Introduction:
Generic Engineering Construction and Projects Limited (the Company) is engaged
in the construction of residential, industrial, commercial and Institutional buildings
with a presence in Maharashtra, Karnataka, Gujarat, Himachal Pradesh and Goa. Generic
offers general contracting, design-build; engineering, procurement and construction (EPC);
and project management consultancy (PMC) services. The companys forte lies in executing
projects having a ticket size between Rs.25 Crores to Rs. 100 Crores. The company has
expertise in building data centers, hospitals, schools, all types of industrial and
residential buildings. The company is a pioneer in building cold storage. The company has
the highest market share of contracting business in the fastest growing market of Navi
Mumbai, where the company has delivered more than 300 industrial buildings. The company
also provides designing and engineering services for architecture, structural, electrical,
mechanical, HVAC, plumbing and sewerage, fire protection, building management, and
infrastructure works.
Industry Structure and Development
Global Economy:
At the outset of 2023, encouraging developments in the global economy encompass the
easing of inflation and energy costs from their apex levels, along with Chinas decision
to terminate its zero-COVID strategy, which is projected to provide a stimulus to economic
growth. While the complete impact of these changes is yet to be fully realized, emerging
markets and developing economies are already experiencing a substantial upswing in growth
rates, The tightening of monetary policy by the majority of central banks is anticipated
to drive inflation back toward its targets leading it toward the recovery path.
Indian Economy:
The Indian economy has increased in size from being 10th to 5th largest in the world in
the past nine years. According to the Economic Survey 2022-23, the Indian economy has
staged a broad-based recovery across sectors and is positioned to ascend to the
pre-pandemic growth path in FY23 driven by several measures taken by the Government and
RBI - the Central Bank of India.
Indias economic growth in FY23 has been driven primarily by a rebound in private
consumption, a significant increase in capital expenditure (CAPEX) by the Government and a
sustained growth in private CAPEX due to the strengthening of their balance sheet. The
rebound in consumption was mainly driven by an increase in consumer confidence due to
universal vaccination and an overall improvement in labour market conditions. This was
reflected by a ramp-up in infrastructure and construction activity on the back of an
increase in Capex by the Government. The growth in credit offtake, direct tax collections
in FY23, retail inflation back within RBIs target range in November 2022 and increase in
employment generation in urban markets also signaled the strength in the broad-based
recovery of the economy.
Indias GDP growth is expected to remain healthy in FY24 backed by an
infrastructure-led growth model by the Government with an emphasis on transportation,
housing, logistics and last-mile connectivity. This is further supported by crowd-in
private investments, improvement in consumption level, and enhanced affordability.
Construction Sector:
The construction sector contributes roughly 8% to the GDP. The significant capex outlay
by the Government since 2020 and multiple initiatives to bring in private investment have
ramped up the construction activity across the economy. According to Second Advance
Estimates published by the Central Statistics Office (CSO), the construction sector is
likely to see a second year of strong growth of 9.1% in FY23. Further, the strong focus of
the Government on infrastructure-led economic growth is expected to bring significant
opportunities in the sector over the medium term. Indias construction sector is expected
to record a CAGR of 10.8% during the 2022-2026 period.
However, the global conflict had put pressure on commodity prices leading to an
increase in the input prices of critical raw materials like cement, steel, iron ore, etc.
required in the construction industry which in turn resulted in price-hikes by a majority
of the developers to mitigate the rise in construction costs. In order to curb inflation.
Strong demand was driven by various factors such as rent favoring millennials becoming the
convinced buyers of residential homes due to aspiration of owing premium lifestyle homes.
The increased pace of urbanization and improvement in the job market & and business
environment also supported the demand. The Government is also taking several measures to
formalize, regulate and bring sustainable growth in the sector. The Governments
announcement of incentives and tax breaks in the budget for 2023-2024 is expected to have
a significant impact on the Construction industry.
