You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled “Financial Information of the Company” beginning on page 169 You should also read the section titled “Risk Factors” on page 26 and the section titled “Forward Looking Statements” on page 18 of this Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements. Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated May 09, 2024 which is included in this Red Herring Prospectus under “Financial Statements”. The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.
BUSINESS OVERVIEW
We are providing comprehensive portfolios in the field of supply, installation, testing and commissioning (SITC) of solar and electrical goods and services to various government bodies. We have completed projects under various schemes of Central and State Government like - Saubhagya Scheme, KUSUM Scheme, Saur Sujla Yojna. We also forayed into the business of designing, construction, installation and operation and maintenance of Water Supply Scheme Projects like the Mukhya Mantri Nishchay Quality Affected Yojna, Har Ghar Jal (Jal Jeevan Mission) etc.
We started as a partnership firm in the year 2016 with focus on Electrical contracting services. Later in the year 2017 we stepped into the renewable energy sector where we expanded our operations as an integrated solar energy solutions provider offering engineering, procurement and construction (“EPC”) services and operations and maintenance (“O&M”) services for solar home light, solar street light, solar power plants (On Grid and off Grid), Solar Highmast, Solar Pumping System etc. In 2016, we attained the status of Channel Partner of Ministry of New and Renewable Energy (MNRE) and in the year 2018 we completed a substantial project involving 16,486 SPV home lighting system in Rajasthan through Rajasthan Renewable Energy Corporation Limited (RRECL)
Gradually in the year 2019 we started bidding for Water Supply Scheme Projects wherein we are engaged in designing, construction, supply, testing and commissioning of Water Supply Scheme Projects which involves construction of piped water supply with installation of polyethylene water storage tank to provide drinking water through functional household tap connections in villages with all allied works of the scheme and successful trial run.
Our Subsidiary, Souraj Energy Private Limited (Souraj) is involved into manufacturing of solar photo-voltaic (“PV”) modules. SPV modules manufactured in Souraj are made using quality components and advanced technologies that comply with industry standards. We offer our products and services in various specifications and customization options to cater to the unique demands of our customers. Solar PV modules are manufactured using both polycrystalline and monocrystalline cell technology. We have also initiated the use of Topcon Solar Cell Technology for manufacturing Solar PV Modules. The products are differentiated on the basis of solar PV module technology and type as well as cell size. These PV modules (including those under testing) have wattages between 150Wp - 575Wp (550Wp- Mono PERC P Type Solar Cell (10BB) and 385Wp to 575 Wp- Mono PERC N Type Topcon Solar Cell (16BB) module is a prototype and currently under third party lab testing as at the date of this Red Herring Prospectus) which is a measure of the amount of sunlight (irradiation) that falls on the surface of a solar panel and is converted into electricity (“Efficiencies”). Our Subsidiary operates from its manufacturing facility situated at Mehsana, Gujarat and is equipped with machines like: Glass Loader, EVA Cutting Machine, Layup Machine, Stringer Bussing, Backsheet, Pre - EL- Testing, Laminator Framing, Sun Simulator, Aluminum frame cutting & punching machine etc. We also intend to set up additional line for manufacturing of solar photo-voltaic (“PV”) modules in our company for which we have already installed the machinery and are in the process to initiate operations.
Thus over the years our group has diversified its business as service provider into multiple verticals catering to (i) Solar System & Allied Services, (ii) Electrical contracting services (iii) Water Supply Scheme Projects and as a manufacturer of solar photo-voltaic (“PV”) modules. Our in-house engineering and design capabilities help us offer diversified products and solutions to our customers in each of the product categories in which we operate. Our comprehensive solutions include our services as EPC contractor involving designing, engineering, construction, installation and commissioning of projects.
Our Company bids for tenders issued by government authorities and has worked for departments of 8 states viz: Gujarat Industrial Development Corporation (GIDC), Ahmedabad Municipal Corporation (AMC), Rajasthan Renewable Energy Corporation Limited (RRECL), Dakshin Gujarat Vij Company Limited (DGVCL), Gujarat Energy Development Agency (GEDA), Chhattisgarh State Renewable Energy Development Agency (CREDA), Ajmer Vidhyut Vitaran Nigam Limited (AVVNL), Jodhpur Vidhyut Vitaran Nigam Limited (JdVVNL), Jharkhand Renewable Energy Development Agency, Jaipur Vidhyut Vitaran Nigam Limited (JVVNL), Public Health Engineering Department (PHED), Bihar, Public Health Engineering Department (PHED), Madhya Pradesh, PHED,
Rajasthan, Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), UP, NHAI through Kalthia Engineering Construction Ltd( Maharashtra) etc. We also sell Solar PV modules to some of the private sector organizations.
