om metals infraprojects ltd Management discussions

GLOBAL ECONOMY:

The global economy reported de-growth of 3.5% in 2020 compared to a growth of 2.9% in 2019. This steep decline in global economic growth was largely due to the outbreak of the novel corona virus and consequent suspension of economic activities across the world. The global economy is projected to grow by 5.5% in 2021 largely due to the successful roll-out of vaccines across the globe, coupled with policy support in large economies. (Source: IMF)

Region growth %	2020	2019
World output	(3.5)	2.9
Advanced economies	(4.9)	1.7
Emerging and developing economies	(2.4)	3.7

(Source: IMF)

INDIAN MACROECONOMICS REVIEW:

The Indian government announced a complete lockdown in public movement and economic activity from the fourth week of March 2020. The lockdown staggered an already slowing economy as 1.38 billion Indians stayed indoors - one of the most stringent lockdowns anywhere. The outbreak of the novel coronavirus impacted the Indian economy during the first quarter of the year under review.

The Indian economy de-grew 23.9 per cent in the first quarter of 2020-21, the sharpest de-growth experienced by the country since the index was prepared.

The Indian and state governments selectively lifted controls on movement, public gatherings and events from June 2020 onwards. The result is that Indias relief consumption, following the lifting of social distancing controls, translated into a full-blown economic recovery.

With an aim to speed up the economic normalisation, the Government accelerated the public investment in the key infrastructure sector. The wheels of Indias capex cycle were set in motion with a strong revival in investment-led growth supported by the Atmanirbhar Bharat Mission and a massive boost to infrastructure and capital expenditure provided for in the Union Budget 2021.

Indias GDP contracted initially and then recovered in 2020-21. This recovery - one of the most decisive among major economies - validated Indias long-term consumption potential.

Y-o-Y growth of the Indian economy

Region growth %	FY18	FY19	FY20	FY21
Real GDP growth (%)	7	6.1	4.2	NA

Growth of the Indian economy, 2020-21

Region growth %	Q1FY21	Q2 FY21	Q3FY21	Q4FY21
Real GDP growth (%)	(23.9)	(7.5)	0.4	NA

The Indian economy is projected to grow by more than 10% in FY22 as per various institutional estimates, making it one of the fastest-growing economies. Indias growth journey could be the result of a culmination of favourable tailwinds like consistent agricultural performance, flattening of the COVID-19 infection curve, increase in government spending, reforms and an efficient rollout of the vaccine, among others.

However, the only dampener is the surge in Covid-19 in the first quarter of the current financial year that could affect public consumption of products and services.

INFRASTRUCTURE AND ENGINEERING INDUSTRY

Infrastructure sector plays a key role in Indias overall development process. Therefore, government gives intense focus to this sector by initiating policies that would ensure time-bound creation of world class infrastructure in the Country. Increasing demand for various rail structures, tunnels, bridges, and other civil works on account of the growing population and traffic issues across the globe is anticipated to propel the civil engineering market growth.

FY 2020-21 started with the nationwide lockdown due to the Covid-19 pandemic which had stalled all economic activities during the first quarter of the year. The lockdown took a heavy toll on the economy, with up to two-thirds of activity either shut or working at reduced capacity. Post the lockdown, businesses took various steps to bring back labour and materials to site. Gradually, the operations at sites picked up, and by the second quarter of the year, there was improved labour presence at sites and work progress. Adequate precautions were taken to curtail the spread of the virus.

The slew of other relief measures undertaken by the Central Government - including relaxation on EMD (Earnest Money Deposit) and performance security, relaxation of bidding eligibility criterion and increased frequency of payments for on-going contracts, relief for contractors/developers under the Aatmanirbhar Bharat Scheme - has aided the growth of construction players.

The EPC market in India has evolved over the last few years with increased project size and complexity in various sectors including Construction of Dams, bridges and Water Treatment. With increasing competition, Indian EPC players have developed their in-house design, engineering and construction capabilities to bid for and execute large and complex EPC projects. International design houses are also taking keen interest in infrastructure projects in India.

