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Statement in this Management Discussion and Analysis Report detailing the Companys objective, projections about the future, estimates, expectations or predictions including, but not limited to, statements about the Companys strategy for growth, market position and expenditures may be forward looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied in the statement. Factors that could make a difference to the Companys operations include economic conditions affecting demand/ supply and price conditions in the domestic markets in which the Company operates, Changes in the Government regulations, tax laws and other statues or other incidental factors.
After a lackluster outturn in 2018, economic activity is projected to pick up pace in 2018 and 2019, especially in emerging market and developing economies. However, there is a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications.
With these caveats, aggregate growth estimates and projections for 2017-19 remain unchanged relative to the October 2017 World Economic Outlook. The outlook for advanced economies has improved for 2018-19, reflecting somewhat stronger activity in the second half of 2017 as well as a projected fiscal stimulus in the United States. Growth prospects have marginally worsened for emerging market and developing economies, where financial conditions have generally tightened.
While the balance of risks is viewed as being to the downside, there are also upside risks to near-term growth. Specifically, global activity could accelerate more strongly if policy stimulus turns out to be larger than currently projected in the United States or China. Notable negative risks to activity include a possible shift toward inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and in some emerging market economies, increased geopolitical tensions, and a more severe slowdown in China.
The Global Economic Prospects report released by the World Bank on Tuesday projects that India will see its gross domestic product (GDP) grow at a rate of 7.3 per cent during the ongoing fiscal and at 7.5 per cent in the two succeeding ones.
Indian economy is likely to regain its pace in the current fiscal and once again become the fastest growing emerging economy, a World Bank report said. The Global Economic Prospects report released by the World Bank on Tuesday projects that India will see its gross domestic product (GDP) grow at a rate of 7.3 per cent during the ongoing fiscal and at 7.5 per cent in the two succeeding ones.
"Growth in India is projected to accelerate to 7.3 percent in FY2018/19 and 7.5 percent on average in 2019-20, reflecting robust private consumption and firming investment, broadly in line with January projections," the World Bank report said.
In comparison, the rest of the South Asia region (SAR), excluding India, will post GDP growth of 5.6 per cent in for the current fiscal and the next one, moving up to 5.7 in 2020-21.
"Indias GDP growth bottomed out in the middle of 2017 after slowing for five consecutive quarters, and has since improved significantly, with momentum carrying over into 2018 on the back of a recovery in investment. Although investment growth was still moderately lower in 2017 than in 2016, high-frequency indicators suggest that it accelerated into 2018," World Bank said.
"While activity slowed following the currency exchange initiative, growth for 2018-19 at 7.1 per cent was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year," it said, referring to Indias demonetization measure as well as to the base year revisions in GDP calculations made by the Central Statistics Office.
"Growth out-turns in the first quarter of 2017 were higher than the April WEO forecasts in.
INDIAS INFRASTRUCTURE SECTOR
India is the fastest-growing large economy in the world, and the government has set itself a target of investing US$377 bn in infrastructure over the next three years, making India an attractive destination for long-term global infrastructure investors, who recognize it as a country with a healthy prospects and several good potential partners.
India climbed 12 spots to 130th in 2016 from 142nd place in 2015 in the 2016 Study of Ease of Doing Business by World Bank. Even better, eight of the most economically progressive Indian states are, on an individual basis, comparable with the worlds top-50 countries. The Ministry of Road Transport and Highways, and Shipping announced a US$ 376.53 bn investment in the infrastructure sector over three years, which will include US$ 120.49 bn for developing 27 industrial clusters and an additional US$ 75.30 bn for road, railway and port connectivity projects.
Terming infrastructure as "sine qua non" for achieving robust growth, the Economic Survey 2015-16 said government has accorded top priority to the sector and has undertaken a slew of steps to augment it. The Survey, presented in Parliament by Finance Minister Arun Jaitley, however expressed concern over stressed advances of the infrastructure sector which increased to 24 per cent in June 2016, from 22.9 percent in March 2016.