Opportunities
Indias construction industry has been one of the most lucrative economic prospects in
the countrys recent history, due to growing urbanization and population growth The
construction industry in India has experienced substantial expansion in recent years, and
it is likely to continue rising at good rates in the foreseeable future. As a veteran in
the industry, Generic has having potential in getting more projects in the said sector.
Hence your company is continuously making efforts to fuel this industrys growth as well
as the prospective opportunities for investors in this field.
Further, having wide range of working experience in the said industry your company has
already completed or nearly completion of numerous projects, which will help the Company
to bagged more such projects.
Threats
The threat be it external or internal, is inherent in every business. The main concerns
are, demand constrains for the products arising from the prevailing environment, natural
calamities, low disposable income and charge in the priority of consumers and fierce
completion leading to higher spent on trade activities and promotional support
necessitating allocation of more resources.
In order to deal for such threats or risk, your Company has closely monitored various
aspects like cost of the construction, materials, time of completion of project etc. and
whenever it has realized to take immediate action, it has given effect to. Focus on
financial discipline including effective management of net working capital has helped to
overcome the above risk and concerns to some extent.
Segment Analysis and Review:
The company operates in a single business / geographical segment. Hence, segment wise
performance is not furnished. Outlook
Financial year 2022-23 was largely a normal year in terms of operating Environments
which tends to be an opportunity for the Indian economy to become a world leader.
Consolidation of the industry continues to accelerate with more than 50% of incremental
new supply now coming from branded developers. This consolidation is expected to continue
even going forward especially in context of rising interest rates.
Post-pandemic, developers have moved away from the traditional way of doing business
and rightly focused on end-user customer demand with a strong focus on innovation and
digital transformation. Financially strong and reputed developers with superior execution
capabilities stand to benefit disproportionately from the ongoing cyclical upturn
Another aspect to consider is talent management strategies: finding the right people
and training and reskilling them to enable the work and workplaces of tomorrow. FY 2023-24
is expected to be another rewarding, but challenging year, and the industry looks to be
poised to capture growth opportunities.
Risk and Concerns
Our Company remains exposed to risks which could impact our operating and financial
performance. These risks could be macro, geopolitical, environmental, health related and
sector specific in nature. We continue to remain vigilant and have mitigation strategies
in place to minimise the impact from such risks.
• Geopolitical tensions leading to supply chain disruptions
Risk: Given the escalating geopolitical tensions especially in Russia-Ukraine war could
have an impact on the global growth and return of energy price inflation which in turn
feeds into overall inflation making the task of policymaking tougher, there may be
significant disruption to various supply chains and the resultant price volatility. In
case of prolonged conflict, this may have an impact on the economy in general including
real estate sector.
Mitigation: While it is pretty evident that any such disruption impacts global economy
instantly, impact of the same on longer time horizon in case such conflicts lasts longer,
is hard to predict. Most of our inputs are domestic in nature and thus face muted global
disruption risks. As a company, we are committed to keep our sourcing for inputs from
diversified sources which lowers such risks.
• Availability and Price of Raw Materials
Risk: The enforcement Steel, ready-mix concrete, steel, pipe and pipe fittings, and
cement are only a few of the basic resources that the Company needs. Due to a supply and
demand mismatch, severe competition, and fluctuations in production levels, its price and
availability may be affected. Price changes and failure to purchase items on schedule may
influence the Companys brand value and profitability
Mitigation: The Company has maintained positive, mutually beneficial relationships with
its suppliers, ensuring a steady supply of high-quality raw materials. It also engages in
contracts where the conditions include a general escalation clause based on the wholesale
price index of materials, which transfers the risk of fluctuating input prices to the
client. Seasonal changes in raw material costs, however, are unavoidable and are accounted
for in the cost calculations.
• Changes in the Competitive Landscape
Risk: The construction business is vulnerable to both new and established competitors.
The intense rivalry may result in pricing pressure, affecting the Companys profitability
and growth.