In the last 10 years, we have successfully completed (i) 17 work orders under Solar System & Allied Services aggregating to Rs 18515.46 Lakhs (ii) 7 work orders under Electrical contracting services aggregating to Rs 2146.20 Lakhs (iii) 2 work orders under Water Supply Scheme Projects aggregating to Rs 1667.70 Lakhs. For details of work order executed by our company see “Completed Projects” on page 116 of the Red Herring Prospectus.
As of March 31, 2024, our Order Book includes (i) 10 work orders under Solar System & Allied Services aggregating to Rs 27328.03 (ii) 7 work orders under Electrical contracting services aggregating to Rs 2645.57 Lakhs, (iii) 1 work order under Water Supply Scheme Projects for an aggregate value of Rs. 1423.97 lakhs. For further details on our Order Book, see “- Order Book” on page 120 and “Risk Factors - Our Order Book may not be representative of our future results and our actual income may be significantly less than the estimates reflected in our Order Book, which could adversely affect our results of operations ” on page 29 of this Red Herring Prospectus.
We have an in-house team for designing, engineering and construction which makes us self-reliant on all aspects of our business. We have a team of 10 Engineers who are supported by third-party consultants and industry experts to ensure compliance and quality standards laid down by the industry and government agencies & departments. The scope of our services typically includes design and engineering of the projects, procurement of raw materials, execution at site with overall project management up to the installation and commissioning of projects. Post commissioning, operations and maintenance of some of the projects for a certain period of time is generally a part of the award in recent times. We have a team of dedicated engineers and personnel focused on operations and maintenance of completed projects.
In addition to the execution of projects independently, we also enter into joint ventures with other infrastructure companies to jointly bid and execute projects. Joint ventures or partnerships enable us to achieve pre-qualification, both technical and financial, with our joint venture partner at the time of the bid. As on March 31, 2024, we are executing 5 projects in partnership with our joint venture partner. We have also gained experience from instances where we have been sub contracted some of the projects for execution.
Our Company is led by our Promoters, Ketanbhai Narsinhbhai Patel, Rajendrakumar Narsinhbhai Patel having an overall experience of more than two decades in the associated industry and Niravkumar Sureshbhai Patel and Shilpaben Ketanbhai Patel having an overall experience of more than a decade in the associated industry.
Over the years our Company has obtained various registrations and certifications that facilitate our business and help us to secure orders:
> Electrical Contractor license from Govt. of Gujarat to act as an Approved Electrical Contractor in Class ‘A in R & B. Department. Government of Gujarat
> Electrical Contractor license from Govt. of Bihar to act as Category ‘ 1 Contractor for Bihar
> Electrical Contractor license from Govt. of Rajasthan to act as Electrical Contractor ‘Class A for Rajasthan
> Electrical Contractor license from Govt. of Madhya Pradesh to act as Electrical Contractor for Madhya Pradesh
> Electrical Contractor licensee from Govt. of Maharashtra to act as Electrical Contractor for Maharashtra
> BIS Registration Certificate for Sealed Secondary Portable Lithium System Battery
> BIS Registration Certificate for Crystalline Silicon Terrestrial Photovoltaic (PV) modules (Si wafer based)
> BIS Registration Certificate for Fixed General Purpose Led Luminaires
> ISO 9001:2015 Certificate of Registration for Quality Management System for following activities: Manufacturer, Supplier, Importer, exporter and contractor of Electrical Battery and Solar related products.
> ISO 14001:2015 Certificate of Registration for Environmental Management System for following activities: Manufacturer, Supplier, Importer, exporter and contractor of Electrical Battery and Solar related products.
> We are enlisted in Approved List of Models and Manufactures (ALMM) for Solar Photovoltaic Modules by Ministry of New & Renewable Energy.
