Rudrabhishek Enterprises Ltd Management Discussions.

COMPANY IN BRIEF

Rudrabhishek Enterprises Limited (REPL) is Integrated Urban Development & Infrastructure Consultants, with a legacy of over 25 Years. Our business is Infrastructure and Real Estate Consultancy, Urban planning, Building designing, Structural designing, Services designing, Project Management Consultancy, Geographic Information System (GIS). We integrate a diverse range of services to deliver end-to-end consultancy in diverse sectors which includes Viability Analysis, Infrastructure Services, Urban Planning & GIS, Building Area & Design, Structural Design, Services Design (MEP), Project Management Consultancy (PMC), and Strategic Marketing Advisory etc. through our subsidiaries and group companies. REPL group is uniquely positioned to manage projects right from the ideation stage and carry it through planning, designing, execution and marketing. We can take up a green-field or brown-field project and convert it into an integrated Hi-tech Township, Smart City, IT Park or SEZ. We have designed and managed complex projects in sectors such as Real Estate (Residential, Commercial, Group Housing & Integrated Township projects), Retail (Malls & Office Complexes), Hospitality & Healthcare, Recreation (Sports Stadium, Clubs), Water Sanitation & Environment, Solid Waste Management, Hi-Tech Cities, Smart Cities etc., just to name a few. The group is intensively involved in Smart City Mission of Government of India and are actively providing consultancy in conceptualization, planning and implementation of multiple smart cities viz., Varanasi (U.P.), Indore (M.P.), Kanpur (U.P) and Dehradun (Uttrakhand) Today, the Group has many subsidiary Companies for providing focused solutions, which includes Rudrabhishek Infosystem Pvt. Ltd. (RIPL), IM + Capitals, REPL Singapore Pvt. Ltd. (RSPL) and Shing Design Atelier (SDA), Singapore. REPL derives strength from its in-house team of qualified and experienced financial analysts, engineers, urban planners, building design experts, GIS experts and project managers. We have made crucial strategic partnerships with reputed firms having complimentary skill-set, to provide inclusive services to our clientele. REPL is an ISO 9001:2008 certified organization empaneled with more than 30 government department & agencies. The Group has the privilege of serving a number of esteemed clients from Government, Public and Private sectors. We handle pan India projects from our branch offices located at Delhi, Noida & Lucknow; and project offices at Varanasi, Indore & Kanpur. For catering to clients from S.E. Asia region, we have office of RSPL in Singapore.

Seeing the continuous growth and future prospects, our company was converted into Public Limited Company on 03rd November 2017 and it also got itself listed with the Emerge platform of National Stock Exchange of India (NSE- SME Sector) on this 13th July 2018.

GLOBAL ECONOMIC OVERVIEW

According to "World Economic Forum" "Every dollar spent on Infrastructure Development generates an economic revenue of 5% to 25%", this accounts for rapid growth. The investment in this sector is expected to rise to US$ 130 billion world-wide. In keeping pace with rising economic activity and shifting demographic trends on infrastructure spending will largely be driven by Emerging Economies in comparison to Developed Economies. The growing urbanization in developing countries like India, China, Indonesia and Nigeria will greatly help in boosting Global Infrastructure Investment to rise to i n f r a s t r u c t u r the $130 billion development. With increase in infrastructure spending, comes demand for financing, which is also expected to increase with increase in new projects, as large capital funds will be available for investment. Many financially constrained economies have established public-private partnership models for avoiding

"Infrastructure spending to be the risk of running short of funds. led by Emerging Economies"

Many developing economies also provide opportunities to foreign investors and financing agencies to finance large projects. Governments float many infrastructure tenders which are open for foreign participation. Larger spending coming from developing countries has led to geographical shift of opportunities. Technological advancement is also another factor driving growth which is not only changing the nature of investment but also speed and efficiency. Today, aspirations of smart and resilient infrastructure are driving the way new infrastructure will be developed in cities.

INDIAN ECONOMIC OVERVIEW

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government of India for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Banks Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries. Fast development of the country is rated by the infrastructure development of the country. This sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. The Ministry of Road Transport and Highways, and Shipping, has announced the governments target of Rs 25 trillion (US$ 376.53 billion) investment in infrastructure over a period of three years, which will include Rs 8 trillion (US$ 120.49 billion) for developing 27 industrial clusters and an additional Rs 5 trillion (US$ 75.30 billion) for road, railway and port connectivity projects. The Government of India has made a record allocation of Rs 221,246 crore (US$ 33.07 billion) for several infrastructure projects in Union Budget 2016-17, which is expected to provide significant boost to Indian infrastructure sector. Increased impetus to develop infrastructure in the country is attracting both domestic and international players. Private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications to power and airports. In order to boost the construction of buildings in the country, the Government of India has decided to come up with a single window clearance facility to accord speedy approval of construction projects. Indian infrastructure sector witnessed 91 M&A deals worth US$ 5.4 billion in 2017. Private equity and venture capital (PE/VC) investments in the sector reached US$ 3.3 billion with 25 deals during January-May 2018.

