Nila Infrastructures Ltd Management Discussions

THE ECONOMIC SCENARIO:

The gLobaL economy has been surprisingLy resiLient, despite significant centraL bank interest rate hikes to restore price stability and although tension amongst super power nations and war conditions. The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025 wiLL be offset by a modest sLowdown in emerging market and deveLoping economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. GLobaL infLation is forecast to decLine steadiLy, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their infLation targets sooner than emerging market and deveLoping economies.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the worLd over the next 10-15 years, backed by its robust democracy and strong partnerships. India is expected to become the third-Largest economy in the worLd with a GDP of $5 triLLion in the next three years and touch $7 triLLion by 2030 on the back of continued reforms. Ten years ago, India was the 10th Largest economy in the worLd, with a GDP of $1.9 triLLion at current market prices. Today, it is the 5th Largest with a GDP of $3.7 trillion. The government has, however, set a higher goal of becoming a developed country by 2047.

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, severaL investments and deveLopments have been made across various sectors of the economy. According to WorLd Bank, India must continue to prioritise Lowering inequaLity whiLe aLso putting growth-oriented policies into place to boost the economy. In view of this, there have been some developments that have taken pLace in the recent past. Some of them are mentioned beLow.

• According to HSBC FLash India PMI report, business activity surged in April to its highest LeveL in about 14 years as well as sustained robust demand. The composite index reached 62.2, indicating continuous expansion since August 2021, alongside positive job growth and decreased input inflation, affirming Indias status as the fastest-growing major economy.

• As of April 12, 2024, Indias foreign exchange reserves stood at US$ 643.162 billion. In 2023, India saw a total of US$ 49.8 billion in PE-VC investments.

• Merchandise exports in March 2024 stood at US$ 41.68 billion, with total merchandise exports of US$ 437.06 billion during the period of April 2023 to March 2024.

• India was also named as the 48th most innovative country among the top 50 countries, securing 40th position out of 132 economies in the Global Innovation Index 2023. India rose from 81st position in 2015 to 40th position in 2023. India ranks 3rd position in the global number of scientific publications.

• In March 2024, the gross Goods and Services Tax (GST) stood at second highest monthly revenue collection atn.78 lakh crore (US$ 21.35 billion), of which CGST is Rs. 34,532 crore (US$ 4.14 billion), SGST is Rs. 43,746 crore (US$ 5.25 billion).

• Between April 2000-December 2023, cumulative FDI equity inflows to India stood at US$ 971.52 billion.

• In February 2024, the overall IIP (Index of Industrial Production) stood at 147.2. The Indices of Industrial Production for the mining, manufacturing and electricity sectors stood at 139.6, 144.5 and 187.1, respectively, in February 2024.

• According to data released by the Ministry of Statistics & Programme Implementation (MoSPI), Indias Consumer Price Index (CPI) based retail inflation reached 5.69% in December 2023.

• Foreign Institutional Investors (Fll) inflows between April-July (2023-24) were close to Rs. 80,500 crore (US$ 9.67 billion), while Domestic Institutional Investors (Dll) sold Rs. 4,500 crore (US$ 540.56 million) in the same period. As per depository data, Foreign Portfolio Investors (FPIs) invested (US$ 8.06 billion) in India during January-April 2024.

Over the years, the Indian government has introduced many initiatives to strengthen the nations economy. The Indian government has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financiaL stabiLity but aLso for the overaLL growth of the economy. Over recent decades, Indias rapid economic growth has Led to a substantiaL increase in its demand for exports. Besides this, a number of the governments fLagship programmes, incLuding Make in India, Start-up India, DigitaL India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, is aimed at creating immense opportunities in India. In this regard, some of the initiatives taken by the government to improve the economic condition of the country are Pradhan Mantri Suryodaya Yojana, PM-VISHWAKARMA, Amrit Bharat Station Scheme, Atma Nirbhar Bharat and ‘LocaL goes GLobaL, Production Linked Incentive Scheme, Pradhan Mantri Garib KaLyan Ann Yojana, Antodaya Ann Yojna, Amrit Bharat Station scheme, Credit Guarantee Scheme for Start-ups, TeLecom TechnoLogy DeveLopment Fund and many more incentive schemes and projects in diverse sectors Like Agriculture and Allied industries, IT and Electronics, MSME, Manufacturing, Renewable Energy, Pharma, Tourism, Defence & Aerospace, and HandLoom & TextiLes. Numerous foreign companies are setting up their faciLities in India on account of various Government initiatives Like Make in India and DigitaL India. The Government of India, under its Make in India initiative, is trying to boost the contribution made by the manufacturing sector with an aim to take it to 25% of the GDP from the current 17%. Besides, the government has aLso come up with the DigitaL India initiative, which focuses on three core components: the creation of digital infrastructure, delivering services digitally, and increasing digital literacy.

Indias FDI infLows have increased 20 times from 2000-01 to 2023-24. According to the Department for Promotion of Industry and InternaL Trade (DPIIT), Indias cumuLative FDI infLow stood at US$ 971.52 biLLion between April 2000- December 2023, mainly due to the governments efforts to improve the ease of doing business and easing of FDI norms. The total FDI inflow into India from April 2023 to December 2023 stood at US$ 51.50 billion and FDI equity inflow for the same period stood at US$ 32.04 billion. From April 2000-December 2023, Indias service sector attracted the highest FDI equity inflow of 16.21% amounting to US$ 108.04 billion, followed by the computer software and hardware industry at 14.75%, amounting to US$ 98.32 billion, trading at 6.33% (US$ 42.19 billion), telecommunications at 5.90% (US$ 39.31 billion), and automobile industry at 5.35% (US$ 35.65 billion).

Nominal GDP or GDP at Current Prices in the year 2023-24 is estimated at Rs. 293.90 Lakh crores (US$ 3.52 trillion), against the First Revised Estimates (FRE) of GDP for the year 2022-23 of Rs. 269.50 Lakh crores (US$ 3.23 trillion). The growth in nominal GDP during 2023-24 is estimated at 9.1% as compared to 14.2% in 2022-23. Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 are estimated at Rs. 172.90 Lakh crores (US$ 2.07 trillion), against the First Revised Estimates (FRE) of GDP for the year 2022-23 of Rs. 160.71 Lakh crores (US$ 1.92 trillion). The growth in real GDP during 2023-24 is estimated at 7.6% as compared to 7.0% in 2022-23.

Inflationary pressures have somewhat subsided. In January 2024, overall inflation stood at 5.1%, down from 5.69% in the previous month and 6.52% in the same period Last year. This is now within the central banks target range of 2% to 6%.