Key Performance Indicators of our Company
| Key Financial Performance | FY 2023-24 | FY 2022-23 | FY 2021-22 |
| Revenue from operations(1) | 17017.02 | 9019.91 | 10553.67 |
| EBITDA(2) | 3462.14 | 1368.98 | 859.18 |
| EBITDA Margin(3) | 20.35% | 15.18% | 8.14% |
| PAT(4) | 1988.50 | 815.57 | 520.75 |
| PAT Margin(5) | 11.69% | 9.04% | 4.93% |
| Net Worth (6) | 5727.64 | 3522.91 | 2707.34 |
| RoE(%)(7) | 46.42% | 26.18% | 21.28% |
| RoCE (%)(8) | 29.98% | 21.70% | 18.83% |
(1)
‘Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements(2)
‘EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses - Other Income(3)
‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations(4)
‘PAT is PAT available for owner of the group.(5)
‘PAT Margin is calculated as PAT available for owner of the group for the period/year divided by revenue from operations.(6)
‘Net worth means Equity share capital + Reserves and surplus (including, Securities Premium, General Reserve and surplus in statement of profit and loss) (Excluding Minorites Interest).(7)
‘Return on Equity is ratio of Profit after Tax and Average Shareholder Equity.(8)
‘Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total borrowings {current & non-current}.STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
For details in respect of “Statement of Significant Accounting Policies”, please refer to Annexure IV of Restated Financial Statements beginning on page 175 of this Red Herring Prospectus.
Factors Affecting our Results of Operations
1. Our business is directly and significantly dependent on projects funded by the Central and State Governments and derive our revenues from the contracts awarded to us. Any reduction in budgetary allocation to this sector may affect the number of projects that the government authorities/bodies may plan to develop in a particular period;
2. Inability to qualify for, compete and win future projects awarded by government authorities through competitive bidding process could adversely affect our business and results of operations;
3. Any incapability to adopt a new technology by us or change in the requirement of a particular technology by the government authorities may affect our position to bid for the Projects;
4. If any of the project (awarded and / or which may be awarded to us in the future) is terminated prematurely, we may not receive payments;
5. due to the nature ofour contracts, we may be subjected to claim and counter-claims including to and from the concessioning authorities among others;
6. Failure to increase the size of our projects and pre-qualification may affect our growth prospects;
7. Insufficient cash flows to meet required payments, on our working capital requirements towards execution of projects, there may be an adverse effect on the results of our operations;
8. Any change in government policies resulting in increases in taxes payable by us;
9. Conflicts of interest with affiliated companies, the promoter group and other related parties;
10. Any adverse outcome in the legal proceedings in which we are involved; and
11. Other factors beyond our control
Discussion on Result of Operations
The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the year ended March 31, 2024, March 31, 2023, and March 31, 2022.
| Particulars | Consolidated | |||||
| 31 March 2024 | % of Total Income | 31 March 2023 | % of Total Income | 31 March 2022 | % of Total Income | |
| Revenue from Operations | 17017.02 | 98.96% | 9019.91 | 99.56% | 10553.67 | 99.45% |
| Other Income | 179.46 | 1.04% | 39.62 | 0.44% | 58.43 | 0.55% |
| Total Income | 17196.48 | 100% | 9059.53 | 100.00% | 10612.10 | 100.00% |
| Expenses | ||||||
| Cost of Material Consumed | 12515.67 | 72.78% | 6044.59 | 66.72% | 6521.65 | 61.45% |
| Change in Inventories of Finished Good | (1085.05) | -6.31% | 0.00 | 0.00% | 0.00 | 0.00% |
| Employee Benefit Expenses | 435.80 | 2.53% | 400.18 | 4.42% | 574.39 | 5.41% |
| Finance Costs | 537.34 | 3.12% | 255.86 | 2.82% | 229.06 | 2.16% |
| Depreciation and Amortization Expenses | 337.10 | 1.96% | 76.54 | 0.84% | 51.87 | 0.49% |
| Other Expenses | 1618.95 | 9.41% | 1179.40 | 13.02% | 2531.51 | 23.85% |
| Total expenses | 14359.81 | 83.50% | 7956.57 | 87.83% | 9908.48 | 93.37% |
| Profit/(Loss) before Tax | 2836.67 | 16.50% | 1102.95 | 12.17% | 703.62 | 6.63% |
| Tax Expenses | ||||||
| - Current Tax | 665.60 | 3.87% | 292.12 | 3.22% | 187.06 | 1.76% |
| - Deferred Tax | (11.91) | -0.07% | (4.74) | -0.05% | (4.19) | -0.04% |
| Total Tax Expense | 653.69 | 3.80% | 287.38 | 3.17% | 182.87 | 1.72% |
| Particulars | Consolidated | |||||
| 31 March 2024 | % of Total Income | 31 March 2023 | % of Total Income | 31 March 2022 | % of Total Income | |
| Profit/(Loss) after Tax | 2182.98 | 12.69% | 815.57 | 9.00% | 520.75 | 4.91% |
| Profit attributable to Minority holders | 194.47 | 1.13% | 0.00 | 0.00% | 0.00 | 0.00% |
| Profit attributable to owner of the group | 1988.50 | 11.56% | 815.57 | 9.00% | 520.75 | 4.91% |
Over the past three fiscal years, our company has experienced fluctuations in both revenue and PAT margins. In FY 22, despite higher revenue, there was a decrease in PAT, while in FY 23, PAT increased despite lower revenue. These changes were primarily driven by rising raw material costs due to increased demand for solar cells globally and operational challenges, including COVID- 19 disruptions, which led to increase in labour costs and increase in material costs.
