the infrastructure sector of Rs. 11,111 billion. (Source: CARE Report). Furthermore, continuous efforts by the Government of India to make the business environment convenient to operate and streamline the regulatory process will support the growth of investments in the infrastructure segment (Source: CARE Report). We have demonstrated our ability to execute projects on or ahead of schedule in the past and we believe that we have the requisite capabilities and expertise to take advantage of the industrys growth. Over the years, our Company has become an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways and has a reputation of delivering quality projects. We have a consistent track-record of execution of projects either on time or ahead of schedule. We believe that our efficient project execution capabilities have enabled us to execute projects in a timely manner, and in certain cases before the stipulated timelines, while maintaining requisite quality standards. As on the date of this Red Herring Prospectus, we have completed 7 (seven) EPC projects out of 16 EPC projects on or before the scheduled completion date and we have already received bonus payments for early completion for 2 (two) EPC projects. For details, see “- Strong project management and established track record of timely execution” below. The first HAM project undertaken by us i.e., Malout-Abohar Project, was also completed 214 days ahead of its scheduled completion date.
We have a successful track-record in executing projects of different sizes ranging from 20.42 lane km to 260.00 lane km in terms of length. As on March 31, 2024, we have constructed over 1,739.88 lane kms of roads and highways, which also includes specialized structures such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. As on March 31, 2024, we have 1,488.17 lane kms of ongoing projects. As on March 31, 2024, we have completed 2,158.72 lane kms of O&M projects.For our EPC and HAM projects, the scope of our services typically includes design and engineering of the project, procurement of raw materials, project execution at site with overall project management up to the commissioning of these projects. Our employee resources and fleet of owned equipment, some of which are under buyback arrangements, and rental equipment, together with our engineering skills and capabilities, enable us to execute a range of projects.
We have an experience of executing projects across diverse geographic locations in India with varying degrees of complexities such as construction in high-traffic and high-density areas, construction of tunnels in hilly terrain and slope protection and rock fall protection due to high rainfall and involving specialised structures such as tunnels, bridges and elevated roads. We have diversified our geographical presence in construction and development and execution of major multi-lane highway projects with specialised structures in various states of India, including Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Delhi, Maharashtra and Bihar. Our projects were spread across six states in Fiscal 2022, and we expanded to ten states by Fiscal 2024. As on date of this Red Herring Prospectus, our projects are spread across ten states in India. Set forth below is a graphical representation of our geographic presence across various states in India.
Our Company has been awarded the “Gold Award” at the National Highways Excellence Award, 2020 by the Ministry of Road Transport and Highways, Government of India for Excellence in Project Management for Khemkaran-Amritsar Project and the “Special Award” at National Highways Excellence Awards, 2021 by the Ministry of Road Transport and Highways, Government of India for outstanding work in challenging condition for Ramdas Gurdaspur Project, including the Kartarpur Sahib Project.
While we execute a majority of our projects ourselves or through our Subsidiaries, we also form project-specific joint ventures, special purpose vehicles with other infrastructure and construction companies. In particular, when a project requires us to partner to meet specific eligibility requirements in relation to certain projects, including requirements relating to specific types of experience and financial resources, we enter into such partnerships with other infrastructure and construction companies. As on the date of this Red Herring Prospectus, we have nine Subsidiaries (including five direct Subsidiary and four indirect Subsidiaries) and eight Joint Ventures, for the purpose of execution of projects. In addition, during our ordinary course of business we also enter into joint operations agreements with other parties for the purposes of participating in the bidding process.
We are led by our individual Promoter and Managing Director, Ramneek Sehgal, who has more than 20 years of experience in the construction industry. We have a dedicated management team with a strong understanding of the industry that enables us to effectively identify and take advantage of market opportunities. We believe that the experience of our senior management team has significantly contributed to our success and growth.
The following table sets forth certain of our key financial information derived from the Restated Consolidated Financial Information:
(in € million, unless stated otherwise)
| Particulars | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
| Revenue from Operations | 30,293.52 | 20,681.68 | 11,337.88 |
| EBITDA(1) | 5,176.62 | 2,956.29 | 1,859.15 |
| EBITDA Margin(2) (%) | 17.09% | 14.29 | 16.40 |
| Profit after tax | 3,043.07 | 1,672.72 | 1,258.61 |
| PAT Margin (%)(3) | 10.05% | 8.09 | 11.10 |
| Net Worth(4) | 9,064.13 | 5,930.62 | 4,312.51 |
| Fixed Asset Turnover Ratio(5) | 0.14 | 0.17 | 0.17 |
| Total Debt to Equity(6) | 1.17 | 1.18 | 0.73 |
| ROE(7) (%) | 33.57 | 28.20 | 29.19 |
| RoCE(8) (%) | 31.98 | 28.67 | 29.84 |
Notes: |
(1 EBITDA is calculated as restated profit before exceptional items and tax minus Other Income plus Finance Costs, Depreciation and |
amortisation expense. |
(2 EBITDA Margin is calculated as EBITDA/ Revenue from operations. |
(3 PAT Margin is calculated as Profit after tax/ Revenue from operations. |
(4 Net Worth is calculated as Restated equity share capital + Restated other equity including minority interest. |
(5 Fixed Asset Turnover Ratio is calculated as Gross Block as a % of Revenue from Operations. |
(6 Debt to Equity is calculated as Total borrowings/Total equity. |
(7 ROE is calculated as Net Profit after tax/ Total equity. |
(8 |
On account of efficient utilisation of resources and low working capital cycle, effective control over operational expenses, low emphasis on fixed assets, high external credit rating, low financial cost and priority to purchase equipment under buy back arrangements, our Company has been able to generate RoCE of 31.98%, 28.67% and 29.84% and RoE of 33.57%, 28.20% and 29.19%, for Fiscals 2024, 2023 and 2022, respectively.
FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Our results of operations and financial condition are affected by several important factors including:
Growth of our Order Book
Our Order Book represents the estimated contract value of the unexecuted portion of our existing assigned EPC contracts. As on June 30, 2024, our Order Book was Rs. 94,708.42 million. The projects in our Order Book are subject to changes in the scope of undertakings as well as adjustments to the costs relating to the contracts. For the purposes of calculating the Order Book value, our Company does not take into account any escalation or change in work scope of our ongoing projects as of the relevant date, or the work conducted by us in relation to any such escalation of change in work scope of such projects until such date. The value of the orders we receive impacts our future performance. Any cancellation of orders or termination of projects under construction by our customers may result in a reduction of our expected future revenue. Our revenues and profitability are also affected by the type, number and value of the projects we undertake in a relevant financial year, as well as the stages of completion of the relevant projects. As our projects may have different profit margins and may be in different stages of completion or operation, different amounts of revenue and profit can be recognized and/or realized at relevant times. Our results of operation from our projects may vary from fiscal to fiscal depending on the project implementation schedule. Projects which are spread over longer periods of time may also be subject to various other risks which we may not be able to control or foresee. Further, the projects awarded to us may be cancelled subsequently on account of various factors, including non-availability of land. There have been instances in the past where contracts with NHAI were amicably revoked on account of non-availability of land for the purpose of projects.
Our bidding and execution capabilities
As a part of our business and operations, we bid for projects on a continual basis. Projects are awarded following competitive bidding processes and satisfaction of prescribed qualification criteria. In our business, our ability to bid for EPC and HAM projects is based on our pre-qualification credentials which is based on our technical capability and performance, reputation for quality, safety record, financial strength and experience in similar projects undertaken in the past. We face significant competition for the award of projects from a large number of infrastructure and road development companies who also operate in the same regional markets as us. Further, some of our competitors are larger than us, have stronger financial resources or have a more experienced management team, or have stronger engineering capabilities in executing technically complex projects. Competition from other infrastructure and road development companies may adversely affect our ability to successfully bid for projects at price levels which would generate desired returns for us. As a part of the bidding process, the nature and value of contracts executed in the past is an important factor in allowing companies to bid for the new projects. Pre-qualification is key to our winning major projects. Our net worth and track record qualify us to bid for a large number of the projects in India. To bid for some higher value contracts, we sometimes seek to form joint ventures or do joint operations with other experienced and qualified companies.
After a project is awarded, completion on time is subject to various factors, including, funding arrangements being in place, acquisition of land by the authority, obtaining the relevant licenses and approvals in a timely manner and quick mobilization of resources. We target efficient deployment of equipment and resources, quick decisionmaking capabilities by on-site project managers, strong relationships with vendors and effective co-ordination between project sites and our offices. Delays in the completion of a project can lead to our customers delaying in making our payments. Even relatively short delays or surmountable difficulties in the execution of a project could result in delays in receiving, on a timely basis, all payments due to us on a project. Our inability to complete or monetize such work in a timely manner, or at all, may adversely affect our business and results of operations.
Cost of Raw materials
Our construction operations require various bulk construction materials including steel, cement, bitumen and aggregate. Fuel costs for operating our construction and other equipment also constitute a significant part of our operating expenses. Cost of materials consumed primarily consists of expenses incurred towards purchase of raw materials, such as bitumen, fuel, steel and cement, for our ongoing EPC and HAM projects. Cost of materials consumed accounted for 34.76%, 33.22% and 36.29% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. We may experience unanticipated increases in costs due to fluctuations in the supply and demand in the national and international markets for construction materials. At certain times, there can be a scarcity of raw materials, which may cause substantial increases in the prices of such raw materials. Transport of these raw materials is subject to various conditions beyond our control, including poor roads, inclement weather or industrial accidents. Our ability to pass on increased costs to our customers depends on our contractual arrangements. If we are unable to pass on such unanticipated price increases to our customers under our contractual arrangements, we may have to absorb such increases and our business, financial condition and results of operations may be adversely affected.