Governments need of revival in capex cycle and infrastructure development would remain conducive for achieving the growth aspirations of the Company with reduced EMD and PBG in tender and contracts.

The Government intends to establish a Development Financial Institution (DFI) with an initial capital of INR 200 billion, aiming to create a lending portfolio of at least INR 5 trillion in 3 years. Furthermore, the Government assured access to finance for InVITs by enabling debt financing by Foreign Portfolio Investors (FPI).

Indias construction industry is engaged in growth, which mainly includes real estate and urban development projects. Given the nations objective to modernize infrastructure and bring about a smart development in its cities, India is expected to emerge as the third largest construction market by 2025. This industry covers a wide scope and contributes around 55% to the steel, 15% to the paint and 30% to the glass industry. To facilitate growth, India relaxed foreign investment norms, with the real estate sector solely receiving investments worth US$ 5 billion.

Government Initiatives and investment In Union Budget 2021, the government has given a massive push to the infrastructure sector by allocating Rs 23,30,830 million (US$ 32.02 billion) to enhance the transport infrastructure. The government expanded the National Infrastructure Pipeline (NIP) to 7,400 projects. ~217 projects worth Rs 1.10 lakh crore (US$ 15.09 billion) were completed as of 2020. The key highlights of the Budget 2021 are as follows:

• In May 2021, Minister for Road Transport & Highways and Micro, Small and Medium Enterprises, Mr. Nitin Gadkari stated that the government is giving utmost priority to infrastructure development and has set a target of road construction of worth Rs 15 lakh crore (US$ 206 billion) in the next two years.

• The Ministry of Railways plans to monetise assets including Eastern and Western Dedicated Freight Corridors after commissioning, induction of 150 modern rakes through PPP, station redevelopment through PPP, railway land parcels, multifunctional complexes (MFC), railway colonies, hill railways and stadiums.

• In March 2021, the government announced a long-term US$ 82 billion plan to invest in the countrys seaports. ~574 projects have been identified, under the Sagarmala project, for implementation through 2035.

• In April 2021, the Ministry of Power (MoP) released the draft National Electricity Policy (NEP) 2021. The MoP created an expert committee including members from state governments, the Ministry of New and Renewable Energy (MNRE), NITI Aayog and the Central Electricity Authority (CEA).

• In March 2021, the Parliament passed a bill to set up the National Bank for Financing Infrastructure and Development (NaBFID) to fund infrastructure projects in India.

• Indian railways received Rs 11,00,550 million (US$ 15.09 billion), of which Rs 10,71,000 million (US$ 14.69 billion) is for capital expenditure.

• Rs 11,81,010 million (US$ 16.20 billion) has been allocated towards road transport and highway sector.

• In Budget 2021, the government announced the following interventions under Pradhan Mantri Aatmanirbhar Swasth Bharat Yojana (PMANSY):

• An outlay of Rs 6,41,800 million (US$ 8.80 billion) over six years to strengthen the existing National Health Mission by developing capacities of primary, secondary & tertiary care and healthcare systems & institutions to detect and cure new and emerging diseases.

• This scheme will strengthen 17,000 rural and 11,000 urban health and wellness centres.

• Setting up integrated public health labs in all districts and 3,382 block public health units in 11 states.

• Establishing critical care hospital blocks in 602 districts and 12 central institutions.

• Strengthening the NCDC (National Centre for Disease Control) to have five regional branches and 20 metropolitan health surveillance units.

• Expanding integrated health information portal to all states/UTs.

• Rolling out the pneumococcal vaccine, a Made in India product, across the country.

• Rs 3,50,000 million (US$ 4.80 billion) has been allocated for COVID-19 vaccines in FY 22

• The government announced Rs 1,89,980 million (US$ 2.61 billion) for metro projects.

• Mega Investment Textiles Parks (MITRA) scheme was launched to establish world-class infrastructure in the textile sector and establish seven textile parks over three years.

• The government announced Rs 30,59,840 million (US$ 42 billion) over the next five years for a revamped, reforms-based and result- linked new power distribution sector scheme.

COMPANY UPDATES:

Om Infra Limited is one of the leading Diversified group of Companies having business interests into various fields which covers Construction of EPC projects in Hydro Mechanical projects, Irrigation projects, Canal & Dams projects and Construction of Real Estate projects.

