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 inFlow s – 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 inFlow s 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.
| Regional growth (%) |
2022 |
2021 |
| World output |
3.2 |
6.1 |
| Advanced economies |
2.5 |
5 |
| Emerging and developing economies |
3.8 |
6.3 |
Performance of major economies
| United States |
China |
United Kingdom |
Japan |
Germany |
| Reported GDP growth of 2.1% compared to 5.9%
in |
GDP growth rate was 3% in 2022 compared to
8.1% in |
GDP growth rate was 4.1% in 2022 compared to
7.6% in |
GDP growth rate was 1.7% in 2022 compared to
1.6% in |
GDP growth rate was 1.8% compared to 2.6% in
2021 |
| 2021 |
2021 |
2021 |
2021 |
|
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.
(Source: IMF).
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 (Source: IMF, World Bank)
Growth of the Indian economy
|
FY 20 |
FY 21 |
FY 22 |
FY23 |
| Real GDP growth (%) |
3.7 |
(6.6) |
8.7 |
7.2 |
Growth of the Indian economy quarter by quarter, FY 2022-23
|
Q1FY23 |
Q2FY23 |
Q3FY23 |
Q4FY23 |
| Real GDP growth (%) |
13.1 |
6.3 |
4.4 |
6.1 |
(Source: Budget FY24; Economy Projections, RBI projections)
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.
Indias auto industry grew 21% in FY23; passenger vehicle (UVs,
cars and vans) retail sales touched a record 3.9 million units in FY23, crossing 3.2
million units in FY19. The commercial vehicles segment grew 33%. Two-wheeler sales fell to
a seven-year low; the three-wheeler category grew 84%.
Till the end of Q3FY23, total gross non-performing assets (NPAs) of the
banking system fell to 4.5% from 6.5% a year ago. Gross NPA for FY23 was expected to be
4.2% and a further drop is predicted to 3.8% in FY2023-24.
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.7.55 Lakh Crore and 6.4% of GDP for the year ending
March 31, 2023.
(Source: Ministry of Trade & Commerce)
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.0,000 Crore against a
target of RS.5,000 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.5.91
to a US dollar to RS.2.34 by March 31, 2023, driven by a stronger dollar and increasing
current account deficit. Despite these factors, India continued to attract investable
capital.
The countrys retail inflation, measured by the consumer price
index (CPI), eased to 5.66% in March 2023. Infiation data on the Wholesale Price Index,
WPI (calculates the overall price of goods before retail) eased to 1.3% during the period.
In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May
2022. By close of the year under review, inflation had begun trending down and in April
2023 declined below 5%, its lowest in months. Indias total industrial output for
FY23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on-year as
against a growth of 11.4 percent in 2021-22.
India moved up in the Ease of Doing Business (EoDB) rankings from 100th
in 2017 to 63rd in 2022. As of March 2023, Indias unemployment rate was
7.8 percent.
In 2022-23, total receipts (other than borrowings) were estimated at
6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by
11.1 percent Y-o-Y in RE 2022-23. The total gross collection for FY23 was RS.8.10 Lakh
Crore, an average of RS..51 Lakh a month and up 22% from FY22, Indias monthly goods
and services tax (GST) collections hit the second highest ever in March 2023 to RS..6 Lakh
Crore. For 2022–23, the government collected RS.6.61 Lakh Crore in direct taxes,
according to data from the Finance Ministry. This amount was 17.6 percent more than what
was collected in the previous fiscal.
Per capita income almost doubled in nine years to RS.72,000 during the
year under review, a rise of 15.8 percent over the previous year. Indias GDP per
capita was 2,320 USD (March 2023), close to the magic figure of $2500 when consumption
spikes across countries. Despite headline inflation, private consumption in India
witnessed continued momentum and was estimated to have grown 7.3 percent in 2022-23.
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, benefit ing 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.
(Source: IMF).
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.