INDUSTRY SCENARIO:

Infrastructure sector Is a key driver for the Indian economy. The sector is highLy responsibLe for propeLLing Indias overaLL deveLopment and enjoys intense focus from Government for Initiating poLicies that wouLd ensure time- bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the aLLied sectors Like townships, housing, buiLt-up infrastructure, and construction development projects.

Infrastructure Industry

Infrastructure Is the backbone of industriaL and agricuLturaL output, as weLL as internationaL and domestic commerce. It is the fundamental organisational and physical structure required to run a successful firm. Communication and transportation, sewage, water, education, health, safe drinking water, and monetary systems are all examples of basic infrastructure in an organisation or for a country. The infrastructure of a country has a direct impact on its economic and social growth. Because of the massive expansion of economic and social infrastructures, many developed countries have made significant developments. A good infrastructure facilitates the work process, resulting in increased productivity. Infrastructure Is a key enabler in helping India become a USD $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. The Government also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors.

The governments focus on building infrastructure of the future has been evident given the slew of initiatives Launched recently. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Infrastructure support to the nations manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical. The "Smart Cities Mission" and "Housing for All" programmes have benefited from these initiatives. Saudi Arabia seeks to spend up to US$ 100 billion in India in energy, petrochemicals, refinery, infrastructure, agriculture, minerals, and mining.

The infrastructure sector Is a key driver of the Indian economy. The sector Is highly responsible for propelling Indias overall development and enjoys intense focus from the Government for initiating policies that would ensure the time-bound creation of world-class infrastructure in the country. The infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure, and construction development projects.

India to reach a US$ 5 trillion economy by 2025, infrastructure development is the need of the hour. The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India and the production-linked incentives (PLI) scheme to augment the growth of the infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water, and irrigation. While these sectors still remain the key focus, the government has also started to focus on other sectors as Indias environment and demographics are evolving. There is a compelling need for enhanced and improved delivery across the whole infrastructure spectrum, from housing provision to water and sanitation services to digital and transportation demands, which will assure economic growth, increase quality of life, and boost sectoral competitiveness. The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India and the production-linked incentives (PLI) scheme to augment the growth of infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water& irrigation. While these sectors still remain the key focus, the government has also started to focus on other sectors as Indias environment and demographics are evolving. There is a compelling need for enhanced and improved delivery across the whole infrastructure spectrum, from housing provision to water and sanitation services to digital and transportation demands, which will assure economic growth, increase quality of life, and boost sectoral competitiveness.

In Budget 2023-24, capital investment outlay for infrastructure Is being increased by 33% to Rs. 10 lakh crore (US$ 122 billion), which would be 3.3 per cent of GDP. As per the Union Budget 2023-24, a capital outlay of Rs. 2.40 lakh crore (US$ 29 billion) has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013-14. Starting with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors, as per news reports. Under the initiative, 2476 projects are under the development phase with an estimated investment of US$ 1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 are in the roads and bridges sub-sector. The Indian Railways expects to complete total revenue of Rs. 2,64,500 crore (US$ 31.81 biLLion) by the end of 2023-24. Indias Logistics Market is estimated to be US$ 435.43 biLLion in 2023 and is expected to reach US$ 50.52 biLLion by 2028, growing at a CAGR of 8.36%. India intends to raise its ranking in the Logistics Performance Index to 25 and bring down the Logistics cost from 14% to 8% of GDP, Leading to a reduction of approximateLy 40%, within the next five years. Apart that Under NIP, India has an investment budget of $1.4 Tn on infrastructure - 24% on renewable energy, 18% on roads & highways, 17% on urban infrastructure, and 12% on railways.

Affordable Housing:

The affordabLe housing sector is expected to maintain its positive momentum in 2024, marking a potentiaL upswing for the rate-sensitive segment that has seen restrained growth in recent years.

AffordabLe housing primariLy comprises of houses for Economic Weaker Section (EWS), MiddLe Income Group (MIG) and, Low Income Group (LIG). In a deveLoping country Like ours, it become prudent to provide income- friendly housing options for various sections of society. The Indian government has been pushing for creating more affordabLe home options for the EWS, MIG and LIG of the society. Estimates suggest that over 600 miLLion people will be living in urban India by 2031. This appreciable growth of 51% since 2011 indicates a dire need to roll out cost-effective housing options, ensuring the underprivileged sections can afford a house while giving a boost to the Indian real estate sector. India has been going through an economic transition for the last few years. This has widened the gap between the rich and the poor. Moreover, home loan mainly cater to the more financially robust section of the population. As such, there is a need for the government to push affordable home loans in India and create other opportunities to house the growing migrant population from rural to urban areas.

Currently, the housing shortage in urban areas is estimated at 19 million units, according to a study conducted by the Ministry of Housing and Urban Poverty ALLeviation (MHUPA). The gap is projected to widen further to around 38 miLLion units by 2030 due to continued popuLation growth and increased urbanization. In 2015, Indias "Housing for ALL" project caLLed Indira Awas Yojana was Launched in an effort to address the housing shortage amongst Low-income househoLds in cities. The Later version of the scheme has two components, Gramin (ruraL) and Urban.

Industrial Park & Logistics:

The warehousing, industrial, and Logistics (WIL) sectors are projected to be crucial for attaining Indias vision of being a US$ 5 trillion economy by FY25. The warehouse and Logistics industry has benefited the most from the COVID-19 epidemic, increasing its share from 2% in 2020 to 20% in 2021. Because of the growing shift from discretionary to essential internet buying during the COVID-19 epidemic, the e-commerce industry became more appealing and attractive.

The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favourable business environment. Increasing consumerism and a huge consumer base are fostering the growth of retail and e-commerce in India. The Indian retail sectors market size is predicted to increase at a CAGR of 9% between 2019 and 2030, totalling more than US$ 1.8 trillion. Large international funds and corporations have invested in warehousing developers and operators to grow their reach and geographical footprint, which are the sectors key differentiators. The Government of India has taken many initiatives to strengthen the sectors infrastructure, including the establishment of dedicated freight corridors and the extension of road and rail networks, to improve connectivity and decrease travel times. Another critical governmental intervention has been the sectors digital transformation, projects such as Digital India, Bharat Net, and the National Logistics Portal would aid in the industrys digitization. Furthermore, the government has announced the establishment of logistics parks and warehouses across the country to provide appropriate storage facilities for enterprises. The warehouse sector has grown rapidly in recent years, fuelled by the expansion of e-commerce, solid infrastructure, the adoption of GST, and the advent of organized retail. The recently implemented National Logistics Policy intends to reduce Indias logistics costs from the double digits of GDP to the single digits by 2030.