The EPC contracts work include civil construction, designing, engineering, procurement, fabrication, manufacturing, supply, installation, commissioning and operations & maintenance. Our core business is providing turnkey EPC solutions for Engineering and Construction of Dams, Hydro power and irrigation projects in India and Abroad.

Company has successfully executed road projects and more than 60 Civil and Hydro-mechanical contracts for Hydro-power & Irrigation projects across the country and abroad. Currently working on 17 construction projects with total outstanding unexecuted contract value of Rs 1864 crores (OMIL Share).

These projects are across multiple states (Gujarat, Uttar Pradesh, Madhya Pradesh, Uttarakhand, Himachal Pradesh, Jharkhand, Tamil Nadu, Arunachal Pradesh,Punjab and Rajasthan) and three international locations (two projects in Africa and one project in Nepal)

Two Real Estate projects are under progress across Jaipur, Kota with sellable area of over a Million sq ft and one is in planning stage at Mumbai with the total expected saleable area over 2.5 lakh sq ft (Oms share)

Though FY21 so far has seen marginally positive in revenues as compared to last year due to the lockdown and reverse migration of workers, but companys profitability for this period increased significantly led by improvement in margins. FY22 seems and likely to be much better as compared to FY21 in terms of execution of projects at both domestic and international sites leading to higher revenue recognition and FY22 is expected to witness handsome growth. Focus on tapping huge potential in Hydro Electric Power, River Linking and irrigation by capitalizing on the governments plans of accelerating infrastructure projects. Company is also focused on better operational efficiencies which would help in further margins improvement with a better recognition post name change.

Contracts Details - Unexecuted Order-Book at Rs 1864 Crore

Sr. Name of No. Contract	Client	Location	Project Type	Contract Value Share of OMIL (Rs Crore)	Value of Balance work (Rs Crore)	Estimated Completion Date	OMIL Share
1 Kutchh Canal Power - SSNN	Govt. of Gujarat	Gujarat	Hydro Mechanical and civil	230.13	39.38	March 22	100%
2 Koshi Canal System, Rampur#	Govt of Uttar Pradesh	Uttar Pradesh	Dam/ barrage	193.76	11.33	March 23	100%
3 Ujjain Smart city	Govt of Madhya Pradesh	Madhya Pradesh	EPC - smart city	128.80	4.28	Sept t21	50%
4 Vyasi Hydro Mech	Uttaranchal Jal Vidyut Nigam	Himachal Pradesh	Hydro Mechanical	105.91	14.17	Dec -21	100%
5 Tapovan Hydroelectric Project	NTPC	Himachal Pradesh	Hydro Mechanical	72.4	16.43		100%
6 Mpanga Irrigation	Government of India	Rwanda (Africa)	Irrigation	121.25	42.38	Dec--21	100%
7 Kpong Irrigation	World Bank	Ghana (Africa)	Irrigation	108.03	14.43	Sept-21	100%
8 North Koel Reservoir	Government of India	Jharkhand	Dam	38.54	30.83	Mar-22	100%
9 Kundah Hydro Mech Project	Govt of Tamil Nadu	Tamil Nadu	Hydro Mechanical	92.10	92.10	Nov-22	100%
10 Arun-3 Hydroelectric Project	SJVN Limited	Nepal	Hydro Mechanical	156.98	142.13	Jul-22	100%
11 BairaSiul Power Station	NHPC	Himachal Pradesh	Hydro Mechanical	19.88	7.66	Dec -21	100%
12 Pench Diversion Project	Govt of Madhya Pradesh	Madhya Pradesh	Irrigation	78.9	58.00	Dec-23	30%
13 Kameng HEP	NEEPCO	Arunachal Pradesh	Hydro Mechanical	195.4	4.10		60%
14 Isarda Dam Project#	Govt of Rajasthan	Rajasthan	Dam water storage	549.2	441.02	Dec-23	100%
15 Amravati Project Construction		Maharashtra	Irrigation	240.07	238.28	Mar-25	100%
16 Hiran Water Resources Division	Govt of Madhya Pradesh	Madhya Pradesh	Irrigation	156.46	153.30	Dec-23	51%
17 Shapurkhandi Punjab	WRD PUnjab	Pathankot	Power house	554.46	554.46	March 2026	100

Execution Update of Domestic & International Projects

• Companys operations which were impacted as the nation-wide lockdown, halted most of the construction activity in the country now getting stable and regular gradually.

