Man Infraconstruction Ltd Management Discussions.

Indian Economy:

Indias Gross Domestic Product (GDP) grew at a rate of 6.6% in the third quarter (October-December) slipping from 7.0% in the second quarter (July-September) and 8.0% in the first quarter (April - June) of the fiscal year 2018-19. According to the Ministry of Statistics, the growth in GDP during 2018-19 is estimated at 7.0% as compared to the growth rate of 7.2% in 2017-18. The slowdown was led primarily by the subdued expansion in Agriculture and Manufacturing sectors. The agricultural growth slumped to 2.7% in Q3FY19, from 4.2% in Q2FY19. Manufacturing activity slowed down considerably over the course of the year with GVA estimated to have grown by 6.7% in Q3FY19, down from 12.4% in Q1FY19.

The International Monetary Fund (IMF), in its World Economic Outlook (WEO), projected Indias GDP growth rate at 7.3% in 2019 and 7.5% in 2020 as against Chinas 6.3% and 6.1% during the same period, making India the fastest growing economy among emerging economies.

High crude oil prices, currency fuctuation and tight liquidity condition-aftermath of NBFC crisis, were some of the factors that impacted the overall economic activity. However, continued implementation of structural reforms and easing of infrastructure bottlenecks is expected to stabilize growth in India.

Infrastructure and Construction:

The construction sector continued to show signs of an upswing, growing at 9.6% in Q3FY19, up from 8.5% in Q2FY19. The CSO pegged the sectors full-year growth at 8.9%, up from 5.6% the year before, on the back of infrastructure spending push by the Government.

There has been a significant push from the Government on Indias infrastructure development ever since it came to power in 2014. As infrastructure is highly responsible for propelling growth of other sectors and Indias overall development, Government of India is giving huge impetus for development of infrastructure and construction services through focused policies such as open FDI norms, large budget allocation to infrastructure sector, Smart cities mission, etc. to boost the sector.

A total of Rs. 4.56 lakh crore was allocated to the infrastructure sector under the Interim Union Budget 2019-20 which includes allocation for railways, roads, shipping and aviation.

Growth Drivers:

Urban Infra Development

The Government of India has taken several initiatives to encourage urban infrastructure development. Initiatives such as Housing for All, Smart Cities, AMRUT, etc. are fuelling the growth of urban infrastructure and construction development. Below are some of the major Government initiatives which will open numerous opportunities for construction companies:

"Smart Cities Mission" is an urban renewal program with the mission to develop 100 cities across the country. Rs. 2.05 lakh crore will be invested by Government of India to make 100 cities citizen friendly and sustainable.

"Pradhan Mantri Awas Yojana (Urban)" scheme under the ambitious "Housing for All" program, has been allocated Rs. 6,853.26 crore in the Union Budget 2019-20. In February 2018, the Union cabinet approved creation of a Rs. 60,000-crore National Urban Housing Fund (NU HF) to finance the Housing for All program, which aims to build 12 million affordable housing units in urban areas by 2022.

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme, which aims at ensuring robust sewage networks, water supply and other infrastructure to improve the quality of life of people in urban areas has been allocated Rs. 7,300 crore in the current fiscal.

The Government has set aside Rs. 19,152 crore for Mass Rapid Transit System (MRTS) and Metro projects across the country.

Roads & Bridges

Ministry of Road, Transport & Highways has been allocated Rs. 1.12 lakh crore in the Interim Union Budget 2019-20 for development of National highways, Roads & Bridges across the country. The Government of Indias ambitious ‘Bharatmala Pariyojana Program aims to deliver seamless connectivity within the interior and backward areas of the country, and develop around 35,000 km of roads in Phase-1 at an estimated cost of Rs. 5.35 lakh crore by 2022.



Components Length Km Outlay Rs. crore
a. Economic corridors development 9,000 120,000
b. Inter-corridor & feeder roads 6,000 80,000
c. National Corridors Efficiency improvements 5,000 100,000
d. Border & International connectivity roads 2,000 25,000
e. Coastal & port connectivity roads 2,000 20,000
f. Expressways 800 40,000
g- Balance road works under NHDP 10,000 150,000
Total 34,800 535,000


With Government allowing 100% FDI in the roads sector, foreign investors have constituted consortium with Indian companies to participate in the development of road projects in the country. Construction companiesare expected to benefitfromthe upcoming opportunities in the roads sector.

Port Infrastructure

Since ports handle almost 95% of trade volumes in India, the rising trade has contributed significantly to the countrys cargo traffic. I n order to meet the ever increasing trade requirements of the country, the focus has been on the infrastructure development and capacity enhancement of the Ports.