To address the challenges faced in FY 22, we implemented measures such as cost optimization, renegotiation of supply contracts, and prioritization of higher-margin projects in FY 23. Examples of some of the high margins projects undertaken by the company include EPC work for Solar water pumping system in the Solar and Allied Services and Substation work in the Electrical Contracting Services. For details of such work orders completed in past please refer “ Completed Projects” in the section titled “Our Business” on page 116 of the RHP. Moreover supply of solar PV modules also attracts higher margins and we have recently received orders for the supply of Solar PV Modules to SJVNL Green Energy Limited executed in FY 2024. Additionally, the company has secured various new order for Supply and Installation of SPV Power Projects which are in process of completion. For details of such work orders in hand please refer “Our Order Book in the section titled “Our Business” on page 120 of the RHP. Furthermore, these orders and adjustments made in response to the pandemic and market dynamics have enhanced our financial resilience and operational efficiency. Specifically, projects like the supply of solar modules and EPC orders for Supply and Installation of Solar Power Project have proven to be particularly offering higher margins compared to other endeavours. Therefore, we are actively pursuing similar orders to ensure sustained profitability in the future. Additionally, streamlining project execution and effectively reducing overheads contributed to enhanced financial performance.
Revenue from operations:
Revenue from operations mainly consists of Revenue from EPC, Revenue from Solar Panel - Manufacture services and Other operating revenues. The company generates revenue from supply, installation, testing and commissioning (SITC) of solar and electrical goods and services to various government bodies and designing, construction, installation and operation and maintenance of Water Supply Scheme Projects.
Other Incomes
Other income primarily comprises of Rent, Interest Income on FD and income tax refund, Interest Subsidy received from government, Dividend Income, Commission Income, Exchange Fluctuation Gain, Rounding Off Income, Miscellaneous income.
Total Expenses:
Total expenses consist of operating cost like Cost of Material consumed, Change in inventories of finished goods, work-in-progress and Stock-in-Trade, Employee benefits expense, Finance costs, Depreciation and amortization expenses and other expenses.
Cost of Material consumed
Cost of Material consumed expenses primarily comprise of Raw material consumption.
Change in inventories of finished goods
Change in inventories of finished goods comprises of increase/ (decrease) in stock of finished goods.
Employee benefits expense:
Employee benefits expense primarily comprises of salaries and wages, Remuneration to directors, Expenses related to ESIC and other, Contribution to PF & Other Funds, Gratuity Expenses, Leave Encashment, and Staff welfare expenses.
Finance Costs:
Our Finance cost includes Interest expenses and Bank charges, Processing fees and Credit Card Financial Charges.
Depreciation and Amortization Expenses:
Depreciation and Amortization Expenses includes depreciation on Factory Building, Plant and Machinery, Furniture and Fixture, Vehicles (Cars), Mobiles, Electrical Equipment, Computers, Office and factory Equipment, Fire control system and software.
Other Expenses:
Other Expenses consists of Expenses like: a.) Direct Expenses: Contract expenses for Labour, Site Expenses, Tender Fees, Freight, Loading and Unloading charges, Packing and forwarding charges, Royalty, Expenses related to import purchase, Labour Cess Expenses, BIS Certification Charges, Power - Electricity Expenses, Fuel Expenses, Factory Expenses, Rate Difference. b.) Indirect Expenses: Auditors Remuneration, Advertisement and Business promotion, Consultancy fees, Petrol and Diesel, Insurance, Professional fees, Legal Fee, Testing Fee, Rent Expenses, Vehicle Hire Charges, Maintenance Expenses, Telephone expenses, Travelling Expenses, Late fee penalty and other dues, Electricity Expenses, Postage and Couriers Expenses, Registration and Licenses Fees, Repairs and Maintenance, Rounding Off, Stationery and Printing Expenses, Website Design Expenses, CSR Expenditure, Donation Expenses, Rate and Taxes, Office Expenses, MCA Charges, Security Charges, Miscellaneous expenses.