Mitigation: The Company is devoted to boosting efficiency, decreasing wastage, and cost
optimisation, among other things, to remain competitive and secure projects without
sacrificing profitability. Furthermore, the Company is dedicated to a strong customer
relationship management strategy, with an emphasis on repeat purchases from the private
sector and expansion into new public-sector business fields.
• Project delay risk
Risk: If projects are not finished on time, then the company is susceptible to
increased cost and loss of reputation which can hurt the order book.
Mitigation: The Company has processes, systems and strong human capital which
continuously improves the project management capabilities of the organisation and engages
in careful bid preparation to avoid any over utilisation of resources.
• Safety concerns
Risk: Onsite accidents can lead to serious or fatal injuries which is against the
companys policies and ethos. Moreover, there is risk from pecuniary and nonpecuniary
losses to the company.
Mitigation: The company considers the safety of all its personnels including off
payroll workers in the construction site, as the highest priority. Therefore, the company
deploys safety measures such as safety gear for workers, equipments integrated with
warning systems and safety attachments, standard operating procedure (SOP) manual.
Internal Control systems and their adequacy
The Company has an adequate internal financial control system commensurate with the
size, scale and complexity of its operations. It has put in place adequate controls,
procedures and policies for ensuring orderly and efficient conduct of its business
including adherence to polices, safeguarding its assets, prevention and detection of
frauds and errors, accuracy and completeness of accounting records. Appropriate frameworks
have been designed to have internal controls over financial reporting, which ensures the
integrity of financial statements of the Company and reduces possibility of malpractice.
Design of key processes and various policies are reviewed periodically, from the point of
view of adequacy of controls.
The Board of Directors and management at all levels of the Company demonstrate through
their directives, actions and behaviours the importance of integrity and ethical values to
support the functioning of the system of internal control. The ‘Code of Conduct and
the ‘Whistle-blower/ Vigil Mechanism policies form an integral component of the
internal control system. The Code of Conduct compliance is mandatory for employees and the
Whistle-blower / Vigil Mechanism policies enables employees and vendors to raise genuine
concerns about any actual or suspected ethical / legal violations or misconduct or fraud,
with adequate safeguards against victimisation, fear of punishment or unfair treatment.
Internal controls are tested for effectiveness, across all project sites and functions
by the Internal Audit team, which is reviewed by the management for corrective action from
time to time and deviations, if any, are reported to the Audit Committee periodically.
Operational and financial performance
During the year under review, your company has achieved Revenue from Operations and
including other Income of Rs. 27,391.22 Lakhs as compared to Rs. 26,255.35 Lakhs in the
previous year. After deducting Expenses and Exceptional Items the profits of the Company
were standing at Rs. 2,003.74 Lakhs as compared to Profit of Rs. 1,742.40 Lakhs during the
previous year. After providing for taxes and other adjustments, the current year earned a
profit at Rs. 1,531.12 Lakhs as compared to a Profit of Rs. 1,392.22 Lakhs during the
previous year.
Material developments in Human Resources / Industrial Relations front, including number
of people employed.
The Company recognise our industry in which we operated is a labour and employees
intensive industry and key to the success of the organization and in meeting its business
objectives. Hence, our company strive to create a quality of life for its employees.
Keeping the spirits high at workplace needs a sound mental and physical fitness and
deep-rooted culture which promotes work life balance.
Key Financial Ratios are as follows
The key financial ratios for the financial year 2022-23 and comparison thereof with the
financial year 2021-22 has been stated in the Financial statement for the period ended
March 31, 2023.
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For and on behalf of the Board of Directors of |
|
Generic Engineering Construction and Projects Limited |
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Sd/- |
|
Manish Patel |
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Managing Director |
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DIN:00195878 |
|
Sd/- |
|
Jayesh Rawal |
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Whole-Time Director |
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DIN:00464313 |
| Place: Mumbai |
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| Date: 06/09/2023 |
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| C/o: 201 & 202, Fitwell House, |
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| 2nd Floor, Opp Home Town LBS Road, |
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| Vikhroli (West), Mumbai City - 400083, |
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| Maharashtra, India |
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+91-9892691696
