man infraconstruction ltd share price Management discussions

Indian Economy:

The last two years have been difficult for the world and the Indian economy on account of the repeated waves of COVID-19 and supply-chain disruption. Despite such disruptions, Indian economy staged a sustained recovery among all major economies, since the second half of 2020-21 and was also able to navigate the crisis. This was on account of supportive government policies with higher impetus placed on increase in capital expenditure on infrastructure, favourable monetary policy, relaxation in COVID- led restriction and widespread vaccine coverage. According to the second advance estimates of National Income, the growth in GDP during financial year 2021-22 is estimated at 8.9 percent as compared to the contraction of 6.6% in 2020-21. India, is projected to be the fastest growing economies in the world in FY22, according to the data by International Monetary Fund (IMF).

Source: Central Statistics Office (CSO) - Second advance estimates

The government of India aims to implement supply-side reforms and kick-start the virtuous investment cycle to bring sustainable demand in the economy. In Union Budget of 2022-23 it laid strong importance over its flagship program - Production Linked Incentive (PLI) scheme with a focus to expand Make in India initiative, spur private investment in the country, increase the employment ratio and boost overall development in the economy. According to CRISIL, a rating agency, the PLI scheme will lead to a potential capital expenditure of Rs. 2.5-3 lakh crore over the scheme period. Further, in order to support COVID-hit Micro, Small, and Medium Enterprises (MSMEs), Emergency Credit Line Guarantee Scheme (ECLGS) benefit is extended upto 2023 and will also expand the guarantee cover for the scheme by Rs. 50,000 crore to Rs. 5 lakh crore. This not only will provide interim liquidity support but will also help the beneficiaries in meeting their operational liabilities. The Union Budget 2022-23 also announced a number of measures to build digital ecosystem and support inclusive economic development.

In the later part of fiscal 2022, India experienced the third wave of COVID-19, however, its overall impact was less disruptive than previous waves. The economy has become far more resilient to the pandemic due to relatively better health care infrastructure in the country, better supply chain management and rising confidence among business & consumers. A large part of the countrys adult population is also fully vaccinated and with rollout of the vaccination among 15 to 18 years of age from this year will further provide support to policymakers in avoiding stricter restrictions.

The recent geopolitical tensions in Ukraine and Russia has resulted in logistic disruption and supply side bottlenecks. According to Reserve Bank of India (RBI) annual report 2021-22, India will have an immediate impact on inflation from the Russia-Ukraine conflict. However, as per RBI, inflation is expected to moderate in the near future with calibrated monetary policy and targeted fiscal policy.

As per IMF report which was released in April 2022, Indias gross domestic product (GDP) is projected to grow by 8.2% in 2022 and 6.9% in 2023, continue to be fastest growing economy in the world.

Infrastructure and Construction:

With an objective to pump-prime public investment, increase demand and create infrastructure-led development, the Union Finance Minister Nirmala Sitharaman proposed a capital expenditure of Rs. 7.50 lakh crore in the Union Budget 2022-23. It is 35.4% higher than the budget outlay of Rs. 5.54 lakh crore in 2021-22 and more than doubled the expenditure of 2019-20. The Centre will also provide financial assistance to states with an allocation of Rs. 1 lakh crore in catalysing overall investments in the economy.

In October FY22, the Prime Minister launched Rs. 100 lakh crore PM Gati Shakti National Master Plan intended to bring integrated planning and execution of projects to address the issues of multimodal connectivity, reduce logistics costs and improve last-mile connectivity. The plan will provide a transformative approach to boost economic growth and sustainable development driven by its seven engines. This includes - Mass Transport, Waterways, Railways, Roads, Airports, Ports, and Logistics Infrastructure. Gatishakti aims to expand national highway network to 2 lakh km, develop 200 airports, increase cargo handling railway to 1,600 mn tonnes from 1210 mn tonnes and many such other objectives. PM GatiShakti framework is built on National Infrastructure Pipeline (NIP) and will include projects pertaining to these 7 engines in NIP. As part of the NIP, the Union government plans to invest over Rs. 100 lakh crore in 9,365 infrastructure projects till 2025. Out of the total NIP, Rs. 44 lakh crore (40%) worth projects are already implemented and rest is under development. The investments planned under the National Infrastructure Pipeline (NIP) will be key growth drivers for the construction sector and drive the demand for cement and steel industries as well.

