Kyra Landscapes Ltd Management Discussions

1. OVERVIEW:

That the Indian economy is slowing down is very evident. Advance estimates from the Central Statistical Organisation (CSO), Government of India (GoI) suggest that real GDP growth is estimated at 4.9 percent as compared to the growth rate of 4.5 percent in 2012-13. India’s economic growth pegged at 4.9% in 2013-14. This is the second year in a row during which the economy’s growth remained below the 5 percent.

The structure of economic growth is also not very encouraging for the immediate future. Incremental Gross Fixed Capital Formation (GFCF), which gives an indication of the creation of growth promoting assets in an economy, has also reduced from high levels of 14% in 2010-11 to 4.4% in 2011-12 and further down to a mere 2.5% in 2012-13. In light of this economic slowdown, it is natural witness a reduction in construction Activity. The data released by the Central Statistics Office (CSO) confirms that both the manufacturing and mining sectors shrunk in 2013-14 with fall in output. Lacklustre infrastructure activity dampened construction growth as well. The manufacturing sector contracted (-) 0.7 per cent in 2013-14 against 1.1 per cent in 2012-13. Mining and quarrying declined (-) 1.4 per cent against (-) 2.2 per cent in 2012-13.

2. INDUSTRY:

The GoI certainly realizes the importance of accelerating investments in infrastructure to boost the country’s slowing economy. Therefore, it has set a massive target for doubling investment in infrastructure from 20.5 trillion to40.9 trillion during the Twelfth Plan period (2012–2017). Total investment in infrastructure, including roads, railways, ports, airports, electricity, telecommunications, oil, gas, pipelines and irrigation, was expected to increase from 5.7% of India’s GDP in the first year of the Eleventh Plan to around 8.3% in the last year of the Plan.

Today, there is a negative sentiment for private sector investment in this sector. First, the global economic Slowdown and the financial sector issues in Europe have led to a drop in flow of foreign capital into emerging markets like India. Second, domestic investors are increasingly getting riddled with financial pressures resulting out of errors in estimation and delays in execution. In this milieu, HCC has been focusing on consolidating its position as one of the leaders in the industry. The emphasis has been on reorienting its business strategy and enhancing its internal capabilities.

3. FINANCIAL PERFORMANCE:

Even under these tough times the company has managed to earn profits of Rs 118.94 lacs as against 70.16 lacs in previous year. This was mainly achieved due to right investment decisions making prudent use of capital. At present our focus is to strengthen our balance sheet and create a long term shareholder value.

a) OPPORTUNITIES AND THREATS: OPPORTUNITIES:

The Company is utilizing its funds availability with the intent to invest in real estate development and allied activities. The company expects that the proposed strategic alliance with an infrastructure development company pioneer in this industry would go a long way to strengthen our balance sheet and create a strong foundation for growth

b) THREATS:

The slowdown in economy is likely to see some slowdown in economic growth and our industry is no exception to it.

c) INTERNAL CONTROLS:

The Company has adequate system of strong internal controls for business processes, with regard to operations, financial reporting, compliance with applicable laws and regulations, etc. Regular internal audits and stocks ensure that responsibilities are executed effectively. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening the existing control system in view of the changing business needs from time to time.

f) FORWARD-LOOKING STATEMENT:

The report contains forward-looking statements, identified by words like ‘plans’, ‘expects’, will’, anticipates’, ‘believes’, ‘intends’, projects’, ‘estimates’ and so on. All statements that address expectations or projections about the future, but not limited to the Company’s strategy for growth. Product development, market position, expenditures, and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Company’s actual results, performance or achievements could thus differ from those projected in any forward-looking Statements. The Company assumes no responsibility to publicly amend, modify revise any such statements on the basis of subsequent developments, information or events.