• All safety measures have been ensured and followed at all the office and construction sites as set out by the Government

• Execution has already picked up again at all our EPC projects (see slide no. 5) and real estate projects (see slide no. 7)

• Companys largest contract - Isarda Dam project (Rs 550 Crore pre GST ) has gathered pace; revenue booking already started and shapurkhandi Punjab also started generating revenue and is another big milestone in companys order book

• Revenue booking at other new Hydro Mechanical contracts, Arun-3 (Nepal) and Amravati (Maharashtra), is going to take pace from the FY 2021-22.

• Africa Irrigation projects are progressing smoothly. Pace of execution of these projects has been better with completion expected by this FY

• In Gujarat and Bihar Silo projects - Ground breaking & civil structures work at both the projects are in progress. Company is hopeful to achieve Financial closure soon and COD in next 12-15 months

• In the month of Jan 2021, company has received power house projects from Water Resource Department, govt. of Punjab with total contract value of INR 621 crore.

SMART CITIES

National Smart Cities Mission is an urban renewal and retrofitting program by the Government of India with the mission to develop smart cities across the country, making them citizen friendly and sustainable. The Union Ministry of Urban Development is responsible for implementing the mission in collaboration with the state governments of the respective cities. The mission initially included 100 cities, with the deadline for completion of the projects set between 2019 and 2023.

Your company has entered a 50:50 JV with SPML Infra Ltd for developing infrastructure of Ujjain Smart City in Madhya Pradesh. The share of OMIL in the Contract value is app. 128.80 Crores.

The development activities include -

• Water Supply, treatment along with drainage system

• Solid Waste Management

• Internal & External roads of 4 & 6 lanes

• Power Transmission & Distribution

• Domestic Gas Distribution System

• Street Lighting, CCTV & SCADA Systems and Safety & Security Systems

The Vikram Udyogpuri Ujjain project (smart city project) is almost complete, the estimated completion is around September, 2021 and the final completion certificate is expected soon.

REAL ESTATE

The Indian real estate sector was expected to start recovering in 2020 after few lackluster years wherein the sector was impacted by multiple reforms and the changes brought about by Demonetisation, RERA, GST and the NBFC crisis. It has been a tough task for the sector to align itself with these externalities, but the measures have resulted in much needed transparency, accountability and fiscal discipline for the sector. Prior to the pandemic, the real estate sector was expected to contribute around 13% of Indias GDP by 2025 (from around 6-7% in 2017), according to ANAROCK Research.

The pandemic nearly stalled the markets in 2020 and the sector was virtually written off at the early stages of the pandemic on the expectations of a subsequent economic fallout.

However, during this unprecedented crisis, the real estate sector exhibited remarkable resilience and recovered ahead of expectations. After grappling with initial labor shortages and demand deferment, both the residential and office markets witnessed signs of revival from Q3 2020 onwards.

The real estate segment accounted for over 41% share of the global revenue in 2020 and is expected to witness significant growth over the forecast period. Rising purchasing power and consumer confidence are fueling the recovery of housing construction including both new constructions as well as renovation. This is expected to result in overall market growth.

While the pandemic outbreak temporarily disrupted the sector, it also led to emergence of certain trends such as preference for larger apartments, increasing inclination for home ownership as against rental housing, de-densification of office spaces and acceleration of the ongoing consolidation in the sector. Also, the current situation has opened up a lot of business development opportunities for well capitalised developers. The uncertainties of the second COVID-19 wave and its impact will need to be assessed and tracked closely.

COMPANY UPDATES:

• Execution of the two key real estate projects; Om Meadows (Kota) and Pallacia (Jaipur) are progressing well. The finishing, interior and value addition work in Pallacia /Kota residential project is going on. The structure completion has been achieved in Pallacia and the same is applied to JDA for CC .

