<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>
FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2023
A. OUTLOOK Industry Outlook
Headquartered in Coimbatore, Tamil Nadu, Semac consultants Limited
(SCL) (formerly Revathi Equipment Limited) is one of the countrys leading service
providers of integrated design, engineering, procurement, construction and project
management services for Industrial construction for process industries, automobile and
FMCG & Metallurgy. It also includes Multi Model logistics parks and warehousing and
commercial development. Semac consultants Limited has a proven track record, having
executed some of the most complex and technically challenging projects across the country
and overseas.
The Company Semac Consultants Limited, is engaged in the business as
Engineering and Procurement Contractors (EPC), general engineers, mechanical engineers,
process engineers, civil engineers, general mechanical and civil contractors, Design
(covering architectural structural, MEP (Mechanical, Electrical &Plumbing), Interiors
etc & warehousing storage solutions) and construction with focussed approach. The
company has achieved a revenue growth of 290% as compared to previous year and has clocked
a profit growth of 618%.
The National Company Law Tribunal, Chennai Bench has vide its order
dated 14th June 2023 and received certified copy of Final Order dated 21st March 2023
sanctioned the Scheme of Arrangement amongst Renaissance Advanced Consultancy Limited
("RACL") and Renaissance Consultancy Services Limited ("RCSL") and
Renaissance Stocks Limited ("RSL") and Revathi Equipment Limited
("REL") ("the Company") and Semac Consultants Private Limited
("SCPL") and Renaissance Corporate Consultants Limited ("RCCL") with
effect from the appointed date of 1st April, 2022. The said order was filed with the
Registrar of Companies, Coimbatore on 10th July 2023 pursuant to which the Scheme has come
into effect. Accordingly, the financial statements for the year ended 31st March, 2023
have been presented giving effect to the said Scheme of Arrangement. As per the scheme:
• Renaissance Advanced Consultancy Limited (RACL) and Renaissance
Stocks Limited (RSL) has been merged with the Company.
• The Company has demerged its business of designing, engineering,
manufacturing and marketing of blast hole drills to Renaissance Corporate Consultants
Limited (now Revathi Equipment India Limited REIL).
• The business of Semac Consultants Private Limited (SCPL) has
been merged with the Company.
• Subsequently, the Company is renamed to "Semac Consultants
Limited (SCL)" and it shall continue the business of SCPL under the new name of Semac
Consultants Limited (SCL).
• Thereafter, as on 27th July 2023 the Company has received new
certificate of Incorporation pursuant to name change from Revathi Equipment Limited (REL)
to Semac Consultants Limited (SCL) as per the Rule 29 of the Companies (Incorporation)
Rules, 2014.
• The financial statements for the year ended 31st March, 2023
have been presented giving effect to the said Scheme of Arrangement.
B. SWOT ANALYSIS STRENGTHS AND WEAKNESS-
| Strengths |
WEAKNESS |
| • TECHNICAL PROFICIENCY- SCLs efficiency in offering
high end designing and engineering solutions have enabled it to carve out a niche for
itself in domestic and international market. The Companys ability to provide cost
effective solutions to its clients facilitates them to improve their competitive
positioning, maximize assets and increase long term business success. Further, SCLs
capability in offering customized solutions helps it to differentiate itself from the
rest. The confluence of such factors results in securing repeat orders from its clients. |
Cyclical nature of business- Despite offering solutions and
services across various sectors, the Companys success is dependent upon the business
climate and health of the overall economy. Any slowdown in domestic or global business
environment might result in clients delaying or curtailing their expansion plan in turn
affecting the growth of our business. Rising unemployment rate in India |
| • SKILLED MANAGEMENT - A strong management team with
rich experience has been instrumental in guiding the Company through the most challenging
and difficult times for the EPC Industry. The Company is well supported by its Board of
directors, who have helped the management to take certain strategic decisions to ensure
that the growth and development of the business of the Company is maintained. |
Financial Position - Companys financial strength is impacted
by external environment. The promoters have also periodically supported the Company
financially. As the cash flows improve, its ability to compete for business will be
enhanced. |
D. OPPORTUNITY AND THREAT-
| Opportunities |
Threats |
| • Governments push for infrastructure development and
domestic manufacturing through schemes and concessions. |
• Rising unemployment rate in India |
| • Focus of Companies to increase production and
warehousing capacity to utilize Government initiatives such as Make in India, PLI
incentive scheme of the Government of India |
• Possibility of interest rate hikes by the Central Bank
to control inflation |
| Following an explosion in e-commerce, ancillary industries
such as packaging, warehousing and logistics are also driving demand for space managed
properties.^ |
• There are considerable procedural delays with respect
to Government approvals related to acquisition and use of land, environment approval, etc. |
|
• Stringent Environment and Conservation Laws may create
operational difficulties. |
E. SEGMENT - WISE PERFORMANCE
Engineering, Construction and Design Services is the segment of Semac
Consultants Limited (SCL) as a standalone company. The financial performance of the said
segment is more detailed in the audited standalone financial statements of the Company.
