Nila Infrastructures Ltd Management Discussions.


Uncertainty has gripped the world with the outbreak of COVID-19. The implied real GDP growth of 5 per cent for FY2020 in the second advance estimates of the National Statistics Office, is now at risk from the pandemics impact on the economy. Off late, most businesses have deferred their real estate decisions due to the impending crisis. With a nationwide lockdown in place, there was enhanced emphasis on business continuity plans and management of costs to mitigate the adverse effects of the pandemic. Construction activity and the process of obtaining requisite approvals from the government also slowed down in the beginning of March, in line with growing concerns of the impact of COVID-19, before it came to a standstill. In the medium to long run, the current crisis will lead to corporates re-evaluating their commercial real estate strategy to make it more resilient to such shocks. Business continuity plans and remote working strategies have already been successful.

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.

Indias GDP (at constant 2011-12 prices) was estimated to be Rs. 145.65 lakh crore for FY2020 i.e. 4.2 per cent growth over FY2019.


During FY2020, the GDP of India has grown at 4.2 per cent, which is the lowest for the decade. Such stressed economic condition has been aggravated by the outbreak of COVID-19 pandemic. These have adversely affected the Infrastructure/Construction industry. Meanwhile, India has successfully retained its position as the third largest start-up base in the world with over 8,900-9,300 start-ups as 1,300 new start-ups got incorporated in 2019 according to a report by NASSCOM. India also witnessed the addition of seven (7) unicorns in 2019 (till August 2019), taking the total tally to 24. Indias foreign exchange reserves reached Rs. 37.31 lakh crore in the week up to May 29, 2020 according to the RBI. Meanwhile, various economic packages are announced, having a cumulative worth of around Rs.20 lakh crore i.e. almost 10 per cent of Indias GDP Under the PMAY, Government has sanctioned more than 96.50 lakh houses and approved 606 proposals for the construction of 3,31,075 houses with an overall investment of Rs. 15,125 crore.

A. Infrastructure

Any highly-populated country needs a robust infrastructure and India is no exception to the rule.

A key driver of the economy, Infrastructure is highly responsible for propelling Indias overall development. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. It is a major contributor towards Indias GDP both directly and indirectly.

GDP from Construction in India averaged Rs. 2,21,966 crore from 2011 until 2020, reaching an all-time high of Rs. 2,73,046 crore in the Q1-FY2019 and a record low of Rs. 1,86,137 crore in the Q3-FY2012. The latest estimate of Indias GDP from Construction is quarterly Rs. 2,67,000 crore, while the forecast is Rs 2,94,500 crore by 2022. It employs 4,730 lakh people, and any improvements in the construction sector affect a number of associated industries such as cement, steel, technology, skill-enhancement, etc. Low entry and technology barriers make the industry highly fragmented. While low fixed costs narrow the entry barriers, uncertainties on payments drives up working capital requirements. Entities in a contracting process of infrastructure and industrial projects include the owner (project implementer), contractors, consultants, process licensors and suppliers of raw materials and equipment. The industry is regulated and implemented by different apex authorities of the various segments. It encompasses different types of contracts (EPC, EPCM, BOT, BOOT, etc.), depending on the nature of project. Each contract has certain features which draw interest of players and aim at enhancing overall efficiency. Revenues in construction contract are recognised as per Ind- AS 115 i.e. the revenue is recognised to depict the transfer of goods or services to customers at an amount that is expected to be entitled to in exchange for those goods or services. Contract costs that meet certain criteria will be capitalised as an asset and get amortised as revenue is recognised.

Infrastructure accounts for nearly 40% of Indias industrial output. Hence, it enjoys intense focus from the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. To prevent lack of infrastructure becoming a binding constraint on the growth of Indian economy that aspires to become a USD 5 trillion by 2024-25, the country needs to spend about USD 1.4 trillion on infrastructure.

India is witnessing significant interest from international investors in the infrastructure space with many MNCs keen to collaborate on infrastructure, high speed trains, renewable energy, developing smart cities, etc. FDI in Construction Development sector (townships, housing, built up infrastructure and construction development projects) stood at USD 25.66 billion during April 2000 to March 2020.

The Government of India is keen on developing the infrastructure sector in the country. This is clearly evident through the numerous initiatives announced for this sector as part of the Union Budget 2020-21, while National Infrastructure Pipeline has projected total infrastructure investment of Rs. 1,02,000 crore during the period FY2020 to 2025 in India.

Overall construction spends in key infrastructure sectors has gathered further pace, aided by a slew of recent policy reforms. Roads would drive majority construction spends while investments in urban infrastructure and railways are expected to grow at a faster pace with the governments increased focus on schemes such as HFA by 2022, Smart cities, AMRUT, Swachh Bharat, Clean Ganga Mission, WSS projects and metro construction in major Indian cities are expected to boost urban infrastructure investment in the years to come. India is expected to become the third largest construction market globally by 2022.

B. Logistics:

In recent times the warehousing sector has achieved new benchmarks on demand, supply and investments. Further, these have also been backed by graduating value-chain of the logistics eco-system i.e. improvement in quality. The coveted status of "Infrastructure" has further catalysed the growth of this segment.

The presence of a robust logistics-related infrastructure and an effective logistics management system facilitates seamless movement of goods from the point of origin to that of consumption, and aids an economys movement to prosperity. The progress of logistics sector holds an immense value for India as well; as such advancement would increase exports, generate employment and give the country a significant place in the global supply chain. Indian logistics industry is a sunshine sector. The Indian logistics sector provides livelihood to about 220 lakh people. Improving the sector would facilitate a 10% decrease in indirect logistics cost, leading to a growth of 5-8% in exports.

The industrial warehousing segment in India is highly fragmented, with the unorganised players have aggregated 83-85% share of the total warehousing space. As a consequence, there is severe price competition among players. The industrial warehousing segment witnesses intense competition on account of unorganized nature of the industry. The other challenges hindering its growth include high cost, underdeveloped material handling infrastructure, fragmented warehousing, presence of multiple regulatory and policy making entities, lack of seamless movement of goods across modes, and poor integration with modern information technology. These challenges, particularly the ones pertaining to procedural complexities, redundant documentations and involvement of several agencies at our ports and borders, severely dent our performance in international trade, resulting into about 70% of the delays.

There are several policies aimed at encouraging investment in the sector, including free trade warehousing zones and logistics parks. Selecting the right location, optimal usage of storage facilities, providing value-added services, and achieving scale are the key success factors for the warehousing industry. The government has laid an emphasis on infrastructure growth with plans to develop highways, railways and rural roads, and revive unused airstrips and airports. The government also announced the revival of the Sagarmala project for port modernisation and port automation, development of multimodal logistics parks, and dedicated freight corridors. The successful and timely completion of these proposed projects can help ensure cost effectiveness and operational efficiencies.

The GST implementation in 2017 has since brought efficiency in supply chain e.g. it has expedited the freight movement at interstate borders due to dismantling of check posts by upto 20%. The rollout of GST has started to improve supply-chain effectiveness and reduction in consolidation costs by promoting hub-and-spoke model (have a large warehouse in a strategic location instead of numerous small ones) resulting in a reorganised industry. There is a target to reduce the logistics cost in India from the present 14% of GDP to less than 10% of it, by 2022. Warehousing space in India is expected to grow at a healthy pace up to 2020 i.e. about Rs. 1,50,000 crore at CAGR of 10.5%. The industrial warehousing segment is driving growth, led by the organised segment (largely third-party logistics players i.e. 3PL) fuelled by value-added services. The growth of logistics is two sided - led by demand and supply. The demand-led growth is mainly strengthened with the economic recovery, and implementation of GST. The supply-led growth drivers include improvement in logistics infrastructure, integrated logistics and birth of numerous logistics start-ups, especially tech led start-ups. Such significant development is reflected in improvement in the global rankings i.e. 44th out of 167 countries in World Banks Logistics Performance Index (LPI) 2018.

The Indian government has announced that it is working at the policy in order to set up new logistics plan in the country. The intention is to devise the most cost-effective method to transport goods by the year 2035. The policy aims at preparing a proper integrated logistics plan. The new logistics division within the department of commerce is working on this national integrated plan, with the objective to identify and iron out any existing bottlenecks and gaps in the industry. It will also encourage tech-enabled startups in the logistics sector as they will be able to provide seamless movement of goods across the country.

In the post COVID-19 era consolidation of warehouses are expected to accelerate, while stocking levels shall increase. 3PL will be at the forefront for warehouse demand; however the largest occupier will be e-Commerce. With accelerated institutionalisation of warehousing segment, the footprint shall expand in the smaller cities, too.

The industry is attracting a lot of investment and as a result of the transformations and changes led by these investments; the industry will stimulate job creation. The experts predict that it can be the largest job creator by 2022. Some of key investors include Ascendas-Singbridge, Morgan Stanley, and Warburg Pincus, beside others. The investment burst in the sector is leading to development of new and better warehousing facilities. The future for the Indian logistics industry is going to shine even brighter. It will enhance our trade competitiveness, create jobs, shoot up countrys performance in global rankings and pave the way for India to become a logistics hub. Such measures will also contribute to creation of a New India by 2022.