• In the next three years, considering that the reality market to do considerably well, the company expects about Rs • 5 billion revenue and unrealized cash inflow from both the projects.

Real Estate Project Details

Project	Location	Partner	Project Type	Number of Units	Project Area Sq Ft. (OMIL Share)
Om Meadows	Kota	-	Housing	340	4,45,972
Palacia	Jaipur	-	Housing	152	6,46,150
Bandra MHADA	Mumbai	DBRealty & Others	Housing	-	2,50,000

Real Estate Project	Sold in sq.ft	Unsold in sq.ft.	Total estimated realisable value of revenue (Rs Cr)	Consideration of sold units (Rs Cr)	Total revenue realizable for unsold units (Rs Cr)
Om Meadows	1,85,500	2,60,472	107	42	65
Palacia	2,51,530	3,94,620	646	210	436
Bandra MHADA*>	-	2,50,000	750	0	*750
Total			1,523	249	1251

• Note: *Bandra Mhada project 0 subject to finalization of drawing plan and FSI approval and subject to market conditions and revenue is purely estimated.

• The revenue projections are subjected to growth in real estate markets and sale of units and FSI approval (at decided rate and time)

Strategy

OMIL is leading player in the hydro mechanical segment with expertise in hydro mechanical equipments along with Engineering Construction for dams and Irrigation Projects. With highly expertise and experience team OMIL is always striving to constantly upgrade its benchmarks to meet and conquer the growing competitiveness of this segment. We are Indias leading mechanical equipment manufacturers having mastery in execution of large and complex hydro -projects.

To strengthen and boost our international presence we secured Irrigation and Watershed Development in Mpanga Sector of Africa. Going ahead, it will continue to focus on the African region to secure new projects in order to garner new growth opportunities that the African region is offering.

The company is re-aligning its corporate structure and is focusing on Core operation of the business by re-structuring the business into core and non-core operation. In tune of this, company has already sold few of the non-core assets. The company has already disposed of a few of its divisions including the Hotel, Cineplex division and One of the Packing divisions machinery has already been sold to make the packaging business more viable and will further look to exit all its non-core assets very soon.

Along with its strategy to exit the non-core business, the company is also focusing on new profitable ventures like Construction and Operations of Food Grain Silos, Constructions of Smart Cities and Irrigation and water pipe laying.

OTHER SEGMENTS

Silos

The company has received its first project for construction of Silos. Silos are to be constructed at 4 locations with 50,000 MT capacity each for storage of Wheat on PPP Mode. Few Advantages of Silos are that it occupies less space as compared to warehouses and is easier to maintain optimum grain storage conditions in the silo and better equipped to control the temperature and keep birds, moulds and bugs. Government is planning for construction of 100 LMT Silos till 2020 in a Phase Wise manner. The Company will continue to evaluate the projects that the Government will bid out in future.

Packaging & Manufacturing

The plastic caps and closures market was valued at 1683.73 billion units in 2019 and is expected to reach 2095.21 billion units by 2025, at a CAGR of 5.62% over the forecast period 2020 - 2025. Heat induction cap liner could be used on the variety of bottles made up of different plastic materials such as PP, PVC, HDPE etc, which protects the container from leakage and provides tamper evidence characteristics to it, due to which the market will grow in future.

Plastic caps and closures are used in a stretch of industries segments, such as food and beverages, pharmaceuticals, household goods, cosmetic products, etc. Caps and closures are the final components of packaging and are responsible for maintaining the integrity of the product packing.

The company has ventured into manufacturing of closure for water PET bottles and Carbonated Soft Drinks which is high margin business. It involves using compression moulding technology over injection moulding used by existing players in the industry. The technology has been imported from Italy which will generate high returns on investment and help unlocking greater value to shareholders.

