Gayatri Highways Ltd Management Discussions

COMPANYS OVERVIEW

Gayatri Highways Limited - GHL ("the Company") was incorporated during the year 2006 in accordance with the provisions of Companies Act, 1956. The Company on its own and through its jointly controlled entities is in the business of construction, operations and maintenance of carriageways on toll and annuity basis pursuant to the development agreements with the National and State Governments and makes investments in companies engaged in the construction, operations and maintenance of roads, highways, vehicle bridges and tunnels and toll roads. The registered office of the Company is located at 5th Floor, A-Block, 6-3-1090, TSR Towers, Rajbhavan Road, Somajiguda, Hyderabad-500082, Telangana.

Industry Analysis:

Increased impetus to develop infrastructure in the country is attracting both domestic and international players. In the roads sector, the Governments policy to increase private sector participation has proved to be a boon for the infrastructure industry as many private players are entering the business through the public private partnership (PPP) model. According to a leading analysis forecast, India is expected to become the third largest construction market globally.

Minister for Road Transport & Highways and Micro, Small and Medium Enterprises stated that the government is giving utmost priority to infrastructure development and has set a target of road construction of worth Rs. 15 lakh crore (US$ 206 billion) in the next two years.

Opportunities and Threats

In view of more and more competition in construction industry, the opportunities for securing contracts need continuous innovation in its various core functions. The Company has emerged as a significant Infrastructure Company with diversification in Roads and Expressways. The Company is poised to seize every opportunity to expand the existing line of business. The Company is well equipped to handle threats of competition and challenges or the Companys ongoing execution of Projects.

Business outlook:

In Union Budget 2023-24, the Government of India has given a massive push to the infrastructure sector by allocating approximately Rs. 2,70,435 Crores to enhance the infrastructure sector by emphasizing its importance and creating modern infrastructure.

The Budget aims to construct 25,000 Kilometers of National Highways in 2022-23 which is nearly double that of the maximum achieved the last 5 years, and by 2024, the Ministry of Road Transport and Highways wants to build 60,000 kms of world-class national highways at a rate of 40 kms each day, and 2 Lakh kms of National Highways are targeted to be completed by 2024-25 under PM Gati Shakti.

In the roads sector, the Governments policy to increase private sector participation has proved to be a boon for the infrastructure industry as many private players are entering the business through the public-private partnership (PPP) model.

Your Company is exploring new opportunities to identify suitable and viable project or to continue and strengthen its present business with its existing SPVs keeping in view the current business conditions, financial constraints, modern technologies, project deadlines, safety protocols, compliances and market margins

RISKS AND CONCERNS

Inadequate risk management is a primary cause of concern indicated by most organizations in India. To be in a position to have fully identified all risks associated with a project and have a response plan for each; that is clearly a benchmark most organizations acknowledge, nevertheless, do little about it. Risk Management by its very nature is flawed because it only identifies the things project managers know; it fails to appreciate the "unknown", "unknowns", the "un-controllable". That said, the more risks identified and planned for, the better position the project team is in to deliver a successful project. Risk Management has been identified as a best practice by most respondents. Moreover, there is a growing concern among Organizations about inaccurate risk identification. The project will yield continuous flow of revenue for the Company

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has adequate Internal Control Systems and Procedures with regard to purchase of Stores, Raw Materialsincluding Components, Plant and Machinery, equipment,sale of goods and other assets. The company has clearly defined roles and responsibilities for all managerial positionsand all operating parameters are monitored and controlled.

The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits.

FINANCIAL PERFORMANCE & OPERATIONALPERFORMANCE:

A. FINANCIAL CONDITION:

Capital Structure:

The Paid-up Share Capital of the Company as on 31st March, 2023 is Rs 21,563.07 Lakhs divided into 239,651,900 Equity Shares of Rs 2/- each fully paid up and 167,700,300 9% Non-convertible Cumulative Redeemable Preference shares (NCRPS) of Rs 10/- each.

Other Equity:

The retained earnings in other equity of the company as on 31st March, 2023 stand at Rs (28,706.27) Lakhs as compared to Rs (10,832.52) Lakhs in the previous year. The major share of increase in loss is due to the exceptional loss of Rs 17,172.85 Lakhs recognized during the FY 2022-23 by Investments written off Rs 35,060.36 Lakhs and loans payable written off Rs 17,887.51 Lakhs.