3. NILA:

A. In retrospect:

The Company commenced its business operations from 1990 and operated profitably, mainly as a city- based realtor. The Company executed several housing projects successfully and developed land bank at economic rate during the recessionary phase. The Company gained momentum in FY2007 when the flagship company of the Group Sambhaav Media Ltd was awarded construction of decorative AMTS bus stands in the city of Ahmedabad. NILA entered into urban infrastructure project through the development of unique bus stands of AMTS on behalf of Sambhaav Media Ltd. In FY2008 the Company launched its ambitious residential project "Asmaakam" The project received overwhelming response even during the period of global meltdown in FY2009. However, with limited resources, the Company was not able to work at its full potential, while it was strategized to transform the Company to a meaningful infrastructure player. Thus, the Company initiated amalgamation of Pearl Stockholdings Pvt. Ltd (PSPL) during 2009-10. PSPLs sound financials prepared a strong platform for the Companys growth and transformation. This strengthened the Companys eligibility with respect to "financials" parameter for certain civic urban infrastructure construction contracts by various government bodies/agencies. With such backdrop the Company has since transformed into a specialist in civic urban infrastructure contractor.

Post successful consolidation of resources, the Company concentrated on sustainable growth in civic urban infrastructure segment. Planning an effective vision at the right time and efficient implementation of the strategy transformed the Company. During FY2017, about 86% revenue of the Company was derived from Affordable Housing and civic urban infrastructure projects on EPC/LSTK, and PPP basis. While, the Company initiated to create avenues for growth and seizing such growth opportunities, it was thought prudent to demerge the real-estate undertaking into a separate entity viz. Nila Spaces Limited (NSL - earlier known as Parmananday Superstructure Ltd) and operate on a Lighter, Fitter, and Faster model.

B. The Demerger of Real Estate Undertaking:

The Company initiated a Scheme of Arrangement whereby the real estate undertaking is transferred to and vested in NSL, issue of equity shares by NSL to the shareholders of the Company and subsequent listing thereof. In this connection NCLT pronounced the written orders confirming official approval to the Scheme with Appointment Date of April 1, 2017. Accordingly, trading of equity share of NSL on BSE (542231) and NSE (NILASPACES) has since commenced from December 28, 2018.

C. In prospect:

The Company has started experiencing the benefits of recent initiative to have a Lighter, Fitter and Faster model by demerging the erstwhile real estate undertaking. The Company is working hard to reap the full benefits of this and is convinced about the impetus that it will provide for growth. The Company has since become an established pure-play Civic Urban Infrastructure contractor. The Company works on AH Infrastructure and civic urban infrastructure projects by leveraging its core competency. The management is optimistic towards the growth of the economy in general and construction sector in particular. The Company has since secured meaningful EPC Construction Projects of Affordable Housing and envisage that, on back of enhanced pre- qualifications/bidding capacities, its business will grow sustainably. Also, the outbreak of COVID-19 pandemic has compelled people to stay at home as a precautionary measure to abate further spread. While, 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.

The Company has also built significant PPP based order book where the remuneration is superior for a long-term sustainable growth. The Company is now a sort of a Specialist in AH Infrastructure and pure-play Civic Urban Infrastructure player.

4. Strategic Focus of NILA:

A. Unique Business Model - Diversified and Flexible:

The company has developed a unique business model of construction contracts on EPC/LSTK, EPC+PPP and PPP mode for AH projects as well as Civic 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. An integrated well balanced business model of construction and development of government and private projects and contracts provides hedging.

This diversified model of business has shown great strength and resilience 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 inhouse expertise in the entire gamut of construction and execution - including design, planning & estimation, project preparation, project execution, interior designing, integration of project management.

B. 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, and strategic marketing; 2) site selection and due diligence, land acquisition, deal structure, entitlements, permissions, etc.; and 3) planning and design, construction management, operations and property management. Hence, with sufficient due-diligence the project is selected 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.

C. 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.

D. 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 long-term and working capital requirements. During the year your Company has successfully contracted/renewed substantial credit limits at competitive terms. Such negotiations will enhance the overall financial flexibility.

E. 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 the 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.

5. Opportunities and Outlook:

A. Gujarat - The Growth Engine of India:

The organisation of "Vibrant Gujarat" at every two-years has been instrumental to make Gujarat a corporate hub with the entry of national and multinational companies which has led to rising employment. Gujarat is one of the leading industrialised states in India. As of February 2020, Gujarat had a total installed power generation capacity of 31,013 megawatt (MW). Gujarat is considered the petroleum capital of India due to presence of large refining capacity set up by private and public sector companies with total refining capacity of 102 MMTPA, accounting for 42% of the countrys capacity. The state is the worlds largest producer of processed diamonds, accounting for 72% of the worlds processed diamond share and 80% of Indias diamond exports. With a contribution of 65 to 70% to Indias denim production, Gujarat is the largest manufacturer of denim in the country and the third largest in the world. There are 42 ports, 18 domestic airports and one international airport. There are 106 product clusters and 60 notified special economic zones (SEZs). Large scale investment is expected in Gujarat as part of the USD 9,000 crore DMIC.

Further, it may be noted that Gujarat is amongst the "Top-achiever" states in the recent EODB Combined Score Card of Reform Evidence and Feedback. Hence, your Company foresees ample opportunities in infrastructural development. The rapid urbanisation is likely to boost metaphorical growth in years to come. All these would ultimately generate a demand to develop infrastructure that shall offer opportunity to the developers to grow in years to come. The envisaged opportunities are discussed further. Your Company is favourably placed to participate in the opportunities arising from the home-state that is considered the "Growth Engine of India".

B. Rajasthan - The Sunrise State for Civic Urban Infrastructure:

Rajasthan is Indias largest state by area and it is bordered by the other important Indian states: Punjab to the north; Haryana and Uttar Pradesh to the northeast; Madhya Pradesh to the southeast; and Gujarat to the southwest. Thus it is a natural corridor between the wealthy northern and the prosperous western states, making it an important trade and commerce centre.

The population of Rajasthan stands at about 680 lakh (2011 census), making it the eighth most populated state in India (5.6% of the countrys population).

Globally, the urban areas are becoming centres of economic growth. Due to the rapid growth and urbanization, there has been an increased pressure on the urban infrastructure facilities. Rajasthan is also in accordance with such global phenomenon and has recorded 29% urbanisation growth rate during 20012011 as per the Census.

Meanwhile, the Urban infrastructure and Public Services for Rajasthans burgeoning urban population is inadequate. On a conservative basis, an investment to the tune of Rs. 10,000 crore would be required in the next 10 years to adequately address the infrastructure needs of various urban centres in Rajasthan.

The natural resources, policy incentives, strategic location and infrastructure in the state are favourably suited for investments in sectors such as cement, IT and IteS, ceramics, tourism, automotive and agrobased industries. Rajasthan is the largest producer of oilseeds, seed spices and coarse cereals in India.

Tremendous opportunities exist in the areas of organic and contract farming as well as in infrastructure developments. Rajasthan accounts for 17.5% of the total cement grade limestone reserves in India and is the largest cement producer with 21 major cement plants having a total capacity of 55 MTPA. A SWC

System for investment approvals is operational in the state and BIP is a nodal agency of the GoR that facilitates investments in various sectors in the state.

The state has undertaken a series of labour and industry reforms in recent past. It has also opened many sectors for PPP; earning favourable response from residents, activists and industrialists. The GoR is committed to providing a significantly better and more prosperous life to all the citizens of the State. For people of Rajasthan to realise their dream of a much better life for themselves and their children, it is creating an entire ecosystem of opportunities including a slew of measures, which gets reflected as Rajasthan ranked 9th (95.70%) in the recent EODB Combined Score Card of Reform Evidence and Feedback. Hence, your Company foresees ample opportunities in infrastructural development and has built a propitious order-book (as detailed further).

C. Infrastructure:

i. Affordable Housing:

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.

The latest mission of the MHUPA i.e. "Pradhan Mantri Awas Yojana - HFA by 2022" offers a considerable opportunity. It aims to build about 200 lakh houses across the length and breadth of the country for EWS, ST, SC, and women (irrespective of caste and religion). HFA alongwith the "100 Smart Cities" will be a major game changer for the industry. While, the most coveted "Infrastructure" tag to AH has already initiated change in the rules-of-the-game amongst even the established and branded real-estate players.

A combination of factors such as: 1) government financial and policy thrust, 2) regulatory support, 3) rising urbanisation, 4) increasing nuclearisation of families, and 5) increasing affordability is converting latent demand into a commercially lucrative business opportunity. The AH finance sector alone will attract over RS. 20,000 crore of equity inflows upto FY2022 to support growth. Increased impetus to the creation of affordable housing mission, along with quicker approvals and other supportive policy changes offers a considerable opportunity. On operating cost metrics, the new entrants with their pan-India ambitions would need to build scale quickly to compete with the incumbents whose regional-focussed models have helped maintain tight opex ratios in addition to their cost of fund advantage. This entails building up the order-book at a rapid pace. This in turn would necessitate having the right people (who have seen various cycles and scale) and the right processes (building a scalable and robust platform) while getting the pricing (risk and opex adjusted spreads) right. These are the key differentiators. As your Company has already become a sort of a Specialist in affordable housing space, it is quite favourably placed to participate in such opportunity as discussed further.