Indian Economy Growth can be ascertained from various government announcement and related data as given below:

• Value of total roads and bridges infrastructure in India is estimated to have expanded at a CAGR of 13.6 per cent over FY09–17 to US$ 19.2 billion

• In Union Budget 2018-19, Rs 71,000 crore (US$ 10.97 billion) was allocated for national highways while Rs 19,000 crore (US$ 2.94 billion) was allocated to Pradhan Mantri Gram Sadak Yojana (PMGSY) for development of roads in rural and backward areas of the country.

• Highway network in the country is expected to cover 50,0000 km by 2019. National highway construction in India increased by 20 per cent year-on-year in 2017-18.

In December 2017, the National Highway Authority of India (NHAI) created the National Highways Investment Promotion Cell (NHIPC) to attract foreign and domestic investments towards highway projects in India.

GOVERNMENT OF INDIA INITIATIVES

India is one of the most rapidly growing economies, with a per capita GDP growth estimates at 8.5 % CAGR (CY 2015 to CY 2021). Together with the growing population and trends of increasing urbanization, this is expected to translate into increasing infrastructure demand. Extrapolating Indias position, we believe there is significant infrastructural demand potential in the country. This enormous economic growth potential in the country, coupled with the vast, untapped and underexplored resources, provides massive opportunity. This growth story is backed by a strong Government push for Infrastructure development with high budgetary allocations. Several supportive regulatory reforms have been initiated by the GOI. The Indian economy is booming, with rates of Gross Domestic Product (GDP) growth exceeding 8% every year since 2003/04. This ongoing growth is due to rapidly developing services and manufacturing sectors, increasing consumer demand (largely driven by increased spending by Indias middle class) and government commitments to rejuvenate the agricultural sector and improve the economic conditions of Indias rural population. Foreign Direct Investment (FDI) received in Construction Development sector (townships, housing, built up infrastructure and construction development projects) from April 2000 to December 2017 stood at US$ 24.67 billion, according to the Department of Industrial Policy and Promotion (DIPP). Further, In January 2018, the National Investment and Infrastructure Fund (NIIF) partnered with UAE-based DP World to create a platform that will mobilize investments worth US$ 3 billion into ports, terminals, transportation, and logistics businesses in India.

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport, prior to the general elections in 2019. The Government of India is working to ensure a good living habitat for the poor in the country and has launched new flagship urban missions like the Pradhan Mantri Awas Yojana (Urban), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Swachh Bharat Mission (Urban) under the urban habitat model.

INDUSTRY STRUCTURE, DEVELOPMENT & OUTLOOK

Infrastructure is the main priority of Indian Government currently. The development of infrastructure today is the main tool to achieving GDP growth targets. The sector needs huge finances and massive funding. Indian economy is big and getting bigger. Liberal and supportive Government policies coupled with deliberate strategies to promote infrastructure spells great opportunities for engineering and construction (E&C) companies in India. Major infrastructure development requires a substantial in_ux of investment capital. The policies of the Indian Government seek to encourage investments in domestic infrastructure from both local and foreign private capital. The country is already a hot destination for foreign investors. As per the World Investment Report of the UNCTAD, India was rated the second most attractive location (after China) for global FDI in 2007. Currently, India has FDI of about US$21 billion per year, well below the targeted US$30 billion. In order to increase FDI inflows, particularly with a view to catalyzing investment and enhancing infrastructure, the Indian Government has introduced significant policy reforms. For example, it now permits 100% FDI under the automatic route for a broad range of sectors, only certain post investment intimation is required. For FDI in a few sectors, a prior approval is required, which takes around 6-8 weeks. As part of policy reforms, the Indian Government is constantly simplifying the approval route process, including setting up several agencies to expedite FDI approval. Further liberalization is expected as the Government continues to emphasize infrastructure investment.

In order to promote the construction sector, the Indian Government has relaxed some of the exchange control restrictions and is now allowing foreign nationals/ citizens to acquire immovable property in India, subject to certain conditions and procedures. Whilst the need for greater infrastructure investment is clear, equally important is the need to sustainably manage such investments. The Indian Governments success in infrastructure provision will be measured not only by the quantum of funds invested, but on how infrastructure contributes to the achievement of Indias economic, social and environmental objectives. Importantly, infrastructure investment should be considered as a means to an end, not an end in itself.