Availability of cost-effective funding sources
Our ability to grow in the infrastructure sector depends largely on cost effective avenues of funding. Our business requires a large amount of working capital, including to finance the purchase of raw materials and equipment, the hiring of equipment and the performance of engineering, construction and other work on projects before payments are received from customers.
Our outstanding borrowings (including fund and non-fund based), on a consolidated basis, amounted to Rs. 18,110.18 million, Rs. 12,525.80 million and Rs. 6,521.18 million, as on Fiscals 2024, 2023 and 2022, respectively.
We have typically financed our capital requirements through bank borrowings and internal accruals. Access to adequate capital from bank borrowings is on such terms and conditions which are mutually acceptable to our Company and the lenders. If we experience insufficient cash flows to allow us to make required payments on our debt or fund working capital requirements, there may be an adverse effect on our business and results of operations.
Geographic locations, seasonality and weather conditions
Our business operations are dependent on the location where the project to be executed is situated. Certain of our ongoing projects involve varied degrees of complexities such as construction in high-traffic and high-density areas, construction of tunnels in hilly terrain and slope protection and rock fall protection due to high rainfall. For instance, our ongoing EPC project, Ramban-Banihal PKG III Project in Jammu and Kashmir, involve construction of twin tube tunnels in hilly terrain. Adverse weather conditions such as heavy rains, landslides, floods, including during the monsoon season, may restrict our ability to carry on construction activities or may result in damage to a portion of our fleet of equipment or camp sites resulting in the suspension of operations, and may prevent us from completing the projects on time or generally reduce our operational efficiency. Our operations are also adversely affected by difficult working conditions and extremely high temperatures during summer months and shorter working hours in peak winter season, each of which may restrict our ability to carry on construction activities and fully utilize our resources. Additionally, executing projects in high altitude areas and hilly terrains may restrict our ability to transport manpower and equipment in a timely manner.
Government policies, budgetary allocationsfor investments in road infrastructure and general macroeconomic and business conditions
Our business is primarily dependent on contracts awarded by governmental authorities. We currently derive majority of our revenue from contracts entered into with NHAI. The ongoing projects awarded to us by NHAI
constitute Rs. 76,062.43 million i.e. 80.31% of our Order Book as on June 30, 2024, and the remaining Order Book value are through projects awarded by other central and state governmental departments. One of the key drivers for economic growth is the increased infrastructure investment thrust by the Government of India. In the Union Budget for Fiscal 2025, the Government of India continued its focus on infrastructure development with budget estimates of capital expenditure towards the infrastructure sector of Rs. 11,111.00 billion (Source: CARE Report). Furthermore, continuous efforts by the Government of India to make the business environment convenient to operate and streamline the regulatory process will support the growth of investments in the infrastructure segment (Source: CARE Report). Our ability to benefit from such investments proposed in the infrastructure sector is, therefore, key to our results of operations. Further, our ability to bid for, and hence, undertake major infrastructure projects, will depend on our ability to pre-qualify for these projects, including by entering into joint ventures with other companies.
Macro-economic factors in India relating to the roads and highways sector will have a significant impact on our prospects and results of operations. Overall economic growth in manufacturing, services and logistics sectors will lead to demand of better transportation facilities, which would include demand for construction, upgradation and maintenance of highways. Other macro-economic factors like global growth, attractiveness of India in attracting capital, oil prices and financial stability may impact the economic environment of India and the policies of the government with regards to the infrastructure and the roads and highways sector. The overall economic growth will therefore affect our results of operations.
Competition
We compete against various infrastructure and engineering and construction companies. We face significant competition for the award of projects from a large number of infrastructure and road development companies who also operate in the same regional markets as us. Further, some of our competitors are larger than us, have stronger financial resources or a more experienced management team, or have stronger engineering capabilities in executing technically complex projects. Our competition depends on various factors, such as the type of project, total contract value, potential margins, complexity, location of the project and risks relating to revenue generation. While service quality, technical ability, performance record, experience, health and safety records and the availability of skilled personnel are key factors in client decisions among competitors, price often is the deciding factor in most tender awards. Competition from other infrastructure and road development companies may adversely affect our ability to successfully bid for projects at price levels which would generate desired returns for us. We believe our main competitors are J. Kumar Infraprojects, ITD Cementation India Limited, PNC Infratech Limited, H.G. Infra Engineering Limited, KNR Constructions Limited and G R Infraprojects Limited.
SIGNIFICANT ACCOUNTING POLICIES UNDER IND AS
The notes to the Restated Consolidated Financial Information included in this Red Herring Prospectus contain a summary of our significant accounting policies. Set forth below is a summary of our most significant accounting policies adopted in preparation of the Restated Consolidated Financial Information.
Statement of Compliance
The Restated Consolidated Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 as amended time to time and relevant provisions of the Companies Act, 2013 and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III). Our Company has consistently applied the accounting policies used in the preparation for all periods presented.
Basis of Preparation
The Restated Consolidated Financial Information of our Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (India Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard) (Amendment) Rules, 2016. Our Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Act, the SEBI ICDR Regulations and the Guidance note on Reports in Company prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended from time to time. The audited financial statements as at and for the period ended March 31, 2024, March 31, 2023 and March 31, 2022 which was prepared in accordance with the Indian accounting standards notified under the section 133 of the Act (“Ind AS”) at the
relevant time which was approved by the Board of Directors at their meeting held on July 8, 2024, June 28, 2023 and June 30, 2022, respectively.
Basis of consolidation
The Restated Consolidated Financial Statements includes the financial statements of our Company and its Subsidiaries.
Revenue Recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which our Company expects to be entitled in exchange for those goods or services. Our Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer. The accounting policies for the specific revenue streams of our Company as summarized below:
Sale of products
Revenue from the sale of products is recognised at point in time when the control of the goods is transferred to the customer based on contractual terms i.e. either on dispatch of goods or on delivery of the products at the customers location.
Construction contracts
Performance obligation in case of construction contracts is satisfied over a period of time, since our Company creates an asset that the customer controls as the asset is created and our Company has an enforceable right to payment for performance completed to date if it meets the agreed specifications. Revenue from construction contracts, where the outcome can be estimated reliably and is recognized under the percentage of completion method by reference to the stage of completion of the contract activity. The stage of completion is measured by input method i.e. the proportion that costs incurred to date bear to the estimated total costs of a contract. The percentage of-completion method (an input method) is the most faithful depiction of our Companys performance because it directly measures the value of the services transferred to the customer. The total costs of contracts are estimated based on technical and other estimates. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. Contract revenue earned in excess of billing is reflected under as “contract asset” and billing in excess of contract revenue is reflected under “contract liabilities”. Revenue billings are done based on milestone completion basis or go-live of project basis. Retention money receivable from project customers does not contain any significant financing element, these are retained for satisfactory performance of contract. In case of long-term construction contracts payment is generally due upon completion of milestone as per terms of contract. In certain contracts, short-term advances are received before the performance obligation is satisfied.
Our company recognizes bonus/incentive revenue on early completion of the project upon acceptance of corresponding claim by the customer. The major component of contract estimate is “budgeted cost to complete the contract” and on assumption that contract price will not reduce vis-a-vis agreement values. While estimating the various assumptions are considered by management such as:
• Work will be executed in the manner expected so that the project is completed timely;
• Consumption norms will remain same;
• Cost escalation comprising of increase in cost to compete the project are considered as a part of budgeted cost to complete the project, etc.
Due to technical complexities involved in the budgeting process, contract estimates are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Service contract
Service contracts (including operation and maintenance contracts and job work contracts) in which our Company has the right to consideration from the customer in an amount that corresponds directly with the value to the
customer of our Companys performance completed to date, revenue is recognized when services are performed and contractually billable.
Variable consideration
The nature of our Companys contracts gives rise to several types of variable consideration, including claims, bonus, unpriced change orders, award and incentive fees, change in law, liquidated damages and penalties. Our Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount.
Our Companys claim for extra work, incentives and escalation in rates relating to execution of contracts are recognized as revenue in the year in which said claims are finally accepted by the clients. Claims under arbitration/ disputes are accounted as income based on final award. Expenses on arbitration are accounted as incurred.
Service Concession Arrangement
Our Company constructs or upgrades infrastructure (construction or upgrade services) used to provide a public service and operates and maintains that infrastructure (operation services) for a specified period of time. These arrangements may include infrastructure used in a public-to-private service concession arrangement for its entire useful life. Under Appendix C to Ind AS 115 - Service Concession Arrangements, these arrangements are accounted for based on the nature of the consideration. The intangible asset model is used to the extent that our Company receives a right (i.e. a franchisee) to charge users of the public service. The financial asset model is used to the extent our Company has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction services. When the unconditional right to receive cash covers only part of the service, the two models are combined to account separately for each component. If our Company performs more than one service (i.e., construction or upgrade services and operation services) under a single contract or arrangement, consideration received or receivable is allocated by reference to the relative fair values of the services delivered, when the amounts are separately identifiable. In the financial asset model, the amount due from the grantor meets the definition of a receivable which is measured at fair value. Based on business model assessment, our Company measures such financial assets at amortised cost. The amount initially recognised plus the cumulative interest on that amount is calculated using the effective interest method. Any asset carried under concession arrangements is derecognised on disposal or when no future economic benefits are expected from its future use or disposal or when the contractual rights to the financial asset expire.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If our Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets represent revenue recognized in excess of amount billed and include unbilled receivables. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed under the terms of the contract.