FINANCIAL YEAR 2024 COMPARED TO FINANCIAL YEAR 2023
Total Income:
Total income for the financial year 2023-24 stood at Rs 17196.48 Lakhs whereas in Financial Year 2022-23 the same stood at Rs. 9059.53 Lakhs representing an increase of 89.82%. The main reason of increase was increase in the volume of business operations of the company.
Revenue from Operations
During the financial year 2023-24 the net revenue from the operation of our Company increased to 17017.02 Rs. Lakhs as against Rs. 9019.91 Lakhs in the Financial Year 2022-23 representing an increase of 88.66%. The detailed and comparative bifurcation of revenue from operations is as under:
| Particular | March 31, 2024 | March 31, 2023 | % of change |
| PV Module Sales | 8989.73 | 0 | 100% |
| Solar System & Allied Services | 1949.12 | 2503.65 | -22.15% |
| Electrical contracting services | 5078.98 | 5104.32 | -0.50% |
| Water Supply Scheme Projects | 999.19 | 1411.93 | -29.23% |
| TOTAL | 17017.02 | 9019.91 | 88.66% |
The successful installation of manufacturing facility for SPV modules contributed to growth in revenue from operations from sale of Solar PV Modules. Moreover, the revenue from Electrical contracting services has been flat and similar in both the financial years and the marginal decrease in revenue from sale of Solar System & Allied Services and Water Supply Scheme Projects have been complemented by substantial increase in sale from Solar PV Modules.
Other Income:
During the financial year 2023-24 the other income of our Company increased to Rs.179.46 Lakhs as against Rs. 39.62 lakhs in the Financial Year 2022-23 representing an increase of 352.96% which was due to an increase in income from (i) Subsidy received from government 123.19 lakhs in FY 2023-24 to Rs. NIL in the financial year 2022-23. (ii) Interest on FDR income of Rs. 46.64 lakhs in the financial year 2023-24 as compared to Rs. 37.22 lakhs in the financial year 2022-23 which amount to increase of 25.29% (iii) Forex exchange gain of Rs. 9.11 in the financial year 2023-24 as compared to Nil in the financial year 2022-23.
Total Expenses
The total expense for the financial year 2023-24 increased to Rs. 14359.81 Lakhs from Rs. 7956.57 lakhs in the Financial Year 2022-23 representing an increase of 80.48%. Such an increase was due to an increase in the volume of business operations of the Company.
Cost of Raw Material consumed
The Cost of material consumed for the financial year 2023-24 increased to Rs. 12515.67 lakhs from Rs. 6044.59 lakhs in the Financial Year 2022-23 representing an increase of 107.05%. Such decrease was due to increase in closing stock of materials from Rs 1511.88 lakhs in financial year 2022-2023 to Rs 2786.96 lakhs in financial year 2023-2024 representing an increase of 84.34%.
Employee benefits expense:
Our Company has incurred Rs. 435.80 Lakhs as Employee benefits expense during the financial year 2023-24 as compared to Rs. 400.18 Lakhs in the financial year 2022-23. The increase of 8.90% was due to an increase in (i) Salaries and wages of Rs. 219.42 lakhs in the financial year 2023-24 as compared to Rs. 141.39 lakhs in the financial year 2022-23 which amount to an increase of 55.19%, (ii) Contribution to provident and other funds of Rs. 6.51 lakhs in the financial year 2023-24 as compared to Rs. 2.14 lakhs
in the financial year 2022-23 which amount to increase of 205.06% (iii) Defined Benefit - Leave Encashment of Rs. 0.86 lakhs in the financial year 2023-24 as compared to Rs. 0.15 lakhs in the financial year 2022-23 which amount to increase of 480.72%.
Finance Costs:
Our Company has incurred Rs. 537.34 Lakhs as finance costs during the financial year 2023-24 as compared to Rs. 255.86 Lakhs in the financial year 2022-23. The increase of 110.02% was due to an increase in loans.