"Many reforms have been initiated in the infrastructure sector, resulting in robust growth in most of the sectors. Major infrastructure sectors, namely power, road, railways, civil aviation, ports and telecommunication, have performed better during 2015-16 as compared to 2014-15" it said.
Electricity generation in the country during the current year registered a growth of 4.4 per cent, it said adding, a total of 3030 MW of grid-connected power generation capacity from renewable energy sources like solar and wind has been added so far this fiscal, taking the cumulative generation capacity in the country to over 38,820 MW from the sources.
With Construction Industry being the second largest employer and a one of the key growth driver of the economy, the current government is focusing more to revive the industry. Few of the prominent steps taken by the government are as follows:
The Reserve Bank of India (RBI) has notified 100% foreign direct investment (FDI) under automatic route in the construction development sector.
Relaxed rules for FDI in the construction sector by reducing minimum built-up areas as well as capital requirement and liberalised the exit norms. The cabinet has also approved the proposal to amend the FDI policy.
India and US have signed a memorandum of understanding (MoU) in order to establish Infrastructure collaboration Platform which intends to facilitate US industry participation in Indian Infrastructure projects to improve the bilateral commercial relationship and benefit both the participants economies.
The focused approach to revive the construction industry is visible in governments effort to revive the Roads & Highways segment. Rolling out the Environment and Forest Clearances faster, Environmental Clearance through e-portal for infrastructure projects, Delegation of more power to state governments for giving environment clearances, Cleared norms for setting up investment trusts for Real Estate and infrastructure sectors, Changing or amending the Land Acquisition Act, Concrete roads instead of Bitumen roads, Introduction of Electronic Chip System are few of the steps taken by Government to provide with conducive operating environment to the sector.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
INTERST AND FINANCE CHARGES
The net interest and finance charges increased during the year due to higher interest rates and increased availment of working capital facilities for operation of Company.
PROFIT BEFORE TAX
Your Company has registered PBT of Rs. 134.15 Lakhs as against Rs. 170.06 Lakhs last year.
PROFIT AFTER TAX
Your Company has registered PAT of Rs.104.95 Lakhs as against Rs. 110.69 Lakhs last year.
OUR PROJECT EXECUTION CAPABILITIES
The Company has developed reputation for undertaking infrastructure and construction projects and completing them in timely manner. We intend to continue to focus on performance and project execution in order to maximize client satisfaction. We leverage technologies, designs and project management tools to increase productivity and maximize asset utilization in capital-intensive activities. Our ability to effectively manage projects will be crucial to our continued success as a recognised infrastructure Company. We believe that we stand distinguished from our peers because of our management strength and inhouse development, construction, operations and maintenance capabilities.
OPPORTUNITIES, THREATS, RISKS AND CONCERN
With the stable government in place and Infrastructure Sector high on its agenda, the Indian Construction Industry is poised for growth in medium to long term. To achieve the targeted Economic Growth, the government has to spend on the capacity building and infrastructure improvements which will provide huge growth potential for construction industry. India investment in infrastructure is estimated to double to about USD 1 trillion during the 12th plan (10% of GDP during 12th plan) compared to previous plan. Indian government has also planned to build 100 smart cities. The government has allocated USD 1.2 billion for this project in its 2004-16 budget. This plan would need more PPPs for better and fast execution.
Due to low entry barriers, the competition is increase in the construction industry. There are many small and large regional and national players who are competing with each others. There has been not very high project awarding which has affected the order-book of many of the players in the industry thereby affecting their operational and financial health. The balance sheet of many of the players is stretched due high debts on the book and difficult operating environment thereby affecting their ability to service the debt. This along with lower bargaining due to various factors has kept the sector profitability under pressure. There are a few macro risks like increasing commodity risk, higher interest rates, funding constraints etc. which can impact he sector.
To minimise the risk your company has taken few initiatives like diversified & integrated business model, strong balance sheet, along with managers having strong management and organisational skills.
