GLOBAL ECONOMY
Overview
The global economic growth was estimated at a slower 3.2% in 2022,
compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic
effect). The relatively slow global growth of 2022 was marked by the Russian invasion in
Ukraine, unprecedented inflation, pandemic induced slowdown in China, higher interest
rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.
The challenges of 2022 translated into moderated spending, disrupted
trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in
decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The
Federal Reserve raised its benchmark interest rate to its highest in 15 years. The concern
in 2022 is that the following year would be slower.
The global equities, bonds, and crypto assets reported an aggregated
value drawdown of USD26 trillion from its peak, equivalent to 26% of the global gross
domestic product (GDP). In 2022, there was a concurrently unique decline in bond and
equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries
delivered negative returns of more than 10%. Gross FDI inflows equity, reinvested earnings
and other capital declined 8.4% to $55.3 billion in April-December 2022. The decline was
even sharper in the case of FDI inflows as equity: these fell 15% to $36.75 billion
between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow
to 1.7% in 2023).
The S&P GSCI TR (Global benchmark for commodity performance) fell
from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in
crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent
crude oil dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per
barrel at the end of the calendar year following the enhanced availability of low-cost
Russian oil.
Outlook
The global economy is expected to grow at 2.8% in 2023, influenced by
the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall
marginally to 7%. Despite these challenges, there are positive elements within the global
economic landscape. The largest economies like China, the US, the European Union, India,
Japan, the UK, and South Korea are not in recession. Approximately 70% of the global
economy demonstrates resilience, with no major financial distress observed in large
emerging economies. The energy shock in Europe did not result in a recession, and
significant developments, including Chinas progressive departure from its strict
zero-Covid policy and the resolution of the European energy crisis, fostered optimism for
an improved global trade performance. Despite high inflation, the US economy demonstrated
robust consumer demand in 2022. Driven by these positive factors, global inflation is
likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global
economy is projected to grow less than 3% for the next five years, India and China are
projected to account for half the global growth.
INDIAN ECONOMY
Overview
Even as the global conflict remained geographically distant from India,
ripples comprised increased oil import bills, Inflation, cautious government and a
sluggish equity market. Indias economic growth is at 7.2% in FY 2022-23. India
emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to
become the fifth-largest global economy. India surpassed China to become the worlds
most populous nation.
According to the India Meteorological Department, the year 2022
delivered 8% higher rainfall over the long-period average. Due to unseasonal rains,
Indias wheat harvest was expected to fall to around 102 million metric tons (MMT) in
2022-23 from 107 MMT in the preceding year. Rice production at 132 million metric tons
(MMT) was almost at par with the previous year. Pulses acreage grew to 31 million hectares
from 28 million hectares. Due to a renewed focus, oilseeds area increased 7.31% from
102.36 Lakh hectares in 2021-22 to 109.84 Lakh hectares in 2022-23.
As Indias domestic demand remained steady amidst a global
slowdown, import growth in FY23 was estimated at 16.5% to $714 billion as against $613
billion in FY22. Indias merchandise exports were up 6% to $447 billion in FY23.
Indias total exports (merchandise and services) in FY23 grew 14 percent to a record
of $775 billion in FY23 and is expected to touch $900 billion in FY24. Till Q3 FY23,
Indias current account deficit, a crucial indicator of the countrys balance of
payments position, decreased to $18.2 billion, or 2.2% of GDP. Indias fiscal deficit
was estimated in nominal terms at Rs.17.55 Lakh Crore and 6.4% of GDP for the year ending
March 31, 2023.
Indias headline foreign direct investment (FDI) numbers rose from
US$74.01 billion in 2021 to a record $84.8 billion in 2021- 22, a 14% Y-o-Y increase, till
Q3FY23. India recorded a robust $36.75 billion of FDI. In 2022-23, the government was
estimated to have addressed 77% of its disinvestment target (Rs. 50,000 Crore against a
target of Rs. 65,000 Crore). Indias foreign exchange reserves, which had witnessed
three consecutive years of growth, experienced a decline of approximately $70 billion in
2022, primarily influenced by rising inflation and interest rates. Starting from $606.47
billion on April 1, 2022, reserves decreased to $578.44 billion by March 31, 2023. The
Indian currency also weakened during this period, with the exchange rate weakening from
Rs.75.91 to a US dollar to Rs. 82.34 by March 31, 2023, driven by a stronger dollar and
increasing current account deficit. Despite these factors, India continued to attract
investable capital.