Depreciation and Amortization Expenses:
Depreciation for the financial year 2023-24 stood at Rs. 337.10 Lakhs as against Rs. 76.54 Lakhs during the financial year 202223. The increase in depreciation was around 340.42% which was due to the addition of plant and machinery.
Other Expenses:
Our Company has incurred Rs. 1618.95 Lakhs during the Financial Year 2023-24 on other expenses as against Rs. 1179.40 Lakhs during the financial year 2022-23. There was an increase of 37.26% mainly due (i) an Increase in contract expenses for labour by 63.22% from Rs. 544.94 lakhs in the financial year 2022-23 to Rs. 889.46 lakhs in the financial year 2023-24, (iii) decrease in Site expenses by (49.06%) from Rs. 168.10 lakhs in financial year 2022-23 to Rs. 85.63 lakhs in the financial year 2023-24, (iv) decrease in Tender fees by (45.45%) from Rs. 9.15 lakhs in the financial year 2023-24 to Rs. 4.99 lakhs in the financial year 2022-23 (v) Increase in Freight by 10.99 % from Rs. 75.40 lakhs in financial year 2022-23 to Rs 83.69 lakhs in financial year 2023-24 (vi) Increase in Auditors remuneration by 94.55% from Rs. 2.57 lakhs in financial year 2022-23 to Rs. 5.00 lakhs in financial year 202324, (vii) decrease in Advertisement and business promotion by (99.20%) from Rs.7.40 lakhs in financial year 2022-23 to Rs. 0.06 lakhs in financial year 2023-24, (viii) decrease in Consultancy fees by (43.16%) from Rs. 6.20 lakhs in financial year 2022-23 to Rs. 3.52 lakhs in financial year 2023-24, (ix) decrease in Petrol and Diesel Expenses by (37.98%) from Rs.59.62 lakhs in financial year 2022-23 to Rs. 36.98 lakhs in financial year 2023-24, (x) decrease in Electricity Expenses by (48.60%) from Rs.5.12 lakhs in financial year 2022-23 to Rs. 2.63 lakhs in financial year 2023-24. However, the decrease was partially offset by increase in some other items
Restated Profit before tax:
Our profit after tax for the Fiscal 2024 increased by 143.82% from a net Profit of Rs. 815.57 Lakhs in the financial year 2022-23 to a net profit of Rs. 1988.50 lakhs in the financial year 2023-24. Consequently, our PAT Margin expanded to 11.69% in the financial year 2023-24 from 9.04 % in the financial year 2022-23. The main reason for increase in PAT margin is due to various factors as under:
> Expansion in business operations and model of the company which led to increase in revenue from operations. Our company started generating revenue from sale of Solar PV Modules during Fiscal 2024 which is higher margin business in comparison to EPC contracts.
> Strategies like: cost optimization, renegotiation of supply contracts due to increased capabilities to execute larger projects and prioritization of higher-margin projects aimed at strengthening our financial resilience and operational efficiency.
> Furthermore streamlining project execution and reducing overhead costs significantly contributed to our improved financial performance. For example some of the fixed and variable costs like: employee benefit expenses and other expenses did not increase in similar proportion to increase in revenue from operations.
Additionally, we identified that supplying solar modules offered higher margins than other projects and we are actively pursuing similar orders to ensure sustained profitability in the future. The current order book of the company as of March 31, 2024, includes orders of approx Rs 5000 lakhs for the supply of Solar PV Modules.
Restated profit after tax:
As a result of the above factors, our profit after tax for the year increased by 143.82% from a net Profit of Rs. 815.57 Lakhs in in the financial year 2022-23 to a net profit of Rs. 1988.50 lakhs in the financial year 2023-24. Consequently, our PAT Margin expanded to 11.69% in the financial year 2023-24 from 9.04 % in the financial year 2022-23.
FINANCIAL YEAR 2023 COMPARED TO FINANCIAL YEAR 2022
Total Income:
Total income for the financial year 2022-23 stood at Rs 10612.10 Lakhs whereas in Financial Year 2021-22 the same stood at Rs. 9059.53 Lakhs representing an decrease of (14.63%). The main reason of increase was increase in the volume of business operations of the company.