Trade receivables
A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which our Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before our Company transfers goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when our Company performs under the contract. Contract liabilities include unearned revenue which represent amounts billed to clients in excess of revenue recognized to date and advance received from customers. For contract where progress billing exceeds, the aggregate of contract costs incurred to date plus recognised profits (or minus
recognised losses, as the case may be), the surplus is shown as contract liability and termed as unearned revenue. Amount received before the related work is performed are disclosed in the balance sheet as contract liability and termed as advances received from customers.
Recognition of dividend income, interest income and insurance claim
Dividend income is recognised in profit or loss on the date on which our Companys right to receive payment is established. Interest income is recognised using the effective interest method. Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims. Income from partnership firms is recognized in statement of Profit and Loss as and when the right to receive the profit/loss is established.
Operating cycle for current and non-current classification
Our Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
• Expected to be realised or intended to be sold or consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current. A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the reporting period, or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Our Company classifies all other liabilities as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Our Company has identified twelve months as its operating cycle.
Property, Plant and Equipment and Intangible Assets and Depreciation
Property, Plant and Equipment are carried at cost of acquisition net of recoverable taxes, any trade discounts and rebates and accumulated depreciation. The cost comprises of purchase price including import duties, other nonrefundable taxes/ levies, borrowing cost and any other expenses directly attributable to bringing the asset to its current location and working condition for its intended use.
Capital Work-In Progress
Cost of assets not ready for intended use, as on balance sheet date is shown as capital work in progress. Advances given towards acquisition of property, plant and equipment outstanding at each balance sheet date are disclosed as other non-current assets.
Recognition
Subsequent costs of property, plant and equipment shall be included in assets carrying amount only if (a) it is probable that future economic benefits associated with the item will flow to the entity; and (b) the cost of the item can be measured reliably. Gains or losses arising from de-recognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Depreciation on Property, Plant and Equipment
Depreciation on Property, Plant and Equipment is provided on the WDV method, over the estimated useful life of each asset as prescribed in Schedule II to the Companies Act, 2013 and as determined by the management.
Class of the Assets |
Useful Life in Years |
Office Building |
60 years |
Furniture & Fixtures |
10 years |
Computers & DPUs |
3 years |
Electric Installation & Equipments |
10 years |
Vehicles |
8 years |
Office Equipments |
5 years |
Plant & Machinery* |
12-25 years |
Leasehold Improvements |
Over the period of lease |
Freehold land is not depreciated.
* Solar panels are capitalized with useful life estimate of 25 years.
Depreciation on additions is provided on a pro-rata basis from the month of acquisition/installation. Depreciation on sale/deduction from fixed assets is provided for up to the date of sale/adjustment, as the case may be.
Intangible Assets (Other than Goodwill)
I. Intangible asset represents computer software acquired by our Company carried at cost of acquisition net of any trade discounts and rebates less amortization. The cost comprises of purchase price including import duties, other non-refundable taxes/ levies, borrowing cost and any other expenses directly attributable to bringing the asset to its current location and working condition for its intended use.
II. The amortization period is three years which is reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset. Such changes are treated as changes in accounting estimates.
III. On transition to Ind AS, there was no intangible asset standing in the books of our Company.
Financial Instrument
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial asset and liabilities are recognised when our Company becomes a part to the contractual provisions of the instrument.
(A) Financial Assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assets contractual cash flow characteristics and our Companys business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which our Company has applied the practical expedient, our Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which our Company has applied the practical expedient are measured at the transaction price determined under Ind AS 115. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
Our Companys business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held
within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that our Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through profit or loss
• Equity investments in Subsidiaries, Associates and Joint Venture at Cost
Financial assets at amortized cost (debt instruments)
A financial asset is measured at amortised cost if it meets both of the following conditions are met (a) the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. Our Companys financial assets at amortised cost includes trade receivables, security and other deposits, other receivable and loan to the subsidiaries included under other financial assets.
Financial assets at fair value through Other comprehensive income (FVOCI) (equity instrument)
Upon initial recognition, our Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument- by- instrument basis. Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the statement of profit and loss when the right of payment has been established, except when our Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Financial assets at Fair Value through Profit and Loss (FVTPL)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets and Mutual Funds. On initial recognition, our Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
Equity investments in Subsidiaries, Associates and Joint Venture at Cost
Our Company accounts for its investment in subsidiaries, joint ventures and associates and other equity investments in subsidiary companies at cost in accordance with Ind AS 27 - ‘Separate Financial Statements. Interest free loans by our Company to its subsidiaries are in the nature of perpetual debt repayable as per terms of agreement. The borrower has classified the said loans as equity under Ind AS-32 financial instruments Presentations”. Accordingly our Company has classified the investment as Equity instrument and has accounted at cost as per Ind-AS-27 ‘Separate Financial Statements.
Derecognition
A financial asset is derecognized only when:
• our Company has transferred the rights to receive cash flows from the financial asset or retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
• where the entity has transferred an asset, our Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if our Company has not retained control of the financial asset. Where our Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
Impairment of financial Assets
At each reporting date, our Company assesses whether financial assets carried at amortised cost are credit- impaired. A financial asset is ‘credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
| • significant financial difficulty of the borrower or issuer; • a breach of contract such as a default or being past due for 90 days or more; • the restructuring of a loan or advance by our Company on terms that our Company would not consider otherwise; • it is probable that the borrower will enter bankruptcy or other financial reorganization; or • the disappearance of an active market for a security because of financial difficulties. |
Ind AS 109 requires expected credit losses to be measured through a loss allowance. Our Company applies the expected credit loss (ECL) model for measurement and recognition of impairment losses. Our Company follow the simplified approach for recognition of impairment allowance on all trade receivable and/or contract assets. The application of the simplified approach does not require our Company to track changes in credit risk. Rather, it recognizes impairment allowance based on lifetime. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets and recognized in the standalone statement of profit and losses under the head of “Other Expenses”.
(B) Financial liabilities
Initial recognition and measurement
Financial liabilities are initially measured at its fair value plus or minus, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue/origination of the financial liability.
Subsequent measurement
Financial liabilities are classified as measured at amortized cost. Financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on derecognition is also recognized in statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
(C) Financial guarantee contracts
Financial guarantee contracts issued by our Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115. Investment made by way of Financial Guarantee contracts in subsidiary, associate and joint venture companies are initially recognised at fair value of the Guarantee.
(D) Reclassification of financial Instruments
Our Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets, such as equity instruments designated at FVTPL or FVOCI and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.
(E) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, our Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
(F) Fair values measurement
Our Company measures financial instrument, such as derivative, investment and mutual fund at fair values at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by our Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Our Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, our Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Our Company has an established control framework with respect of fair values. This includes a financial reporting team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer.
The financial reporting team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as pricing services, is used to measure fair values, then the financial reporting team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. For the purpose of fair value disclosures, our Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Income Taxes
Income tax expense for the period is the tax payable on the current periods taxable income based on the applicable income tax rate and changes in deferred tax assets and liabilities attributable to temporary differences. The current income tax charge is calculated in accordance with the provisions of the Income Tax Act 1961. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences and brought forward losses only if it is probable that future taxable profit will be available to realise the temporary differences. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Leases
At inception of a contract, our Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
Our Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. Lease term which is a non-cancellable period together with periods covered by an option to extend the lease if our Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if our Company is reasonably certain not to exercise that option. Our Company uses judgement in assessing the lease term (including anticipated renewals/ termination options). Our Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right of use of Assets
Our Company recognises a right-of-use asset and a lease liability at the lease commencement date (i.e., the date the underlying asset is available for use). The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to our Company by the end of the lease term or the cost of the right-of-use asset reflects that our Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted for certain re measurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease or, if that rate cannot be readily determined. After the commencement date, lease liability is increased to reflect the accretion of interest and reduced for the lease payment made. Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that our Company is reasonably certain to exercise, lease payments in an optional renewal period if our Company is reasonably certain to exercise an extension option. The lease liability is measured at amortised cost using the effective interest method. Modifications to a lease agreement beyond the original terms and conditions are generally accounted for as a re-measurement of the lease liability with a corresponding adjustment to the ROU asset. Any gain or loss on modification is recognized in the Statement of Profit & Loss. However, the modifications that increase the scope of the lease by adding the right to use one or more underlying assets at a price commensurate with the stand-alone selling price are accounted for as a separate new lease. In case of lease modifications, discounting rates used for measurement of lease liability and ROU assets is also suitably adjusted.
Short-term leases and leases of low-value assets
Our Company has elected not to recognise right of use assets and lease liabilities for short term leases of all the assets that have a lease term of twelve months or less with no purchase option and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straightline basis over the lease term.
Company as a lessor
Leases in which our Company does not transfer substantially all the risks and rewards incidental to ownership of an asset is classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from our Company to the lessee.
Borrowing Cost
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. All other borrowing costs are expensed in the period in which they occur.
Inventories
The stock of construction materials, stores, spares and fuel is valued at cost or net realisable value (“NRV”), whichever is lower. Cost is determined on FIFO basis and includes all applicable cost of bringing the goods to their present location and condition. NRV is estimated selling price in ordinary course of business less the estimated cost necessary to make the sale.