PMAY has selected 171 cities of Gujarat and 189 cities of Rajasthan for HFA by 2022. The latest progress of PMAY (U) - HFA at June 1, 2020 is furnished below:

State Project Financial Progress (Rs in crores) Physical Progress (Nos.)
Proposal Considered Investment in Projects Central Assistance Sanctioned Central Assistance Released Houses Sanctioned Houses grounded* for construction Houses Completed*
Gujarat 1,195 61,703 12,313 8,168 6,86,006 6,05,724 4,17,110
Rajasthan 396 14,040 3,639 1,599 2,14,586 1,22,689 98,375
Total 1,591 75,743 15,952 9,767 9,00,592 7,28,413 5,15,485
PAN India 21,566 635,000 166,000 70,910 1,05,00,000 64,80,000 34,23,000

* Including incomplete houses of earlier NURM.

It can be gathered from the above table that your Company is already operating in states that offer about 9% in numbers and 12% amount wise opportunity. Also, about 61% Central assistance is already released in Gujarat (66%) and Rajasthan (44%) combined together, wherein it is 43% for Pan India. Out of the Houses Sanctioned, Gujarat has completed 61% and Rajasthan 46% that is superior to 33% for Pan India.

ii. Slum Redevelopment in PPP:

According to the GoGs UDUHD, 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 25 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 FSI, 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 has already built proprietary knowledge required to execute such PPP projects by successfully delivering a 630 units slum in recordtime, while a couple of Slum projects are currently in final phase that shall be soon get delivered. Your Company is further executing certain meaningful projects that could further change lives of about 2,300 slum dwelling families. Hence, your Company is very enthusiastic about such opportunity.

iii. Civic 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, etc. Through execution of such projects, your Company has built proprietary knowledge and it places your Company favourably with employers of such projects. The 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.

1. 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.

2. Office/Commercial Complex

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

3. Health and Medical

Your Company has already executing 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.

D. 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 duringa products journey from the factory to the consumer. Administration is supply chain management.

Logistics entails a lot of coordination and integration, which is made efficient through supply chain management. It plays an indispensable role in the transportation of goods across the country. There is a target to reduce the logistics cost in India from the present 14% of GDP to less than 10% by 2022. At present it is nearly double as compared to 6-9% in developed countries such as the US, Hong Kong and France. Much of the higher cost could be attributed to absence of efficient intermodal and multimodal transport systems. Moreover, warehousing which approximately accounts for 25% of the logistics cost has also been facing major challenges. This further added to the logistics cost borne by the end users and other stakeholders.

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 and borrows from IIFCL. 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 noncomplaint 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, 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.

6. 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 the companys approach to managing them.

Risk Explanation Mitigation approach
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.
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 customer 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.
Water risk Water scarcity in the supply chain or at the project site leads to reduced construction Your Company has a diversified supply chain that facilitates risk reduction and avoidance for water risks. Those projects which are located in areas of water scarcity are identified and required to drive rationale water reuse and reduction programs.
Material source or type compliance risks Your Company aims to avoid the use of hazardous substances in its products and processes; the 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, subcontractors, 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. Your Companys construction strategy aims to assure adequate insurance, so that your Company is not financially affected. While, the loss prevention programmes, protect your Companys tangible and intangible assets through active risk management. Your Company is operating on about 21 projects across Gujarat and Rajasthan. Hence, if one project is taken out of action, others could provide support.
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.
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, labours, workers, so as to tackle such risks. Zero accident programs supported by proactive near miss reporting aims at the avoidance of all workplace accidents.
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.
Health and Safety related to your Companys construction (conformance and performance) 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.
Corrupt or fraudulent actions carried out by your Companys representatives Your Companys employee or employees fail to adhere to the 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 programmes 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 the 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 the Companys reputation. Your Company has put in place comprehensive and robust compliance programme which is based on the Companys Code of Conduct. The compliance programme is put in place to ensure that applicable laws and regulations are identified, understood and adhered to.
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 the 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 completion of the projects. Shortage of labour and raw material may delay the execution of projects of the Company. The infrastructure projects are capital intensive in nature. The Companys business requires long-term commitment of capital to meet the financial requirement of long-term projects. Further, timely availability of skilled 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 Civic 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.

Please refer the COVID-19 section, part of this Report, for detailed comments on the affects, response, and future-readiness of your Company.

7. Corporate Governance:

Your Companys Corporate Governance philosophy is based on conscience, openness, fairness, professionalism and accountability. These qualities are ingrained in its value system and are reflected in its policies, procedures and systems. Your Company not only believes in adopting the best corporate governance system but also in proactive inclusion of public interest in its corporate priorities. The Company has its mission, vision, goals and core values. The Company is being governed in accordance with the policies, code of conducts, charters and various committees are formed in accordance with the law to ensure governance. The Companies Act, 2013 and SEBI Listing Regulations have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the new law and listing regulations. The Company has adopted the policies in line with new governance requirements including the Policy on Related Party Transactions, Policy on Material Subsidiaries, CSR Policy and Whistle Blower Policy. These policies are available on the website of the Company at The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

The extract of annual return in Form MGT-9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure to this Report. A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations. A Certificate of the CEO and CFO of the 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 also annexed.

8. Work Culture and Human Resources:

The management believes in team work and a corporate environment which is self-motivating. Your Company has successfully developed a work force of people over a period of time i.e. 55 Nos. at 31 March 2020. 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 engineering 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.

9. Internal Control System:

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 the 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 the 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

10. Business Overview:

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 the 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.

A. Infrastructure

During FY2020, your Company has completed and/or handed-over certain projects - the details are furnished below.

CUI Projects-EPC
Medical college campus and residences at Barmer, Rajasthan EPIL had awarded a contract for construction of the Medical College Campus and Residences at Barmer, Rajasthan. The Medical College Campus site is 9.3 km from District Hospital at Barmer and spread over 19.38 acres of land on NH-15. The Project of about 3,00,000 sq. ft. is completed.
Demolition of Existing old building of DK Patel Hall and Construction of new Building with all amenities in Naranpura ward West Zone AMC had awarded a contract for demolition of old building of DK Patel Hall and construction of new building with all amenities in Naranpura ward West Zone. AMC intended to construct a majestic community hall with all the latest amenities for the benefit of the citizens. The hall can be used for social, religious, and other general community purpose. The EPC project involved construction of about 6,000 sq. ft. built-up area and is since completed.
Adani - APSEZ APSEZ has awarded a contract for construction of PMC Office Building at Adani Shantigram, located on S.G. Highway, Ahmedabad. The building envisages overall construction of Ground + 13 floors + two basements covering about 3,00,000 sq. ft. built-up area. The Project is since completed.
Adani - Inspire Business Park Adani Groups Shantigram Estate Management Pvt. Ltd. has awarded an EPC work contract for construction of "Inspire Business Park" Project (Basement and Towers CH1 to CH9) at Shantigram, Ahmedabad. The project envisages overall construction covering about 4,00,000 sq. ft. built-up area. The Project is since handed-over to client per their specific request.
Adani - Inspire Business Park Phase-II Adani Groups Shantigram Estate Management Pvt. Ltd. has awarded an EPC work contract for further construction of "Inspire Business Park, Phase-II" Project (Basement and Towers CH1 to CH9) at Shantigram, Ahmedabad. The project envisages overall construction covering about 4,00,000 sq. ft. built-up area (one (1) tower having double basement+G+12 floors and two (2) towers with double basement+G+8 floors). The Project is since handed-over to client per their specific request.

Currently, your Company is executing various projects on PPP, EPC/LSTK basis as detailed further.