Revenue from Operations
During the financial year 2022-23 the net revenue from the operation of our Company decrease to Rs. 9019.91 Lakhs as against Rs. 10553.67 Lakhs in the Financial Year 2021-22 representing a decrease of (14.53%). The main reason of decrease was due to decrease in the revenue from EPC from 10552.19 Lakhs in the Financial Year 2021-22 as compared to Rs. 8530.31 Lakhs in the financial year 2022-23 representing a decrease of (19.16%).
Other Income:
During the financial year 2022-23 the other income of our Company decreased to Rs.39.62 Lakhs as against Rs. 58.43 lakhs in the Financial Year 2021-22 representing an decrease of (32.20%) which was due to Decrease in income from (i) Interest on FDR income of Rs. 37.22 lakhs in the financial year 2022-23 as compared to Rs. 54.85 lakhs in financial year 2021 -22 which amount to decrease of (32.14%) (ii) Commission and Forex exchange gain of Nil in the financial year 2022-23 as compared to Rs. 1.01 & 2.32 lakhs respectively in financial year 2021-22.
Total Expenses
The total expense for the financial year 2022-23 Decrease to Rs. 7956.57 Lakhs from Rs. 9908.48 lakhs in the Financial Year 202122 representing an decrease of (19.70%). Such decrease was due to Decrease in the volume of business operations of the Company.
Cost of Raw Material consumed
The Cost of material consumed for the financial year 2022-23 decreased to Rs. 6044.59 lakhs from Rs. 6521.65 lakhs in the Financial Year 2021-22 representing a decrease of (7.32%). Such decrease was due to increase in closing stock of materials from Rs 702.57 lakhs in financial year 2021 -2022 to Rs 1511.88 lakhs in financial year 2022-2023 representing an increase of 115.19%.
Employee benefits expense:
Our Company has incurred Rs. 400.18 Lakhs as Employee benefits expense during the financial year 2022-23 as compared to Rs. 574.39 Lakhs in the financial year 2021-22. The decrease of (30.33%) was due to decrease in (i) Salaries and wages of Rs. 141.39 lakhs in the financial year 2022-23 as compared to Rs. 151.43 lakhs in financial year 2021-22 which amount to decrease of (6.63%), (ii) Remuneration to Directors of Rs. 230.00 lakhs in the financial year 2022-23 as compared to Rs. 395.00 lakhs in financial year
2021- 22 which amount to decrease of (41.77%), (iii) Contribution to PF & other Funds of Rs. 2.14 lakhs in the financial year 202223 as compared to Rs. 2.38 lakhs in financial year 2021-22 which amount to decrease of (10.19%) (iv) Expenses related to ESIC and other of Rs. 0.78 lakhs in the financial year 2022-23 as compared to Rs. 1.03 lakhs in financial year 2021-22 which amount to decrease of (24.37%).
Finance Costs:
Our Company has incurred Rs. 255.86 Lakhs as finance cost during the financial year 2022-23 as compared to Rs. 229.06 Lakhs in the financial year 2021-22. The increase of 11.70% was due to increase in loan.
Depreciation and Amortization Expenses:
Depreciation for the financial year 2022-23 stood at Rs. 76.54 Lakhs as against Rs. 51.87 Lakhs during the financial year 2021-22. The increase in depreciation was around 47.56% which was due to addition in vehicles.