With an aim to provide housing for all under PM Awas Yojana (PMAY) urban and rural, Finance Minister in Union Budget 2022-23 increased the allocation under PMAY to provide boost to the affordable housing sector. In order to further promote affordable housing for the middle-class people and for the economically weaker sections (EWS) in urban areas, the Centre will also collaborate with the state government for the reduction of time required for all land and construction-related approvals. Additionally, grant of infrastructure status to Data Centres will provide cheaper credit and faster growth in adding capacity in the country. This would create robust opportunity in construction sector.

According to CSO, the construction sector is likely to see sharp improvement in growth by 10.0% in FY22 compared to contraction by 7.3% in FY21. 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. With increase in capital expenditure outlay in infrastructure, growth in investments and uptick in consumption, Indias construction sector is expected to record a CAGR of 9.5% during 2022-2026 period according to Business Wire.

Port Infrastructure

Indian ports sector is seeing very high demand in handling cargo traffic driven by increase external trade. The volume of cargo traffic handled at the government-run Indian major ports in FY22 has recovered sharply and is highest in last one decade mainly due to increase in cargo handling capacity and significant drop in turnaround time. Indias 12 major ports witnessed a 7.1% rise in cargo traffic to 720.35 million tonnes (MT) in the FY22 (April21 - March22) compared to a growth of 672.70 MT achieved in FY21 (April20-March21).

As per Union Budget 2022-23, a total of Rs. 1,709.50 crore has been allocated for the Ministry of Shipping, Ports and Waterways. The Finance Minister also announced privatization of the operations of seven major ports worth Rs. 2,000 crore in FY21-22. In July 2021, the Marine Aids to Navigation Bill 2021 was passed by the Parliament, incorporating global best practices, technological developments and Indias international obligations in this field.

The Sagarmala project was introduced by the government to promote ports developments. Under this program, the cargo handling capacity is set to enhance to 3,300+ MT by 2025 to cater the rise in cargo traffic. A total of 802 projects has been identified by the Centre at an estimated cost of Rs 5.5 lakh crore, targeted to be executed by 2035. Out of these projects a total of 123 are PPP projects worth Rs 2.6 lakh crore which will provide massive opportunity for private investments. Overall projects worth Rs. 1 lakh crore is completed, Rs. 2.1 lakh crore projects is under construction and remaining is under development pipleline.

The Government also aims to operationalize 23 waterways by 2030. It is also taking steps to introduce urban water transport systems in key states and cities such as Kochi, Mumbai, Gujarat and Goa. The Ministry of Port Shipping and Waterways has created a list of 400 investable projects. These projects have an investment potential of Rs. 2.25 lakh crore. Through the focus areas of upgradation of infrastructure, boosting reform journey, India aims to strengthen the vision of Aatmanirbhar Bharat.


Indias exports have crossed 400bn$ mark for the first time in history and is expected to continue this momentum due to strong external demand. India is becoming a strategic and favorable port hub for global players due to strengthening international ties, Make in India initiative, global companies adopting China +1 business model and counter cyclical policies adopted by some of the foreign countries. With the various Government initiatives and increasing investment the Indian ports sector indicates a healthy outlook.