A warehouse is an essential component of corporate infrastructure and one of the primary enablers in the global supply chain. the Indian warehousing market is predicted to reach US$ 34.99 billion (? 2,872.10 billion), expanding at a CAGR of 15.64% from 2022 to 2027. Modern warehouse facilities and technology-driven solutions have changed the warehousing sector in India in recent years. With increased demand and supply throughout the years, the Indian warehousing industry is gaining traction. The key players are third-party logistics (third-party logistics) and e-commerce enterprises, which are growing into tier 2 and 3 cities and eventually increasing their proportion of secondary marketplaces. Businesses are transitioning to a hub-and-spoke model while also implementing technology to simplify operations, with an eye on the larger picture of ease, efficiency, and sustainability. Grade A warehouses are modernized buildings created specifically to meet the needs of warehouse logistics. They feature the most up-to-date technology, superior building materials, a prime location, and a convenient traffic interchange. Grade B objects are outdated buildings that must be rebuilt to satisfy modern warehouse logistics standards.

The governments warehousing policy focuses on creating exclusive warehousing zones through public-private partnerships in order to reduce transportation and logistics costs and accelerate growth. The government will invest US$ 91.38 billion (Rs. 7.5 lakh crore) in infrastructure, logistics development, and multi-modal connectivity in FY23. Reforms such as GST and e-way bills are fostering industrial growth, consolidation, and efficiency. The introduction of free trade logistics parks and warehousing zones. The emergence of new-age tech logistics startups that are aggressively infiltrating this market and producing competing products. Several new businesses are entering the B2B market, driven by manufacturing. New players are introducing more technology and digital systems to boost productivity, resulting in overall industry growth. Solutions based on modern technology are opening up chances for solution expansion throughout the entire value chain. Warehouses are being designed and integrated with technologies such as the Internet of Things (IoT), robotics, and artificial intelligence (AI). An increase in e-commerce leads to expanded operations to meet increased demand. Consumer behaviour is changing, and they are demanding convenience through last-mile connectivity, ease of returns, and other value- added services. The expansion of Direct-to-Consumer (D2C) brands demanding end-to-end logistics services. Omni-channel retailing increases the need for several warehouses to serve end users.

Foreign corporations are actively investing in Indias logistics infrastructure to capitalize on the countrys strategic location, trained labour, and improved business environment. The development of industrial and logistics parks, as well as data centres, is a new bright spot on the Indian real estate heatmap. In 2022, these two segments received US$ 1.8 billion in Private Equity (PE)/ Venture Capitalist (VC) investments, representing a 29% increase year on year. The industry garnered investments worth US$ 1 billion (Rs. 8,257 crore) at the beginning of 2022. The logistics and industrial industries quarterly average investment was around 1.3 times more in 2021 than it was in 2021 when it was US$ 335.69 million (Rs. 2,755) crore. Over the last four years (2019-2022), the warehouse and

Logistics sector has received a total institutional investment of US$ 5.4 billion, with 2022 accounting for a major 35% portion.

Warehouse investment accounted for the second greatest percentage of institutional real estate investment in both 2021 and 2022, accounting for 27% and 31%, respectively, outperforming other asset classes such as residential and retail. During the four-year period 2019-2022, the western area of the country - led by Mumbai, Pune, and Becharji, (a tiny town in Gujarat) - witnessed the second-greatest institutionaL investment in warehousing, accounting for 35% of total investment in the industry, demonstrating the increased confidence that investors have in the nations Tier II cities.

NILA INFRASTRUCTURES - The Company

As a pure-pLay Urban Infrastructure contractor/deveLoper, your Company works on Infrastructure and urban infrastructure projects by leveraging its core competency. The management is optimistic about the growth of our economy in general and construction sector in particular. Your Company has on hand meaningful Affordable Housing deveLopment orders to the tune of the highest order-book in the history of your Company and providing a visibiLity of a muLti-year growth. Hence, it envisages that on back of enhanced pre-quaLifications/bidding capacities, its business wiLL grow sustainabLy. There are Lakhs of peopLe in India who do not have a home of their own, inducing the government to plan more aggressively to provide houses to these people who dont have housing at this point of time.

Your Company has aLso buiLt significant PPP based order-book where the remuneration is superior for a Longterm sustainabLe growth. Your Company is now a sort of a SpeciaList in AffordabLe Housing Infrastructure and pure-play Urban Infrastructure player.

Strategic Focus of NILA:

Unique Business Model - Diversified and Flexible:

Your company has developed a unique business model of construction contracts on EPC/LSTK, EPC+PPP and PPP mode for AffordabLe Housing projects as weLL as Urban Infrastructure Projects. Your Company has successfuLLy leveraged the construction expertise to grow into construction contracts from government authorities and reputed corporates. Your Company holds commercial properties in the prime location of Ahmedabad and such lease rent ensures continues revenue.

This diversified business model for Transforming Lives has shown great strength in the past years of challenging business environment. Leasing ensures steady cash fLow income whiLe construction contracts of Government assure timely and confirmed recovery of dues, whereas the PPP projects ensure better profitability margins. Your Company has developed in-house expertise in the entire gamut of construction and execution - including design, planning & estimation, project preparation, project execution, interior designing, integration of project management.

Project Selection and Execution:

Your Companys comprehensive evaluation of opportunities in infrastructure projects includes the following parameters:

• Principal: Constitution, financial strength, bureaucratic structure, involvement of any bilateral/multilateral agency, track record on other projects, contract management strength, appropriateness of design for LocaL market, etc.

• Pre-deveLopment: Financing fLexibiLity to fund the earLy design work, community/poLiticaL participation/ opposition, government stability over the life of the project, environmental problems, site selection and regulatory approval delays, land acquisition, etc.

• Finance: CommerciaL viability of the project, capacity of the Lender to evaLuate and speed in providing the credit lines, repayment mechanism, credit availability on viable terms, etc.

• Construction: Viability of the design/technology, availability of labour and raw-material, outlook of raw- material cost, contractor failure, developers access to funds on a timely basis for construction, etc.

• Market: Local economic conditions, demand-supply outlook, interest/inflation rate scenario, etc.