Outlook
There are green shoots of economic revival, marked by an increase in
rural growth during the last quarter and appreciable decline in consumer price index
inflation to less than 5 percent in April 2023. India is expected to grow around 6-6.5
percent (as per various sources) in FY2024, catalysed in no small measure by the
governments 35% capital expenditure growth by the government. The growth could also
be driven by broad-based credit expansion, better capacity utilisation and improving trade
deficit. Headline and core inflation could trend down.
Private sector investments could revive. What provides optimism is that
even as the global structural shifts are creating a wider berth for Indias exports,
the country is making its largest infrastructure investment. This unprecedented investment
is expected to translate into a robust building block that, going ahead, moderates
logistics costs, facilitates a quicker transfer of products and empowers the country to
become increasingly competitive. This can benefit Indias exports in general,
benefiting several sectors. The construction of national highways in 2022-23 was 10,993
kilometres; the Ministry of Road Transport and Highways awarded highway contracts of
12,375 km in the last financial year.
The global landscape favours India: Europe is moving towards a probable
recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less
than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest
inflation in 40 years.
Broad-based credit growth, improving capacity utilisation,
governments thrust on capital spending and infrastructure should bolster investment
activity. According to our surveys, manufacturing, services and infrastructure sector
firms are optimistic about the business outlook. The downside risks are protracted
geopolitical tensions, tightening global financial conditions, and slowing external
demand.
INFRASTRCTURE SECTOR
Road infrastructure, including national highways, state highways,
district roads, rural roads and urban roads, plays a crucial role in connecting and
transporting the diverse population of consumers and businesses. It provides last-mile
connectivity to remote areas and compliments other modes of transportation.
India boasts the worlds second-largest road network, spanning 6.3
million km and catering to over 90% of passenger traffic and 64.5% of freight traffic. In
FY 2020-21, the pace of national highway construction reached a record high of 37 km per
day but subsequently decreased to 30.11 km per day in FY 2022-23. During FY 2022-23, the
construction of national highways in India reached 10,993 kilometers, falling short of the
governments target of 12,500 kilometers by 13.70%. Target of 12,200 km set for
construction of National Highways (NHs) in the country during the current financial year
2022-23. Overall road projects exceeding 65,000 km in length, costing more than INR 11
Lakh Crore, are in progress, of which projects of more than 39,000 km length has been
completed and length of more than 26,000 km works are in progress. NHs of 5,774 km length
has been constructed during the first nine months of FY 2022-23. 100% Foreign Direct
Investment is allowed under the automatic route in the road and highways sector.
Under Indias Gati Shakti program, a list of 81 high-impact
projects was consolidated, with road infrastructure projects given the top priority. The
government aims to construct 23 new national highways by 2025. National Highway Authority
of India (NHAI) is expected to generate H1 Lakh Crore (US$ 14.30 billion) annually from
toll and other sources in five years. The total expenditure of the Ministry in 2023- 24 is
estimated at Rs. 2, 70,435 Crore. This is 25% higher than the revised estimates for
2022-23. The highest expenditure (60% of the total expenditure) is towards NHAI. In
2023-24, NHAI is allocated Rs. 1, 62,207 Crore. Capital expenditure for 2023-24 is
estimated at H2, 58,606 Crore, while revenue expenditure is estimated at Rs.11, 829 Crore.
The proportion of capital expenditure in total expenditure has increased from the revised
estimates of 2022-23, from 95% to 96%. NHAI plans to construct 25,000 kilometers of
national highways in 2022-23 at a pace of 50 km per day.
The infrastructure sector is headed for a solid growth. The Indian
infrastructure sector seems to be in a much better shape, compared to other global larger
reputed players with easy access to funding and a focus on technology continued to gain
market share during the year.
Apart from improving connectivity, the development of road can open up
hitherto unconnected regions to trade and investment and set up access to goods, services
and employment opportunities.