Other Expenses:
Our Company has incurred Rs. 1179.40 Lakhs during the Financial Year 2022-23 on other expenses as against Rs. 2531.51 Lakhs during the financial year 2021-22. There was an decrease of (53.41%) mainly due (i) Decrease in contract expenses for labour by (69.92%) from Rs. 1811.83 lakhs in financial year 2021-22 to Rs. 544.94 lakhs in financial year 2022-23, (iii) decrease in Site expenses by (5.77%) from Rs. 178.39 lakhs in financial year 2021-22 to Rs. 168.10 lakhs in financial year 2022-23, (iv) decrease in Tender fees by (42.58%) from Rs. 15.94 lakhs in financial year 2021-22 to Rs. 9.15 lakhs in financial year 2022-23 (v) decrease in Freight by (42.09 %) from Rs. 130.21 lakhs in financial year 2021-22 to Rs 75.40 lakhs in financial year 2022-23 (vi) decrease in Expenses related to import purchase from Rs. 53.81 lakhs in financial year 2021-22 to Rs. Nil in financial year 2022-23 (vii) decrease in Auditors remuneration by (11.68%) from Rs. 2.91 lakhs in financial year 2021-22 to Rs. 2.57 lakhs in financial year
2022- 23, (viii) decrease in Advertisement and business promotion by (40.94%) from Rs.12.53 lakhs in financial year 2021-22 to Rs. 7.40 lakhs in financial year 2022-23, (ix) decrease in Consultancy fees by (24.37%) from Rs.8.20 lakhs in financial year 202122 to Rs. 6.20 lakhs in financial year 2022-23, (x) decrease in Petrol and Diesel Expenses by (22.66%) from Rs.77.09 lakhs in financial year 2021-22 to Rs. 59.62 lakhs in financial year 2022-23, (xi) Decrease in Insurance, Legal and Testing Fees by (14.28%),
(68.23%), (87.77%) respectively from Rs.6.86 Lakhs, 4.25 lakhs, 27.24 Lakhs respectively in financial year 2021-22 to Rs. 5.88 lakhs, 1.35 Lakhs, 3.33 Lakhs respectively in financial year 2022-23, (xii) decrease in Electricity Expenses by (64.71%) from Rs.14.52 lakhs in financial year 2021-22 to Rs. 5.12 lakhs in financial year 2022-23. However, the decrease was partially offset by increase in some other items
Restated Profit before tax:
Net profit before tax for the financial year 2022-23 increased to Rs. 1102.95 Lakhs as compared to profit of Rs 703.62 Lakhs in the financial year 2021-22. The increase of 56.75% was majorly due to factors as mentioned above.
Restated profit after tax:
As a result of the above factors, our profit after tax for the year increase by 56.61% from net profit of Rs. 520.75 Lakhs in in financial year 2021 -22 to net profit Rs. 815.57 lakhs in financial year 2022-23. Consequently, our PAT Margin expanded to 9.04% in financial year 2022-23 from 4.3 % in financial year 2021-22.
Information required as per Item (IDtCltiv) of Part A of Schedule VI to the SEBI Regulations:
An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:
1. Unusual or infrequent events or transactions
The impact of COVID-19 pandemic which occurred in past affected the supply chain in our business operations and accordingly the financial position of the company. Any unusual or infrequent events like COVID-19, if occurred in future may affect the future operations and performance of the company.
2. Significant economic changes that materially affect or are likely to affect income from continuing operations.
There are no significant economic changes that may materially affect or are likely to affect income from continuing operations.
3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.
Apart from the risks as disclosed under Section “Risk Factors” beginning on page 26 of the Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.
4. Future changes in the relationship between costs and revenues
Other than as described in the sections “Risk Factors”, “Our Business” and “Managements Discussion and Analysis of Financial Condition and Results of Operations” on pages 26, 106, and 217 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.
5. Segment Reporting
Our company operates in a single product segment. For details on geographical segment please refer “Annexure IV” forming part of “Financial Information of the Company” on page 179 of the Red Herring Prospectus.
6. Status of any publicly announced New Products or Business Segment
Except as disclosed in the Chapter “Our Business”, our Company has not announced any new product or service.
7. Seasonality of business
Our business is not subject to seasonality. For further information, see “Industry Overview” and “Our Business” on pages 93 and 106 respectively.
8. Dependence on single or few customers
Our business is substantially dependent on projects awarded by government authorities. We derive almost all of our revenue from work orders awarded to us. Our business could be materially and adversely affected if there are adverse changes in the policies and delays in awarding contracts by these authorities, among other risks. For further details, see “Risk Factors - We bid for projects funded by the Central and State Governments and derive our revenues from the work orders awarded to us. Any reduction in budgetary allocation to our industry sector may affect the number of projects that the government authorities/bodies may plan to develop in a particular period. Our business is directly and significantly dependent on projects awarded by them” on page 26.
9. Competitive conditions
Competitive conditions are as described under the Chapters “Industry Overview” and “Our Business” beginning on pages 93 and 106 respectively of this Red Herring Prospectus.
10. Details of material developments after the date of last balance sheet i.e., March 31, 2024
After the date of last Balance sheet i.e., March 31, 2024, the following material events have occurred after the last audited period:
1. Our company has approved the audited consolidated financial statements for the Financial Year ending March 31, 2024 in the Board meeting dated April 26, 2024
2. Our Company has approved the Restated Financial Statements for the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022 in the Board meeting dated May 09, 2024
3. Our Company has approved the Draft Red Herring Prospectus vide resolution in the Board Meeting dated May 16, 2024.
4. Our Company has approved the Red Herring Prospectus vide resolution in the Board Meeting dated June 28, 2024
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