Throughout this process, your Company has to identify and mitigate inherent risks that can adversely affect the project. It is broadly evaluated in three parts: 1) preliminary considerations, market analysis, financial analysis, tender analysis, and strategic marketing; 2) site due diligence, tender due diligence, entitlements, permissions, etc.; and 3) planning and design, construction management, operations and property management. Hence, with sufficient due-diligence the project is bided and execution is carried-out accordingly by your Company. Your Companys Quality Management System is ISO 9001: 2015 accredited by INTERCERT that include Project Management, Site Development and Construction activities for Infrastructure, Industrial, Residential and Commercial projects.

Project Management and Monitoring:

Your Company has adopted an integrated system for planning, scheduling, monitoring and control of the approved project under implementation. To coordinate and synchronise all the support function of Project Management it relies on an Integrated Project Management Control System which integrates its project management, contract management and control function addressing all stages of project implementation from concept to commissioning.

All projects have project monitoring centres which facilitate monitoring of key project milestones and also act as a Decision Support System for the management. It is used as integrated web based collaborative system to facilitate consolidation of project related issues and its timely resolution. Various features for information delivery of ERP facilitate project tracking, issues resolution and management interventions on a regular basis. Integrated ERP platform for monitoring and controlling of critical project activities spread across various functions - projects, contracts, finance and execution. This helps in decision support through timely identification of critical input and provides a holistic approach towards project implementation and major project milestones.

Financial Resources:

The foremost source of finance of your Company has traditionally been internal accruals and borrowings from banks. Your Company has made financial arrangement with banks and financial institutions for its various longterm and working capital requirements. During the year your Company has not only successfully contracted/ renewed substantial credit limits at competitive terms, but also pertinently tuned the requisite credit limits. Such measures will enhance the overall financial flexibility.

Joint Ventures:

In order to share risk and cost, experience and expertise your Company deveLops certain projects in association with other renowned corporates and has formed associates and joint ventures. This provides a Larger scale to your Company to work on specific operations. In such a scenario, the construction work is invariabLy carried- out by your Company. Your Company Looks upon them as partners in its progress and shares with them the rewards of growth. It is your Companys endeavour to buiLd and nurture strong Links with the trade based on mutuaLity of benefits, respect for and cooperation with each other, consistent with consumer interests.

OPPORTUNITIES AND OUTLOOK:

Your Company primariLy focuses on the State of Gujarat which is considered as Growth Engine of the Nation. Gujarats GSDP growth for the Last 10 years is at 12.8% surpassing the countrys rate of growth. The growth rate in 2021-22 and 2022-23 was 19.3 percent and 15.7 per cent, respectiveLy. Gujarat is one of the Leading industriaLised states in India. At current prices, Gujarats Gross State Domestic Product (GSDP) is estimated at Rs. 22.61 Lakh crore (US$ 275.78 biLLion in FY23, an increase of 15.5% YoY. In 2022-23, Gujarat contributed 8.6% to Indias GDP.

There are 13 major industry groups that together account for around 82.05% of total factories, 95.85% of total fixed capitaL investment, 90.09% of the vaLue of output and 93.21% of vaLue addition in Gujarats industriaL economy. Gujarat ranked 1st in Export Preparedness Index 2021 with the highest exports worth US$ 131 biLLion (April 2022- January 2023). Gujarat is a Leader in industriaL sectors such as chemicaLs, petrochemicaLs, dairy, drugs and pharmaceuticals, cement and ceramics, gems and jewellery, textiles and engineering. The industrial sector comprises of over 800 large industries and 453,339 micro, small and medium enterprises.

According to the DPIIT, FDI inflows in Gujarat stood at US$ 4,714 million in FY23 and were US$ 31,901 million between October 2019-March 2023. In 2020-21, the secondary sector contributed 42.9% to the states GSDP (at current prices), followed by tertiary (37.3%) and primary (19.8%) sectors. Gujarat ranks fourth among states in terms of FDI received, with an 83% increase in FDI over the previous year.

Affordable Housing Opportunities

Right to adequate housing is a basic human right as shelter is a basic human need. Provision of adequate housing is emerging as a major thrust area for Government and the government accords a very high priority to this task. With all round increase in the cost of land, building materials, labour and infrastructure, affordable housing has become a distant dream for the economicaLLy weaker, Low-income groups, and middLe-income groups. Hence, the roLe and intervention of the Government has become aLL the more important. SustainabLe human deveLopment cannot be achieved without adequate & affordable housing. Affordable shelter for the masses or creation of productive and responsive housing for all is not a simple technological issue or a mere problem of finance. It is a compLex amaLgam of a host of factors, which need to be tackLed at aLL LeveLs and in a synchronised manner. Due to rapid pace of urbanisation, increasing rural to urban migration and the gap between demand and supply, there is a growing requirement for shelter and reLated infrastructure in urban areas of the country. Factors Leading to growth of affordable housing industry are as under.

Rising middle class Population enhances the affordable housing market:

The need for affordable housing in India is being driven by the courntrys expanding middle class. Indias middle class population is expanding as is anticipating to continue to grow during the forecast period. It is estimated by the National Council of Applied Economic Research that Indias middle class population would have grown from around 47 million in 2010 to 200 million by 2025. The need for affordable housing is being driven by the growth of the middle class, as more individual are seeking houses that meet their basis need. To meet the increasing need, the Government and the private developers in India are more and more focusing constructing affordable houses.

Increasing working population:

The demand for cheap housing is driven by Indias growing working population. By 2050, India is expected to have one of the Largest employment markets in the world with a population of over 1 billion people who are of working age. As this population expands, there will be an increasing need for housing, especially in metropolitan cities, where most of the job possibilities are located. This will create immense demand of housing units in these cities fand affordable housing will play pivotal role to cater this need.

High cost of Land and construction material:

The high cost of Land and construction material in India is a key obstacle in delivering affordable houses to its population. Due to a Lack of available Land, population expansion and urbanization, Land prices in India have been growing quickly. This has made it a problem for developers to secure Land at inexpensive costs, which in turn raises the cost of raw materials such as cement, steel, and bricks made it difficult for developers to execute affordable housing.

The Government of Gujarat came out with "Gujarat AffordabLe Housing PoLicy 2014" had been announced vide order dated 15-01-2014 under "Mukhya Mantri GRUH Yojana. It focuses on provision of housing at affordabLe price to EconomicaLLy Weaker Section (EWS), Lower Income Group (LIG) and MiddLe-Income Group (MIG) urban families, The state aims to involve both public institutions as well as private developers in such projects. The poLicy comprises three modeL for deveLopment of affordabLe housing in Gujarat.