Residential Real Estate :

The Indian residential real estate market which started to pick pace since the second half of 2020, showed a resilience during the 2nd and 3rd wave of Covid-19 and continued to maintain growth momentum in sales in 2021-22. This improvement in market sentiment was on the back of economic recovery which drove optimism and confidence among developers and also in end- users. The surge in the housing market was mainly led by decadal low interest rates, enticing discount & incentives offered by developers, festival led demand, steady prices and new launches by developers. Unlike the housing boom seen in 2004-08, the current housing demand in the top 7 cities is much sturdier as the majority pie of the housing purchases is done by genuine home buyers who are the end-users.

According to Anarock Research, the housing sales in top 7 cities recorded an all-time high since 2015 at about 99,500 units in Q1-2022. It crossed the previous quarter sales by 10% and rose 71% in comparison to 58,300 units sold in Q1-2021. Mumbai Metropolitan Region (MMR) market sales increased by 43% annually and recorded nearly 30% of the total sales in the quarter, highest compared to any other cities.

City-wise Sales in Top 7 Cities

City Q1 2022 Q4 2021 Q1 2021 Q-o-Q % Y-o-Y %
MMR 29,100 27,700 20,300 5% 43%
NCR 18,800 17,600 8,800 7% 114%
Pune 14,000 11,900 10,600 17% 33%
Bengaluru 13,400 12,300 8,700 9% 55%
Hyderabad 13,100 11,000 4,400 19% 199%
Kolkata 6,000 5,700 2,700 6% 124%
Chennai 5,000 4,700 2,900 6% 75%

Some of the notable industry trends that have emerged post the pandemic has further changed the residential landscape. The crisis has laid the importance of owning a permanent home that offers a sense of security. Further the need of upgradation to the larger homes with better amenities amidst Work from Home (WFH) environment, hybrid working model and online schooling for children has also sparked keen interest among genuine homer buyers in buying bigger homes. The sector is also witnessing consolidation among the organized and listed developers who are gaining market share on the back of better corporate governance practices, financial accountability, trust, and reliable brand. According to the Anarock research, buyers are ready to pay reasonable premium for homes built by such reputed developers.

The government is also taking several measures to formalize, regulate, revive and bring sustainable growth in the sector. The government has brought landmark reforms such as RERA and GST that has established real estate sector as one of the preferred investment destinations. The launch of Real Estate Investment Trusts (REITs) have further stimulated investments in the sector.

The Union Budget 2022-23 has announced measures to boost the real estate sector. Some of the measures announced for the sector are as under:

• To boost affordable housing and provide housing for all, Rs. 48,000 crore allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana urban and rural

• Tax relief by capping surcharge at 15% on Long Term Capital Gains will result in a lower effective tax on transfer of real estate classified as long term in nature

• In addition to bonus stripping, dividend stripping provisions are extended to units of REITs/InVITs, where the REITs/ InVITs have invested in SPVs that have not opted for the lower corporate tax rate regime

These measures are expected to boost the private investments in the sector


According to NITI Aayog Indian real estate sector is expected to reach a market size of $1 trillion by 2030 from $ 200 billion in 2021 and will account for 13 per cent of Indias GDP by 2025. The industry may witness price hike in order to mitigate rise in input costs. With strengthening fundamentals of the economy, positive consumer sentiments, better liquidity and aspiration for homeownership will continue to drive the growth in the real estate sector in the long term.

Operational Review:

The operations of Man Infraconstruction Ltd. (Man Infra) is divided into two business verticals viz., Construction and Real Estate Development. Man Infra is an integrated EPC (Engineering, Procurement and Construction) company with over 50 years of experience and execution capabilities in Port, Residential, Commercial & Industrial and Road construction segments with projects spanning across India. As a Real Estate Developer, Man Infra has delivered multiple Residential projects in Mumbai and is recognised for its superior quality construction and timely project delivery. The Company has extensive experience in construction management and has inherent skills and resources to develop and deliver Real estate projects.

