Purohit Construction Ltd Management Discussions

ANNEXURE 3

A. INTRODUCTION:

Purohit Construction Limited, Established in 1991, is one of the leading Construction Company in Gujarat. Your Company has more than three decade years of experience in the construction business with capabilities in providing Construction services for civil construction and infrastructure projects. With engineering experience, trained and qualified manpower, your Company can successfully execute and implement projects independently or through subcontracting.

B. ECONOMIC OVERVIEW:

The global economic output is expected to witness stable growth, fuelled by stabilising inflationary pressures, reviving consumer sentiment and investor confidence. The employment scenario in the US and other advanced economies has recovered from pandemic levels and higher disposable income is also expected to facilitate growth in the coming years.

Emerging and developing countries are also experiencing stable growth across multiple sectors, powered by governments focus on infrastructure and manufacturing sectors.

The global economy is anticipated to register a growth rate of 3.2% in CY24, which is likely to gradually remain at at 3.2% in CY25. Developing economies, including India, are powering ahead in many cases, with growth rates expected to be 6.5% in CY25.

(Source - IMF World Economic Outlook, April, 2024)

C. INDUSTRY STRUCTURE AND DEVELOPMENTS

In India, the real estate sector is the second-highest employment generator. Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to the countrys GDP. Indias real estate sector is witnessing a healthy increase in demand in 2024 and this momentum is expected to hold for the rest of the year. From commercial spaces to the residential market, the overall market outlook is a bright one for the real estate industry.

Despite significant headwinds, the sector has continued to show resilience and steady growth in 2024. In addition, the festive season fed the sectors growth. Buoyed by these factors, the sector made a strong comeback.

D. STRENGTHS & OPPORTUNITIES:

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term.

Your Company continues to capitalize on the market opportunities by leveraging its key strengths like Brand Reputation, Transparency, outsourcing, significant leveraging opportunity.

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

E THREATS & CHALLENGES:

While we are well prepared to capture the opportunities, few challenges in the near to medium term may have an impact on performance:

• Wars,

• Unanticipated delays in project approvals;

• Availability of accomplished and trained labour force

• Concerns due to ongoing pandemic situation;

• Increased cost of manpower;

• Rising cost of construction lead by increase in commodity prices;

• Over regulated environment.

F. RISKS AND CONCERNS

Risks are an inherent part of the Company operations due to the highly regulated and dynamic nature construction industry. The Company has implemented a comprehensive risk management framework to make sure that it is geared to address any negative effects posed by financial, operational, strategic, or regulatory risks.

G DISCUSSION ON FINANCIAL PERFORMANCE:

(Rs. in Lakhs)

The Company has completed all the projects on hand during the year under review, the total income of the Company has been decreased from Rs. 120.43 Lakhs in previous year to Rs. 0.05 Lakhs in current year. Further, the Loss before tax of the Company has been decreased from Rs. 76.06 Lakhs to Rs. 43.98 Lakhs and Loss after Tax decreased from Rs. 75.77 lakhs to Rs. 46.24 Lakhs in the current financial year.

H. INTERNAL CONTROL SYSTEM & THEIR ADEQUACY:

The Company has an internal control system, which provides protection to all its assets against loss from unauthorised use and for correct reporting of transactions. The internal control systems are further supplemented by internal audit carried out by an independent firm of Chartered Accountants and periodical review by the management. The company has put in place Proper controls, which are reviewed at regular intervals to ensure that transactions are properly authorized & correctly reported and assets are safeguarded. The Audit Committee of the Board addresses issues raised by both the Internal and Statutory Auditors. The internal control systems are implemented to safeguard the Companys assets from loss or damage. To keep constant check on cost structure and to provide adequate financial and accounting controls and implement accounting standards.

In addition to above, Purohit Construction Limited has formulated a Vigil Mechanism (Whistle Blower Policy) for its Directors and Employees of the Company for reporting genuine concern about unethical practices and suspected mal-practices.

I. KEY FINANCIAL RATIO ANALYSIS:

A comparative table showing synopsis of FY 2023-24 versus FY 2022-23 of Key Financial Ratio is provided below:

J. HUMAN RESOURCES DEVELOPMENT:

The Company strives to create a professional workspace by fostering the values of fairness, equity and respect; encouraging knowledge exchange and teamwork; and ensuring an effective human resource management to drive the growth and success of the Company.

In construction industry, a project mainly focuses on two things, one is optimum utilization of resources and the other is speedy completion of project. In line to this trend, construction industry has seen Human Resource Management as a primary entity for every company.

For a construction industry, employees are an organisations most valuable asset. However, people also represent the most difficult resource for organisations to manage. Unlike physical assets, people have their own individual needs which must be met and idiosyncrasies which must be managed if they are to contribute to organisational growth and development. People are individuals who bring their own perspectives, values and attributes to organisational life, and, when managed effectively, these human traits can bring considerable benefits to organisations. However, when managed poorly they have the potential to severely limit organisational growth and threaten the viability of a business.

Purohit Construction Limited ensures that the project has sufficient human resources, with the correct skill sets and experience, for the project to be successfully completed.

K. CAUTIONARY STATEMENT:

The above Management Discussion and Analysis contains certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation ,etc. In accordance with the Regulations on Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the Company.