The Government of India has embarked on the ambitious Sagarmala Program which aims to promote port-led development in the country. As part of Sagarmala Program, 604 projects (Cost: Rs. 8.8 Lakh crore) have been identified for implementation, during 2015-2035, across the areas of port modernization & new port development, port connectivity enhancement, port-linked industrialization and coastal community development. As of 30th Sep, 2018; a total of 522 projects (Cost: Rs. 4.32 Lakh crore) were under various stages of implementation, development and completion.

Projects under Sagarmala program

Till 2018-19

2019 - 2035


No. of projects Project Cost (Rs. Crore) No. of projects Project Cost (Rs. Crore) No. of projects Project Cost (Rs. Crore)
Port Modernisation 207 71,778 59 73,319 266 145,097
Connectivity 151 111,275 62 139,640 213 250,915
Port-Linked 19 148,007 38 326,886 57 474,893
Coastal Community 62 6,463 6 740 68 7,203
Total 439 337,523 165 540,585 604 878,108

Indias 12 major ports handled 699.04 million tonnes (MT) of cargo during April 2018 - March 2019. The total cargo handling capacity in Major Ports as on 31st March, 2018 was 1,451.19 million tonnes per annum (MTPA). Ministry of Shipping, along with the State Governments are striving to increase the overall port capacity to 3,500 MTPA to cater to the projected traffic of 2,500 MTPA by 2025.

The Government of India has allowed FDI upto 100% under Automatic Route for port development projects. Ports sector in India has received a cumulative FDI of USD 1.64 billion between April 2000 and December 2018. Increasing investments and cargo traffic bolstered by progressive policies and various Government initiatives point towards a healthy outlook for the Indian ports sector. Port infra service providers are expected to benefit from these investments.

Real Estate Development

• Increasing Urbanisation:

Increasing income, urbanization and economic growth are driving residential real estate demand in India.

Services sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space driving growth of commercial real estate in the country.

• Policy Support:

Policy reforms like GST and RERA have led to greater transparency, and institutional investors are now looking at Indian real estate with renewed interest.

To boost demand in the real estate sector, the GST Council, on February 24, 2019, slashed tax rates for under-construction flats to 5% and affordable homes to 1%, effective April 1, 2019.

• Tax Reforms:

Interim Finance Minister Piyush Goya I proposed a number of tax benefits for the homebuyers in the Interim Budget 2018- 19 like -

Exemption on levy of income tax on notional rent on a second self-occupied house proposed

TDS threshold for deduction of tax on rental income proposed to be increased from Rs. 1.8 lakhs to Rs. 2.4 lakhs

Reinvestment of capital gains in two residential houses proposed, for an individual having capital gains up to Rs. 2.0 crores

Tax exemptions to home buyers and owners and reduction in GST are likely to drive demand in the housing segment.

• Increasing Investments:

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market.

According to EYs Private Equity Monthly Deal Tracker - March 2019, real estate witnessed a steady increase in the PE/VC investments on a month-on-month basis from January to March 2019. However, on a quarterly basis, real estate attracted USD 1.47 billion investments in Q12019 marginally higher than USD 1.46 billion investments in Q42018.

According to ANAROCK Property Consultants research, 2019 has started on a positive note with residential unit launches recording a 27% increase in Q1 2019 over the previous quarter across top 7 cities of India. In Q1 2019, Sales across top 7 cities of India increased by 12% over the previous quarter to attain the highest volume since Q1 2016. MMR sales rose by 19% - from 20,220 units in Q4 2018 to 24,010 units in Q1 2019. This signals fresh optimism in the sector.

City - wise Sales

Cities Q1 2018 Q4 2018 Q1 2019 Q-o-Q Change Y-o-Y Change

No. of units

% %
NCR 9,070 12,730 13,740 8% 51%
MMR 12,300 20,220 24,010 19% 95%
Bengaluru 11,690 14,820 15,580 5% 33%
Pune 6,850 9,940 12,340 24% 80%
Hyderabad 4,050 4,990 5,400 8% 33%
Chennai 2,420 3,290 3,430 4% 42%
Kolkata 3,420 3,860 4,020 4% 18%
Total 49,800 69,850 78,520 12% 58%

Source: ANAROCK Property Consultants Residential Report, Q12019

Backed by positive economic fundamentals, healthy demand and quality supply infusion across sectors, Indias real estate sector is poised for strong growth in FY2019-20 auguring well for companies like Man Infra thatareon both sides of business - Real Estate Development and Construction services.

Operational Review:

Man Infraconstruction Ltd. (Man Infra) has two business verticals viz., Construction and Real Estate Development. Man Infra is an integrated EPC (Engineering, Procurement and Construction) Company with five decades 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 6 Residential projects in Mumbai and is recognized 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.


