CMM Infraprojects Ltd Management Discussions.

Indian Economic Overview

The Indian economy was negatively impacted by an unprecedented health crisis in 2020-21 with the highly contagious corona virus (Covid-19) spreading across the country. In response to the pandemic, Government has taken several proactive preventive and mitigating measures starting with progressive tightening of international travel, issue of advisories for the members of the public, setting up quarantine facilities, contact tracing of persons infected by the virus and various social distancing measures. Government imposed a strict 21 days nationwide lockdown from 25th March, 2020, under the Disaster Management Act, 2005, with subsequent extensions and relaxations, to contain the spread of Covid-19 while ramping up the health infrastructure in the country. The lockdown measures, imposed to contain the spread of Covid-19 pandemic in India, ubiquitously affected employment, business, trade, manufacturing, and services activities.

Following the lifting of social distancing controls, India experienced a full-blown economic recovery. India de-grew at a relatively improved 7.5 per cent in the July-September quarter and reported 0.4 per cent growth in the October-December quarter and a 1.6% growth in the last quarter of the year under review. The result is that Indias GDP contracted 7.3% during 2020-21, largely on account of the sharp depreciation of the first two quarters. This sharp Indian recovery one of the most decisive among major economies validated Indias robust long-term consumption potential.

Construction Industry

Construction Industry received the 2nd highest FDI in the period 2000-2020. The Indian construction industry is the engine of the Indian economy. The Indian construction sector is responsible for propelling the countrys overall development as good infrastructure is the basis for all other projects, and it enjoys prime attention from the government. A huge employment opportunity exists for Indias youth in construction, operation and maintenance of infrastructure. As a result, the National Skill Development Agency is also maintaining its thrust on infrastructure-focused skill development opportunities.


India is expected to become the worlds third largest construction market by 2022. India will require investment worth Rs. 50 trillion (US$ 777.73 billion) across infrastructure by 2022 for a sustainable devepolment in the country. In FY21, infrastructure activities accounted for 13% share of the total FDI in flows of US$ 81.72 billion.

Indian Infrastructure Industry

Infrastructure sector is one of the key drivers for the Indian economy. The sector is highly responsible for driving Indias overall development and hence enjoys intense focus from the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. The Indian government proposed setting up National Infrastructure Pipeline in 2019; the number of infrastructure projects rose to 7400 in 2021 from 6835 and 217 projects worth Rs. 1.10 Lakh Crore. Sectors such as roads, urban development, railways and energy accounted for ~71% of the projected infrastructure investments.

India is expected to become the third largest construction market globally by 2022. India plans to spend US$ 1.4 trillion on infrastructure projects through the National Infrastructure Pipeline (NIP), from 2019 to 2023, to ensure sustainable development in the country. In the Union Budget 2020-21, the Government of India has given a massive push to the infrastructure sector by allocating Rs. 1, 69, 637 crores for the transport infrastructure.

Roads: Road Transport is a critical infrastructure for the economic development of a country. It impacts the pace, structure and pattern of development. The Indian road network is the second largest in the world spanning over 6.21 million km covering over 90% of passenger traf c and 64.5% of freight traf c. Since the last few years there has been a significant improvement in the road connectivity across the country. The increasing production of commercial and passenger vehicles catalysed the demand wider and more connected road network. In spite of the Covid-19 crisis and a long lockdown; national highways were constructed at the speed of 29.81 km per day - the fastest in ve years. From 2016 to 2019, highway construction reported a CAGR of 21.44%. In the year 2020-21, the government decided to complete all ongoing projects awarded up to 2015-16 and aimed to construct at least 11,000 kms of national highways during the year under review (road projects spanning 55,000 km with an investment outlay of Rs. 6.26 Lakh Crore are in progress).

Railways: India has the fourth-largest railway system in the world, following the US, Russia and China. As of 2019-20, the Indian Railways had 13,169 passenger trains and 8,479 freight trains. As of 2019-20, it had a total route network of 67,956 kms and introduced 153 new passenger train in the same period. Indian Railways has logged the highest ever electri cation of sections covering 6,015 Route Kilometer (RKM) in a single year during 2020-21. More than 5 times electri cation was achieved during (2014-21) last seven years as compared to during 2007-14. By 2024, Indian railways will be run completely on electricity.

Under the Union Budget 2021-22, the government allocated Rs. 110,054.64 crore (US$ 15.19 billion) to the Ministry of Railways. FDI In flow in railway-related components stood at US$ 1.12 billion from April 2000 to September 2020.Under the Union Budget 2021-22, the government allotted Rs. 1,803.01 crore (US$ 249.07 million) for gauge conversion, Rs. 3,000 crore (US$ 414.43 million) for doubling tracks, Rs. 6,815.36 crore (US$ 941.51 million) for rolling stock and Rs. 2,448.30 crore (US$ 338.22 million) for signalling and telecom. With increasing participation expected from private players, domestic and foreign, due to favourable policy measures, both passenger and freight traf c is expected to grow rapidly over the medium to long term. The Government of Indias focus on infrastructure is a major factor which will accelerate growth of railways. Railways infrastructure plans to invest Rs 50 lakh crore (US$ 715.41 billion) by 2030.

Company Overview

During the year under review Company has made a turnover of Rs. 55,63,53,560/- and a profit after tax of Rs. 20,16,030/- .