Indias production-linked incentive appears to catalyse the
downstream sectors. Infiation is steady. India is at the cusp of making significant
investments in renewable energy and other sectors and emerging as a suitable industrial
supplement to China. India is poised to outpace Germany and Japan and emerge as the
third-largest economy by the end of the decade. The outlook for private business
investment remains positive despite an increase in interest rates. India is less exposed
to Chinese economic weakness, with much less direct trade with China than many Asian
peers. 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.
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 RS.0 Lakh Crores,
equivalentto3.3%ofGDPandalmostthree 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..94 Lakh Crore was made to the Ministry of Defence (13.18% of
the total Budget outlay). An announcement of nearly RS.0,000 Crores was made for the PM
Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of
RS..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.
Indian road infrastructure sector review
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 tra_c and 64.5% of freight tra_c. 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 RS. 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.,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.,62,207 Crore. Capital expenditure for 2023-24 is estimated at RS.,58,606
Crore, while revenue expenditure is estimated at RS.1,829 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 kilometres of national highways in 2022-23 at a
pace of 50 km per day.
Budget Allocation for the Ministry of Road Transport and Highways (in Rs.
Crore)
|
Actuals |
FY 2022-23 |
FY 2023-24 |
% change |
|
21-22 |
|
|
|
| NHAI |
57,314 |
1,41,606 |
1,62,207 |
14.5 |
| Roads and bridges |
66,237 |
74,984 |
1,07,713 |
43.6 |
| Total |
1,23,551 |
2,17,027 |
2,70,435 |
24.6 |
(Source: ibef.org, pib.gov.in, economictimes.indiatimes.com,
prsindia.org)
Indianrailwayinfrastructure sector overview
India has the worlds fourth-largest railway system, trailing only
the US, Russia and China. It spans a track length of 126,366 km with 7,335 stations. In
2022-23, a remarkable 5,243 km of track length was achieved, compared to 2,909 km in
2021-22. The daily average track laying reached 14.4 km, the highest ever recorded.
The Indian railways operate 13,523 passenger trains and 9,146 freight
trains every day. In FY 22-23, a record-breaking freight loading of 1,512 million tonnes
was achieved. The Indian railway is the largest employer in India and the eighth largest
globally, providing employment to around 1.3 million people.
FDI inFlow s in railway-related components reached US$ 1.23 billion
between April 2000 and September 2022. By 2030, the rail infrastructure will receive an
investment of RS.0 Lakh Crore (US$ 715.41 billion). Government has allowed 100% FDI in the
railway sector. India is projected to account for 40% of the total global share of rail
activity by 2050. In the Union Budget 2022-23, the Ministry of Railways was allocated a
budget of RS.40,367.13 Crore (US$ 18.40 billion).
(Source: investindia.gov.in, ibef.org)
Government initiatives
Bharatmala Pariyojana
Projects under the governments flagship Bharatmala Pariyojana is
expected to be completed by 2026-27 at a higher cost of RS.0.63 trillion as against the
original investment of RS..35 trillion. Till date, projects spanning a length of 22,302 km
and entailing a cost of RS..9 billion have been awarded under the programme while 9,548 km
of length has been completed. In addition, expenditure of RS..29 trillion has been
incurred.
Pradhan Mantri Gati Shakti – National master plan for multimodal
connectivity
This initiative primarily aims to establish an interconnected and
integrated multimodal transportation network in India. It focuses on enhancing
connectivity in road freight transport by developing 39 multi-modal logistics parks. These
parks will alleviate congestion in critical areas, allow smoother and more efficient
movement of goods.
NHIDCL (National Highways andInfrastructure Development Corporation
Limited)
Under Bharatmala Pariyojana Phase I, the NHIDCL has been assigned to
develop 5,070 km of roads. This project will improve connectivity among border highways
and the economic corridor.
