Marg Projects & Infrastructure Ltd Management Discussions.

Industry Scenario and Economic Overview

The overall economic situation in the country is looking better and the basic parameters of the Indian economy are moving in the right direction. According to Knight Frank Indias Logistics and Warehousing Report, 2014, Indias warehousing requirement is expected to grow at an annual average rate of 9% to 1,439 million sq.ft. in 2019 from 919 million sq. ft in 2014.

Further, the government has taken several initiatives to encourage the development in the sector, the key ones such as clearance of Real Estate (Regulation and Development) Bill, 2013 by the Union Cabinet, relaxation in the norms to allow foreign direct investment (FDI) in the construction development sector, introduction of SEBI (Real Estate Investment Trusts) Regulations, 2014 etc.

The Indian economy had been suffering from lower growth and various structural weaknesses as it entered 2014-15 and these continued throughout the fiscal year. The slowdown in growth over the last ten quarters has contributed to low business confidence which, in turn, has put a dampener on private sector investment in infrastructure projects. Moreover, the economy has been under serious fiscal pressure.

By the end of 2014-15, there have been some positive signals, although it is probably too early to make a call as to whether the nation is definitely getting back to a higher growth path.

Financial Performance

MARG Projects and Infrastructure Limited Company (‘MPIL or ‘the Company) is focusing primarily on large scale projects. It has always looked to adopt class operational processes and trying to promote responsibility in infrastructure development. This is a reason for dip in turnover of the Company from Rs.1.13 Crores last year to nil income in the Current year.

Opportunity, Risks and Concerns

India is the worlds 19th largest exporter and 10th largest importer. With a trillion rupee investment envisaged for the next Five Year Plan (2012- 17), Indias infrastructure investment is bound to grow significantly. To maintain its growth momentum, the provision of adequate infrastructural facilities is critical. Unreliable services or a disruption in infrastructure facilities may restrict output or hinder investments in productive capital. Moreover, infrastructural investment of about USD 1,025 Billion is necessary during the Twelfth Five Year Plan (2012-17) to achieve a share of 9.95% as a proportion of GDP. Government of India is attempting to improve the countrys infrastructure as a top policy priority and recently came out with measures to revive the activities in the road infrastructure sector.

The infrastructure and construction market in India is particularly affected in an atmosphere of lack of complete inertia in new project development and execution. Issues like environment clearances and financial difficulties for large developers have led to very little new opportunities in terms of infrastructure related development.

Announcements in Union Budget 2014-15 of various tax incentives and a scheme to create 100 smart cities in the country have added to the optimism of industry towards revival and growth in the sector.

Raw materials, such as bitumen, stone aggregates cement and steel, need to be supplied continuously to complete projects. There is also a risk of cost escalation or raw material shortage. The Company is operating in a highly competitive environment. However, during the year, the Company has observed that competition has diminished to larger extent. Hence, we will continue to bid for projects with financial, operational and execution viability. However, the Company believes that the competitive intensity may come back in FY 2015-16. This has led to risks related to order book growth and margins of the Company. MPIL continues to try and offset this risk by diversifying its sector base and client base.

A tough monetary policy adopted by Reserve bank of India (RBI) to tackle inflation. The lack of reforms and drop in growth in India in the last couple of years has led to an increase in its sovereign risk ratings and global capital flows into the country have also dried up. This gradual increase in the cost of servicing debt is a risk affecting the Company. Easing, inflation continues to be at a fairly high level. This results in increase in operating costs for the Company particularly in terms of input material and wage costs to meet this inflationary environment.


Engineering and Construction is the Companys core business of executing construction work on contract basis. The Company has started the year 2015-16 with a not so healthy Order Book mainly because of lack of orders in the previous years. A stable Government at the Centre and a strong leadership will improve sentiments and lead to economic reforms, which will augur well for the retailing industry. The threat of inflation has completely submerged, and borrowing rates are sure to go down from the current levels. This will encourage potential buyers planning to avail of home loans to finally take the plunge. Further, the Company is mainly focusing on sectors in terms of transportation, power, water supply and industrial construction projects. The business has been extended to include complete engineering, procurement and construction (EPC) services.

Segmentwise/Productwise Performance

Your Company was operating only in one segment both in terms of business and geographical operations in the year 2014-15. (Accordingly, segmental reporting in terms of Accounting Standard 17 is not applicable to the Company)

Internal Control System and Adequacy

The Company has adequate system of internal control in place. This is to ensure that assets are safeguarded and all transactions are authorized, recorded and correctly reported. The internal audit function is empowered to examine the adequacy, relevance and effective control system, compliance with policies, plans and statutory requirements.

Material Developments in Human Resources and Industrial Relation

During the year there was no increase in manpower due to the adverse market condition and slowdown in companys business.

Cautionary Statement

The statements in report of the Board of Directors and the Management Discussion and Analysis Report describe the Companys outlook, estimates, performance or predictions with a forward perspective considering the applicable business and economic regulations affecting the industry. Actual results could differ from those expressed or implied, since the Companys operations are influenced by many external and internal factors beyond the control of the Management. The Management takes no responsibility for keeping the members updated on changes in these factors stated above apart from those, which may statutorily be required to be reported from time to time.

For and on behalf of the Board of Directors
G Srinivasa Reddy S Chandrashekaran
Director Director
Place: Chennai
Date: 30th May 2015