GOVERNMENT INITIATIVES FOR SERVICE, INFRASTRUCTURE, REAL ESTATE SECTOR

In Union Budget 2018-19, Govt. of India announced massive push to the infrastructure sector by allocating Rs 5.97 lakh crore (US$ 92.22 billion) while Indian Railways received the highest ever budgetary allocation of Rs 1.48 trillion (US$ 22.86 billion). The 90 smart cities shortlisted by the Government of India have proposed projects with investments of Rs 191,155 crore (US$ 30.02 billion) which include Projects Focusing on Revamping an Identified Area (Area Based Projects) with investment of Rs 152,500 crore (US$ 23.95 billion). The Government of India is working to ensure a good living habitat for the poor in the country and has launched new flagship urban missions like the Pradhan Mantri Awas Yojana (Urban), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Swachh Bharat Mission (Urban) under the urban habitat model.

In February 2018, creation of National Urban Housing Fund was approved with an outlay of Rs 60,000 crore (US$ 9.27 billion). Under the Pradhan Mantri Awas Yojana (PMAY) Urban 1,427,486 houses have been sanctioned in 2017-18. In March 2018, construction of additional 3,21,567 a_ordable houses was sanctioned under the scheme. Under the Mid-Term Review of Foreign Trade Policy (2015-20), the Central Government increased incentives provided under Services Exports from India Scheme (SEIS) by two per cent. SEIS is aimed at promoting export of services from India by providing duty scrip credit for eligible exports. Under this scheme, a reward of 3 to 5 per cent of net foreign exchange earned is given for Mode 1 and Mode 2 services. In the Midterm review of FTP* 2015-20, SEIS incentives to notified services were increased by 2 per cent. The Union Budget 2018 reflects governments focused vision for boosting agricultural and rural economy and the infrastructure spending through the public exchequer, while encouraging greater involvement of private sector participants. The Governments focus has not only been on ‘Ease of Doing Business but the announcement to build 1 crore houses by 2019 in rural areas under the mission ‘Housing for All by 2022 has shown governments focus. The ambitious Bharatmala Pariyojana with an estimated cost of Rs 5.35 lakh crore has been approved. The railways capital expenditure for the fiscal year 2018-19 has been proposed at Rs 1.48 lakh crore. The

Source: Report of the Technical Group on Urban Housing Shortage 2012-17, GOI

government stated that additional 3.7 million homes will be built in urban areas in 2018-19, and 5.1 million homes in rural areas. These initiatives will create job opportunities and facilitate generation of employment. India will require around $4.5 trillion in the next 25 years for infrastructure development, of which it will be able to garner about $3.9 trillion, according to the Economic Survey. Hence, India to realize its infrastructure dreams, the government must revisit public–private partnership (PPP) models and re-instate confidence into the private sector, whichs lagging at this point of time. Moreover, the Government of India has also released nearly Rs 9,940 crore to the states so far for the Smart Cities Mission, with Maharashtra accounting for the highest amount of Rs 1,378 crore, followed by Madhya Pradesh getting Rs 984 crore. The total proposed investment in these cities was Rs 2.03 lakh crores.

OPPORTUNITIES AND THREATS

The infrastructure industry in India has traditionally been a major driving force towards the economys growth, contributing to 5% of

Indias GDP and continues to be a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Banks Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries. With continuous strengthening and strategizing itself over the years, the Companys business expects to make the best of the opportunities by diversifying its operations in related Infrastructure Sub-sectors like Roads & Bridges, Highways, Ports, etc. India is estimated to spend Rs. 31 trillion on infrastructure development in the next 5 years. The magnitude of growth can be ascertained by the fact that the government itself wishes to inject more than Rs. 25 trillion into the infrastructure market in the next 3 years. The government plans to build a home for every Indian by 2022 through different schemes and magnitude measure. The Government is also working to ensure a good living habitat for the poor in the country and has launched new flagship urban missions like the Pradhan Mantri Awas Yojana (Urban), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Swachh Bharat Mission (Urban) under the urban habitat model. The company, thus, has vast scope for getting more integrated PMC projects from government & large EPC assignments from Private sector as well.

Apart from the opportunities, like every industry our business is also not free from the threats which may hamper the growth story. We are engaged into the services of Infrastructure and Real Estate Consultancy, Urban planning, building designing, Structural designing, Service designing, Project Management Consultancy, Geographic Information System (GIS). Some of the projects undertaken by us are given by Government Authorities / Government departments. It may be possible that we may not be able to meet quality standards, completion of projects within scheduled time period etc., for any of the reasons which will affect our financial loss, business loss, receiving of warning letters, imposing of fines or penalties, which could harm our business. Also, failure to comply with quality requirements may lead to disqualification for bidding for future projects or could lead to cancellation of contracts which may have a material adverse effect on our business and revenue. Apart from this, some of our projects are given by Government authorities, the contracts awarded by Government authorities are tender based and it may be possible we are not qualified or are not amongst the lowest bidders, we would be in position to lose the project. We cannot assure that every times the bids submitted by us would be accepted / awarded; therefore our ability to procure the contracts by bidding at the lowest rates is crucial for our revenues.