Employee Benefits
(a) Short-Term Employees Benefits
All employee benefits payable/available within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.
(b) Post Employment Benefits
(i) Defined Contribution Plan - Provident Fund:
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contribution and has no obligation to pay any further amounts. Our Company makes specified monthly contributions towards employee provident fund to the Government administrated provident fund scheme which is defined contribution plan. Our Companys contribution is recognized as an expense in the Statement of Profit and Loss during the period in which employee renders the related service.
(ii) Defined Benefits Plan - Gratuity:
The liability or asset recognized in the Standalone Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Standalone Statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the Standalone Balance Sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in Standalone Statement of profit and loss as past service cost.
Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow or resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. There are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities
Our Company recognizes a provision when there is a present obligation as a result of a past event and it is more likely than not that there will be an outflow of resources embodying economic benefits to settle such obligation and the amount of such obligation can be reliably estimated. Provisions are not discounted to its present value, and are determined based on the managements best estimate of the amount of obligation required at the year end. These are reviewed at each balance sheet date and adjusted to reflect current management estimates. Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of our Company. When there is a possible obligation or a present obligation where the likelihood of an outflow of resources is remote, no disclosure or provision is made.
Cash and Cash Equivalents
Cash and cash equivalents for the purposes of Financial Statement comprise of cash at bank and cash in hand including fixed deposits. Fixed deposits other short term investment with an original maturity of 12 months or less has been shown as other Bank balances under current financial assets in the financial statements. Fixed deposit with an original maturity of more than 12 months has been shown as non current financial assets. For the purpose
of the statement of cash flows, cash and cash equivalents consist of cash and deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of our Companys cash management.
Interest in Joint Arrangements
As per Ind AS 111 - “Joint Arrangements / investments in joint arrangements” are classified either as joint operations or joint ventures. Our Company has joint operations. Our Company recognizes its direct right to the assets, liabilities, revenues & expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the Restated Standalone financial statement in appropriate headings. Where our Company participates in a joint operation, where it does not have joint control and also does not have the right to the assets and obligation of the liabilities relating to that joint operation, the interest in the same joint operations has been accounted for in accordance with the applicability of IND AS to that interest.
PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE Income
Our total income is divided into revenue from operations and other income. The following table shows our revenue from operations and other income.
(t in million, except percentages)
Particulars |
Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
A. Revenue from operations |
30,293.52 | 20,681.68 | 11,337.88 |
A. 1 Revenue from construction contracts |
28,425.55 | 20,154.89 | 11,173.45 |
- Construction contract |
28,425.55 | 20,154.89 | 11,173.45 |
Percentage of revenue from operations (% of A) |
93.83% | 97.45% | 98.55% |
A.2 Other operating revenue |
1,867.97 | 526.79 | 164.43 |
- Revenue from goods and materials |
1,274.47 | 526.79 | 164.43 |
- Finance income on financial assets carried on amortised cost |
593.49 | - | - |
Percentage of revenue from operations (A.2 as % of A) |
6.17% | 2.55% | 1.45% |
B. Other income |
368.36 | 188.74 | 127.15 |
Total income (A+B) |
30,661.88 | 20,870.41 | 11,465.04 |
Revenue from Operations
Our revenue from operations is primarily generated from (i) construction contracts, and (ii) sale of goods and materials.
Revenue from construction contracts
Our revenue from construction contracts primarily consists of revenue generated from execution of EPC and HAM projects at various locations across India. Our revenue from construction contracts accounted for 93.83%, 97.45%, and 98.55% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Revenue from goods and materials
Our revenue from goods and materials primarily consists of sale of materials used in the construction, such as bitumen, cement, iron and steel, to our sub-contractors. Our revenue from sale of services accounted for 4.21%, 2.55% and 1.45% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Finance income on financial assets carried on amortised cost
Our finance income on financial assets which were carried on amortised cost account for 1.96% of our revenue from operations for the Fiscal 2024.
Other Income
Other income includes (i) interest income (including bank deposits, gold bonds and income tax refund), (ii) profit
on sale of mutual funds, (iii) profit on sale of property, plant and equipment, (iv) rebate and discounts, (v) income from other investments, (vi) liabilities/ amounts written back, (vii) rental income, and (viii) miscellaneous income. Our other income accounted for 1.22%, 0.91% and 1.12% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Expenses
Our expenses comprise of (i) cost of materials consumed, (ii) cost of construction, (iii) employee benefit expense,
(iv) finance cost, (v) depreciation and amortisation expenses and (vi) other expenses.
The following table sets forth our expenditure as a percentage of our revenue from operations for the periods indicated.
C in million, except percentages)
Particulars |
Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
Cost of materials consumed |
10,530.54 | 6,870.93 | 4,114.50 |
Percentage of revenue from operations |
34.76% | 33.22% | 36.29% |
Cost of construction |
12,978.43 | 9,873.78 | 4,598.65 |
Percentage of revenue from operations |
42.84% | 47.74% | 40.56% |
Employee benefit expenses |
619.77 | 296.27 | 252.86 |
Percentage of revenue from operations |
2.05% | 1.43% | 2.23% |
Finance cost |
941.54 | 517.11 | 105.47 |
Percentage of revenue from operations |
3.11% | 2.50% | 0.93% |
Depreciation and amortization expenses |
549.90 | 376.00 | 186.12 |
Percentage of revenue from operations |
1.82% | 1.82% | 1.64% |
Other expenses |
988.17 | 684.40 | 512.72 |
Percentage of revenue from operations |
3.26% | 3.31% | 4.52% |
Total expenses |
26,608.34 | 18,618.50 | 9,770.32 |
Cost of materials consumed
Cost of material consumed primarily consists of expenses incurred towards purchase of raw materials, such as bitumen, steel, aggregate and cement, for our EPC and HAM projects. Cost of materials consumed accounted for 34.76%, 33.22% and 36.29% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively and and indicates the difference between the opening and closing inventory, as adjusted for raw materials purchased during the period/ year.
Cost of construction
Cost of construction primarily consists of expenses incurred at our project sites towards rent of equipment, civil construction, labour cost, sub-contracting cost, royalties to the government authority for usage of soil and freight charges. Cost of construction accounted for 42.84%, 47.74% and 40.56% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Employee benefit expenses
Employee benefits expenses primarily comprises salaries, wages and allowances, contribution to provident fund, employee insurance and staff welfare expenses. Employee benefit expenses accounted for 2.05%, 1.43% and 2.23% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Finance cost
Finance cost primarily includes interest paid to banks on term loans, working capital facilities and equipment loan, interest on lease liabilities, interest on mobilisation advance and bank guarantee charges. Finance cost accounted for 3.11%, 2.50% and 0.93% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Depreciation and amortization expenses
equipment, (b) depreciation on right of use of assets and (c) amortization of intangible assets. Depreciation on property, plant and equipment is calculated using the written-down value method, over the estimated useful life of each asset as prescribed under Schedule II to the Companies Act, 2013, and as determined by the management. Depreciation and amortization expenses accounted for 1.82%, 1.82% and 1.64% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
Other expenses
Other expenses primarily comprise of payment of fees to auditors, power and electricity expenses, sales and business promotion expenses, rent, travelling expenses, telephone expenses, repairs and maintenance expenses, expenses incurred toward corporate social responsibility activities, legal and professional fees, taxes, provision for credit impaired receivables, sitting fees to directors and other miscellaneous expenses. Other expenses accounted for 3.26%, 3.31% and 4.52% of our revenue from operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.
RESULTS OF OPERATIONS
Fiscal 2024 compared with Fiscal 2023
Total income
Our total income increased by Rs. 9,791.47 million or by 46.92% from Rs. 20,870.41 million in the Fiscal 2023 to Rs. 30,661.88 million in the Fiscal 2024. This was primarily due to increase in our revenue from operations.
Revenue from operations
Our revenue from operations increased significantly by Rs. 9,611.84 million or by 46.48% from Rs. 20,681.68 million in the Fiscal 2023 to Rs. 30,293.52 million in the Fiscal 2024. This increase was primarily driven by Rs. 8,270.66 million increase in revenue from construction contracts, and Rs. 747.69 million increase in revenue from sale of goods and materials and Rs. 593.49 million increase in Finance income on financial assets carried on amortised cost.
Revenue from construction contracts
Our revenue from construction contracts increased by Rs. 8,270.66 million or by 41.04% from Rs. 20,154.89 million in the Fiscal 2023 to Rs. 28,425.55 million in the Fiscal 2024. This increase in revenue from construction contracts was primarily driven by EPC projects, namely Delhi-Saharanpur Project, Delhi-Amritsar-Katra Project, Ludhiana- Rupnagar Project, Ramban-Banihal PKG II Project, Ramban-Banihal PKG III Project, Danapur Bihta Koilwar Bihar Project and HAM projects, namely, Malout - Abohar Project, Bathinda-Dabwali Project, Jalbehra - Shahbad Project.
Finance income on financial assets carried on amortised cost
Our finance income on financial assets which were carried on amortised cost amounted to 593.49 million which account for 1.96% of our revenue from operations for the year ended March 31, 2024.