Man Infra is executing construction of 4 residential buildings of Project Aaradhya HighPark near Dahisar, Thane; valued at approximately Rs. 308.7 crore. The total outstanding EPC order book stands at Rs. 636.5 crore as on March 31, 2019. Out of the total order book, 96% was contributed by Residential & Government Residential segment and balance 4% was contributed by Infrastructure segment.

Man Projects Limited (MPL), subsidiary of Man Infraconstruction Limited completed execution of port infrastructure works for development of 4th container terminal, Nhava Sheva - Phase 1 at Navi Mumbai in financial year 2018-19. MPL had received this order worth Rs. 751 crore in June 2016 from PSA Singapore which was to be executed in 22 months. However, on account of expansion in scope of work, the total value of work executed as the project got completed was over Rs. 850 crore.

Real Estate -

The current portfolio of the Group includes 3 ongoing and 3 upcoming residential development projects in Mumbai/MMR with an approximate saleable area of 6 million sq. ft.

During the year, the Group launched 4 towers from total 6 towers of Phase 1 of the Project ‘Aaradhya Highpark near Dahisar, Thane in October 2018. The project received an overwhelming response. Total saleable area for Aaradhya HighPark- Phase 1 is approximately 1.2 million sq.ft.

Ml CL Developers LLP (where Man Infra holds 99.99%) is developing project Aaradhya Eastwind which is a MHADA redevelopment project at Vikhroli, Mumbai having a potential of approximately 0.17 million sq.ft, of saleable area. The construction work has commenced and the project has been registered with RERA.

The construction work for project Aaradhya Nine which is being developed by Ml CL Realty LLP (where Man Infra holds 46.00% stake) is progressing as per the delivery schedule. The Company started recognizing revenue for ‘Aaradhya Nine in financial year 2018-19. The project is expected to get completed in financial year 2019-20. Sales Progress for Aaradhya Nine has been satisfactory.

Phase 1 of the Residential project Atmosphere having a saleable area of 0.85 million sq.ft, got completed in financial year 2018-2019. The projectAtmosphere is being developed by Atmosphere Realty Private Limited (where Man Infra holds 17.50% stake). It is in joint venture with The Wadhwa Group and Chandak Developers. As on 31st March, 2019, only 12% of inventory is unsold, which will be monetized in financial year 2019-20.

The Group is expecting to launch two residential projects in financial year 2019-20 which include -

(i) The MHADA Redevelopment project which is being developed by Man Realtors and Holdings Private Limited (where Man Infra holds 66.00%). This project is located at Ghatkopar East, Mumbai and has a potential of developing approximately 1.0 million sq.ft, of saleable area.

(ii) Atmosphere Realty Private Limited (where Man Infra holds 17.50%) will be launching the second phase of Project Atmosphere having a potential saleable area of 1.5 million sq.ft, in financial year 2019-20.

As on March 31, 2019, the Holding Company Man Infra has cash & cash equivalent of Rs. 60.3 crore approximately. Going ahead, the Company will focus on expediting the launch of its upcoming projects and completingthe ongoing projects in time. The Company will continue to explore opportunities to add prudent EPC and real estate projects to its portfolio.

Financial Performance:

Rs. In Lakhs




FY 2018-19 FY 2017-18 FY 2018-19 FY 2017-18
Total Revenue 37,125.69 65,160.19 16,648.47 19,286.71
Total Income 40,278.22 69,575.32 27,398.12 28,311.84
Profit before tax 8,545.36 17,876.63 14,276.60 10,221.41
Profit after tax 4,178.99 6,652.58 10,851.58 7,367.04
PAT Margin (%) 10.38 9.56 39.61 26.02

The decrease in Consolidated Revenue from operations in FY2018-19 on a year-on-year basis was primarily on account of dip in revenue from the subsidiary Man Projects Limited (MPL) on a year-on-year basis as a substantial portion of the port project executed by MPL was completed in FY2018.

The increase in Standalone Profit aftertax in FY2018-19 on a year-on-year basis was mainly due to increase in dividend income received from subsidiary and income from Project Management & Consultancy (PMC) fees.

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, infation, 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 strong clientele with broadly timely payment track-record which helps in minimizing the impact of any downturn in economy.

2. 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, 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 disciplinewith regardstothe 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.

3. 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 regards to every project. Extensive diligence is carried out before entering into partnerships for joint development.

4. 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 disciplinewith regardstothe 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 fol lowing 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 DebtEquity ratio of 0.65xason March 31, 2019.

5. 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 usual ly sells the projects in a phased manner which aids in covering the rise in cost of construction in subsequent sale.

6. 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 I nfra 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.

Human Resources

The Company believes that its capability to preserve and continue its growth depends largely on its strength of developing, motivatingand retainingtalent. 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. Man Group has a team of more than 480 employees as on 31st March, 2019.

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 al I 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. Enterprise Resource Planning Software is in implementation for Head Office and most of the 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.