Special Accelerated Road Development Programme for North Eastern region
(SARDP-NE)
This project mainly focuses on the development of the North-Eastern
region road infrastructure. SARDP-NE Phase B will construct 3,723 km of roads, which
consist of 2,210 km of national highways and 1,513 km of state roads by 2023-24.
Arunachal Pradesh scheme
This project aims to be complete by 2023-24 and will develop 2,205 km
of national highways and 114 km of state roads.
Bharat Gaurav
Indian Railways introduced the ‘Bharat Gaurav theme-based
tourist circuit train to highlight Indias vibrant cultural heritage and magni_cent
historical sites.
National Rail Plan Vision – 2030
The Indian Railways has developed a National Rail Plan (NRP) for India
2030 with the goal of building a future-ready railway system by 2030. The plan focuses on
increasing the Railways modal share in freight to 45% by implementing strategies
based on operational capacities and commercial policies. By creating capacity ahead of
demand, the NRP aims to accommodate future growth in demand until 2050 while sustaining a
45% modal share in freight tra_c for the railways.
(Source: mobilityoutlook.com, pib.gov.in)
Growth drivers
Increasing population
India, with a population of 1,425,775,850 has recently surpassed China.
With a median age of 28.2 years, Indias growing population underscores the critical
need to prioritize infrastructure development, particularly in terms of roadways and
transit time. Improving connectivity through enhanced infrastructure is vital to ensure
efficient and seamless transportation for its citizens.
Urbanisation
By 2047, 50% of the population is projected to reside in urban areas,
creating a demand for enhanced urban infrastructure.
Industrialization
The launch of the PLI scheme will fuel industrial growth, leading to an
increased demand for faster transit times and improved road infrastructure. This
highlights the need for enhanced road connectivity throughout the country.
Infrastructure investment
To achieve Indias goal of becoming a $5 trillion economy by 2025,
infrastructure development is crucial. The government has introduced the National
Infrastructure Pipeline (NIP) along with initiatives like ‘Make in India and
the production-linked incentives (PLI) scheme to accelerate the growth of the
infrastructure sector.
Outlook
Timely asset monetization has become crucial to fund the Bharatmala
program, given the cost escalation in land acquisition and input costs. NHAI aims to raise
approximately RS.50 billion through asset monetization. The authority has identified
potential (Build-operate-transfer) BOT projects to be awarded this year and expects an
increase in BOT awards following amendments in the BOT concession agreement.
The road sector in India is experiencing a positive growth trajectory.
Factors such as healthy tra_c growth, expressway development under Gati Shakti,
sustainability and multimodal connectivity and private capital in_ux contribute to its
bright prospects. Private investments in the sector are expected to reach RS. trillion by
2030. Regulatory interventions, optimistic investor sentiment and a focus on improved
mobility will further accelerate the sectors development.
Company overview
Rs..G. Infra Engineering Limited (HGIEL), established in 2003, has
become a recognized name in the Indian road infrastructure and railways sector. The
Company has a strong presence in Rajasthan, Haryana, Delhi, Uttar Pradesh, Himachal
Pradesh, Maharashtra, Jharkhand, Telangana, Odisha, Andhra Pradesh and Karnataka.
The company is primarily involved in road construction activities and
has emerged as a significant Engineering Procurement Construction (EPC) player. The
company is increasingly focusing on Hybrid Annuity
Model (HAM) projects and serves a diverse clientele, including
government and private sectors. With a strong brand reputation, HGIEL has established a
robust business model that integrates complete project execution, supported by an
extensive fleet of in-house equipment and skilled manpower. The company has a successful
track record in executing large civil construction projects such as highway and railway
extensions, land development and water pipeline projects.
Outlook
The company has recently witnessed a strong emphasis on infrastructure
development, aiming to enhance connectivity and expand the road network and railways
nationwide. With a consistent increase in awarding activity and rapid construction pace,
the company foresees significant potential for future order inFlow s. By focusing on
strengthening its presence and enhancing capabilities, the company is well-prepared to
seize emerging opportunities in the sector. Adoption of digital technology enables daily
activity monitoring, and improves operational efficiency. These measures will optimize
resource utilization, leading to margin expansion and robust Financial performance.