Revenue from goods and materials
Our revenue from goods and materials increased significantly by Rs. 747.69 million or by 141.93% from Rs. 526.79 million in the Fiscal 2023 to Rs. 1,274.47 million in the Fiscal 2024. This was primarily due to increase in sale of raw materials, including bitumen, cement, iron, steel, etc. which are used in the construction, to our subcontractors for the projects, namely Delhi-Saharanpur Project, Delhi-Amritsar-Katra Project, Ludhiana-Rupnagar Project, Ramban-Banihal PKG II Project, Ramban-Banihal PKG III Project and Danapur Bihta Koilwar Bihar Project and HAM projects, namely, Malout - Abohar Project, Bathinda-Dabwali Project, Jalbehra-Shahbad Project.
Other income
Our other income increased by Rs. 179.62 million or by 95.17% from Rs. 188.74 million in the Fiscal 2023 to Rs. 368.36
million in the Fiscal 2024. This increase was primarily driven by returns from interest on fixed deposits, interest on mobilisation advance to sub-contractors, profit on sale of equipment on buy-back basis, discounts provided by OEM on purchase of equipment, liabilities/amount written back, gain from investments made in mutual funds and miscellaneous income.
Expenses
Total expenses increased significantly by Rs. 7,989.85 million or by 42.91% from Rs. 18,618.50 million in the Fiscal 2023 to Rs. 26,608.24 million in the Fiscal 2024. This was primarily driven by Rs. 3,104.65 million or 31.44% increase in cost of construction, Rs. 3,659.61 million or 53.26% increase in cost of materials consumed, Rs. 424.42 million or 82.08% increase in finance cost and Rs. 323.50 million or 109.19% increase in employee benefits expenses.
Cost of materials consumed
Cost of material consumed increased by Rs. 3,659.61 million or by 53.26% from Rs. 6,870.93 million in the Fiscal 2023 to Rs. 10,530.54 million in the Fiscal 2024 due to purchase of raw materials, such as bitumen, steel, aggregate and cement, for the purpose of construction of our ongoing EPC projects namely, Delhi-Amritsar-Katra Project, Ludhiana-Rupnagar Project, Delhi-Saharanpur Project, Kiratpur-Nerchowk Project, Ramban-Banihal PKG II Project, Makhu-Arifke, Ramban-Banihal PKG III Project, Danapur Bihta Koilwar Bihar Project and Gonde- Vadape Project and HAM project, namely, Malout-Abohar Project Bathinda-Dabwali Project, and Jalbehra- Shahbad Project.
As a percentage of our revenue from operations, our cost of materials consumed accounted for 34.76% in the Fiscal 2024 compared to 33.22% in the Fiscal 2023.
Cost of construction
Cost of construction increased significantly by Rs. 3,104.65 million or by 31.44% from Rs. 9,873.78 million in the Fiscal 2023 to Rs. 12,978.43 million in the Fiscal 2024. This increase was attributable to increase in the construction and structural work for our ongoing EPC projects, namely, Delhi-Saharanpur Project, Delhi-Amritsar-Katra Project, Ludhiana-Rupnagar Project, Ramban-Banihal PKG II Project, Ramban-Banihal PKG III Project and Danapur Bihta Koilwar Bihar Project and HAM projects, namely Malout-Abohar Project, Bathinda-Dabwali Project and Jalbehra- Shahbad Project.
As a result of increase in number of ongoing project in the Fiscal 2024 (i) hire charges (which includes equipment hire charges, vehicle hire charges and shuttering charges) increased by Rs. 59.00 million or by 20.03% from the Fiscal 2023 to the Fiscal 2024, (ii) consumption of fuels/ lubricants and consumable stores at project sites increased by Rs. 80.11 million or by 4.87% from the Fiscal 2023 to the Fiscal 2024, on account of increase in consumption of fuel by the machinery/ equipment at project sites, (iii) contracting cost at project sites, which includes contract labour, sub-contracting cost, increased by Rs. 2,590.09 million or by 35.46% from the Fiscal 2023 to the Fiscal 2024, (iv) wages and labour cost at project sites increased by Rs. 167.98 million or by 44.64% from the Fiscal 2023 to the Fiscal 2024, and (v) royalty charges, i.e., charges paid to the authority for usage of soil for the purpose of construction, increased significantly by Rs. 299.73 million or by 454.99% from the Fiscal 2023 to the Fiscal 2024. This was partially offset by Rs. 92.26 million on account of reduction in freight & forwarding charges or by 49.14% from the Fiscal 2023 to the Fiscal 2024. As a percentage of our revenue from operations, our cost of construction accounted for 42.84% in the Fiscal 2024 compared to 47.74% in the Fiscal 2023. Employee benefit expenses
Employee benefit expenses increased by Rs. 323.50 million or by 109.19% from Rs. 296.27 million in the Fiscal 2023 to Rs. 619.77 million in the Fiscal 2024. This was primarily on account of (i) increase in number of employees appointed for new corporate office in New Delhi for various departments such as contracts, tendering, accounts and human resources and (ii) appointment of new employees at ongoing project sites and new projects. As a percentage of our revenue from operations, employee benefit expenses accounted for 2.05% in the Fiscal 2024 compared to 1.43% in the Fiscal 2023.
Finance cost
Finance cost increased significantly by Rs. 424.42 million or by 82.08% from Rs. 517.11 million in the Fiscal 2023 to Rs. 941.54 million in the Fiscal 2024. This increase was primarily on account of (i) interest paid on borrowings, i.e., term loans from Federal Bank Limited, HDFC Bank Limited and IDFC First Bank , working capital facilities
from State Bank of India, IndusInd Bank, South Indian Bank Limited, Bank of Baroda, RBL Bank Limited ,HDFC Bank , Axis Bank , Federal Bank , Punjab & Sind bank and Union Bank of India and equipment loan primarily from Axis Bank Limited, HDFC Bank Limited, Tata Motor Finance, HDB Financial Services, Federal Bank, Mahindra finance and Kotak Bank (ii) interest paid on new lease arrangements for the establishment of camp sites and corporate office in New Delhi, (iii) interest paid on mobilisation advance taken from NHAI and financial institutions for execution of certain projects, including, Delhi-Amritsar-Katra Project, Ramban-Banihal PKG II Project and Ramban-Banihal PKG III Project , (iv) increase in bank guarantee charges due to increase in the number of new projects, and (v) increase in bank processing changes for various facilities. As a percentage of our revenue from operations, finance cost accounted for 3.11% in the Fiscal 2024 compared to 2.50% in the Fiscal 2023.
Depreciation and amortization expenses
Our depreciation and amortisation expenses increased significantly by t 173.90 million or by 46.25% from t 376.00 million in the Fiscal 2023 to t 549.90 million in the Fiscal 2024. This increase was primarily due to depreciation on account of purchase of new equipment for new projects and depreciation charge on the value of new lease arrangements. As a percentage of our revenue from operations, depreciation and amortization expenses accounted for 1.82% in the Fiscal 2024 compared to 1.82% in the Fiscal 2023.
Other expenses
Other expenses increased by t 303.77 million or by 44.38% from t 684.40 million in the Fiscal 2023 to t 988.17 million in the Fiscal 2024. This increase was primarily on account of (i) charges incurred by our Company in relation to set-up of new corporate office in New Delhi such as lease rent, power and electricity charges, (ii) insurance charges for the new equipment, (iii) increase in travelling and telephone expenses, and (iv) increase in bidding related charges on account of increase in number of bids submitted by us. As a percentage of our revenue from operations, other expenses accounted for 3.26% in the Fiscal 2024 compared to 3.31% in the Fiscal 2023.
Profit before tax
In light of the above discussions, our profit before tax increased significantly by t 1,801.62 million from t 2,251.92 million in the Fiscal 2023 to t 4,053.54 million in the Fiscal 2024.
Tax expenses
Our tax expenses increased by t 431.27 million from t 579.20 million in the Fiscal 2023 to t 1,010.47 million in the Fiscal 2024.
Profit for the year
For the various reasons discussed above, and following adjustments for tax expense, we recorded a significant increase in our profit for the year by t 1,672.72 million in the Fiscal 2023 to t 3,043.07 million in the Fiscal 2024.
Fiscal 2023 compared with Fiscal 2022
Total income
Our total income increased by t 9,405.37 million or by 82.04% from t 11,465.04 million in the Fiscal 2022 to t 20,870.41 million in the Fiscal 2023. This was primarily due to increase in our revenue from operations.
Revenue from operations
Our revenue from operations increased significantly by t 9,343.79 million or by 82.41% from t 11,337.88 million in the Fiscal 2022 to t 20,681.68 million in the Fiscal 2023. This increase was primarily driven by t 8,981.44 million increase in revenue from construction contracts and t 362.36 million increase in revenue from sale of goods and materials.
Revenue from construction contracts
Our revenue from construction contracts increased by t 8,981.44 million or by 80.38% from t 11,173.45 million
in the Fiscal 2022 to Rs. 20,154.89 million in the Fiscal 2023. This increase in revenue from construction contracts was primarily on account of revenue from four new EPC projects which commenced in Fiscal 2023, namely, Delhi-Amritsar-Katra Project, Delhi-Saharanpur Project, Ramban-Banihal PKG II Project and Ludhiana- Rupnagar Project.
Revenue from goods and materials
Our revenue from goods and materials increased significantly by Rs. 362.36 million or by 220.37% from Rs. 164.43 million in the Fiscal 2022 to Rs. 526.79 million in the Fiscal 2023. This was primarily due to increase in sale of raw materials, including bitumen, cement, iron, steel, etc. which are used in the construction, to our sub-contractors for the projects, namely, Delhi-Amritsar-Katra Project, Delhi-Saharanpur Project, Ramban-Banihal PKG II Project, Ramban-Banihal PKG III Project and Ludhiana-Rupnagar Project.