The Cash Flow summary for the financial year 2020-21 under indirect cash flow method is as follows:

Sr. No. Particulars 2020-2021
1. Operational Cash Outflow 3,71,03,966
2. Investing Cash Inflow 58,25,030
3. Financing Cash Outflow (4,24,88,812)


FY 2020-21 started with the nationwide lockdown due to the Covid-19 pandemic which had stalled all economic activities during the first quarter of the year. The lockdown took a heavy toll on the economy, with up to two- thirds of activity either shut or working at reduced capacity. Post the lockdown, businesses took various steps to bring back labour and materials to site. Gradually, the operations at sites picked up, and by the end of second quarter of the year, there was improved labour presence at sites and work progress.

Adequate precautions were taken to curtail the spread of the virus by following the social distancing norms, proper sanitization and by restricting physical movement.


The government of India announced larger outlays for infrastructure development. The government announced Rs. 1.1 Lakh Crore for the Indian Railways to improve infrastructure, Rs. 1.07 Lakh Crore allocated towards capital expenditure, a growth opportunity for the company.

Risk Management

Construction industry is highly risk prone, with complex and dynamic project environments creating an atmosphere of high uncertainty and risk. The industry is vulnerable to various technical, socio-political and business risks- errors caused on account of adoption of improper methodology of construction, carrying out improper market survey, improper data input, extraordinary hike in the cost of construction materials, fluctuation in the exchange rates involving transactions in foreign currency, improper assessment of the locational hazards and assessment of taxes/duties in the operation of the contract are being independently assessed/analyzed by various Cells like tendering, operations, procurement, finance, banking, HR and IT Cells and mitigation procedures/plans are being formulated and monitored to reduce, if not totally eliminate, the risks associated with the above.

The Companys ability to foresee and manage business risks is crucial in achieving favourable results. While management is positive about the Companys long term outlook, we are subject to few risks and uncertainties as given below:

Finance Risk: Unable to meet funding requirements for the project may lead to delays in project execution. The inability to negotiate interest rates in favour of the company may increase finance costs and lower profitability. To meet its working capital requirements and to fund its debt, the company constantly monitors its cash flow.

Market price fluctuation: The performance of your company may be affected by the sales at a price which are driven by prevailing market conditions, the nature and location of the projects.

Quality Risk: Inability to maintain the quality of products and failure to adhere to recommended quality standards might adversely impact the Companys reputation as well as its financial position.

Raw material price risk: The primary construction materials like steel, cement and etc are subject to price volatility due to general economic conditions, competition, production levels, transportation costs and domestic and import duties and any adverse impact of rise in input cost will have impact on the pro tability of the Company.

Technology risk: With the advancement of technology there is a growing need to improve operational efficiency and ensure better customer satisfaction through advanced systems and processes. The Company relies on advanced technology to build high rise towers, which helps to increase its operational efficiency.

Human Resources Risk: Inability to complete and deliver projects on time due to lack of skilled labour can result in hefty penalties for the company, leading to a loss of reputation. The inability to retain or acquire competent and experienced employees may also hamper its ability to pursue growth strategies effectively. The Company has a dedicated labour department to look after the deployment and allocation of human resources within the organization and the project sites.

Economic risk: Any adverse change in any macroeconomic variables like GDP growth, interest rates, inflation, changes in tax, trade, fiscal and monetary policies etc. may adversely impact the Companys business, profitability and financial condition.

Health and safety risks: Construction Companies constantly face the risk of injury or illness to the Companys or third parties construction workers.

Financial Highlights

(Rs. in Lakhs)

Balance Sheet As at March 31, 2021 As at March 31, 2020
Share Capital 1,567.33 1,567.33
Reserve & Surplus 4,115.53 4,095.37
Non- Current Liabilities 1,540.73 1,546.10
Current Liabilities 5,959.40 5,940.20
Non- Current Assets 2,609.46 2,817.94
Current Assets 10,572.53 10,331.06

(Rs. in Lakhs)

Profit & Loss Account For the year 2020-21 For the year 2019-20
Total Revenue 5,563.54 7,169.27
Pro t / (Loss) before interest, depreciation, amortization and taxes (EBITDA) 1010.05 949.93
Depreciation and amortisation 211.48 228.72
Pro t after tax 20.16 110.40
Earnings Per Share 0.13 0.70

The Companys financial position has also affected due to the ongoing pandemic. Delays in release of payments are being observed from various departments whose works are being performed at different places, which affected the financial stability of the Company. Still the Company has tried to fulfill its financial commitments to a certain extent.

Human Resources

The Company treats its workforce as a precious asset. Employees are the key to achieve the Companys objectives and strategies. The Company promotes fair HR practices and employee-friendly policies and processes. The Companys employees possess requisite qualifications and technical expertise to execute projects across the construction services domain. The Company supports its employees to develop their capabilities along with providing them freedom to act and to take responsibilities for the tasks assigned. The Company strongly believes that its team of capable and committed manpower, which is its core strength, is the key factor behind its achievements, success and future growth. The Company has always aimed to create a workplace where every person can achieve their optimum potential and add value to the organizational growth. Company has really good relation with industries by which Company can get leads for the Constructions.

Cautionary Statement

Certain statements made in this report on "Management Discussion and Analysis", describing the Companys objectives, estimations, expectations or projections, outlook etc., may constitute forward looking statements within the meaning of the applicable Rules, Laws and Regulations. Actual results may differ from such expectations, projections and forward-looking statement due to various risk and uncertainties either it is express or implied. These statements are based on certain assumptions and expectations of future events over which the Company has no direct control and the company assumes no responsibility to publicly amend, modify or reverse any of these statements on the basis of any subsequent development, information or events.