AH-PPP Projects
Kailashnagar, Sabarmati The Project envisages rehabilitation of about 80 slum-dwelling families living at Kailashnagar, Sabarmati, Ahmedabad. The slum redevelopment is to be completed in 18 months. The execution is almost complete, while the revision in units to 196 entails revision in the development cost and the TDRs.
Chhanaji Na Chappra, Khodiyarnagar, Asarva1 The Project envisages rehabilitation of about 360 slum-dwelling families living at Chhanaji Na Chappra and Khodiyarnagar, Asarva Slum. The slum redevelopment is to be completed in 24 months. The execution is going on.
Sonaria Block, AMC AMC has awarded an order for development of Integrated Group Housing Facility at Sonaria Block, Rakhiyal-Asarwa, Ahmedabad on PPP Basis under "Redevelopment of Public Housing Scheme - 2016" of Urban Development & Urban Housing Department, Government of Gujarat. The project envisages overall construction of 760 Dwelling Units (DU) and 18 shops alongwith common amenities, infrastructure & development works of the entire site, and SITC of Roof Top Solar PV System covering atleast 50% of roof-area. It is to be executed within 24 months. The Company has also agreed to develop 80 DU towards creation of additional AH stock as premium to AMC.
Labalavi ni Chali, Behrampura1 The Project envisages rehabilitation of about 105 slum-dwelling families living at Labalavi ni Chali, Behrampura. The slum redevelopment is to be completed in 18 months. The project is to commence soon.
Rabari na Chhapra, Gulbai- Tekra1 The Project envisages rehabilitation of about 89 slum-dwelling families living at Rabari na Chhapra, Gulbai-Tekra. The slum redevelopment is to be completed in 18 months. The project is to commence soon.
Bank of Baroda Society na Chhapra, Paldi1 The Project envisages rehabilitation of about 91 slum-dwelling families living at Bank of Baroda Society na Chhapra, Paldi. The slum redevelopment is to be completed in 18 months. The project is to commence soon.
Kanku Maa ni Chali, Stadium1 The Project envisages rehabilitation of about 43 slum-dwelling families living at Kanku Maa ni Chali, Stadium. The slum redevelopment is to be completed in 18 months. The project is to commence soon.
Harivan na Chhapra, Sabarmati1 The Project envisages rehabilitation of about 687 slum-dwelling families living and 36 shops at Harivan na Chhapra, Sabarmati. The slum redevelopment is to be completed in 24 months. The project is to commence soon.
AH-EPC Projects
Radha Raman Ni Chali - Vyapti Vyapti Infrabuild Pvt Ltd has awarded a Turnkey contract for slum redevelopment project, at Radha Raman Ni Chali, Bapunagar, Ahmedabad involving about 1,80,000 sq. ft. built-up area for 552 slum -dwelling families. The execution is going on.
F.P. No. 241 EWS (Cat.-II) at Bopal - AUDA The Project envisages construction of 70 units and SITC of 22 KW Rooftop Solar with completion time of 18 months. The contract is awarded by AUDA for EWS units with

402 sq. ft. super built-up area each alongwith common amenities, infrastructure & development works of the entire site, 11 kv electrification, and Supply, Installation, Testing and Commissioning (SITC) of Roof Top Solar PV System. The execution is going on.

1. The contract is awarded by AMC for the Integrated Slum In-situ Development for P.P.P. Project at Ahmedabad under Urban Development & Urban Housing Department, Government of Gujarats Slum Rehabilitation and Redevelopment Policy-2013. As remuneration, the Company will get the balance vacant land and/or the TDRs to be used within the development plan of the Ahmedabad City. These offer financial and operational flexibility to either use it for captive consumption or monetize it by selling it to other developer/s, depending on the market trends.

RUDSICO - Jodhpur RUDSICO has awarded a contract for construction of Project of Mega Housing at Jodhpur for EWS, LIG & MIG through PPP. Out of the total land area of 10.12 acre, Nila has developed 75% area for RUDSICO and balance 25% of total land is allotted to NILA free of cost to subsidise the ceiling rate. 1,072 units are constructed, wherein 50% are EWS units (325 sft each), 35% are LIG units (500 sft each) and 15% MIG units (700 sft each) i.e. total

4,72,800 sft is constructed. Your Company can further develop a Residential (1,50,000 sft) cum Commercial (25,000 sft) area on the 25% free land allotted by RUDSICO.

Urban Improvement Trust (UIT) - Udaipur Urban Improvement Trust, Udaipur has awarded four (4) contracts for the construction of affordable housing flats on turnkey basis under the Chief Ministers Jan Awas Yojana - 2015 corresponding to the Memorandum of Understanding under the latest "Resurgent Rajasthan Partnership Summit - 2015". The large scale affordable housing schemes for EWS (325-350 sq. ft.) and LIG (500-550 sq. ft.) categories envisage overall construction of approx. 4,00,000 sq. ft. super built-up area on the Government lands at Sector A, South Extension Scheme, Udaipur. The Project will be constructed on 75% of the land area and remaining 25% will be allotted to the Company, free of cost to subsidize the ceiling rate. The execution is going on.
Urban Improvement Trust (UIT) - Bhilwara Urban Improvement Trust, Bhilwara has awarded a contract for the construction of affordable housing flats on turnkey basis under the Chief Ministers Jan Awas Yojana - 2015 corresponding to the Memorandum of Understanding under the latest "Resurgent Rajasthan Partnership Summit - 2015" The large scale affordable housing schemes for EWS (325-350 sq. ft.) and LIG (500-550 sq. ft.) categories envisage overall construction of approx. 3,00,000 sq. ft. super built-up area on the Government land at Harni Khurd village, Bhilwara. The Project will be constructed on 75% of the land area and remaining 25% will be allotted to the Company, free of cost to subsidize the ceiling rate. The execution is going on.
Jodhpur Development Authority - Jodhpur JoDA has since revised the contract for construction of EWS and LIG Houses with G+3 pattern and internal Development as per Model No. 4A (i) of Chief Minister Jan Awas Yojana 2015 at Khasra No. 88, Village Barli, District Jodhpur. The township / complex / campus will comprise total 1,216 residential units i.e. total

4,70,000 sft will be constructed by NILA. Work will be completed in stipulated time. The Company will also get the balance vacant land of 3.37 acres towards part-remuneration, once the project reaches 50% completion.

CUI Projects-EPC
Service Area Building - Dholera ICDL Dholera Industrial City Development Limited has awarded a construction contract to design and construct "Service Area Building" in Dholera SIR. The contract is on EPC basis with specific duration of 545 days. The execution is going on.
GSRTC Bus Terminals-Amreli and Modasa To improve the urban transport infrastructure, GSRTC has awarded a contract to develop and operate state-of-the-art BTF with an iconic structure and design as well as modern facilities that integrate CF on DBFOT Basis. The BTF construction work envisages development of the latest infrastructure including bus bays, administrative area, operating area, works/repairs area, passenger amenities, etc. The SPV of your Company will have to maintain certain basic BTF facility for 30 years, while the core operating and depot facility will be maintained by GSRTC. In consideration, the Company will get the right to develop, design, finance, construct, operate and maintain the CF (shops, offices, restaurants, hospitals, multiplex, parking lots, etc.) to be leased upto period of 90 (ninety) years. At Amreli, out of the total area of 17,095 square meters, the BTF facility will be constructed in 7,719 square meter built-up area incorporating 12 (twelve) boarding/ alighting bays and six (6) idle bays. In consideration the SPV will get right to monetise CF of about 12,800 square meters.
While, at Modasa, out of the total area of 30,212 square meters, the BTF facility will be constructed in 6,279 square meter incorporating 11 (eleven) boarding/alighting bays and seven (7) idle bays. In consideration the SPV will get right to monetise CF of about 39,000 square meters. While the Amreli BTF facility is awarded individually to the Company, the Modasa BTF is awarded in Consortium with Vyapti Infrabuild Pvt Ltd (wherein the Companys share is 34%). The execution is going on.
Kalupur Vegetable Market - AMC AMC has awarded an order for development of Vegetable Market at Kalupur. The execution period is 24 months excluding monsoon. The state-of-the-art Vegetable Market will be the first such market in Gujarat. The redevelopment of the existing vegetable market shall be done afresh post demolition of super-structure and substructure upto foundation level of existing old building of Vegetable Market. Two (2) basement + Ground + two (2) floors are planned as fresh construction of about 3,53,763 sq. ft. - to be carried-out on a plot of 1,08,711 sq ft. It shall comprise general shopping area and offices. The effective layout plan incorporates a fully covered market besides the requisite amenities like ripening chamber, water works, garbage collection and disposal, etc. It shall also have provisions for canteen, bank, police control room, first-aid room, etc., besides separate ingress and egress. The work is yet to commence.

Summary of movement in your Companys order book for last five (5) years is furnished below: *

(Rs. in lakhs)

Particulars FY2016 FY2017 FY2018 FY2019 FY2020
Opening Order book 20,955 20,259 40,761 51,784 64,747
Add: Work started on new orders 15,050 39,758 35,053 40,276 27,061
Less: *2,919 @6,508 @19,354
Less: Work executed 15,746 19,256 21,111 #22,278 #19,003
Confirmed unexecuted Order book 20,259 40,761 51,784 64,747


* To be executed by the SPV : # Including value of proportionate land : @ Tender value reduction post allocation and/or orders terminated by the Company

^ Meanwhile, in order to reflect the realistic unexecuted value of the specific work-order, as an optimal prudence, your Company has since decided to declare the practically executable order-book - duly derived by considering the intricate dynamics of the respective work-orders. This shall ensure the absolute reconciliation of execution vis-a-vis Revenue with the books of accounts.

The composition of the existing order-book of your Company is quite balanced. The summary of the existing unexecuted order-book is furnished further.