One of the Packing divisions machinery has already been sold to make the packaging business more viable

SEGMENT WISE REVENUE

OPPORTUNITIES & THREATS

Indian economy has witnessed significant improvements over the past three years, in the form of lower inflation, benign global commodity prices, improved fiscal deficit, higher Government spend (Centre and State) and improving financial savings. However, the COVID-19 pandemic has creeped in the sense of depression and brought the world economy at halt during latter half of March 2020, these impacts are yet to be evaluated which could temper the GDP growth. However, the Company is of the view, that post COVID-19 era, these headwinds to resume back to normalization.

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy, and urban transport. Indian energy sector is expected to offer investment opportunities worth US$ 300 billion over the next 10 years. In the Union Budget 2020-21, the Government has given a massive push to the infrastructure sector by allocating Rs 1,69,637 crore (US$ 24.27 billion) to develop the transport infrastructure. The infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country.

As per the statement made by the Reserve Bank of India (RBI) Governor on April 17, 2020, India is expected to post a sharp turnaround in the financial year 2021-22. Quoting projections made by the International Monetary Fund (IMF), Governor said the IMFs projection of 1.9 per cent GDP growth for India is the highest among G-20 nations.The impact of the Covid-19 pandemic on the Indian economy, RBI Governor said since March 27, 2020, the macro economic and financial landscape have "deteriorated precipitously" in some areas but might still swim through in some others.

In 2019, the government launched several policy measures. These include the renewal of the government vehicle fleet, the launch of the Pradhan Mantri Kisan Samman Nidhi scheme (more commonly known as the income support scheme for farmers) of INR 750 billion, the merger of ten state-owned banks into four entities, an acceleration of an INR 700 billion capital infusion for banks, the removal of a surcharge on portfolio investments, a significant cut in corporate taxes (reducing the base rate from 30% to 22%) and, finally, an investment package in infrastructure of 102 lakh crore (roughly USD 1450 billion) over the next five years.

Infrastructure Industry in India has registered great progress in the recent years. Creation of infrastructure is vital for Indias economic development as the opportunities for future growth are enormous in the country. The major takeaways from the budgetary allocation 2020-21 for the Infrastructure Sector includes the launched Rs 103 trillion infra projects besides providing about Rs 1.70 trillion for transport infrastructure and accelerating highways construction and 6,500 projects across sectors under National Infrastructure Pipeline (NIP) envisions ease of living for citizens. In his Independence Day speech 2019, Prime Minister had highlighted that Rs 100 trillion would be invested on infrastructure over the next 5 years.

Owing to the nature of the industry the Company operates in, the management of company perceives the following as threats in the construction of hydropower projects:

• Time in clearances - Stringent norms and cumbersome procedures for getting environmental and forest clearances leads to delays in obtaining clearances for projects, which may affect the capacity addition programs, even though State Governments are trying their best to adopt to single window clearance system, which will mitigate this threat to large extent.

• Land acquisition- The process of land acquisition for infrastructure work as well as for a projects components including submergence is quite cumbersome and time consuming. Single window clearance system will also mitigate this threat to great extent.

• Geological uncertainties - In spite of extensive surveys and investigations, various components of hydro projects such as head race tunnels, power houses, pressure shafts and surge shafts face geological surprises especially in the hilly region.

• Inter-state and International disputes - As water is a state subject in India, there are often interstate river disputes due to which many hydro projects may get delayed or abandoned. Certain projects are situated outside India which is affected by Indias international relations.

• Natural calamities - As most of the hydro projects are located in hilly terrains, natural calamities like landslides, hill slope collapses and road blocks, floods and cloud bursts cause severe setbacks in construction schedules.

• Unexpected complexities - Unexpected complexities and delays in clearances / execution due to reasons beyond ones control may cause variation / escalations in estimates.

RISKS & CONCERNS

The construction industry is the second largest contributor to Indias GDP. It not only has economic potential but is also among the biggest employment providers. Owing to the nature of the industry the Company operates in, it is exposed to a variety of risk factors which are broadly categorized into financial, technical, construction policy, political, market and legal. A tight risk process is carried out from pre-bid to project completion stage to manage, mitigate and monitor these risks by adopting specific risk mitigation measures.

During the year, the Board has reviewed the process and the Risks that have already been identified for the business and necessary action for mitigation has been initiated. Infra sector is crumbling as project delays, cost overruns and financing woes mount. Even new models like hybrid-annuity are proving to be unviable. Private sector investment is the key to revival, but the return of private capital may be delayed because of the inherent weakness in financial markets.