• ModeL-l: PubLic Agency on PubLic Land (Green FieLd DeveLopment)

• Model-II: Private Developer on Public Land through PPP

• Model-III: Private Developer on Private Land

Slum Rehabilitation in PPP

According to the Government of Gujarat about 7,00,000 famiLies reside in sLums in the urban areas of Gujarat. State Government aims to accord priority to rehabiLitate such sLum dweLLer famiLies in-situ. ELigibLe sLum dweLLers families will be provided houses of minimum 30 sq. mtr. Carpet area with basic civic amenities free of cost in lieu of their hutments with main objectives being:

• In-situ rehabilitation of the slums situated on public land in urban areas of the State

• Provision of pucca houses with basic amenities having two rooms, kitchen, bath room and Latrine for sLum dwellers families

• Ownership rights of the house to the beneficiaries after 15 years

• Provision of hygienic and healthy life style especially for urban poor

• QuaLitative improvement in socio-economic and environmentaL conditions of towns and cities of Gujarat

• Attracting private investment by PPP for this purpose

• SimpLe and transparent poLicy framework to rehabiLitate sLums in-situ on pubLic Land through PPP

The beneficiaries get basic civic faciLities of drinking water, sewerage Line, eLectricity connections, Anganwadi/ Health Centre. The beneficiaries are responsibLe for payment of operationaL and maintenance cost, property tax and any other tax Levied by LSG. The beneficiaries will be initially granted Lease-hold rights for the houses allotted to them for first 15 years and thereafter will be granted ownership rights. However, the ownership of the land will remain with the LSG. The developer gets certain incentives including additional FSl, TDRs, free-hold rights on balance vacant land for development and free sale, exemption on developmental charges, relaxation in construction. Private developer is selected through established, open and transparent procedures.

Your Company is at forefront in slum rehabilitation projects in Gujarat and possesses sizable chunk of market share within the segment. Looking at the size of opportunity, the scalability of operation is very high and the Company has developed all necessary expertise to execute slum projects involving complexity of varied nature.

Urban Infrastructure:

Your Company has, over a period of time, developed a niche for itself by executing unique and pioneering projects e.g. BRTS bus-shelters, Multi-level parking facility, Slum Rehabilitation and Redevelopment, Medical college campus, etc. Through execution of such projects, your Company has built proprietary knowledge and it places your Company favourably with employers of such projects. Your Company expects that number of large sized urban infrastructure projects in Gujarat will start taking shape on the basis of investments committed vide 28,360 MoUs executed during the latest Vibrant Gujarat. In the backdrop of the announcement of GIFT, MEGA, Dholera SIR, Mega cities, Million plus cities, etc., your Company is favourably poised to replicate such experience. Apart from this, there are also other opportunities that your Company can participate into, such as:

• Transportation infrastructure for better mobility through public transport, improved walkability, parking

• Sewerage, drainage and water supply

• Solid waste management

• SociaL infrastructures such as parks, pLaygrounds and Leisure spaces

• Preservation of heritage precincts

• Community HaLLs

Your Company is confident to benefit from this.

Bus Ports in PPP

A typical SRTC is a state -owned corporation for passenger transport providing bus services both interstate and intra-state. As part of this endeavour, various SRTCs have decided to deveLop state-of-the-art Bus TerminaLs with an iconic structure and design as well as modern facilities. To improve the urban transport infrastructure, SRTC wiLL undertake deveLopment and operation & maintenance of bus terminaLs with commerciaL faciLities on DBFOT basis.

SRTC normally adopts a single stage three step online tendering process for selection of the Concessionaire for award of the Project(s). GoIs guideLines for quaLification of bidders seeking to acquire stakes in any pubLic sector enterprise through the process of disinvestment apply mutatis mutandis. The selected bidder i.e. the Concessionaire is responsible for designing, engineering, financing, procurement, construction, operation and maintenance of the Project(s) under and in accordance with the provisions of a long term Concession Agreement to be entered into between the Concessionaire and SRTC.

The scope of work broadLy incLude rehabiLitation, demoLition of existing bus terminaLs with designing, financing, construction of new bus terminals along with associated amenities & facilities, development and construction of commercial facilities and the operation and maintenance thereof of bus terminal and commercial facilities. The commercial facilities to be developed by the Concessionaire shall be available on a long-term lease basis.

Your Company has already got a couple of orders directly as well as in joint venture with other reputed corporates for AmreLi and Modasa Bus Ports at Gujarat. Your Company is confident to gain positiveLy from execution of such projects.

Office/Commercial Complex

Your Company has aLready executed 8,00,000 sq ft bua for a reputed corporate at Gujarat. Your Company is confident to gain positively from execution of such projects.

Health and Medical

Your Company has aLready executed 3,00,000 sq ft bua faciLity of a MedicaL CoLLege campus for 100 MBBS admission annuaLLy as per appLicabLe MCI norms at Barmer, Rajasthan. This Project wiLL provide additionaL opportunities to your Company into MedicaL and Health reLated construction business, which has abundant prospect - moreso post COVID-19 pandemic. Your Company is confident to gain positively from execution of such project. Your Company is also seriously evaluating options to provide and/or construct Health Community Centres at Land allotted in consideration for slum rehabilitation at various Locations in Gujarat.

Industrial and Logistics:

The logistics value chain comprises three units - transportation, warehousing and administration. Transportation involves the end-to-end movement of freight from the manufacturer/retailer to the customer. This transfer can span across borders and across different modes of transport. Warehousing is the intermediate storage of goods that happens during a products journey from the factory to the consumer. Administration is supply chain management.

Indian Government has increased thrust to improve the Logistics sector. Promising and futuristic PoLicy and Infrastructure environment for the Logistic sector exists in India today, and is creating the most encouraging impact in revoLutionizing the Logistics sector and taking it to the next LeveL of evoLutionary phase. The country is graduaLLy improving its Logistics positioning as seen in the LPI, wherein Indias rank has improved as mentioned earLier - aLso attributabLe to reforms undertaken by the government Like the introduction of the SWIFT in the Customs Department.

The sector indeed has a potential to embrace lot more positive changes and has a long way to go. With the Logistics Sector getting Infrastructure status, the access to credit on Long term basis is at competitive rates from financiaL institution and access to funds as ECB, as weLL as access Long tenure funds from insurance and pension funds. Further, the impLementation of GST has made way for cost and operationaLLy efficient Hub & Spoke ModeL of warehousing and has shifted the end user demand and developer supply from inefficient, low quality redundant warehouses to Large box, good quaLity Grade "A" warehouses. Strong demand and investment are foreseen in short to medium term.