On a consolidated basis also, the company operates in one segment
namely, Engineering, Construction and Design Services. The financial performance of the
said segments is given in greater detail in the audited consolidated financial statements
of the Company.
I. Performance by Segment (Values in Lakhs)
| Particulars |
2022-23 |
2021-22 |
Growth % |
| Engineering Design Services |
32,969.66 |
8,455.28 |
289.93% |
| Total |
32,969.66 |
8,455.28 |
289.93% |
| Less: Inter Segment Revenue |
0 |
0 |
|
| Total income from operations (net) |
32,969.66 |
8,455.28 |
289.93% |
II. Segment Results (Values in Lakhs)
| Particulars |
2022-23 |
2021-22 |
Growth % |
| Profit (+)/Loss (-) before interest and tax from the segment |
|
|
|
| Engineering Design Services |
2,827.83 |
154.98 |
1724.64% |
| Total |
2,827.77 |
154.98 |
1724.64% |
| Less:Interest |
48.09 |
45.03 |
6.80% |
| Profit/ (Loss) before tax & Profit / (Loss) of Associate |
2,779.74 |
109.95 |
2428.19% |
| Add: Profit / (Loss) of Associate |
(53.37) |
68.34 |
0 |
| Total Profit Before Tax |
2726.37 |
178.29 |
1429.18% |
F. RISKS, CONCERNS AND MATERIAL DEVELOPMENT:
The approval of the resolution plan and the new equity infusion will
allow the company to return to growth. Our clients have stood with us during the difficult
times and we should be able to leverage these relationships in the future. Diversification
of customers, industries as well as geographies has enabled . Semac Consultants Limited to
emerge as a capable EPC player. The Company is confident of further elevating its
performance given the improved prospects across the landscape for its customer industries
in India and overseas.
G. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
At Semac Consultants Limited, Internal Control serves as a fundamental
pillar of Corporate Governance. The Company has implemented an Internal Control mechanism
that aligns with its evolving needs. This mechanism operates through the ERP system and
incorporates effective Internal Controls to safeguard the Companys resources, ensure
operational efficiency, monitor systems, and comply with laws and regulations. There is an
efficient internal control system in operation in Semac Consultants Limited, which is
adequate and commensurate with the size and magnitude of operations. Internal Audit
functions directly under the control of Audit Committee. Semac Consultants Limited has an
internal system in place for all the operational and transactional activities to identify
problem areas and bring the same before the Board of Directors for corrective measures.
All the department functions in Semac Consultants Limited are aligned
with the objectives of the internal control systems. The internal audit plays a crucial
role as far as corporate governance is concerned. The reports of the internal auditors are
placed before the Audit Committee of Semac Consultants Limited for discussion. The
decisions arising from the discussion are properly addressed and tracked through
"action taken reports". The Audit committee members have direct discussion with
the internal auditors to ascertain the scope of audit, the efficacy of the audit process
and its effectiveness, and concerns if any arising out of the audit carried out.
H. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE:
The following are the summary of consolidated results of operations,
break up of expenditures and cash flows of your company. RESULTS OF OPERATIONS:
Results of Operations: (Values in Lakhs)
| Particulars |
2022-23 |
2021-22 |
Growth % |
| Revenue from operations |
32,505.60 |
7,959.53 |
308.39% |
| Other Income |
464.05 |
495.75 |
-6.39% |
| Total Income |
32,969.66 |
8,455.28 |
289.93% |
Break up of major heads of Expenditures:
| Particulars |
2022-23 |
2021-22 |
Growth |
|
|
|
|
Absolute |
% |
| Cost of Services |
24,113.08 |
2,960.02 |
21,153.06 |
714.63% |
| Employee benefit expense |
3,933.15 |
3,267.23 |
665.92 |
20.38% |
| Finance Cost |
119.05 |
93.53 |
25.52 |
27.28% |
| Depreciation/Impairment |
203.31 |
151.09 |
52.22 |
34.56% |
| Other expenses |
1,874.69 |
1,805.12 |
69.57 |
3.85% |
| Profit / (loss) before tax |
2726.37 |
178.29 |
2548.08 |
1429.21% |
| Total Comprehensive Income after tax |
2002.87 |
278.82 |
1724.05 |
618.34% |
During the year under review, the revenue from operations increased to
Rs. 32,505.60 lakhs as compared to Rs. 7,959.53 lakhs in the previous year which is
308.39% growth YOY. Though the Company managed to restrict the cost of services incurred
during the year, Company is focusing only on the design build segment and we hired the
good talent which is tends to increase in employee cost. Other Expenses is aligned as
compared to last year. All other items of expenses are in line with the companys activity
levels.
Despite the challenging business environment, the Company has continued
to be profitable during the year under review.