Capital reserve in other equity of the company as on 31st March, 2023 stand at Rs4,738.35 Lakhs as compared to Rs 4,662.80 Lakhs in the previous year. The increase in capital reserve is due to reversal of adjusted goodwill on acquisition Rs 75.55 Lakhs related to SMTL Investment.

Fixed Assets:

During the financial year 2022-23, Computers and Office equipment were acquired for an amount of Rs13.03 Lakhs and Rs3.19 Lakhs respectively by the company, whereas during the previous year 2021-22, Computers were acquired for an amount of Rs2.79 Lakhs by the company.

Sundry Debtors:

Sundry debtors decreased to Rs58.81 Lakhs as on 31st March, 2023 as against Rs156.70 Lakhs debtors in the previous year. These debtors are considered good and realizable.

Cash and Bank Balances:

Cash and Bank balances with Scheduled Banks stood to Rs18.88 Lakhs as against Rs5.90 Lakhs in the previous year. However the company had investments in liquid debt funds (Cash equivalent) worth of Rs130.12 Lakhs as on 31.03.2023 and Rs347.87 Lakhs as on 31.03.2022

Loans and Advances:

Long Term Loans and Advances is Rs Nil in the current year as well as in the previous year.

Short Term Loans and Advances is Rs 2,873.28 Lakhs as against Rs 2,671.17 Lakhs in the previous year.

Current Liabilities:

Current Liabilities as on 31st March, 2023 is Rs15,026.62 Lakhs as against Rs15,824.29 Lakhs in the previous Year.

B. OPERATIONAL RESULTS: Turnover:

During the financial year 2022-23 the turnover of the Company was Rs762.56 Lakhs and income from other sources as on 31st March, 2023 was Rs1,441.01 Lakhs, compared to the turnover of the company was Rs629.92 Lakhs and income from other sources was Rs353.76 Lakhs, in the previous financial year.

Depreciation:

The Company has provided for depreciation of Rs4.11 Lakhs during the financial year 2022-23 whereas depreciation of Rs2.94 Lakhs provided in the previous financial year.

Provision for Tax:

The Company has not provided for tax in the financial year 2022-23 and in the previous financial year since there were no profits.

Net Profit:

The Net loss of the Company after tax is Rs(17,873.75) Lakhs as against Rs(1,507.03) Lakhs in the previous year.

Earnings per Share:

The Earnings(Losses) per Share of the Company as on 31st March, 2023 is Rs (7.46) per share for Face Value of Rs2/- as against Rs (0.63) per share for Face Value of Rs2/- in the previous year.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIALRELATIONS:

The Company believes that the Companys growth and future success depend largely on the skills of the Companys work force, including executives and officers, as well as the designers and engineers and the attraction of critical skills.The loss of the services of one or more of these employees could impair the Companys ability to continue to implementits business strategy. The Companys success also depends,on its continued ability to attract and retain experienced and qualified employees. The Company is committed to building the competencies of its employees and improving their performance through training and development. The Company focus is on identifying gaps in its employeescompetencies and preparing employees for changes in competitive environments, as well as to meet organizational challenges. Some of the focus areas in training inthe last year centered on leadership, innovation management and internationalization besides other training programmes to drive a change in the Companys employees outlook as it continue to develop as a global competitor.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

Keyfinancial ratios on standalone basis including significant changes (more than 25%) are shown in the table below:

Ratio	FY 2022-23	FY 2021-22	Change	Note
Debtor Turnover (days)	39.98	29.55	-35.32%	A
Interest Coverage Ratio	0.66	0.29	-125.60%	B
Current Ratio	0.22	0.21	-7.09%
Debit Equity Ratio	(2.17)	2.50	188.95%	C
Operating Profit margin %	62.71%	63.82%	1.75%
Net profit margin %	(31.81)%	(153.20)%	79.24%	D
Return on Net Worth	(14.62)%	(31.44)%	53.49%	E

A. Receivables decreased during the year end when compared to previous year end.

B. The interest coverage ratio is improved as the earnings are increased compared to previous financial year.

C. Debt equity ratio is decreased due to reduction in profits and net worth.

D. Net profit margin is improved as both revenue and profits increased.

E. Return on Net worth margin is improved as profits increased and net worth reduced.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objective, projections, estimates,expectations may be "forward-looking statements" withinthe meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates changes in the Government regulations, tax lawsand other statutes and incidental factors.

Place: Hyderabad	M.V. NARASIMHA RAO	KRISHNAMURTHY CHATURVEDI
Date: 10th August, 2023	DIRECTOR	DIRECTOR
	DIN: 06761474	DIN:08661228