The top major constraints in infrastructure development over the next three years are thought to be corruption, political and regulatory risk, and access to financing and macroeconomic instability. This last is a shared concern troubling emerging-market economies.

With the resurgence of Covid-19, uncertainty of availability of the work force and disruptions in the supply chain may have adverse effects on the projects under execution. However, strategies to overcome these difficulties are being put in place to minimise the impact, and customers are taken into confidence.

Some of the crucial risks impacting the Companys overall governance are detailed below:

• Liquidity risk

Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. The Company requires funds both for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents and short term investments provide liquidity in the short-term and long-term. . The Company has established an appropriate liquidity risk management framework for the management of the Companys short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

• Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The borrowings of the Company are principally denominated in rupees and US dollars with a mix of fixed and floating rates of interest. The Company has exposure to interest rate risk, arising principally on changes in base lending rate and LIBOR rates.

• Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks.

Companys credit risk arises principally from the trade receivables, loans, investments in debt securities, cash & cash equivalents.

• Commodity price risk

The Companys revenue is exposed to the market risk of price fluctuations in its division is as under:

Engineering Division: the company generally takes Turnkey projects from government departments. The contract price is generally fix and free from any price risk subject to change in any government policy or rules.

Real Estate Division: the company is exposed to risk of prices of Residential and commercial units. These prices may be influenced by factors such as supply and demand, and regional economic conditions.

Packaging Division: the company is exposed to risk of prices of goods. These prices may be influenced by factors such as supply and demand, Cost of Production and regional economic conditions.

Hotel Division: the company is exposed to risk of prices/ rates of Rooms. These prices may be influenced by factors such as supply and demand i.e. inflow of tourist and the seasonal effects, and regional economic conditions.

Market forces generally determine prices for the Real Estate Division and Packaging Division of the Company Adverse changes in any of these factors may reduce the revenue that the Company earns from the sale of its products.

The Company primarily purchases its raw materials in the open market from third parties. The Company is therefore subject to fluctuations in prices for the purchase of Building Material and other raw material inputs. The Company purchased substantially all of its Raw Material from third parties in the open market.

The Company aims to sell the products at prevailing market prices. Similarly the Company procures raw materials on prevailing market rates as the selling prices of its products and the prices of input raw materials move inthe same direction.

• Foreign currency fluctuation risk

The Companys functional currency is Indian Rupees (INR). The Company undertakes transactions denominated in foreign currencies; consequently, exposure to exchange rate fluctuations arise. Volatility in exchange rates affects the Companys revenue from export markets and the costs of imports, primarily in relation to raw materials. The Company is exposed to exchange rate risk under its trade and debt portfolio.

Adverse movements in the exchange rate between the Rupee and any relevant foreign currency results in increase in the Companys overall debt position in Rupee terms without the Company having incurred additional debt and favourable movements in the exchange rates will conversely result in reduction in the Companys receivables in foreign currency.

• Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market prices. The Company is exposed in the ordinary course of its business to risks related to changes in foreign currency exchange rates, commodity prices and interest rates.

• Salary risk

Salary increase should take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

No other post-retirement benefits are provided to these employees.

• Interest risk

The rate used to discount post employment benefit obligation should be determined by reference to market yields at the balance sheet date on Government bonds. The currency and term of government bonds should be in consistent with the currency and estimated term of post employment benefit obligation.

• Investment risk

The liability is not funded and is not relevant in company.

• Health, Safety And Environment Risks

The Infrastructure sector has inherent hazards and is therefore subject to extensive health, safety and environmental laws, regulations and standards. Any incident can result in property damages, injuries and potential fatalities as also adversely impact surrounding communities and environment. Such incidents may result in litigation, disruption of operations, penalties and loss of Company image & goodwill.

• Political, Legal And Regulatory Risks

Regulatory risk is the risk that a change in laws and regulations will materially impact a security, business, sector, or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of an investment, or change the competitive landscape.

Non-compliance with applicable laws & regulations as well as changes in the Government policies may adversely impact operations and hamper growth.