(Rs. in lakhs)

Activity Gujarat Rajasthan Total (A+B) %
GoG PWL/ Misc. Total (A) GoR EPIL Total (B)
Affordable Housing 24,827 2,575 27,403 5,293


5,293 32,696 61.2%
EPC 470 2,576 3,045 5,293


5,293 8,338 15.6%
PPP 24,358






24,358 45.6%
Civic Urban Infra (EPC) 9,654 10,964 20,617 - 138 138 20,755 38.8%
Total 34,481 13,539 48,020 5,293 138 5,431 53,451
% 64.5% 25.3% 89.8% 9.9% 0.3% 10.2% 100%

Geographically the state of Gujarat accounts for 90% orders (Rs. 48,020 lakh), and Principalwise government entities account for 75% (Rs 39,911 lakh). AMC and GoR are the largest government clients. The other orders mainly include orders from the Companys associate/JV/subsidiary/related parties.

Your Company continues to focus on its core competence of "Affordable Housing" with 61% orders (Rs. 32,696 lakh) i.e. about 7,729 units, while EPC is the major tributary with 54% orders (Rs. 29,093 lakh). Detailed information on the order book is given in the subsequent part to this report.

B. Leasing

Your Company holds 88,000 sq ft of commercial properties at the prime location in Ahmedabad, which your Company leases to earn rental income.

C. Share of Profit

Your Company has made certain strategic investments in JV/associates/subsidiaries and earns its share of profit, which is detailed further.


The vision of your Company has always been of THINKING BIG and Staying Focused For Endless Possibilities. Consciously concentrating on Civic Urban Infrastructure Projects is paying-off to the satisfaction. The considerable improvement in business profile of your Company has continued primarily due to focusing the available resources only on developing civic urban infrastructure business. Your Company has since been able to broad-base its offerings as well as expanded scale of operations in civic urban infrastructure activities. The summarized analysis of financial statements viz. Profit and Loss Account, Balance Sheet and Cash Flow are furnished further.

Total Revenue

(Rs. in lakhs : % change)

Particulars For FY2020 For FY2019 YoY change % change
Revenue from Operations (refer note 24) 19,003 22,278 (3,275) (15%)
• EPC basis 15,706 21,656 (5,950) (27%)
• PPP basis 3,297 622 2,675 430%
Sale of land (refer note 24) 6,064 - 6,064 -
Rental income 77 272 (195) (72%)
Share of Profit/(Loss) from LLP (46) 29 (75) (259%)
Total Operating Income (TOI) (A) 25,099 22,580 2,519 11%
Other income (B) (Refer Note 25) 1,234 828 406 49%
Total Revenue (A + B) 26,333 23,408 2,925 12%

The revenue of the Company comprises income from construction and development of civic urban infrastructure projects in the distinct modes as mentioned hereinabove as well as certain income from rental, and share of profit/(loss) from LLPs; while Other income mainly comprises interest earned on investments such as term deposits with banks, and on loans given.

The set pattern of revenue-mix with ~95% contribution from Infrastructure projects has since been modified during FY2020 as on one hand your Company has also earned revenue by sale of certain legacy assets that were part of inventory for a longtime now, while on the other hand the execution on certain new project sites could not be initiated and/or did not reach certain maturity. Hence, the revenue from Infrastructure projects during FY2020 reduced by Rs. 3,275 lakh (15%) as compared to the previous FY. Geographywise Gujarat has contributed higher and Rajasthan has contributed lower as compared to the previous FY. During FY2020, revenue from certain better-margin CUI projects has reduced, while overall EPC streams contribution has also reduced. The contribution from PPP projects of Slum Rehabilitation has witnessed reasonable increase as your Company has satisfactorily executed certain project during FY2020 - as more specifically detailed in the other sections of this AR. During FY2020, your Company has grown on topline. The total income for FY2020 is 26,333 lakh as against Rs. 23,408 lakh in the previous year registering an increase of 12%. The detailed breakup of Infrastructure revenue for FY2020 is furnished in the following table:

(Rs. in lakhs)

Activity Gujarat Rajasthan Total (A+B) %
GoG PWL/ Misc. Total (A) GoR PWL/ Misc. Total (B)
Affordable Housing 3,615 4,512 8,127 1,923 - 1,923 10,049 53%
• EPC 318 4,512 4,829 1,923 - 1,923 6,752 36%
• PPP 3,298 - 3,298 - - - 3,298 17%
Civic Urban Infra (EPC) 496 6,433 6,929 - 2,025 2,025 8,954 47%
Total 4,111 10,945 15,056 1,923 2,025 3,948 19,003
% 22% 57% 79% 10% 11% 21% 100%

Each element of total revenue is discussed further. Infrastructure Projects

Your Company undertakes construction and development of Civic Urban Infrastructure projects for government/ semi-government agencies/departments as well as private entities of repute. Construction and development of Infrastructure project is carried-out pursuant to work order issued by/Agreement entered into with the client. Revenue of your Company from construction and development of Infrastructure project is driven by the success in selecting the right order (nature as well as size), executing it proficiently and building sufficient order-book.

On April 1, 2019, your Company had an unexecuted order- book of construction and development of Infrastructure projects worth Rs. 64,764 lakh. During FY2020, your Company participated in tenders amounting to Rs. 73,819 lakh, while secured work-orders amounting to Rs. 27,061 lakh.

Income from construction and development of civic urban infrastructure project for the FY2020 has reduced by Rs. 3,275 lakh to Rs. 19,003 lakh i.e. a reduction of 15% over FY2019s income of Rs. 22,278 lakh.

The market dynamics are since in favour of the organized players like your Company. The outlook of government spending in civic urban infrastructure is absolutely positive in short, medium and long-term. Be it PMs "Housing for All by 2022 Mission" or "Smart Cities" - the scales here are very promising and additionally the Fiscal and Monetary eco-systems are also galvanized. Moreso, the COVID-19 pandemic has since established the conclusive importance of staying in home, maintaining distance from others as the prime remedy. Observing health, safety, and hygiene guidelines at home are the supreme fortification from getting infected and to abate the spread. The new PPP Policy for AH with central assistance may open door for additional revenue stream for your Company. While, extension of CLSS benefits for one (1) more year, invocation of Force Majeure that provides additional timelines to complete the projects, shall provide the needed relief in execution of extant projects by certain extent.

Your Company is absolutely convinced about the Affordable Housing sector, more so, as i/kku e=h vkok1 ;kituk - "Housing for All by 2022" with thrust from the PMO (e.g. Affordable Housing since officially classified as "Infrastructure"). Currently your Company is executing about 7,700+ units under EWS, LIG and MIG categories (Affordable Houses). Your Company is very favorably placed to seize the endless possibilities in the area of its core competence as the governments focus is on creating more affordable houses. Your Company has since secured meaningful orders in the state of Gujarat and Rajasthan under the schemes of Affordable Housing and envisages that, on back of enhanced pre-qualifications/ bidding capacities, it will grow in natural/normal course of business. Considering the funding dynamics, it well fits into your Companys strategy of executing civic urban infrastructure projects where the cash flows are expected to be steady. Your Company is also executing certain unique Slum Rehabilitation and Redevelopment Projects in Ahmedabad as well as GSRTC Bus Port projects for Amerli and Modasa.

So far as the "Smart Cities" are concerned, your Company is in sweet-spot and very favorably placed to partake in the opportunities as it is already active in all the important facets of "Smart City" concept that is in Social Infrastructure, your Company is qualified to construct infrastructure for education, healthcare, entertainment, sports, childrens parks and gardens, Slum rehabilitation, etc. In Physical Infrastructure, your Company has already executed urban utility projects like BRTS Bus Stations, Multilevel Parking, the housing stock, sanitation facilities, etc. For Economic Infrastructure, your Company has requisite experience and expertise to undertake construction of office complex, industrial parks, logistic parks, community hall, etc.

Sale of land

Your Company owns certain land-bank and has invested in the development as well as requisite statutory clearances/ sanctions/permissions in order to make it practically operational/marketable. During FY2020, your Company has divested/sold certain land aggregating Rs. 6,064 lakh.


Your Company owns prime commercial office space of 88,000 sq ft in an upmarket locality of Ahmedabad. In order to generate regular sustainable income, your Company has leased certain prime commercial office space to reputed corporates on long-term basis. Income from rental for FY2020 is Rs. 77 lakh that is 72% (Rs. 195 lakh) lower as compared to FY2019 on account of amortizing the total lease rental as per Lease Equalization Method as prescribed under Ind AS 19 as well as certain premises remaining vacant. However, your Company is looking-out for the new lessee with better/equivalent credentials and is confident to find lessee/s in due-course.

Share of Profit/(Loss) from LLP

During FY2020, your Company has booked share of its loss from JV LLP firm i.e. Kent Residential and Industrial Park LLP Rs. 46 lakh contrary to profit of Rs. 29 lakh during FY2019. Meanwhile, it may be noted that the operations in subsidiary, associate and JV entities have since commenced and are gradually gaining the scale.

Other Income

Other income mainly comprises interest income from bank deposits and others, liabilities written back, and miscellaneous income. Other income in FY2020 is Rs. 1,234 lakh that is 49% (Rs. 405 lakh) higher as compared to FY2019s Rs. 828 lakh. The break-up of other income is furnished further.