INDUSTRIAL SAFETY, EMPLOYEE HEALTH AND SAFETY RISK
The Company places utmost importance on the safety of its employees and other assets. To reinforce the safety culture in the organisation and mitigate this risk, the Company has taken numerous steps and initiatives. The Company already has a robust approach to tackle this risk through regular safety and health awareness campaigns at all its locations. The various measures taken by the Company include development and implementation of critical safety standards across the units and project sites, establishment of processes for safety training across all levels, promotion of a culture of safety not just for staff members but also for contract workers, and adequate Insurance coverage.
The growth in business size coupled with increasing regulatory enactments has brought in additional compliance requirements. Non-compliance with statutory provisions may not only lead to monetary penalties but may also impact the reputation of the organisation and the goodwill it has accumulated over the years. The risk is mitigated through regular monitoring and review of changes in the regulatory framework and also through monitoring of compliances through Compliance Management Software and other mechanisms.
The Company regularly conducts a study to develop a comprehensive 360 degree view on the opportunities, risks and threats to the business. These include areas such as market trends, new competition, changing customer preferences, disruption in supplies, product development, talent management etc. The Company has constituted a Risk Management Committee ("RMC"), under whose guidance it seeks to better manage the effectiveness of the mitigation strategies of various risks and their implementation progress. The Company has a robust RMC framework to identify and evaluate business risks and opportunities. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Companys competitive advantage. The Board reviews the functioning of the RMC.
With the thrust from Government to the construction industry through various initiatives for reviaval of infrastructure sector, your company is seeing immense opportunities in its core competency area. Your company is pre-qualified for a number of projects which are expected to be awarded by Government.
The year gone by has once again reinforced the strength of management to steer the Company through troubled water. In FY 2017-18 there was growth on all operational and financial parameters. The company has potential and will outperform in the coming years with the improvement in the economy and macro-economic factors. With strong and stable government at the centre, the business outlook of construction industry has changed in a positive direction. The Company is expecting good inflow of fresh orders in FY 2017-18.
Challenges in the sector have thrown immense opportunities to experienced players like APIVL. The adaptability to meet the challenges and encash the opportunities available through a well balanced business plan supported by Strong balance sheet along with increased spending in infrastructure segment in India will help your company to reap the benefit out of the opportunities by evaluating various options for venturing into other infrastructure activities and maximize shareholders value.
INTERNAL CONTROL SYSTEM AND ADEQUACY
The Company has adequate internal control system running throughout the organisation. Internal processes of the Company commensurate with our nature of business. The Company has appointed internal auditor who audits the adequacy and effectiveness of the internal control system as laid down by the management and suggests improvements as required. The audit committee periodically reviews the audit plans, internal audit reports and adequacy of internal controls and risk management. As on 31 March 2018, the Company had complied with all mandatory requirements of the SEBI (LODR) Regulations, 2015 and Clause 49 of the Listing Agreement entered into with BSE Limited.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS:
"Building Business Leaders. Creating Value for India."
Your Company believes that it is the quality and dynamism of its human resource that enables it to make a significant contribution to enhancing stakeholder value. Your Company is guided by a holistic approach to talent management - focusing on synchronising the multiple elements of talent sourcing, work design, performance management, remuneration, individual growth and development - to deliver breakthrough outcomes. Human Resource Development practices in your Company are guided by the principles of relevance, consistency and fairness based on the premise that what is done is as critical as how it is done. Taken together, these initiatives and processes have made a significant impact on talent attraction, retention and commitment.
Your Company has assiduously built a culture of continuous learning, innovation and collaboration across the organisation by judiciously leveraging cutting-edge learning and development practices with coaching, mentoring and on-the-job training. Based on the premise that action learning is a more effective approach to development of human resources, learning and development interventions stress less on classroom learning and more on workplace projects. These interventions are therefore fashioned along the lines of longer term journeys rather than short term events.
CONSERVATION OF ENVIRONMENT
The Company believes in sustainable development by promoting clean and pollution free environment and making the environment eco-friendly. Accordingly, various initiatives have been taken for Clean Development Mechanism (CDM) and pollution prevention. The environmental dimension forms an integral part of the business decisions.
|Date: August 10, 2018||By Order of the Board of Directors|
|(Govind Patodia)||(Bindi Vora)|