• Fraud and Cyber Security

With ever increasing reliance on information technology, there is enhanced risk of security breaches resulting in

misappropriation of funds or assets. Such breaches could bring the operations to a standstill or worse.

• Other Operational Risks:

Execution challenges: The Company faces execution challenges like geological surprises, availability of work front, land acquisition and Right-of-Way (ROW), pending approvals and clearances from Government agencies, working in difficult/harsh weather conditions, manpower issues, etc. The Company closely tracks the key risks for each project to ensure timely mitigation.

• Counter Party Risks:

The Company partners with different contractors (Joint Venture / consortium projects) across businesses based on technical requirements/local market conditions. The partners performance and financial strength is crucial for project success. Learning from the past projects are incorporated in the inter-se agreements with the partners and clauses on liability of each partner is carefully drafted after legal due diligence is exercised.

• Working capital challenges:

Project delays and adverse contractual payment terms sometimes lead to increased working capital requirements. The Company has strengthened the process for close monitoring of cash flows at the project level. It ensures regular follow-up for delay in payments from clients, and has ensured improvement in the working capital levels.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

A strong Internal Control framework is an important part of operations and corporate governance. The management has established internal control systems commensurate with the size and complexity of the business. The internal control provides a structured approach for identification, rectification, monitoring and reporting of gaps in the internal control systems and processes.

Om Infra Limited has an adequate system of internal control to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for preparing financial information and other data and for maintaining accountability of assets. Internal audits of all branches of the company across India are set in place and are reviewed by the management. The Audit Committee regularly reviews the adequacy and effectiveness of the internal controls and internal audit function.

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The success of any project is a direct reflection of the skill of the workers who completed it and the managers who supervised it. The total employee strength of the Group, as on 31st March, 2021 was more than 250.

The Companys Human Resource Development ("HRD"), being a key function is manned by professionally qualified and experienced personnel and with necessary directions from the senior management. The Company focuses on effective HRD, resulting in greater employee satisfaction and retention levels.

OUTLOOK

The GCC economy is returning to pre-Covid levels, with massive vaccination drives by local Governments, enabling quicker recovery. With the resumption of normalcy post the Covid-19 outbreak and with expected growth pick-up in the infrastructure are expected to grow in the next year.

In the future and the Company plans to increase its footprint through value-accretive projects leading to increase in profitability.

• Strong revenue visibility with current unexecuted order-book of Rs 1591 crore, which is over 8x of FY19 revenues

• During the recent budget for FY21, Govt focus remained on building Infrastructure with significant allocations towards Irrigation and Hydro-Power segments. Tendering and bidding activities are expected to pick-up in the coming period

• Liquidity situation has also seen an improvement in the markets. Execution of projects would also see a significant improvement in FY21

• With the execution pick-up expected at both domestic and international projects in FY21, revenue growth for the next financial year should be strong. COVID 19 and its affect in different geographies will be key.

• Company has also been exploring bids for projects in domestic markets and expected to add good amount of fresh orders in FY21

• Focus on improving execution and operational efficiencies would help in further improvement in margins

• With balance sheet remains healthy, the company is well placed to better execute its projects and further look for opportunities in this space leading to increase in profitability

KEY RATIOS

S. PARTICULARS No.	FY 2020-21	FY 2019-20	YOY CHANGE	REMARK	REASONS FOR SIGNIFICANT CHANGES
1 Current Ratio	1.77	1.61	10%	F
2 Debt Equity Ratio	0.04	0.04	0%	NA
3 Debtors turnover ratio	2.16	1.96	10%	F
4 Interest coverage ratio	2.00	1.81	10%	A
5 Operating profit margin	3%	-15%	123%	F	Companys operating profitability increased.
6 Net profit margin	4%	5%	-20%	A
7 Inventory turnover ratio	1.67	1.54	9%	F
8 Return on net worth	2%	2%	0%	NA
A- Adverse
F- Favourable

CAUTIONARY STATEMENT

The statements in this report, particularly which relate to Management Discussion and Analysis describing the Companys objectives, plans, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied in the statement depending on the circumstances.