FINANCIAL AND OPERATIONAL REVIEW

FINANCIAL HIGHLIGHTS FOR FINANCIAL YEAR 2017-18

Particulars 2017-18
Revenue from Operations 384,234,428
Other Income 12,476,281
Total Revenue 396,710,710

 

Total Expenses (322,066,426)
Profit before Tax 74,644,284
Tax Expenses
- Current tax (21,626,000)
- Deferred tax asset/liability 398,698
Profit After Tax for the year 52,619,586

INTERNAL CONTROL SYSTEM & ITS ADEQUACY

Legal and ethical Business has always been a core component of our principles. To ensure the adequacy and efficiency of the various operations, REPL Group has a comprehensive internal control system equipped with qualified and experienced personnel in various departments including Finance, Accounts, Administration, Technical and Corporate affairs. The entire mechanism is constructed and operated under the vision and guidance of Audit Committee and Board of Directors making the entire process an independent, objective and reasonable mechanism brining the adequacy and effectiveness of the organizations risk management, control and governance processes.

The Internal Control Systems ensures smooth corporate functioning and quality management within the company. Each and every transaction are duly authorized, recorded and reported. The company has put in place well defined delegation of power with authority, limits for approving revenue as well as capital expenditure. Processes for creating and reviewing the annual and long-term business plans have been laid down. The Internal audit is carried out based on internal audit plan, which is reviewed each year in consultation with the Statutory Auditors and the Audit Committee. The Internal Audit process is designed to review the internal control checks in the system and covers all significant areas of the Companys operations such as Sales, Purchases, Inventory, Debtors, Creditors, Fixed Assets and legal compliances.

RISKS & CONCERNS

Service sector is highly fragmented and competitive and increased competitive pressure may adversely affect the financial results. We are engaged into the services of Infrastructure and Real Estate Consultancy, Urban planning, Building designing, Structural designing, Project Management Consultancy and we are using the softwares and applications to make projects successful. It may be possible to make changes in softwares and applications after a period due to technological advancements, data security which may cause increment in cost for adequate changes in softwares and applications. Modernization and technology upgradation is essential to reduce costs and increase the output. Changes in technology may render our current technologies obsolete or require us to make substantial capital investments. Presently we are using softwares for designing, mapping etc. with the latest technological standards however in future we may be required to implement new technology or upgrade the software and other equipments employed by us. Further, the costs in upgrading our technology and modernizing the software may be significant which could substantially affect our finances and operations. Also, the cost of implementing new process as well as R & D would require substantial new capital expenditures and could adversely affect our business, prospects, results of operations and financial condition. At present your company has no reportable business Segment. Business conditions continue to be challenging any change in the tax regime, financial policies and regulations by Central as well as State Government, political instability at the Central or State level may affect the financial position of the company. Business growth will depend on Global and Indian economy. The growth of the Company subject to opportunities and threats as are applicable to industry from time to time.

HUMAN RESOURCES

Our Company has maintained the momentum during the year implementing Human Resource practices for effective staffng, retention, training and staff development facilitating delivery excellence for our clients. REPLs people centric focus and adopting a strategy for development of Human Resource through providing an open and motivating work environment, fostering continuous improvement and development has helped recruiting the best talents, providing challenging goals and by creating a culture for learning and growth to several employees during the year. REPL recognizes people as the primary source of its competitiveness and continues to focus on people development by leveraging technology and developing a continuously learning human resource base to unleash their potential and fulfill their aspirations therefore the relationship climate in REPL remained harmonious and peaceful during the year. The

Company has been taking initiatives for harnessing the inherent strengths of its employees and for continuous improvement in work culture and operating & maintenance practices. Presently your company employs 175 employees.

A. CAUTIONARY STATEMENT

The Statement in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning, if applicable, of securities laws and regulations.

Although we believe our expectations are based on reasonable assumptions, these forward looking statements may be influenced by numerous risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed or implied. Important factors that could influence the companys operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in government regulations, tax laws and other factors such as litigation. The company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the basis of subsequent development, information or events and holds no obligation to update these in the future.

BY ORDER OF THE BOARD OF DIRECTORS
Date: 31/08/2018 (Pradeep Misra)
Place: New Delhi Chairman & Managing Director
DIN: 01386739