The recent growth of the road infrastructure sector in India can be
attributed to the different innovative business models adopted by the government such as
Public Private Partnership (PPP), Hybrid Annuity Model (HAM) among others. This helped the
sector attract investment and higher participation from private players.
RESIDENTIAL REAL ESTATE MARKET
The Indian residential real estate sector seems to be in a much better
shape, compared to other global markets. The housing boom witnessed globally has been
accompanied by a sharp rise in housing prices, whereas prices in India have stabilized
after the last few years of correction. There has been a fear of housing bubble in few
countries, along with leverage issues of big players in some countries. The majority of
big real estate players in India have deleveraged the balance sheets in the last few
quarters. However, funding remains a challenge for the smaller players in the sector.
Union budget FY 2023-24 provisions
The Budget 2023-24 sought to lay the foundation for the future of the
Indian economy by raising capital investment outlay by 33% to H10 Lakh Crores, equivalent
to 3.3% of GDP and almost three times the 2019-20 outlay, through various projects like PM
Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise
Opportunities, Energy Transition and Climate Action, as well as Financing of Investments.
An outlay of Rs. 5.94 Lakh Crore was made to the Ministry of Defence (13.18% of the total
Budget outlay). An announcement of nearly Rs. 20, 000 Crores was made for the PM Gati
Shakti National Master Plan to catalyse the infrastructure sector. An outlay of H1.97 Lakh
Crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian
government intends to accelerate road construction in FY24 by 16-21% to 12,000-12,500 km.
The overall road construction project pipeline remains robust at 55,000 km across various
execution stages. These realities indicate that a structural shift is underway that could
strengthen Indias positioning as a long-term provider of manufactured products and
its emergence as a credible global supplier of goods and services.
OPPORTUNITIES
Focus on Road Infrastructure:
Government focus on high speed expressway and urban connectivity
leading to requirement for effective and efficient construction. Infrastructure push by
Government has increased bids and awarding activities. Continued focus on EPC projects
with timely execution and strict disciple in order selection is a core strategy of the
company. The present order book and the opportunities in the infrastructure space gives
good visibility towards a sustainable and profitable growth.
Housing Demand
The pandemic has nudged a lot of fence-sitters to convert into
first-time home buyers and existing ones to upgrade to larger homes by re-establishing the
security that homeownership offers, resulting in rising housing demand across segments. An
expected economic recovery along with the belief of housing prices bottoming out amongst
consumers and rising income levels are some of the factors which will drive the housing
demand going ahead.
Sector Consolidation
The highly fragmented Indian real estate sector has been in a prolonged
consolidation phase from the past few years and the pandemic has been one important factor
pushing weaker players out of business. The disruptions in the real estate sector have
ensured that no new player has an easy entry into the sector. As the sector moves towards
fewer big players in each region, the consolidation presents a lucrative opportunity for
the existing real estate developers to cater to rising housing demand.
THREATS AND CHALLENGES
Regulatory Hurdles
The sector is a highly regulated sector and any unfavorable changes in
government policies and the regulatory environment can adversely impact the performance of
the sector. There are substantial procedural delays with regards to land acquisition, land
use. Retrospective policy changes and regulatory bottlenecks may impact profitability and
affect the attractiveness of the sector and companies operating within the sector.
Monetary Tightening and Funding Issues
Infrastructure sector performance is closely linked to economic
recovery and its monetary policies. The Reserve Bank of India has so far maintained
accommodative stance as it tries to support economic recovery. However, going ahead we
expect to see monetary tightening as the central bank tries to control inflation in the
country.
Shortage of Manpower and Technology
The sector is heavily dependent on manual labour. During the pandemic,
the sector was badly hit due to labour availability issues which affected project
completion timelines. Hence, there is a need for development of technologically less
labour intensive alternative methods of construction.
COMPANYS PERFORMANCE AND PROJECTS
The Company had entered in the road construction projects in the past
year, the Company has made profit of Rs. 248.25 Lacs in FY 2022-23 in accordance with
Ind-AS as explained further in significant accounting policies.
FINANCIAL REVIEW
Revenue & Profitability
The Gross Revenue from operations for F.Y 2022-23 was placed at Rs.