The third wave of COVID-19 did little harm to the construction sector and real estate industry. The government allowed the construction sites to operate with in-situ arrangement of labor with all necessary precautions. Accordingly, Man Infras construction sites were fully operational complying with the guidelines laid down by the state government and the work has been progressing as per schedule. The, company also made all kind of arrangements to ensure safety and health of the workers and employees working on site or office.


Over the recent years, Man Infra has been strategically selective in building its order book for the purpose of keeping it financially strong and healthy. At the same time, the management along with a dedicated EPC team have been continuously identifying opportunities for new tenders across infrastructure construction and residential development space.

The total outstanding EPC order book stands at Rs. 518 crore as on March 31, 2022. Residential Segment contributes 94%, Infrastructure and commercial building segments contribute 5% and 1% respectively.

With all the efforts put in by the team during the financial year, the company has been recently awarded with one of the largest EPC orders in April 2022, from Bharat Mumbai Container Terminals Private Limited, a subsidiary of the PSA International, a leading global port group headquartered in Singapore. The order will allow Man Infraconstruction Limited to carry out the execution of Phase II works at JNPT, Navi Mumbai, Maharashtra. The aggregated value of the order comes to approximately Rs. 1,340 cr. which will increase the total order book size over Rs. 1,850 cr. The endeavour of the company is to timely execute the project and support PSA group to cater to the increasing demand for container handling capacity and facilitate maritime trade in the Country.

Going ahead, the Company will continue to explore opportunities to add prudent EPC projects to its order book.

Real Estate

The Groups portfolio comprises of multiple residential and commercial development projects spread across key pockets of Mumbai / MMR region with high demand potential.

Aaradhya Oneearth, a MHADA Redevelopment project which is being developed by Man Realtors and Holdings Pvt. Ltd. (where Man Infra holds 62.79%) located in Ghatkopar East, Mumbai was launched in September 2020. It is a mixed-use development project comprising of 7 Residential towers and 2 Commercial buildings. The company has received an overwhelming response since the launch of its project, and till March-22 it has launched all the 7 residential towers and 1 commercial tower - Aaradhya Square. As on 31st March, 2022, company sold approximately 89% of total inventory of 8 towers and it has also started recognising the revenue for this project from this financial year of 2021-22. The remaining 1 tower will be launched in financial year 2022-23.

The phase 2 of project Atmosphere, located in Mulund West, Mumbai, is being developed by Atmosphere Realty Pvt. Ltd. (where Man Infra holds 17.50% stake). It is a Joint Venture (JV) between Man Infra, The Wadhwa Group and Chandak Developers. The project consists of 3 residential towers of 47 storey each and 1 commercial tower of 18 storey. The total RERA carpet area of the project is 7.12 Lakh Sq.ft. approximately. The construction work for both residential and commercial buildings is progressing as per schedule. As on 31st March, 2022, approximately 72% of total inventory has been sold in Phase 2. The company has started recognising its share of profit in the form of JV from this financial year 2021-22.

The construction work of Aaradhya Eastwind project which is being developed by MICL Developers LLP (where Man Infra holds 99.99% stake) is going on as per schedule. The project is expected to get completed before Q2-FY22. As on 31st March, 2022, approximately 93% of total inventory has been sold.

The phase 1 of the Aaradhya Highpark comprising of approximately 6.4 lakh carpet area is one of the flagship Project of the company located near Dahisar, Thane which is being developed by Man Vastucon LLP, (where Man Infra holds 99.99%). It is a mixed-use development project with 6 residential towers and 1 commercial tower. The construction work of the 1st four towers of the project is going on as per schedule. During the year, the company launched the remaining 2 towers of the project which received an excellent response. The construction work of both these new towers has also commenced. Approximately 87% of the total inventory has been sold as on 31st March, 2022.

During the year, Man Chandak Developers LLP (where Man Infra holds 50%) in association with Shreepati Rise LLP launched a premium Residential project Insignia, at Vile Parle West, Mumbai in Revenue sharing model. The project is being developed in phases and the construction work for Phase 1 having a RERA carpet area of approximately 36,500 sq.ft. is going on in full swing. As on 31st March, 2022, approximately 80% of total inventory has been sold.