A warehouse is a fundamentaL part of business infrastructure and is one of the key enabLers in the gLobaL suppLy chain. It is the fulcrum for procurement, manufacturing and distribution services which collectively build robust economies. Earlier, the incentives to enter Indias warehousing sector was minimal for organised players as the occupiers themseLves were content to engage with fringe partners offering Low cost options with a network of smaLL storage facilities near consumption centres. Multiple state and central LeveL taxes made it sensible for companies to maintain smaLLer warehouses in each state. Further, this Limited the focus on automation and higher throughput. This attitude of occupiers of preferring to save on costs as their soLe objective is changing. There has been a graduaL transition in the mind-set of occupiers to use the services offered by organised segments. A pLethora of factors are driving this wave of change such as: requirement from compLiance reguLators (in case of the pharmaceuticaL industry), quaLity consistency assurance required by cLients/ reguLators, statutory penalties on non-compLaint warehousing faciLities, economies of scaLe being achieved through Larger warehouses, safety and security of goods, efficiency in operations, quicker turnarounds, need for efficient warehousing designs and the advent of e-commerce and other muLtinationaL businesses that prefer to occupy onLy compLaint faciLities. This shift was further accentuated by the impLementation of the GST. The warehousing market in India is highly fragmented as majority of the warehouses measure Less than 10,000 square feet. Further, almost 90% of the warehousing space is controLLed by unorganised pLayers and comprises smaLL-size warehouses with Limited mechanisation. The present warehousing market in India can be categorised into three - Lower stratum, middle stratum and higher stratum. The Lower stratum is just godowns of the past converted into warehouses. These are oLd buiLdings, mostLy Reinforced Cement Concrete (RCC) structures and their onLy utiLity is storage. The middLe stratum warehouses comprise similar structures as in the Lower stratum, but these are built with pre-engineered slabs and are known as pre-engineered building (PEB) structures. Their planning and functioning is very basic, Like that of the Lower strata, but their buildings are in a comparatively better condition. Higher stratum warehouses are the modern and massive structures that perform a Lot of suppLy chain functions aLong with storage. Another practice in Indian warehousing market is the Lack of attention to warehouse designing. This ignorance stems from Lack of awareness and/or Lack of willingness on the part of Landowners and developers to cater to the requirements of end users. Most warehouses are built keeping in mind the developers perspective and not that of the end user. Hence, the focus is to save cost which resuLts in the construction of a very basic structure for a warehouse. Such warehouses do not adhere to market standards and therefore, end users are frequently plagued with issues like lack of basic amenities and sub-standard infrastructure with lower longevity. Warehouses today take different forms - fuLfiLment centres, distribution centres, return centres, and even showrooms. Your Company, thus, focuses on the concept of Built-to-Suit (BTS) warehouse incorporating the designing and end user centric facilities/ amenities. Demand for large warehousing spaces is likely to see steady increase as occupiers now prefer to move out of their smaLLer warehouses and consoLidate their activities in Larger faciLities, which are presentLy in short suppLy compared to the demand. This demand-suppLy gap is visibLe in the current premium commanded by organised pLayers owning these assets.

Such opportunity has attracted gLobaL corporations in Indian warehousing sector. The governments thrust to the sector such as giving infrastructure status to the logistics sector, "Make in India", "Digital India", "Skill India", India Brand Equity Foundation Trust, Multi-modal logistics parks, Dedicated Freight Corridors, signing of FTA/PTA, etc.; and initiatives to set up industrial corridors like DMIC, Delhi Kolkata Industrial Corridor and logistics parks have propelled the cause. Over the past few years, the government has undertaken several reforms to promote and provide an exit route to real estate investors via the REITs. Currently the market for REITs in India is at a very nascent stage and it would take time to evolve. Once the market for REITs matures, the institutional investors would be able to get a credible exit avenue to gain from their warehousing investments by Listing their warehousing assets through REITs. These initiatives would go a long way in leveraging the true potential of the sector and bring down the overaLL costs Linked to warehousing and Logistics as weLL give credibLe exit opportunities to investors.

As more and more companies streamLine their Logistics networks, it wouLd be observed that unorganised pLayers or smaller organized players would consolidate or sell their assets to larger ones. The industry is expected to witness a structural shift over the next 3-5 years. The warehousing aspect in the logistics supply chain globally is going through a transformation. From being a mere storage space provider for goods, the segment is offering an array of vaLue added services such as packaging, smaLL scaLe manufacturing, cross docking, automation, aLgorithm based demand forecasting and distribution centres. This transition would only happen if economies of scale come into play and companies are able to consolidate their spaces and move into larger warehouses. The Indian warehousing industry, which was lagging behind its global counterparts due to its fragmented structure, would now enter the same league. Your Company is favourably located, being in the economically most vibrant state of India i.e. Gujarat, to participate in deveLoping/constructing the industriaL infrastructure. The MOU with the Kataria Group of Ahmedabad to work jointLy for acquiring Land and deveLoping industriaL and Logistics parks, units, sheds, plots, residential colonies, and allied infrastructure at various locations situated near the upcoming automobile hub at Bechraji - about 90 kms from Ahmedabad at Gujarat; offers your Company a strategic advantage. Your Company has already delivered five (5) dormitories, commercial complex, and a couple of sizeable logistic warehouses under this initiative. Your Company is favourabLy pLaced to take the advantage of the expected spur in construction/deveLopment of new industriaL faciLities e.g. industriaL park, warehouse/Logistics Park, etc.

SEBI Notification on SM REITs:

SEBI has recentLy notified SmaLL REIT structure to start reaL estate REIT fund starting from INR 50 Crore by issuing units to a minimum of 200 investors. These funds are to be used for acquiring and managing real estate properties, generating income for the investors of the fund. This move aims to regulate the fractional ownership industry and safeguard investor interests, incorporating both commercial and residential properties within the new framework. Your Company possesses premium Land bank near Bechraji Region at Gujarat capabLe to deveLop industriaL parks / warehouses and other properties which can be offered to such funds. The opportunities are ample for such structures in future.

RISK, CHALLENGES AND THREATS:

As is typicaL in expanding business activities your Company has become a subject to a variety of risks, chaLLenges, and threats. It is recognised that risks are not onLy inherent to any business but are aLso dynamic in nature. Further, the Company is susceptibLe to certain risks arising out of various activities undertaken in the normaL course of business.

There are many constraints affecting the smooth functioning of the industry in which your Company operates. The tabLe beLow provides a brief overview of the most significant risks and your companys approach to managing them.