(Rs. in lakhs)

Particulars For FY2020 For FY2019 YoY change % change
Interest income: (Refer Note 25) 1,011 732 279 38%
• From loan 947 667 280 42%
• On Bank Deposits 64 65 (1) (2%)
Liabilities no longer required to be paid written back 202 56 146 262%
Other non-operating income 21 40 (19) (47%)
Total Other Income 1,234 828 406 49%

The increment in interest income from other parties to the extent of Rs. 280 lakh is from the advances extended mainly to JVs and subsidiary companies. It may be mentioned that such advances are given in the routine course of business and it carry interest not lesser than the weighted average cost of your Companys funds. Interest income from bank deposits for FY2020 has stagnated owing to falling-interest rate scenario as well as your Company has dynamically utilized its bank-guarantee limits from the banks that stipulate lower cash-margin. Overall interest income has registered a growth of 38% from the previous financial year i.e. by Rs. 279 lakh, while total other income has registered a growth of 49% from the previous financial year i.e. by Rs. 406 lakh.


Total expenses in FY2020 is Rs. 24,096 lakh as compared to Rs. 20,272 lakh in FY2019 i.e. increase of 19% (Rs. 3,824 lakh), which is higher in comparison of 12% (Rs. 2,925 lakh) growth of revenue. The breakup of the said expenses is furnished further.

(Rs. in lakhs)

Particulars For FY2020 For FY2019 YoY change % change
Cost of material consumed and project expenses (Refer Note 26) and Changes in inventories (Refer Note 27) 20,943 17,570 3,373 19%
Employee benefit expenses (Refer Note 28) 505 542 (37 ) (7%)
Finance costs (Refer Note 29) 1,690 1,299 391 30%
Depreciation and amortization expense (Refer Note 4, 5 & 6) 175 186 (12 ) (6%)
CSR Expense (Refer Note 30A) 62 56 6 10%
Other Expenses (Refer Note 30) 722 619 103 17%
Total Expenses 24,096 20,272 3,824 19%

Cost of material consumed and project expenses (Refer Note 26) and Changes in inventories (Refer Note 27)

The expenditure incurred on projects for FY2020 has reduced to Rs. 17,009 lakh, in line with the revenue from construction and development of civic urban infrastructure projects, by 9% over the previous years expenditure of Rs. 18,658 lakh. However, the proportion of reduction in revenue is higher at 15%, while it is lower at 9% for cost of material consumed and project expenses. The prime contributors to the net reduction of Rs. 1,650 lakh are raw- material and construction cost on the back of restrained execution at certain existing project sites while initiation of new project sites being in nascent stage.

The expenditure incurred on consumption of material for FY2020 is Rs. 5,417 lakh, which is reduction by 16% over the previous years expenditure of Rs. 6,414 lakh; while Civil, Electrical, Contracting, Labour work, etc. cost for FY2020 is Rs. 10,091 lakh, which is reduction by 11% (Rs. 1,209 lakh) over the previous years expenditure of Rs. 11,300 lakh. Legal and professional expense for FY2020 is Rs. 106 lakh, which is reduction by 15% over the previous years expenditure of Rs. 124 lakh. However, such reduced costs were curtailed by increment of 147% over the previous years expenditure in certain other direct expense by Rs. 744 lakh i.e. from Rs. 504 lakh for FY2019 to Rs 1,248 lakh for FY2020.

The inventories (RM+WIP) have reduced collectively, at quite higher proportion to TOI, by 25% ( 577 lakh) i.e. Rs. 1,724 lakh during FY2020 from rs 2,301 lakh during FY2019. This is owing to restrained execution as detailed hereinabove. There has been substantial reduction in land- bank by 65% i.e. Rs. 5,152 lakh at 31 March, 2019 to Rs.1,796 lakh during at 31 March, 2020 that has majorly contributed to reduction of the overall inventory by Rs. 3,934 lakh.

Both these have collectively increased the costs for FY2020 by Rs. 3,373 lakh i.e. by 19% over the previous years expenditure.

Employee benefits expenses (Refer Note 28)

Employee benefits expenses include salaries, allowances, bonus, Contribution to provident and other funds, Remuneration and perquisites to Directors, and Staff welfare expenses.

Total No. of employees at 31 March 2020 is 55, which is net reduction as compared to 66 employees at 31 March 2019. It has reduced by 7% (Rs. 37 lakh) i.e. from Rs 542 lakh in FY2019 to RS 505 lakh in FY2020. There is no variable component of remuneration availed by the Directors except fixed pay of monthly salary and sitting fees as applicable, which is in conformity of the Remuneration Policy of your Company.

Finance costs (Refer Note 29)

Your Company does not inventorise any finance cost. The finance costs for FY2020 is Rs 1,690 lakh in comparison to Rs 1,299 lakh during FY2019. Interest on borrowings has increased by Rs 415 lakh over previous financial year due to higher utilization of funds during FY2020. However, the weighted average cost of borrowing is similar and has since stagnated.

The Other borrowing cost has reduced by 12% from Rs 127 lakh in FY2019 to RS 113 lakh in FY2020, as during FY2020 your Company has paid upfront/one-time processing fees higher by Rs 14 lakh (26% increment) towards sanction of new credit facilities, which has been outdone by lower payment of bank charges by Rs 29 lakh (40% reduction) - as compared to FY2019.

Depreciation and amortisation expense (Refer Note 4, 5 & 6)

The depreciation and amortisation expense charged to the profit and loss account during FY2020 is Rs 174 lakh as compared to Rs 186 lakh in FY2019 i.e. a reduction of 6%. During FY2020, your Company has sold certain worn- out Plant & Machinery aggregating Rs 14 lakh and office equipment aggregating Rs 6 lakh; while there has been a net addition of vehicles by Rs 75 lakh. The net-block of PPE has reduced by Rs 46 lakh at 31 March 2020 as compared to 31 March 2019.

CSR Expense (Refer Note 30A)

The Company has undertaken activities for promotion of sanitation and preventive healthcare by way of installation of sanitation equipments, organizing awareness campaigns for cleanliness and waste management, physical work for cleanliness and waste removal at various locations of Ahmedabad. The entire activity has been undertaken as a project under the brand name "My Own Street". Apart from that the Company has undertaken programs of education, food distribution and preventive medical aid during the year. An aggregate amount of Rs 62 lakh is spent on the said CSR projects and programs during the year, well satisfying the statutory stipulations.

Other expenses (excluding CSR Expense) (Refer Note 30) Other expenses majorly comprise Legal and professional charges, Power and fuel expenses, Travelling and conveyance, Provision for loss allowance, TDR cancellation expense, bad-debts written off. Collectively other expenses (excluding CSR Expense) have increased by Rs 103 lakh i.e. Rs 722 lakh in FY2020 from Rs 619 lakh in FY2019 mainly owing to Rs 127 lakh bad-debts written off, Rs 126 lakh TDR cancellation expense, Rs 11 lakh incremental Power and fuel expenses, RS 8 lakh incremental Audit Fees, Rs 17 lakh Assets discarded and enhanced Misc. expenses by Rs 15 lakh.


(Rs in lakhs)

Particulars For FY2020 For FY2019 YoY change % change
Revenue from Operations 25,099 22,580 2,519 11%
Less: Operational Expenses 22,231 18,786 3,445 18%
EBITDA 2,868 3,794 (926) (24%)
EBITDA % to Revenue from operation 11% 17%
Add: Other Income 1,234 828 405 49%
Less: Finance Costs 1,690 1,299 391 30%
Less: Depreciation and amortisation expenses 175 186 (12) (6%)
Profit Before Tax (PBT) 2,237 3,137 (900) (29%)
PBT % to Total Revenue 8% 13%
Tax Expenses 474 920 (446) (48%)
Profit After Tax 1,763 2,218 (455) (21%)
PAT % to Total Income 7% 9%

During FY2020, while the Company has reasonably grown, product-mix and maturity-stage of certain projects have been unable to offer analogous profitability. The EBIDTA has reduced from Rs 3,794 lakh i.e. 17% of revenue from operations for FY2019 to Rs 2,868 lakh i.e. 11% for FY2020. Cost of material consumed and project expenses alongwith Changes in inventories of construction material, land and work in progress are 83% of Revenue from operations for FY2020 as compared to 78% for FY2019. The PBT for FY2020 has reduced by Rs 900 lakh as Operational Expenses, and Finance Costs have increased. PAT for FY2020 is Rs 1,763 lakh (7% of Total Revenue), as against Rs 2,218 lakh (9% of Total Income) for FY2019. Your Company provides for current tax and deferred tax based on the computation in accordance with provisions of Income Tax Act, 1961. The net tax payable for FY2020 is Rs 474 lakh that is reduction by Rs 446 lakh over FY2019s Rs 920 lakh, mainly owing to reduction in tax rate from 29.12% to 25.17%.