We shall continue to explore new opportunities in real estate in and around Mumbai. Currently, the Company is evaluating a few proposals and is looking forward to add some value-accretive projects to its portfolio in financial year 2022-23.

Financial Performance:

Particulars Consolidated Standalone
FY2020- 22 FY2020- 21 YoY FY2020- 22 FY2020- 21 YoY
Rs. in crores % Rs. in crores %
Total Revenue 961.5 427.2 125.1% 236.6 119.6 97.8%
Total Income 1,162.7 452.0 157.2% 311.9 233.4 33.7%
Profit before tax 378.9 55.1 - 131.2 109.8 19.5%
Profit after tax 216.4 32.0 - 105.6 92.4 14.3%

As on March 31, 2021, the holding company Man Infra has Cash & cash equivalent of Rs. 171.75 crores and Networth of Rs. 1,004.0 crores.

The standalone revenue from operations for FY21-22 at Rs. 236.6 crore was higher than previous year by 97.8% on account of execution of orders in hand and new orders received during the year.

The consolidated revenue from operations for FY21-22 at Rs. 961.5 crores was higher than previous year by 125.1% primarily on account of revenue recognition from real estate development projects and increase in revenue from construction contracts.

On standalone basis, the Company reported a profit of Rs. 105.6 crore for FY21-22, higher by 14.3% compared to previous year. The increase in profitability has been primarily due to increase in revenues compared to previous year.

On consolidated basis, the company reported a profit of Rs. 216.4 crores for FY21-22 compared to profit of Rs. 32.0 crores in the previous year. The increase in profitability was on account of the higher contribution from the real estate subsidiaries that started recognising revenue as well as due to rise in profitability in the standalone company. During the year the company received an arbitration award of Rs. 377 crore in favour of Manaj Tollway Pvt. ltd., a subsidiary of MICL (where Man infra holds 63%), which also improved the profitability.

Risk Management:

The Company works in an environment which is affected by various factors, some of which are controllable while some are outside the control of the Company. At Man Infra, we have developed a robust risk management framework that reduces the volatility due to unfavorable internal and external events, facilitates risk assessment and mitigation procedure, lays down reporting procedure and enables timely reviews by the management. The following section discusses some of these risks and steps taken by Man Infra to mitigate such risks.

1. Economic Risk

a. Risk: An unexpected development in any of the macroeconomic variables that may adversely impact the Companys profitability or viability. Both Infrastructure and Real estate are cyclical industry and they get impacted more by the changes in macroeconomic variables like interest rate, GDP Growth, purchasing power, inflation, among others.

b. Mitigation Plan: Man Infra continues to be conservative and follows well defined internal prudential norms. The Company has attempted to hedge against the inherent risks of Real Estate business by following joint development model. It maintains a low debt equity ratio, adequate liquidity and marquee clientele with broadly timely payment track-record which helps in minimizing the impact of any downturn in economy.

1. Policy Risk

a. Risk: Maharashtra finalized the rules under the Real Estate Regulation and Development Act (RERA), 2016; its Housing Regulatory Authority has started operating from May 1, 2017. The Authority has been setup to bring in more transparency and accountability from developers, protect the interests of the buyer and also penalize the non-compliant builders. RERA seeks to address issues like delays, price, quality of construction and title among others.

Any such non-compliance with RERA regulations or delay in project delivery may result in cost overruns and impact the Companys operations unfavorably.

b. Mitigation Plan: Man Infra has put in place processes that include milestone based time & quality checks that help to ensure adherence to quality, cost and delivery as per the plan. All the ongoing projects of the Group are registered under RERA. The Company maintains financial discipline with regards to the investment and subsequent cash flow generation from a project. The Company has a past track record of delivering the projects before time and maintaining high quality standards.