Segment wise performance
Segment wise revenue (Amount in Rs. Million)
|
HAM |
EPC |
Metro |
Railway |
Others |
| FY 2021-22 |
9,336.90 |
26,815.10 |
- |
- |
- |
| FY 2022-23 |
15,204.40 |
28,930.70 |
- |
49.80 |
- |
HGIEL recorded revenue growth of 62.84%, 8.25%, 100% across HAM, EPC
and railway during FY 2022-23.The growth was mainly achieved due to award of new projects
in road and railway sector.
Operating expenses and PBDIT (Amount in Rs. Million)
|
2022-23 |
2021-22 |
| Sales and administration expenses |
106 |
62 |
| Employee expenses |
1959 |
1279 |
| Operating profit |
7103 |
5847 |
Employee expenses for FY 2022-23 amounted to RS.959 Crore, showing a
53.2% increase compared to the previous year. As a percentage of revenue, it rose by nine
basis points, indicating manpower expansion and salary revisions. The company remains
committed to enhancing productivity, digitalization and optimizing manpower across its
various businesses.
Sales and administration expenses stood at RS.06 Crore, which is 71%
increase from the previous year of RS.2 Crore.
The Companys operating profit stood at RS.103 Million for the
year 2022-23 registering a growth of 21.5% y-o-y, largely due to higher revenue volumes.
Financial overview
Analysis of the profit and loss statement Revenues: Revenues from
operations reported from RS.6,152 Million in FY 2021-22 to RS.4,185 Million in FY 2022-23.
Other income of the Company reported a 131% increase and accounted for a 0.4% share of the
Companys revenues, reflecting the Companys dependence on its core business
operations.
Expenses: Total expenses increased by 22.1% from RS.1,684 Million
in FY 2021- 22 to RS.8,679 Million in FY 2022-23 raw material costs, accounting for a
48.51% share of the Companys revenues increased by 19.6% from RS.7,919 Million in FY
2021- 22 to RS.1,435 Million in FY 2022-23. Employees expenses, accounting for a 4.4%
share of the Companys revenues, increased by 53.2% from RS.,279 Million in FY
2021-22 to RS.,959 Million in FY 2022-23.
Analysis of the Balance Sheet
Sources of funds: The capital employed by the Company were RS.0,500
Million as on March 31, 2023 as against RS.5,336 Million as on March 31, 2022. Return on
capital employed, a measurement of returns derived from every rupee invested in the
business, was 30% in FY 2022-23 as against 33% in FY 2021-22.
The net worth of the Company was RS.7,784 Million as on March 31, 2023
as against RS.3,643 Million as on March 31,
2022, due to increase in company reserve and surplus. The
Companys equity share capital, comprising 6,51,71,000 equity shares of RS.0 each,
remained unchanged during the year under review.
Long-term debt of the Company was RS.,360 Million as on March 31, 2023.
The debt-equity ratio of the Company stood at 0.28 in FY 2022-23 compared to 0.23 in FY
2021-22.
Finance costs of the Company decreased by 0.03% from RS.33 Million in
FY 2021-22 to RS.28 Million in FY 2022-23. The Companys debt service coverage ratio
stood at a comfortable 4.97 at the close of FY 2022-23 as against 4.53 at the close of FY
2021- 22.
Applications of funds: Fixed assets (gross) of the Company was
RS.0,336 Million as on March 31, 2023 as against RS.,077 Million as on March 31, 2022.
Depreciation on tangible assets was RS.29.33 Million in FY 2022-23 as
against RS.28.03 Million in FY 2021-22 during the year under review.
Investments: Non-current investments of the Company were RS.,447
Million as on March 31, 2023 as against RS.,545 Million as on March 31, 2022.