Risk	Explanation	Mitigation approach
Pandemic risk	Any epidemic/ pandemic can cause interruption in the execution and business	Your Company categorizes Project sites into High, Medium and Low based on perception of such risk and the sites are mandated to be operated with strict adherence to the government/HSE guidelines. Your Company focuses to ensure the health and safety of all employees, labourers, suppliers and channel partners, while initiating stringent measures to control costs and strengthen cash flows..
Health and Safety at projects	Any employee, Labour, worker is hurt or killed by an accident at work.	Apart from the QMS, project execution policy/processes, loss prevention programmes, insurance, etc. your Company ensures to initiate development and construction of the Project, only post identifying, defining and addressing all such risk propositions and dynamics. Your Company also ensure to share sufficient knowledge about such risks and imparts adequate training to all the employees, Labourers, workers, so as to tackle such risks. Zero accident programs supported by proactive near miss reporting aims at the avoidance of all workplace accidents.
Health and Safety related to your Companys construction	Person or persons are hurt or injured as a result of your Companys construction failure or defect. Stability/ sturdiness of the structure is compromised.	Your Company follows strict design and validation rules for all projects, and fully adheres to PrincipaL/client/NBC specific requirements for safety and structural sturdiness. Your Company ensures implementation of detailed instructions of the Project Principal/client, Architect, Structural Engineer, PMC, etc.
		to ensure the fulfilment of Principal/clients requirements and your Companys quality standards. Your Companys overall approach to quality management assures conformance and performance to the highest level.
Interest rate risk	Your Companys interest costs are impacted by market rates.	Your Companys liquidity and borrowing are managed by professional at Senior management level. The interest rate exposure of your Company is reduced by matching the duration of investments and borrowings.
Credit risk	Your Companys Principals ability to pay can have an impact on the financial result.	As per your Companys policy only well-established institutions/ corporates are approved as counterparties. Exposure per counterparty is continuously monitored.
Liquidity risk	Acceptable liquidity levels are required in order to achieve desired financial results.	In addition to its own liquidity, your Company enjoys credit facilities with the largest Bank of the country as well as other banks/financial institutions of high-standing and good repute.
Competitor risk	Competitors find ways to bid at dramatically lower cost or bid to construct with better functioning/ latest technologies.	Your Company aims to be the cost and value leader, meaning striving to innovate and bring new and increased value through the innovation to our customers while at the same time working to assure that your Companys operations are world class in terms of efficiency, cost and waste avoidance. Your Company has developed proprietary knowledge to construct with different technologies, while the management provides highest importance to the Quality perspective to ensure long- term sustainable growth.
Economic downturn	Your Companys customers could be impacted by a major economic downturn resulting in lower demand for their respective projects.	Your Company has a highly diversified and well balanced customer base. The risk is therefore spread very widely on customer, regional and industrial sector/segment perspective. Your Companys flexible business model is capable to set operational priorities in the face of changing economic scenario. Your Company uses market data intelligence to follow and anticipate developments - allowing proactive management of changing market conditions.
Execution risk	It depends on various factors e.g. labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities, weather conditions, and absence of contingencies such as litigation.	Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and repute contractors.
Input cost fluctuations	Significant changes in raw material costs can impact the profitabiLity.	Your Company has estabLished a proficient suppLy chain which assures raw materials are purchased in a highly competitive manner. Raw material cost indexes could also be included in contractor/supplier agreements.
Supply chain disruption	ExternaL factors such as fires, extreme weather events, natural disasters, water stress, war or pandemic illness to mention a few, could result in disruption of supply and impact on revenue and profit.	Your Company has intentionaLLy set up a flexibLe suppLy chain and works to avoid dependence on a singLe source or production Location. The suppLy chain tracks issues e.g. extreme weather events, natural disasters, water stress, war or pandemic illness, etc. as these may impact the suppLy. In addition your Company focuses on working with suppliers that have adequate insurance for both production and transports.
Material source or type compLiance risks	Your Company aims to avoid the use of hazardous substances in its products and processes; your company aLso strives to avoid negative social impacts within the extended supply chain. Legislations have been and are being introduced in these aspects, failure to meet with direct or customer requirements of these legislations could result in costs as well as loss of business for your Company.	Your Companys majority Principal/client are government bodies and the material used by your Company is subject to stipuLations of the cLient, BIS specifications, Laboratory checks, inspection by independent third-party e.g. Project Management Consultant, etc. Hence, environment, health and safety risks have already been considered while deciding such stipulations.
Labour disputes	Industrial disputes lead to industrial action with impacts your Companys ability to meet Principal/client demands.	Your Company maintains an open and positive relationship with all the employees, sub-contractors, workers, etc.; as exemplified by not a single instance of any such dispute so far.
Loss of a major project site	Fire, flood or naturaL disaster could result in the temporary loss of a construction operation, in addition to the reconstruction and remediation costs; this couLd put time schedule, cost and revenues at risk.	Your Companys Quality Management System is ISO 9001:2015 accredited by INTERCERT that include Project Management, Site Development and Construction activities for Infrastructure, Industrial, Residential and Commercial projects.
Major incident at a project	A major incident during which a significant amount of local environmental damage occurs Leading to fines, Loss of reputation, etc.	Your Companys Quality Management System is certified to ISO 9001 : 2015 and works to assure that all such material risks are identified and effective counter-measures are implemented in order to mitigate them. This includes actions to mitigate the risk as well as emergency response plans to assure the impacts of any incident are minimised.
Climate change risks - extreme weather events	Extreme weather events disrupt project execution.	Requirements for emergency response plans at all sites include flood risks etc. See also mitigations mentioned hereinabove.
Corrupt or fraudulent actions carried out by your Companys representatives	Your Companys employee or employees fail to adhere to your Companys Code of Conduct and related policies and requirements and act in a fraudulent or corrupt manner Leading to financiaL penalties and reputation damage.	Your Company takes a proactive approach to assure awareness of demanded ethical standards by education, compliance programs including anti-corruption, antifraud and antitrust. The work to follow up adherence is facilitated by the whistle blower function and a risk-and incident based audit system.
Non-compliance with applicable laws	The diverse nature of your Companys business and operations means that your Company is required to adhere to numerous laws and regulations related to all aspects of its activities. Failure to meet these requirements could Lead to LegaL and financial consequences as well as damage to your Companys reputation.	Your Company has put in place comprehensive and robust compliance program which is based on your Companys Code of Conduct. The compliance program is put in place to ensure that applicable Laws and regulations are identified
LegaL risks relating to our business activities	In connection with the revenue of your Company and in the purchase of materials and services from our suppliers, consultants, etc. large potential liabilities may occur in case of e.g. late delivery, delivery of defective products, unfulfilled service commitments and incorrect advice. Therefore, it is important that all such risks are identified, that risk decisions are taken on the appropriate level and that carefully worded contractual provisions aiming at reducing your Companys liabilities are included in contracts.	Your Company has put in place policies, procedures and training programs in order to make sure that LegaL risk relating to our business activities are identified and that risk decisions are taken on the appropriate Level. In addition, independent professional legal counsels support your Company in identifying and handling LegaL risks. The LegaL counsels work closely with the Senior management and provide contract drafting and negotiation support, claim and litigation management, support, training and general advice.