Overall reduction in profitability is primarily owing to commensurate expenses booked on certain legacy assets that your Company has sold during FY2020 as well as change in revenue-mix. With contribution from other income (mainly from interest) as well as change in the effective tax-rate, the reduction in profitability is curtailed to 278 bps at PAT level. With certain projects being in nascent/primary stage, the finance expense has increased towards interest, as well as processing charges towards availment of fresh credit facility and renewal of existing credit facilities. Your Company has made sufficient provision towards current tax for FY2020. The Board of Directors of your Company has thought it prudent to not propose declaration of any dividend and plough-back the entire profit instead as retained earnings to ably fuel further growth of your Company.

Non-current Assets

The non-current assets at 31 March 2020 and 31 March 2019 with detail of changes therein during the financial year are as follows:

(Rs in lakhs)

At 31 March 2020 At 31 March 2019 YoY change % change
a. Property, plant and equipment (Refer Note 4) 680 726 (46) (6%)
b. Investment properties (Refer Note 5) 2,383 2,445 (62) (3%)
c. Intangible assets under development (Refer Note 6) 1 1 - (%)
d. Financial assets:
i. Investments (Refer Note 7) 1,544 1,552 (8) (1%)
ii. Loans (Refer Note 8) 7,967 5,972 1,995 33%
iii. Other financial assets (Refer Note 9) 470 330 140 42%
e. Other tax assets net (Refer Note 11) 85 9 76 844%
Total 13,130 11,035 2,095 19%

During FY2020, your Company purchased net new PPE amounting RS 6 lakh - mainly equipments and furniture, etc. to support incremental operations, while it sold certain worn-out Plant & Machinery aggregating RS 15 lakh and used-vehicles of RS 3 lakh. Building amounting to RS 2,601 lakh is the sole Investment Property, while there has been no addition/reduction but only the depreciation has reduced the balance to RS 2,383 lakh at 31 March 2020.

The primary reason of net reduction in Investment during FY2020 is loss from JV LLP firm i.e. Kent Residential and Industrial Park LLP RS 46 lakh, while your Company has arranged to provide further support to JV/associate viz. Vyapnila Terminals (Modasa) Pvt Ltd with incremental RS37 lakh. Your Company has also extended further loans to all four (4) subsidiary/associate/JV entities. These entities are established to address specific business opportunities. Such investments as well as loans/advances are extended in normal course of business in order to pursue the specific objective for which it is formed. Loans and Advances to related parties at 31 March 2020 are RS 6,738 lakh as against RS 4,949 lakh at 31 March 2019 mainly to subsidiary/associate/JV.

Security Deposit has increased to RS 1,229 lakh at 31 March 2020 from RS 1,023 lakh at 31 March 2019 mainly due to initiation of fresh projects during FY2020, wherein the client has held the stipulated amount of revenue as per the tender terms.

The benefits of contracting bank guarantee facilities at favourable terms have started delivering the fruits to your Company with reduction in margin money deposited with bank; alongwith other favourable terms. It may be noted that such interest bearing fixed deposits are kept with bank for the purpose of issuing bank guarantee in order to participate in various tenders. Other financial assets increased by RS 140 lakh at 31 March 2020 to RS470 lakh towards cash-margin of BG due to incremental BG requirement towards more number of work orders/ contracts being executed as well as more projects successfully completed by your Company.

The advance payment of tax has increased from RS 9 lakh at 31 March 2019 to RS 85 lakh at 31 March 2020.

Hence, overall Non-current Assets have increased by net RS2,095 lakh i.e. 19% from RS 11,035 lakh at 31 March 2019 to RS 13,130 lakh at 31 March 2020 mainly due to support operations of the subsidiary, associate and JV entities of your Company.

Current Assets:

The detail of Current Assets at 31 March 2020 and 31 March 2019 with changes therein during the year is furnished further.

(RS in lakhs)

Particulars At 31 March 2020 At 31 March 2019 YoY change % change
a. Inventories (Refer Note 12) 3,520 7,454 (3,934) (53%)
b. Financial Assets
i. Trade receivables (Refer Note 13) 6,833 3,400 3,433 101%
ii. Cash and cash equivalents (Refer Note 14) 66 79 (13) (16%)
iii. Bank balances other than (ii) above (Refer Note 14) 560 625 (65) (10%)
iv. Loans (Refer Note 8) 117 19 98 516%
v. Other financial assets (Refer Note 9) 302 - 302 -
c. Other current assets (Refer Note 10) 10,285 9,960 325 3%
Total 21,683 21,536 147 1%

Total reduction of RS 3,934 lakh in inventories during FY2020 is mainly attributable to substantial reduction in land-bank by 53% i.e. RS 3,357 lakh during FY2020 i.e. RS1,796 lakh at 31 March 2020 from RS 5,152 lakh at 31 March 2019. RM+WIP have also reduced collectively by 25% i.e. RS 577 lakh during FY2020 i.e. RS 1,724 lakh at 31 March 2020 from RS 2,301 lakh at 31 March 2019; as a result of your Companys conscious and focused efforts to rationalize the inventory carrying as well as graduated efficiency of purchase function.

The Receivables from related parties have reduced by RS 159 lakh i.e. from RS 783 lakh at 31 March 2019 to RS624 lakh at 31 March 2020. However, there is an overall increment in the level of Trade Receivables by RS 3,433 lakh i.e. from RS 3,400 lakh at 31 March 2019 to RS 6,833 lakh at 31 March 2020. This is mainly attributable to the TDR of RS 2,329 lakh the Company sold with certain credit-period during FY2020 that eventually becomes due in FY2021, while the Retention that are not due since amount to RS 970 lakh at 31 March 2020. These have resulted in increment to 71 days in proportion of the overall revenue. Collection for FY2020 is RS 22,900 lakh i.e. efficiency of 87%. Meanwhile, your Company has continued rigorous follow-up with debtors (all considered "good") and is confident to recover such amounts in full, in normal course of business.

There is a reduction in collective cash and bank balance by RS 77 lakh i.e. from RS 703 lakh at 31 March 2019 to RS 626 lakh at 31 March 2020.

Loans comprise the portion that is expected to be realized within a period of 12 months from the Balance Sheet Date. At 31 March 2020 it is RS 117 lakh as against RS 19 lakh at 31 March 2019 depicting an increment by RS 98 lakh, which is mainly attributable to certain strategic initiatives of your Company.

During FY2020, your Company has earned interest to the tune of 916 lakh from Loans to Related Parties.

The other receivables amount RS 302 lakh at 31 March 2020.

The other current assets have increased by RS 325 lakh to RS 10,285 lakh at 31 March 2020 as against RS 9,960 lakh at 31 March 2019 mainly on account of increment of unbilled revenue vide Ind AS 115 by RS 497 lakh to 5,100 lakh at 31 March 2020 as against RS 4,603 lakh at 31 March 2019. It may be noted that such contract assets are booked in normal course of business and would be converted to receivables in due course to time. Advance to vendors has increased by RS 384 lakh to RS 1,225 lakh at 31 March 2020 as against RS 841 lakh at 31 March 2019. These have been curtailed by some extent with reduction in land and TDR rights by RS 499 lakh, GST receivables by RS 85 lakh, VAT receivable as well as lease equalisation - both by RS 3 lakh each.

Hence, overall Current Assets have increased by RS 147 lakh i.e. from RS 21,536 lakh at 31 March 2019 to RS 21,683 lakh at 31 March 2020 mainly due to an increase in Trade Receivables, and Other Financial and Current assets.

Net Worth

The net worth of your Company has been augmenting considerably in past financial years. During FY2020, the net worth of your Company has increased by RS 1,831 lakh to RS 14,332 lakh at 31 March 2020 from RS 12,501 lakh at 31 March 2019 mainly due to earnings are retained and ploughed-back.

Non-current liabilities

(RS in lakhs)

Particulars At 31 March 2020 At 31 March 2019 YoY change % change
a. Financial liabilities
i. Borrowings (Refer Note 17) 9,991 8,863 1,128 13%
ii. Trade payable (Refer Note 21) 359 - 359


iii. Other financial liabilities (Refer Note 18) 16 202 (186) (92%)
b. Provisions (Refer Note 19) 99 73 26 36%
c. Deferred tax liabilities (Net) (Refer Note 20) 843 1,001 (158) (16%)
Total 11,308 10,139 1,169 12%

While the order-book increased by adding-up on new projects, incremental no. of sites under operations as well as to support the specific business initiatives through subsidiary, associate, JV; Borrowings of your Company has increased by 1,128 lakh at 31 March 2020 i.e. from RS 8,863 lakh at 31 March 2019 to RS 9,991 lakh at 31 March 2020. It may be mentioned that your Company has honoured all its financial commitments and the account is Standard with all the lenders. None of the BGs submitted by your Company has ever been invoked by any Principal/ Client.

Trade Payable to other than Micro & Small Enterprises (as per the intimation received from vendors) amount to RS359 lakh at 31 March 2020.

Other financial liabilities are security deposits that your Company accepts in ordinary course of business from its various vendors and/or contractors. It has reduced by RS186 lakh i.e. to RS 16 lakh at 31 March 2020 from RS 202 lakh at 31 March 2019 owing to release of retention amount to your Companys contractors after completion of project and/or achieving stipulated milestones by them.