Cash Flows:
| Particulars |
31.03.2023 |
31.03.2022 |
| Opening Cash & Cash equivalents |
1,347.31 |
797.38 |
| Net cash from operating activities |
-14.48 |
1,876.83 |
| Net cash from investing activities |
-387.72 |
-673.22 |
| Net cash used in financing activities |
-237.76 |
-653.68 |
| Change in Cash and cash equivalents |
-639.96 |
549.93 |
| Closing cash & cash equivalents |
707.35 |
1,347.31 |
I. KEY FINANCIAL RATIOS:
| Disclosure of Ratios |
Numerator |
Denominator |
Year ended 31st March 2023 |
Year ended 31st March 2022 |
% Variance |
Reason for Variance |
| Current Ratio |
Current Assets |
Current Liabiltiies |
2.03 |
2.60 |
-21.65% |
|
| Debt-Equity Ratio |
Total Debt |
Shareholders Equity |
0.00 |
0.00 |
0.00% |
Good collection and Optimum utilisation of available
resources |
| Debt Service Coverage Ratio |
Earning Available for Debt Service |
Debt Service |
8.95 |
0.75 |
1098.13% |
Good inflow of cash and sufficient net operating income to
cover of annual debt payments |
| Return on Equity Ratio |
Net Profit after Tax |
Average Shareholders Equity |
0.19 |
0.03 |
439.37% |
Increase in business and optimisation of cost |
| Trade Receivables turnover ratio |
Net Credit Sales/ Net Annual Sales |
Average Accounts Receivables |
9.08 |
3.58 |
153.38% |
Substantial imporvements in collection post Covid Lockdown |
| Trade payables turnover ratio |
Cost of services |
Average Trade Payable |
11.87 |
3.19 |
272.47% |
Payment made in time and proportionate increase in ongoing
projects in DB |
| Disclosure of Ratios |
Numerator |
Denominator |
Year ended 31st March 2023 |
Year ended 31st March 2022 |
% Variance |
Reason for Variance |
| Net capital turnover ratio |
Net Credit Sales/ Net Annual Sales |
(Current Assets-Current Liabiltiies) |
3.52 |
1.12 |
214.57% |
Substantial improvement in business revenue post covid
lockdown |
| Net profit ratio |
Net Income/Net Profit |
Net Credit Sales/ Net Annual Sales |
0.06 |
0.03 |
91.39% |
Substantial improvement in business revenue &
Optimisation of cost post covid lockdown |
| Return on Capital employed |
EBIT |
Net Worth |
0.25 |
0.03 |
773.17% |
Substantial improvement in business revenue post covid
lockdown |
| Return on investment |
Income from Investments |
Average Invstment |
0.10 |
0.04 |
181.36% |
Substantial improvement in business revenue post covid
lockdown |
J. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS
FRONT:
Attracting, motivating, and retaining talent are crucial for Semacs
ongoing success, and the Company accomplishes this by implementing forward-thinking
policies, consistently investing in enhancing employees skills, and enabling them to
fulfil their maximum potential. The Company has demonstrated significant advancements in
enhancing its People Practices over the past few years, by creating a modern, inclusive,
and secure workplace. The manpower strength as on 31st March 2023 is 207 permanent
employees.
Material Development means a development that would have had a material
adverse effect or impact on the business front. When viewed from this point of view, Semac
Consultants Limited continues to function at its optimum level with little or no impact in
HR. Semac Consultants Limited has been able to retain its talents all through the year to
meet its business targets and performance.
| As on |
Executive |
Non-Executive |
Total |
| 31.03.2023 |
89 |
118 |
207 |
| 31.03.2022 |
92 |
124 |
216 |
Material Developments in Human Resources: Development of Human Resource
is one of the important objectives of Semac Consultants Limited for long term economic
growth. Human Resource Development is the integrated use of training and development,
organizational development, career development to improve individual group and
organizational effectiveness.
The Human Resource Development climate of Semac Consultants Limited
plays a very important role in ensuring the competency, motivation and development of our
employees and helps to provide learning related with goals of organization. It influences
morale and the attitudes of the individual towards his / her work and work environment.
Semac Consultants Limited is continuously providing training and
development opportunities to its employees in all levels including management trainees. In
addition, company also arranges external training programs.
Industrial Relations front: Industrial Relations in our company
continue to be highly cordial and harmonious. The participative way of functioning of
management facilitates settling the disputes / grievances amicably through discussions,
which in turn has resulted in maintaining over all healthy ethos of relationship in Semac
Consultants Limited.
Semac Consultnats Limited is committed to maintaining healthy
industrial relations which in turn helps in creating an atmosphere of industrial peace and
harmony, which is necessary for better management, high productivity as well as growth of
Semac Consultants Limited.
CAUTIONARY NOTE
Certain statements in "Management Discussions and Analysis"
section may be forward looking and are stated as required by law and regulations. Many
factors, both external and internal, may affect the actual results which could be
different from what the directors envisage in terms of performance and outlook.
| Date: 29th August 2023 |
By Order of the Board For Semac Consultants
Limited Abhishek Dalmia |
| Place: New Delhi |
Chairman & Managing Director |
|
DIN: 00011958 |
+91-9892691696