Your Company Is operating in a business which is cycLic in nature. TimeLy suppLy of raw materiaL Like cement, steeL, bricks are essentiaL for timeLy compLetlon of the projects. Shortage of Labour and raw materiaL may deLay the execution of projects of your Company. The infrastructure projects are capital intensive in nature. Your Companys business requires Long-term commitment of capital to meet the financial requirement of long-term projects. Further, timeLy avalLablLlty of sklLLed and technicaL personneL Is aLso one of the key chaLLenges. Infrastructure projects are mainly dependent on the economic scenarios and any adverse events affecting the whole economy may deteriorate the industry as weLL. Any significant change in government poLicy in promoting AffordabLe Housing and/or Urban Infrastructure couLd pose a threat. Further, the approvaL process and time for projects are generaLLy uncertain which may delay the execution and thereby affect financials.

Your Company has in pLace an effective risk management mechanism to identify potentiaL risk and its timeLy mitigation.

CORPORATE GOVERNANCE:

Your Companys Corporate Governance phlLosophy Is based on the totaL transparency, integrity, fairness, equity, accountability and commitments to the values. Your Company is committed to the best governance practices that create long term sustainable shareholder value. With the object of your Company to conduct its business in a highLy professionaL manner and thereby enhance trust and confidence of aLL its stakehoLders, your Company has devised a compLete compLIance of Corporate Governance norms. Your Company firmLy beLieves that definite Corporate Governance Leads to the optimaL utlLizatlon of resources and enhances the vaLue of the enterprise and an ethicaL behavior of the enterprise Leads to honoring and protecting the rights of aLL the stakehoLders. Sound Corporate Governance practices and ethicaL business conduct aLways remain at the core of your Companys vaLue system.

The AnnuaL Return for the FY2024 Is avalLabLe at the website of your Company at www.nlLalnfra.com under the Investor segment. A separate report on Corporate Governance Is provided together with a Certificate from the Practicing Company Secretary of your Company regarding compLIance of conditions of Corporate Governance as stipuLated under Listing ReguLations. A Certificate of the CEO and CFO of your Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is part of this Annual Report.

WORK CULTURE AND HUMAN RESOURCE:

The management beLieves in team work and a corporate environment which Is seLf-motivating. Your Company has successfuLLy deveLoped a work force of highLy motivated peopLe over a period of time. The top management Is acting as the governing force in creating and maintaining the corporate work culture. The businesses that your Company engages in are primarily people-driven. Our Vision Is to raise our own benchmarks with every successive endeavour and it Is possible only by making every employee a fully engaged and aligned team member. Your Company continues to remain focused on reinforcing the key thrust areas i.e. being the employer of choice, building an inclusive culture, building a strong talent pipeline, building capabilities in the organization and continuing to focus on progressive employee relations policies. Accordingly, our HR policies are centered around the creation of an environment that attracts, nurtures and rewards high-caliber talent. Young engineers gain the opportunity to operate on the frontlines of technology and associate with projects of scale and complexity. We drive sustainable growth and have been instrumental in bringing in thought leadership in building strong employee relations. There Is no materiaL development in HR. Your Company continued to build on the Diversity and Inclusion agenda through building Leadership capability and recognizing Line managers who provide a simple, flexible and respectful work environment for their teams. Your Company is developing future leaders and having the best people practices. A structured Leadership development initiative has helped to build a robust talent pipeline at all Levels. Our HR organisation is well-geared towards attraction and retention of qualified/potent talent in an ecosystem that provides long-cycle professional development opportunities in various facets of civil urban infrastructure and caters to career building aspirations of talent at all levels.

INTERNAL CONTROL SYSTEM:

The Board of Directors of your Company have prescribed InternaL ControLs for effective controL system within the organisation. The Corporate Governance PoLicy guides the conduct of affairs of your Company and cLearLy delineates the roles, responsibilities and authorities at each Level of its three-tiered governance structure and key functionaries invoLved in governance. The Code of Conduct commits management to financiaL and accounting poLicies, systems and processes. The Corporate Governance PoLicy and the Code of Conduct stand wideLy communicated across your Company at aLL times, and, together with the ‘Strategy of Organisation, PLanning & Review Processes and the Risk Management Framework provide the foundation for InternaL FinanciaL ControLs with reference to your Companys FinanciaL Statements. Such FinanciaL Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by management and approved by the Audit Committee and the Board. These PoLicies are supported by the Corporate Accounting and Systems PoLicies that appLy to the entity as a whoLe to impLement the tenets of Corporate Governance and the Significant Accounting PoLicies uniformly across your Company. The Accounting Policies are reviewed and updated from time to time. These, in turn are supported by a set of divisionaL poLicies and SOPs that have been estabLished for individuaL businesses. Your Company uses ERP System as a business enabLer and aLso to maintain its Books of Account. The SOPs in tandem with transactional controls built into the ERP Systems ensure appropriate segregation of duties, tiered approval mechanisms and maintenance of supporting records. The Information Management Policy reinforces the controL environment. The systems, SOPs and controLs are reviewed by divisionaL management and audited by InternaL Audit whose findings and recommendations are reviewed by the Audit Committee and tracked through to impLementation. Your Company has in pLace adequate internaL financiaL controLs with reference to the FinanciaL Statements. Such controLs have been tested during the year and no reportabLe materiaL weakness in the design or operation was observed. NonetheLess your Company recognises that any internaL financiaL controL framework, no matter how well designed, has inherent limitations and accordingly, regular audit and review processes ensure that such systems are reinforced on an on- going basis. Your Company has also put in place comprehensive systems and proceduraL guideLines concerning other areas of business, too, Like budgeting, execution, materiaL management, quality, safety, procurement, asset management, human resources etc., which are adequate and necessary considering the size and LeveL of operations of your Company. The management has been making constant efforts to review and upgrade existing systems and processes to gear up and meet the changing needs of the business.

Discussion and Information of financial performance of the Company including various ratio analysis are given separately in Financial Discussion And Analysis Report as a part of this report in continuation.