77619.32 lacs (Previous Year Rs. 11263.99 lacs). The Profit after tax stood at Rs. 4557.97
lacs (Previous year was Rs. 248.25 lacs).
Balance Sheet
Your Companys Balance Sheet as on March 31, 2023 reflected with a
net worth of 8131.88 Lacs. The Company does have 2187.24 Lacs debt as on March 31, 2023.
| SIGNIFICANT CHANGES: |
| a. Debtors turnover ratio stood at 16.70 times in FY 23 as against 9.55
times in FY 22. |
| b. Inventory turnover ratio stood at 0.00 times in FY 23. |
| c. Interest Coverage Ratio stood at 36.83 times in FY 23 as against 6.68
times in FY 22. |
| d. Current Ratio has decreased to 0.64 in FY 23 from 0.98 in FY 22. |
| e. Debt Equity Ratio is 0.27 times during the Current Financial year. |
| f. Operating profit margin has increased to 7.84% in FY23 as compares to
3.56% in FY.22. |
| g. Similarly, net profit margin also shown growth of 5.88% in FY 23 as
compares to 2.21% in FY 22. |
| h. Return on capital employed stood at 60.89% in FY 23 as compared to
8.45% in FY 22. |
Risk management
The Company has implemented a robust risk management framework to
identify and mitigate operational and business risks. The senior management and risk
management committee regularly review major risk areas. Comprehensive policies and
procedures are in place to identify, mitigate and monitor risks at various levels. The
company conducts a comprehensive risk review through an external agency, which provides
recommendations to the Board on risk management strategies and possible controls.
Human resources
The company recognizes the pivotal role of its workforce as the source
of its competitive advantage. The company values its employees and acknowledges their
diverse range of experiences across different sectors and industries, as well as their
specialized technological knowledge and expertise. The companys HR philosophy is
firmly grounded in a commitment to innovation and progress, constantly challenging
traditional norms to maintain its competitiveness in the industry. The company
consistently makes employee-centric decisions that prioritize the professional and
personal aspirations of its workforce. The company promotes a healthy work-life balance,
fosters a sense of pride and belonging among its employees, and supports their growth and
development.
INTERNAL CONTROL SYSTEM AND ADEQUACY:
The company has a strong internal audit system in place, which is
regularly monitored and updated to safeguard assets, comply with regulations and promptly
address any issues. The audit committee diligently reviews internal audit reports, takes
corrective action as required and maintains open communication with both statutory and
internal auditors to ensure the effectiveness of internal control systems. This robust
internal audit framework ensures that the company operates with Integrity, transparency
and accountability, while mitigating risks and safeguarding the interests of stakeholders.
OUTLOOK
FY2022-23 was an exciting year for the infrastructure sector. The
company has in recent times witnesses the push on infrastructure development with
objective on better connectivity and increasing road network across the nation. There are
big opportunities in the short term and long term for the infrastructure space in India.
The Governments programmes provide significant opportunities for market players to
transform the sector.
The company has been focusing on strengthening its foothold and up
scaling its capabilities to undertake opportunities arising in the sector.
CAUTIONARY STATEMENT:
This statement made in this section describes the Companys
objectives, projections, expectation and estimations which may be ‘forward looking
statements within the meaning of applicable securities laws and regulations. Forward
looking statements are based on certain assumptions and expectations of future events. The
Company cannot guarantee that these assumptions and expectations are accurate or will be
realised by the Company. Actual result could differ materially from those expressed in the
statement or implied due to the influence of external factors which are beyond the control
of the Company. The Company assumes no responsibility to publicly amend, modify or revise
any forward looking statements on the basis of any subsequent developments.
| Place: Mumbai |
For the Board of Director |
For the Board of Director |
| Date: 25.08.2023 |
HazoorMultiProjectsLimited |
Hazoor Multi Projects Limited |
|
Sd/- |
Sd/- |
|
Pawankumar Nathmal Mallawat |
Akshay Pawan Kumar Jain |
|
Chairperson & ExecutiveDirector |
Whole Time Director |
|
DIN: 01538111 |
DIN: 08595089 |
+91-9892691696