Other income
Our other income increased by Rs. 61.58 million or by 48.43% from Rs. 127.15 million in the Fiscal 2022 to Rs. 188.74 million in the Fiscal 2023. This increase was primarily driven by returns from interest on fixed deposits, interest on mobilisation advance to sub-contractors, profit on sale of equipment on buy-back basis, discounts provided by OEM on purchase of equipment, liabilities/amount written back, gain from investments made in mutual funds and miscellaneous income.
Expenses
Total expenses increased significantly by Rs. 8,848.18 million or by 90.56% from Rs. 9,770.32 million in the Fiscal 2022 to Rs. 18,618.50 million in the Fiscal 2023. This was primarily driven by Rs. 5,275.13 million or 114.71% increase in cost of construction, and Rs. 411.65 million or 390.31% increase in finance cost.
Cost of materials consumed
Cost of material consumed increased by Rs. 2,756.43 million or by 66.99% from Rs. 4,114.50 million in the Fiscal 2022 to Rs. 6,870.93 million in the Fiscal 2023 due to purchase of raw materials, such as bitumen, steel, aggregate and cement, for the purpose of construction of our ongoing EPC projects namely, Delhi-Amritsar-Katra Project, Ludhiana-Rupnagar Project, Delhi-Saharanpur Project, Kiratpur-Nerchowk Project, Ramban-Banihal PKG II Project, Makhu-Arifke Project and Gonde-Vadape Project and HAM project, namely, Malout-Abohar Project.
As a percentage of our revenue from operations, our cost of materials consumed accounted for 33.22% in the Fiscal 2023 compared to 36.29% in the Fiscal 2022.
Cost of construction
Cost of construction increased significantly by Rs. 5,275.13 million or by 114.71% from Rs. 4,598.65 million in the Fiscal 2022 to Rs. 9,873.78 million in the Fiscal 2023. This increase was attributable to increase in the number of ongoing EPC projects, namely, Delhi-Amritsar-Katra Project, Ludhiana-Rupnagar Project, Delhi-Saharanpur Project, Kiratpur-Nerchowk Project, Ramban-Banihal PKG II Project, Makhu-Arifke Project and Gonde-Vadape Project and one HAM project, namely Malout-Abohar Project, being undertaken by us and increase in subcontracting on account of structural work such as related to bridges, flyovers, elevated roads and rail over bridges outsourced to sub-contractors including M/s R.K. Infra in Fiscal 2023 for the projects, namely, Gonde-Vadape Project, Ramban-Banihal PKG II Project, Ramban-Banihal PKG III Project and Makhu-Arifke Project.
As a result of increase in number of ongoing project in the Fiscal 2023 (i) freight and forwarding charges for the projects increased by Rs. 85.16 million or by 83.01% from the Fiscal 2022 to the Fiscal 2023, (ii) hire charges (which includes equipment hire charges, vehicle hire charges and shuttering charges) increased by Rs. 117.76 million or by 66.59% from the Fiscal 2022 to the Fiscal 2023, (iii) consumption of fuels/ lubricants and consumable stores at project sites increased by Rs. 792.92 million or by 92.99% from the Fiscal 2022 to the Fiscal 2023, on account of increase in consumption of fuel by the machinery/ equipment at project sites, (iv) contracting cost at project sites, which includes contract labour, sub-contracting cost, increased by Rs. 4,092.78 million or by 127.47% from the Fiscal 2022 to the Fiscal 2023, (v) wages and labour cost at project sites increased by Rs. 131.93 million or by 53.99% from the Fiscal 2022 to the Fiscal 2023, and (vi) royalty charges, i.e., charges paid to the authority for usage of soil for the purpose of construction, increased significantly by Rs. 54.58 million or by 483.06%
from the Fiscal 2022 to the Fiscal 2023. As a percentage of our revenue from operations, our cost of construction accounted for 47.74% in the Fiscal 2023 compared to 40.56% in the Fiscal 2022.
Employee benefit expenses
Employee benefit expenses increased by t 43.41 million or by 17.17% from t 252.86 million in the Fiscal 2022 to t 296.27 million in the Fiscal 2023. This was primarily on account of (i) increase in number of employees appointed for new corporate office in New Delhi for various departments such as contracts, tendering, accounts and human resources and (ii) appointment of new employees at ongoing project sites. As a percentage of our revenue from operations, employee benefit expenses accounted for 1.43% in the Fiscal 2023 compared to 2.23% in the Fiscal 2022.
Finance cost
Finance cost increased significantly by t 411.65 million or by 390.31% from t 105.47 million in the Fiscal 2022 to t 517.11 million in the Fiscal 2023. This increase was primarily on account of (i) interest paid on borrowings, i.e., term loans from Federal Bank Limited and HDFC Bank Limited, working capital facilities from Kotak Mahindra Bank Limited, South Indian Bank Limited, Bank of Baroda, RBL Bank Limited and IDFC First Bank Limited and equipment loan primarily from Axis Bank Limited and HDFC Bank Limited, (ii) interest paid on new lease arrangements for the establishment of camp sites and corporate office in New Delhi, (iii) interest paid on mobilisation advance taken from NHAI for execution of certain projects, including, Delhi-Amritsar-Katra Project, Ramban-Banihal PKG II Project and Ramban-Banihal PKG III Project , (iv) increase in bank guarantee charges due to increase in the number of new projects, and (v) increase in bank processing changes for various facilities. As a percentage of our revenue from operations, finance cost accounted for 2.50% in the Fiscal 2023 compared to 0.93% in the Fiscal 2022.
Depreciation and amortization expenses
Our depreciation and amortisation expenses increased significantly by t 189.88 million or by 102.02% from t 186.12 million in the Fiscal 2022 to t 376.00 million in the Fiscal 2023. This increase was primarily due to depreciation on account of purchase of new equipment for new projects and depreciation charge on the value of new lease arrangements. As a percentage of our revenue from operations, depreciation and amortization expenses accounted for 1.82% in the Fiscal 2023 compared to 1.64% in the Fiscal 2022.
Other expenses
Other expenses increased by t 171.68 million or by 33.48% from t 512.72 million in the Fiscal 2022 to t 684.40 million in the Fiscal 2023. This increase was primarily on account of (i) charges incurred by our Company in relation to set-up of new corporate office in New Delhi such as lease rent, power and electricity charges, (ii) insurance charges for the new equipment, (iii) increase in travelling and telephone expenses, and (iv) increase in bidding related charges on account of increase in number of bids submitted by us. As a percentage of our revenue from operations, other expenses accounted for 3.31% in the Fiscal 2023 compared to 4.52% in the Fiscal 2022.
Profit before tax
In light of the above discussions, our profit before tax increased significantly by t 557.20 million from t 1,694.72 million in the Fiscal 2022 to t 2,251.92 million in the Fiscal 2023.
Tax expenses
Our tax expenses increased by t 143.09 million from t 436.11 million in the Fiscal 2022 to t 579.20 million in the Fiscal 2023.
Profit for the year
For the various reasons discussed above, and following adjustments for tax expense, we recorded a significant increase in our profit for the year by t 414.11 million from t 1,258.61 million in the Fiscal 2022 to t 1,672.72 million in the Fiscal 2023.
CASH FLOWS
The following table sets forth certain information relating to our cash flows for Fiscal 2024, Fiscal 2023 and Fiscal 2022.
N in million)
Particulars |
Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
Net cash flow generated from/ (used in) operating activities |
(2,108.26) | (727.13) | (1,345.89) |
Net cash flow generated from/ (used in) investing activities |
(381.58) | (1,337.95) | (1,635.86) |
Net cash flow generated from/ (used in) financing activities |
2,749.22 | 3,259.72 | 3,096.12 |
Net increase/ (decrease) in cash and bank balances |
259.39 | 1,194.64 | 114.37 |
Cash and bank balances at the beginning of the year/ period |
2,169.36 | 974.71 | 860.34 |
Cash and bank balances at the end of the year/ |
2,428.74 | 2,169.36 | 974.71 |
Net cash generated from/used in operating activities Fiscal 2024
Net cash used in operating activities in Fiscal 2024 was Rs. 2,108.26 million and our operating profit before working capital changes was Rs. 5,228.43 million. The difference was primarily attributable to increase in non-current provisions of Rs. 12.84 million, increase in other current financial liabilities of Rs. 128.12 million and increase in other current liabilities of Rs. 920.04 million. This was partially offset by increase in inventories of Rs. 113.36 million, increase in trade receivables of Rs. 1134.55 million, increase in other current financial assets of Rs. 4,076.94 million, increase in other current assets of Rs. 1,830.21 million and decrease in current provisions of Rs. 5.46 million and decrease in trade payables of Rs. 151.67 million We paid income tax of Rs. 1,085.51 million.
Fiscal 2023
Net cash used in operating activities in Fiscal 2023 was Rs. 727.13 million and our operating profit before working capital changes was Rs. 2,997.09 million. The difference was primarily attributable to increase in trade payables of Rs. 3,020.75 million, increase in non-current provisions of Rs. 8.46 million, increase in other current financial liabilities of Rs. 115.25 million and increase in other current liabilities of Rs. 65.63 million. This was partially offset by increase in inventories of Rs. 683.28 million, increase in trade receivables of Rs. 2,203.98 million, increase in other current financial assets of Rs. 1,504.85 million, increase in other current assets of Rs. 1,898.97 million and decrease in current provisions of Rs. 5.97 million. We paid income tax of Rs. 637.26 million.