2. Execution Risk

a. Risk: Real Estate and construction projects are subject to various execution risks like regulatory hurdles, delay in receipt of approvals, availability of labour and raw material, etc. Any such delay may result in cost overruns and impact the Companys operations unfavorably.

b. Mitigation Plan: The Company deploys a well-defined standard operating procedure - from project planning to delivery - and adheres to internal checks and balances with regard to every project. Extensive diligence is carried out before entering into partnerships for joint development.

3. Liquidity Risk

a. Risk: The Real estate business has significant initial outflow with staggered and long-term inflows. As per RERA, the developer is required to set aside 70% of the funds received for a particular project, in a dedicated escrow (bank) account and can only be used for construction activities. Delays in project cycle; inadequate funding resources may have an impact on the liquidity position of the Company.

b. Mitigation Plan: The Company maintains financial discipline with regards to the investment and subsequent cash flow generation from a project. Moreover, the Company has also been taking adequate measures to manage working capital cycles like monitoring and closely following up with debtors. For the EPC business, the Company also receives mobilization advances, which aids liquidity management. On the consolidated level, the Groups balance sheet is low geared with a Debt:Equity ratio of 0.65x as on March 31, 2022.

4. Input Price Risk

a. Risk: The Groups Real estate operations as well as EPC contracts are subject to cost overruns due to increase in material cost or labour cost. The Companys earnings may be affected from the volatility in the price of input.

b. Mitigation Plan: For EPC projects, Man Infra has a price escalation clause where the increase in the input cost is directly passed to the client. For development projects, Man Infra takes this risk into account at the time of launch. Also, the Company usually sells the projects in a phased manner which aids in covering the rise in cost of construction in subsequent sale.

5. Sales Volume

a. Risk: The performance of the Company may be affected if there is substantial difference between the estimated and actual sales volume of the Real Estate development projects.

b. Mitigation: The volume of sales in the Real Estate business depends on the nature and location of the project, design & layout and the reputation of the developer. Man Infra strives to build a worthy reputation in the industry by delivering superior quality product and maintaining long-binding relationships with all its clients and stakeholders. The Company constantly focuses on deploying latest technologies for projects and cost effective measures to enhance operational efficiency resulting in timely delivery. Man Infra also strives to offer distinctive features in its projects to stand out from competition. During COVID times, the Company has worked on its digital marketing strategy so as to give customers real experiences and aid decision making when they cannot visit the site in person.

Human Resources

The Company believes that its capability to preserve and continue its growth depends largely on its strength of developing, motivating and retaining talent. It firmly believes that highly motivated and empowered employees are its best assets to maintain a competitive edge in the market. The management is committed to continuously upgrading skills and competency at all levels with the aid of extensive training. The Company is committed to ensure employees safe working conditions and social awareness. The employee strength of the Man Group consists of over 700 employees as on 31st March 2022.

The Companys employees possess requisite qualifications and technical expertise to execute projects across the Real Estate and construction services domain. The Companys HR continues to focus on maintaining excellent work culture, employee development and competitive compensation to ensure a motivated and empowered workforce.

Internal Control Systems

The Company has an adequate internal control system to safeguard all assets and ensure their efficient productivity. The Company practices quality management system for design, planning and construction that complies with International quality standards. The Company has a suitable internal control system for the business processes, operations, financial reporting, compliance with applicable laws and regulations. The company has successfully implemented Enterprise Resource Planning Software in its Head Office and across its Sites. The Internal Audit firm conducts periodical audits to ensure adequacy of internal control systems and adherence to management policies. Wherever deemed necessary, internal control systems are also reassessed and corrective action is taken, if required.

Cautionary Statement

This management discussion and analysis may contain forward looking statements that reflects your Companys performance with respect to future events. The actual results may differ materially from those anticipated in the forward looking statements as a result of many factors.