Working capital management: Current assets of the Company were
RS.9,870 Million as on March 31, 2023 as against RS.5,174 Million as on March 31, 2022.
The Current and Quick ratios of the Company stood at 1.36 and 1.2 respectively at the
close of FY 2022-23 compared to 1.79 and 1.6 , respectively at the close of FY 2021-22.
Inventories, including raw materials, work-in-progress and finished
goods, among others, was RS.,353 Million as on March 31, 2023 as against RS.,836 Million
as on March
31, 2022. The inventory turnover ratio was 10.23 times as against 10.19
times in FY 2021-22. Trade receivables were RS.,712 as on March 31, 2023 as against
RS.,953 as on March 31, 2022. All receivables were secured and considered good. The
Company contained its debtors turnover ratio at 5.60 times in FY 2022-23 compared to
5.33 times in FY 2021-22.
Cash and bank balances of the Company were RS.,794 Million as on March
31, 2023 as against RS.,585 Million as on March 31, 2022.
Return on net worth: The return on net worth of the Company was
RS.3.7% as on March 31, 2023 as against RS.4.8% as on March 31, 2022, due to increase in
profits of the Company. The RoNW serves as a key indicator of the companys
profitability and efficiency in utilizing its net worth to generate returns for
shareholders.
Key ratios
Particulars
EBITDA/Turnover (%)
Debt-equity ratio
Return on equity (%)
Book value per share (Rs.)
Earnings per share (Rs.)
Debtors turnover ratio
Inventory turnover ratio
Interest service coverage ratio
Current ratio
Operating Margin (%)
Net profit margin (%)
Details of significant changes in key Financial ratios along with
explanation:
During the year under review, there was no significant changes i.e.
change of 25% or more as compared to the previous Financial year, in the key Financial
ratio so the requirement as per SEBI(Listing and Disclosure Requirements), 2015 to provide
details along with explanation is not applicable to the Company.
Operational review
As of March 31, 2023, our companys Order Book stands at
RS.,25,953 Million, ensuring revenue visibility for multiple years ahead. The road and
highway infrastructure segment remains the dominant contributor, accounting for 90% of the
consolidated Order Book, compared to 100% as of March 2022. The Order Book witnessed a
growth of 58%, primarily attributed to award of new projects in road and railway sector.
Orders received from government clients constitute approximately 69% of the Order Book.
The private sectors contribution has gained traction, increasing to 31% of the total
Order Book as of March 2023, compared to 8% in March 2022.
SWOT analysis
Strengths
With over 20 years of experience, HGIEL is an established
contractor known for its proven track record in project execution.
A robust presence in eleven states across India.
Follows an integrated business model with a primary focus on
real-time cost efficiencies.
Consistently invests in advanced equipment and cutting-edge
technologies that are deployed at project sites.
Implemented SAP across the organization to enhance operational
effectiveness and promote increased transparency.
Weaknesses
Business Risk emanating from concentrated order book primarily in
the Roads and Highway segment as of now at ~88% of Order book.
Faces operational challenges due to the shortage of labor at
project sites.
JV Partner needed for bidding for Water Projects.
Opportunities
Continuously enhancing its capabilities and expertise to
independently execute projects as a prime contractor.
The governments consistent investment in the infrastructure
sector, aimed at driving growth, has led to a rise in bidding and awarding activities
within the sector.
The governments growing emphasis on high-speed expressways
and urban connectivity indicates significant growth potential in the sector.
The funds proceeds from monetization of HAM projects will be used
for enhancing the diversification of business in other sectors like solar, renewal energy.
Threats
Intense competition in the EPC segment due to presence of small
private players bidding aggressively.
Volatility in the commodity prices may put margin pressure.
Prolonged Monsoon Season may delay execution of projects.
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. As on March 31, 2023, the Company had 4,000+ employees.
Internal control systems and their 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.
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.
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