Fiscal 2022
Net cash used in operating activities in Fiscal 2022 was Rs. 1,345.89 million and our operating profit before working capital changes was Rs. 1,879.68 million. The difference was primarily attributable to increase in trade payables of Rs. 42.36 million, increase in current provisions of Rs. 5.52 million, increase in other current financial liabilities of Rs. 12.45 million and increase in other current liabilities of Rs. 67.52 million. This was partially offset by decrease in non-current provisions of Rs. 2.26 million, increase in inventories of Rs. 102.6 million, increase in trade receivables of Rs. 597.86 million, increase in other current financial assets of Rs. 896.05 million and increase in other current assets of Rs. 1,280.24 million. We paid income tax of Rs. 474.43 million.
Net cash generated used in investing activities
Fiscal 2024
Net cash used in investing activities in Fiscal 2024 was Rs. 381.58 million. This reflected (i) payment of Rs. 1,661.55 million towards purchase of fixed assets, (ii) payment of Rs. 18.76 million towards purchase of investments and (iii) capital advances given for purchase of assets of Rs. 21.87 million. This was partially offset by (i) loans given of Rs. 0.06 million, (iii) sale proceeds of fixed assets of Rs. 604.77 million, (iv) sale proceeds of investments of Rs. 314.73 million, (v) interest received of Rs. 215.20 million on fixed deposits and mobilization advance given to subcontractors, and (vi) decrease of Rs. 185.85 million in fixed deposits in relation to short term borrowings.
Fiscal 2023
Net cash used in investing activities in Fiscal 2023 was Rs. 1,337.95 million. This reflected (i) payment of Rs. 1,707.84 million towards purchase of fixed assets, (ii) payment of Rs. 0.47 million towards purchase of investments, and (iii) increase of Rs. 491.38 million in fixed deposits in relation to short term borrowings. This was partially offset by (i) loans given of Rs. 0.16 million, (ii) capital advances given for purchase of assets of Rs. 104.16 million, (iii) sale proceeds of fixed assets of Rs. 143.7 million, (iv) sale proceeds of investments of Rs. 503.58 million, and (v) interest received of Rs. 110.15 million on fixed deposits and mobilization advance given to sub-contractors.
Fiscal 2022
Net cash used in investing activities in Fiscal 2022 was Rs. 1,635.86 million. This reflected (i) payment of Rs. 846.94 million towards purchase of fixed assets, (ii) payment of Rs. 1,181.14 million towards purchase of investments, (iii) increase of Rs. 286.95 million towards increase in fixed deposits in relation to short term borrowings, and (iv) increase in non-current financial assets of Rs. 106.53 million. This was partially offset by (i) loans given of Rs. 0.18 million, (ii) capital advances given for purchase of assets of Rs. 22.73 million, (iii) sale proceeds of fixed assets of Rs. 50.26 million, (iv) sale proceeds of investments of Rs. 621.81 million, and (v) interest received of Rs. 90.72 million on fixed deposits and mobilization advance given to sub-contractors.
Net cash generated from/ used in financing activities
Fiscal 2024
Net cash generated from financing activities in Fiscal 2024 was Rs. 2,749.22 million. This reflected towards (i) repayments of lease liability of Rs. 3.89 million, (ii) dividend paid of Rs. 117.85 million, (iii) interest paid of Rs. 941.54 million, (iv) net decrease in short term borrowings of Rs. 1,284.28 million, and (v) expenses on issue of Equity Share of Rs. 3.75 million. This was partially offset by, (i) net proceeds from non-current borrowings of Rs. 4,894.51 million, and (ii) proceeds from issue of Equity Share to NCI of Rs. 206.02 million.
Fiscal 2023
Net cash generated from financing activities in Fiscal 2023 was Rs. 3,259.72 million. This reflected towards (i) repayments of lease liability of Rs. 2.12 million, (ii) dividend paid of Rs. 58.93 million, and (iii) interest paid of Rs. 517.11 million. This was partially offset by (i) net increase in short term borrowings of Rs. 1,601.44 million, and (ii) net proceeds from non-current borrowings of Rs. 2,236.45 million.
Fiscal 2022
Net cash generated from financing activities in Fiscal 2022 was Rs. 3,096.12 million. This reflected towards (i) net increase in short term borrowings of Rs. 340.25 million, and (ii) net proceeds from non-current borrowings of Rs. 2,866.1 million. This was partially offset by (i) interest paid of Rs. 105.47 million, and (ii) expense on issue of equity shares of Rs. 4.77 million.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity include cash generated from operations, from borrowings, both short-term and long-term, including cash credit, term loans and working capital facilities. We evaluate our funding requirements regularly in light of cash flows from our operating activities, the requirements of our business and operations and market conditions. Our main uses of funds from operating activities have been to pay for our working capital requirements and capital expenditure. To the extent we do not generate sufficient cash flow from operating activities, we may rely on debt or equity financing activities, subject to market conditions.
Our Company had closing cash and cash equivalents of Rs. 2,428.74 million, Rs. 2,169.36 million and Rs. 974.71 million for years ended March 31, 2024, March 31, 2023 and March 31, 2022, respectively. Our Company had Rs. 6,473.64 million, Rs. 3,675.99 million and Rs. 1,703.97 million non-current borrowings for years ended March 31, 2024, March 31, 2023 and March 31, 2022, respectively. Our Company had Rs. 4,137.57 million, Rs. 3,324.99 million and Rs. 1,459.12 million current borrowings for years ended March 31, 2024, March 31, 2023 and March 31, 2022, respectively. Our Company had Rs. 42.77 million and Rs. 25.48 million non-current lease liabilities for year ended March 31, 2024 and March 31, 2023, respectively, and had nil non-current lease liabilities for years ended March
31, 2022. Our Company had Rs. 8.45 million and Rs. 2.78 million current lease liabilities for year ended March 31, 2024 and March 31, 2023, respectively and had nil current lease liabilities for year ended March 31, 2022.
For further information, see “Restated Consolidated Financial Information” on page 279.
CONTINGENT LIABILITIES AND COMMITMENTS
The following is a summary table of our contingent liabilities as per Ind AS 37 as on March 31, 2024, as indicated in our Restated Consolidated Financial Information.
(in Rs. million)
S. No. Particulars |
As on March 31, 2024 |
1. Demands raised by Income Tax Authorities |
6.82 |
2. Demands raised by Indirect Tax Authorities |
25.01 |
3. Guarantees issued by the bank on groups behalf |
7,498.97 |
4. Corporate guarantees issued by our Company on behalf of Subsidiary |
1,860.00 |
Total |
9,390.80 |
Notes:
Corporate guarantee given to our Subsidiary, namely CBDHPL amounting to Rs. 1,860.00 million is unconditional and irrevocable corporate guarantee as per bank sanction letter, shall be provided till receipt offirst two full annuities.
For further information on our contingent liabilities and commitments, see “Restated Consolidated Financial Information - Notes to the Restated Consolidated Financial Information - Note 42 - Contingent Liabilities”
on page 313.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or which we believe reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, operating results, liquidity, capital expenditure or capital resources.
RELATED PARTY TRANSACTIONS
We enter into various related parties in the ordinary course of business including purchase and sale of fixed assets, managerial remuneration and royalty expenses. For further information relating to our related party transactions, see “Restated Consolidated Financial Information - Notes to the Restated Consolidated Financial Information - Note 48 - Related Party Transactions on page 315.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. We are exposed to certain market risks, including price risk, credit risk and interest rate risk.
Price risk
We are mainly exposed to the price risk due to its investment in mutual funds. Our Company is exposed to NAV price risks arising from investments in these funds. The value of these investments is impacted by movements in interest rates, liquidity, and credit quality of underlying securities.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to our Company. Our Company is only dealing with government authorities which results in mitigating the risk of financial loss from defaults. Financial instruments that are subject to concentration of credit risk, principally consist of balance with banks, investments in bonds, trade receivables and loans and advances. Financial assets are written off when there is no reasonable expectation of recovery. Our Company measures the expected credit loss of trade receivables based on historical trend, industry practices and the business environment in which we operate. Loss rates are based on actual credit loss experience and past trends.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. To optimize our Companys position with regards to interest income and interest expenses and to manage the interest rate risk, our Company performs a comprehensive corporate interest rate risk management by having fixed rate funds only in its total portfolio. There is no interest rate risk exposure for floating rate borrowings.
UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS
Except as described in this Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as “unusual” or “infrequent”.
SIGNIFICANT DEPENDENCE ON A SINGLE OR FEW CUSTOMERS OR SUPPLIERS
Our business is primarily dependent on contracts awarded by governmental authorities. We currently derive the majority of our revenue from contracts entered into with NHAI. For further information see, “Risk Factors - 1. Our business is primarily dependent on contracts awarded by governmental authorities. As on June 30, 2024, the NHAI projects awarded to us constituted 80.31% of our Order Book, while the remaining 19.69% of our Order Book was from contracts with other central, state governmental and local departments. Any adverse changes in the central, state or local government policies may lead to our contracts being foreclosed, terminated, restructured or renegotiated, which may have a material affect on our business, profitability and results of operations.” on page 34.
TOTAL TURNOVER OF EACH MAJOR INDUSTRY SEGMENT
Our Company is primarily engaged in the business of civil construction and there are no other primary reportable segments. The chief operating decision maker monitors the operating results of the business as a single segment. For further information, see “Restated Consolidated Financial Information” on page 279.