Provision for employee benefits including gratuity and leave encashment has increased by RS 26 lakh i.e. RS 99 lakh at 31 March 2020 from RS 73 lakh at 31 March 2019 mainly as the Eligible employees have continued the job, while the reduction in Leave Encashment has reduced as certain employees have left the job and/or have encashed the entitlement.

Net deferred tax liability has reduced by RS 158 lakh i.e. RS843 lakh at 31 March 2020 from RS 1,001 lakh at 31 March 2019 mainly towards excess of depreciation under tax laws over book depreciation and amortization as well as fair valuation of investment in joint venture.

Hence, overall Non-current Liabilities have increased by RS1,169 lakh i.e. 12% from RS 10,139 lakh at 31 March 2019 to RS 11,308 lakh at 31 March 2020 mainly due to increase in borrowings and trade payable.

Current liabilities

(RS in lakhs)

Particulars At 31 March 2020 At 31 March 2019 YoY change % change
a. Financial Liabilities
i. Borrowings (Refer Note 17) 982 1,852 (870) (47%)
ii. Trade payables (Refer Note 21)
iia. Due to micro and small enterprises 234 2 232 10,155%
iib. Due to others 4,038 4,639 (601) (13%)
iii. Other financial liabilities (Refer Note 18) 1,059 1,556 (497) (32%)
b. Other current liabilities (Refer Note 22) 2,784 1,793 991 55%
c. Provisions (Refer Note 19) 76 72 4 6%
d. Current tax liability (Net) (Refer Note 23) 0 15 (231) (94%)
Total 9,172 9,929 (757) (8%)

Current Borrowings consist of overdraft bank facility with reduced utilisation by RS 870 lakh i.e. RS 982 lakh at 31 March 2020 as compared to RS 1,852 lakh at 31 March 2019 mainly due to depositing the proceeds that your Company received from sale of certain legacy assets. Trade Payables at 31 March 2020 have reduced by rs 369 lakh i.e. reduction of 8% RS 4,272 lakh at 31 March 2020 as compared to RS 4,641 lakh at 31 March 2019. The current maturities of long term borrowing during FY2021 are RS932 lakh at 31 March 2019 as per the repayment schedule of term debt contracted by your Company.

Other Current Liabilities have increased by RS 991 lakh mainly towards the advance from customers and contractors, while TDS payable have reduced by RS 28 lakh to RS 34 lakh at 31 March 2020 from RS 62 lakh at 31 March 2019.

Provision consist of employee benefits including gratuity and leave encashment that have reduced to RS 22 lakh at 31 March 2020 from RS 48 lakh at 31 March 2019, while provision for defect liability period has increased to RS 54 lakh at 31 March 2020 from RS 24 lakh at 31 March 2019.

There is no current tax liability of your Company at 31 March 2020.

Hence, overall Current Liabilities have reduced by RS 757 lakh i.e. 8% from RS 9,929 lakh at 31 March 2019 to RS 9,172 lakh at 31 March 2020 mainly due to reduction in other financial liabilities, trade payables and tax liability.

Key financial ratios:

Ratio FY2020 FY2019 Detailed explanation
Debtor Turnover 4.91 6.57 The credit policies, and collection process of your Company are satisfactory and commensurate to the industry and/or the segment it
Days 74 56 operates into. Your Company deals with creditworthy customers. During FY2020, your Company could convert its debtors to cash lower by 1.66 times as compared to FY2019. This is mainly attributable to the TDR of 2,329 lakh the Company sold with certain credit-period during FY2020 that eventually becomes due in FY2021. This one off transaction has disturbed the perspective of No. of days as compared to previous year.
Inventory Turnover 3.82 2.54 As your Company has certain historic land, the inventory turnover is not exactly comparable with industry and/or the segment it operates into.
Days 96 144 However, during FY2020, your Company has sold certain legacy assets that were part of inventory for a longtime now. Hence, the inventory turnover has increased by 1.28 times as compared to FY2019. In the perspective of No. of days, your Company required 48 less days than the previous year, which is mainly owing to overall reduced inventory - as more specifically described in the other sections of this Report.
Interest Coverage Ratio 2.32 3.42 Your Companys debt:equity, leverage, gearing are commensurate to the industry and/or the segment it operates into. Your Company has tied- up with first-rung banks/NBFCs for its various credit requirements. Your Company has successfully maintained Investment Grade credit rating over a period of years, while the account is Standard with all the lenders. For FY2020, the interest coverage is marginally lower by 1.10 times as compared to FY2019, which is mainly owing to higher level of Interest cost while the earnings have reduced.
Current Ratio 2.36 2.17 The improvement in current ratio of your Company at 31 March 2020 as compared to that of 31 March 2019 is mainly owing to the increment in current assets on one hand, while reduction in current liabilities on the other during FY2020. It could also indicate that your Company has sufficient ability to pay short-term obligations or those due within one year. Your company has been able to maximize the current assets on its balance sheet to satisfy its current debt and other payables.
Debt : Equity Ratio 0.83 0.98 During FY 2020, though your Company has been aggressive in financing its growth with debt, it has successfully reduced the Debt:Equity ratio as while the total debt has reduced, the equity has increased due to plough-back of profit. Meanwhile, it is commensurate to the industry and/ or the segment it operates into. Your Company has tied-up with first- rung banks/NBFCs for its various credit requirements. Your Company has successfully maintained Investment Grade credit rating over a period of years, while the account is Standard with all the lenders.
Operating Profit Margin (%) 10.73% 15.98% During FY 2020, your Company could earn lower at operating level as compared to FY 2019, which is mainly owing to higher level of operating expenses including provisioning - as more specifically described in the other sections of this Report.
Net Profit Margin (%) 6.69% 9.47% During FY 2020, your Company could earn lower at net profit level by 278 bps as compared to FY 2019, which is mainly owing to lower profit as compared to previous year - as more specifically described in the other sections of this Report.
Return on Networth 12.30% 17.74%
Return on Capital Employed 15.32% 19.59% The reduction in profit during FY 2020, while increased Networth/Capital Employed/Assets has affected the returns. The phenomena are more specifically described in the other sections of this Report.
Return on Assets 5.06% 6.81%


(RS in lakh)

Particulars For FY2020 For FY2019
Opening cash and cash equivalents 79 132
Net cash generated from / (used in) Operating Activities (A) 3,015 (1,623)
Net cash from / (used in) Investing Activities (B) (1,089) 1,487
Net cash from / (used in) Financing Activities (C) (1,938) 82
Change in cash and cash equivalent (Total = A+B+C) (13) (54)
Closing cash and cash equivalents 66 79

Net cash generated from operating activities is RS 3,015 lakh during FY2020 mainly on account of decrease in the inventories by RS 3,934 lakh, increase in other current liabilities by RS 992 lakh and trade payable by RS 191 lakh. While, it is used mainly towards incremental Trade Receivables of RS 3,668 lakh, payment of income tax of RS 656 lakh, increase in other assets of RS 325 lakh.

Net cash utilized in investing activities is RS 1,089 lakh during FY2020 mainly on account of loans given to related parties with increment by RS 1,819 lakh, RS 100 lakh to others, RS 90 lakh in incremental bank deposit, and RS 84 lakh in RS. While, your Company has earned interest income to the tune of RS 1,003 lakh on the given loans during FY2020.

Net cash utilized in financing activities is towards finance cost of RS 1,677 lakh, and repayment. While, it is generated from fresh borrowings.

Hence, your Companys cash has reduced by RS 13 lakh during FY2020.

Details of Subsidiaries, Associates and JVs of your Company:

(RS in lakhs)

Sr. Name of the entity Project location No. NILAs investment in equity % shareholding Loans & Advances extended Profit After Tax shared
1 Romanovia Industrial Park Pvt Ltd (23.480621, 71.974021), Navyani, Gujarat 1,250* 50% 76
Industrial and logistics park - various structures under execution
2 Kent Residential and Industrial Park LLP (23.478515, 72.009447), Sitapur, Gujarat 24 50% 5,153 (46)
3 Nila Terminals (Amreli) Pvt Ltd (213611"N 711319"E), Amreli, Gujarat 1 100% 479 -
Bus-port projects for GSRTC
4 Vyapnila Terminals (Modasa) Pvt Ltd (2328N 7318E), Modasa, Gujarat 268 34% 1,029 -
- under execution

* measured at fair value at the date of transition to Ind AS i.e. the deemed cost of such investment for your Company.

None of the Pvt Ltd entities mentioned above have declared any dividend during FY2020. Further, with respect to your Companys strategic investment 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, it may be mentioned that the progress is satisfactory and your Company has started to reap benefits as more specifically furnished in detail in other sections of this Annual Report. Your Company has executed a well-thought strategy and is favorably positioned as a first-mover, promoter of industrial eco-system in the region, and fostering infrastructure development.

Your Company has built industrial warehouse structures as well as residential dormitories on BTS basis. Such infrastructure development has already been rented out on long-term lease basis to reputed corporates including MNCs.