SIGNIFICANT ECONOMIC CHANGES THAT MATERIALLY AFFECTED OR ARE LIKELY TO AFFECT INCOME FROM OPERATIONS
Other than as described in this section and in “Our Business”, “Risk Factors”, and “Industry Overview on pages 197, 34 and 132, respectively, there have been no significant economic changes that materially affected or are likely to affect our Companys income from operations.
KNOWN TRENDS OR UNCERTAINTIES THAT HAVE HAD OR ARE EXPECTED TO HAVE A MATERIAL ADVERSE IMPACT ON SALES, REVENUE OR INCOME FROM CONTINUING OPERATIONS
Other than as described in this section and the section titled “Our Business” on page 197, to our knowledge, there are no known trends or uncertainties that have had or are expected to have a material adverse impact on our revenues or income.
FUTURE CHANGES IN RELATIONSHIP BETWEEN COST AND REVENUE
Other than as described in this section and the sections of this Red Herring Prospectus titled “Our Business”, and “Risk Factors” on pages 197 and 34, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.
MATERIAL INCREASES IN NET INCOME AND SALES
Material increases in our Companys net income and sales are primarily due to the reasons described in the section titled “- Results of Operations” above on page 360.
NEW PRODUCTS OR BUSINESS SEGMENTS
Other than as disclosed in this chapter and in “Our Business” on page 197, there are no new products or business segments that have or are expected to have a material impact on our business prospects, results of operations or financial condition.
COMPETITIVE CONDITIONS
We operate in a competitive environment. For further information, see “Our Business - Competition”, “Industry Overview” and “Risk Factors” on pages 236, 132 and 34, respectively.
SEASONALITY OF BUSINESS
There is no seasonality in our business.
MATERIAL DEVELOPMENTS SUBSEQUENT TO MARCH 31, 2024 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS
Except as disclosed in this Red Herring Prospectus, to our knowledge, no circumstances have arisen since the date of the last financial statements disclosed in this Red Herring Prospectus, which materially and adversely affect or are likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.
CAPITALISATION STATEMENT
The following table sets forth our Companys capitalization as at March 31, 2024, as derived from our Restated Consolidated Financial Information. This table should be read in conjunction with the sections titled “Risk Factors”, “Financial Information” and “Managements Discussion and Analysis of Financial Condition and Results of Operations ” beginning on pages 34, 279 and 342, respectively.
(Rs. in million, except ratios)
Particulars |
Pre-offer as at March 31, 2024 | As adjusted for the Offer* |
Borrowings |
||
Total borrowings |
||
- Non-current borrowings |
6,473.64 | [•] |
- Current -borrowings |
1,423.49 | [•] |
- Current maturities of non-current borrowings |
2,714.08 | [•] |
- Interest payable |
22.03 | [•] |
Debt (A) |
10,633.24 | [•] |
Equity |
||
- Equity Share capital |
785.68 | [•] |
- Other equity |
8,278.45 | [•] |
Equity (B) |
9,064.13 | [•] |
Debt equity ratio (A/B) |
1.17 | [•] |
*The corresponding post Offer capitalization data is not determinable at this stage pending the completion of the Book Building Process and hence have not been furnished. To be updated upon finalization of the Offer Price.
#
These terms shall carry the meaning as per Schedule III of the Companies Act.Notes:
The above has been computed on the basis on amounts derived from the Restated Consolidated Financial Information.
FINANCIAL INDEBTEDNESS
Our Company and our Subsidiaries avail fund based and non-fund-based facilities in the ordinary course of business for purposes such as, inter alia, meeting our working capital requirements or business requirements. We have obtained the necessary consents required under the relevant loan documentation for undertaking activities in relation to the Offer, including, inter alia, for effecting a change in our shareholding pattern, for effecting a change in the composition of our Board, and for amending our constitutional documents.
Set forth below is a brief summary of our aggregate outstanding borrowings amounting to Rs. 18,833.58 million, as on June 30, 2024, 2024 on a consolidated basis.
(in Rs. million)
| Category of Borrowing | Sanctioned Amount (to the extent applicable) | Amount outstanding as on June 30, 2024 |
| Secured Loan | ||
| (a) Fund based facilities | ||
| Term loans (including Machinery & Vehicle Loans) | 33,756.59 | 10,411.61 |
| Working capital facilities including Cash Credit** | 2,472.10 | 1,542.27 |
| (b) Non-fund based facilities | ||
| Bank guarantee (interchangeable) | 11,151.45 | 6,879.70 |
| Letter of Credit | Nil | Nil |
| Unsecured Loan | Nil | Nil |
| Total borrowings | 47,380.14 | 18,833.58 |
As certified by Statutory Auditors, by way of their certificate dated July 26, 2024.
• Out of the total sanctioned amounts of ^ 33,756.59 million, a sum amounting to ^ 18,702.40 million that pertains to the Subsidiaries has
been sanctioned but no disbursal has been made against the same. In relation to this, CLRGHPL has been sanctioned a sum amounting to ^
4,000 Million, Ceigall VRK 11 has been sanctioned a sum amounting to ^ 8,389.50 Million, Ceigall VRK 12 has been sanctioned a sum
amounting to ^ 6,312.90 Million.
** The Outstanding amount of cash credit facility includes an overdraft facility amount that is equal to ^ 21.24 million.
All indicative key terms of our borrowings are disclosed below:
• Tenor and interest rate: The tenor of the fund based and non-fund based facilities ranges from 7 days to 15 years. The interest rates for the facilities are typically linked to benchmark rates varying from 6.50% p.a. to 10.45% p.a., such as the repo rate prescribed by the RBI, treasury bill rate and marginal cost of funds-based lending rate (“MCLR”) of the specific lender plus a spread per annum is charged above these benchmark rates.
• Security: In terms of our borrowings where security needs to be created, we are typically required to create security by way of charge on immovable assets (both present and future), current assets, receivables, all stock of raw materials (both present and future), work in progress, finished goods, and book debts. Further, facilities availed by our company are secured by personal guarantees of Ramneek Sehgal. However, in case of our Subsidiaries, Ceigall Malout Abohar Sadhuwali Highway Private Limited and Ceigall Ludhiana Rupnagar Greenfield Highways Private Limited personal guarantee of Mohinder Pal Singh Sehgal has also been provided along with Ramneek Sehgal.
• Repayment: Our facilities are typically repayable within 7 days to 15 years or are repayable on demand.
• Prepayment: Certain loans availed by our Company have prepayment provisions which allows for prepayment of the outstanding loan amount and sometimes carry a pre-payment penalty on the pre-paid amount or on the outstanding amount subject to terms and conditions stipulated under the loan documents. Some of our loan agreements require us to pay prepayment penalties.
• Penal Interest: We are bound to pay additional interest to our lenders for defaults in the payment of interest or other monies due and payable. This additional interest is charged as per the terms of our loan agreements and is typically 2% to 4% over the applicable interest rate.
• Restrictive Covenants: As per the terms of our loan agreements, certain corporate actions for which our Company requires prior written consent of the lenders include:
a) Change in control/ownership/management/directorship/partnership including resignation of promoter directors (including key managerial personnel) of our Company;
b) Amending the constitutional documents of our Company;
c) Effecting any changes to the capital structure or shareholding pattern of our Company;
d) Dilution of Promoters shareholding below its current level or 51% of the controlling stake (whichever is lower);
e) Approaching capital market for mobilizing additional resources either in the form of debt or equity;
f) Enter into any scheme of merger, amalgamation, compromise or reconstruction or do a buyback; and
g) Undertaking any new business, operations or projects or substantial expansion of any current business, operations or projects.
• Events of Default: Our borrowing arrangements prescribe the following events of default, including among
others:
(a) Default in repayment of loan facility;
(b) If all or material part of business is suspended or ceases to exist;
(c) If the loan is used for any other purpose other than the purpose for which the loan is sanctioned;
(d) Bankruptcy, insolvency, dissolution;
(e) Breach in any other loan/ facility agreement;
(f) Jeopardise or likely to prejudice, impair, depreciate any security;
(g) Relevant asset is destroyed, or is stolen or untraceable for 30 days;
(h) Asset is confiscated, attached, taken into custody by any authority or subject to any execution proceeding;
(i) Failure to supply certified true copy of the registration;
(j) Misleading information and representations;
(k) Default under any other financing arrangements of our Company;
(l) Asset is used or alleged to be used for any illegal purposes or activity;
(m) If the Company is is adjudicated insolvent or taking advantage of law for the relief of insolvent debtors;
(n) Any of the cheques delivered or to be delivered by the Borrower to the Bank in terms and conditions hereof is not encashed for any reason whatsoever on presentations;
(o) Any other occurrence or existence of one or more events, conditions or circumstances (including any change in law), which in opinion.
• Consequences of occurrence of events of default: Our borrowing arrangements prescribe the following consequences of occurrence of events of default, including among others:
a) Terminate the sanctioned facilities;
b) Suspend access to facilities;
c) Enforce security;
d) Appoint trustees / observers; and
e) Repossess the hypothecated asset.
• There has not been any default by our Company in meeting its payment obligations for Fiscals 2024, 2023
and 2022.
For risks in relation to the financial and other covenants required to be complied with in relation to our borrowings,
see “Risk Factors - 29. Our inability to meet our obligations, including financial and other covenants under
our debt financing arrangements could adversely affect our business and results of operations.” on page 57.
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