salasar techno engineering ltd Management discussions

COMPANY OVERVIEW

Founded in the year 2007, Salasar Techno Engineering is one of the leaders in the Indian market for advanced steel fabrication and infrastructural solutions. The Companys expertise lies in Telecommunication Towers, Transmission Towers, Railway Towers and Substation Structures, and Solar Module Mounting Structures and heavy steel structures. The Company offers overarching solutions inclusive of engineering, designing, fabrication, galvanizing, and deploying of products. The Companys diverse product portfolio incorporates Telecommunication Towers, Power Transmission Line Towers, Railway Towers, Smart Lighting Poles, Monopoles, Guard Rails, Substation Structures, Solar Module Mounting Structures. Additionally, we provide Customized Galvanized and Non-galvanized Heavy Steel Structures such as Bridges and Heavy Industrial Structure. Alongside this, the Company also deliver extensive engineering, procurement, and control services (EPC) for projects. These services are integral to several sectors and projects such as rural electrification, Railway OHE power transmission lines, and solar power plants.

The Company possess 3 manufacturing facilities with a total capacity of 1,15,000 MTPA. These facilities are packed with the latest technology, in-house designs certified by the esteemed Indian Institute of Technology (IIT), along with the proven "Ramboll" designs and tools that augment the proficiency and quality offering by the Company. Today the Company is catering to more than 600 clients not only on a pan India basis but also at 25 countries across the globe. The Companys team comprises of supremely skilled professionals committed to delivering projects within committed timelines and budgets. Today, the Company quest for perfection in its offering has made it achieve a zero-defect production record and with a record fastest delivery times.

GLOBAL ECONOMY

In 2022, the global economy witnessed a slowdown, marked by a significant surge in inflation. This slowdown stemmed from a combination of factors, including geopolitical uncertainties, supply chain disruptions, and the enduring effects of the COVID-19 pandemic.

Albeit facing the peak of inflationary pressure, global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, still above pre-pandemic (2017-19) levels of about 3.5%. The balance of risks remains tilted to the downside, but adverse risks have moderated since October 2022. With this, the global economy also took a positive turn early in the year. Inflationary pressures began to ease, with global energy prices back at levels last seen prior to the invasion of Ukraine. In addition, base effects from the rise in energy prices following the invasion are now coming off, putting further downward pressure on inflation for the rest of this year. Prices of other commodities as well as global food prices have also eased. This moderating effect is a result of the measures undertaken by the major central banks worldwide. For instance, the Federal Reserve raised interest rates to control inflation in the US, projecting a peak rate of 5.75% (Source: KPMG). Similar actions were taken by the Bank of England, the European Central Bank and the Reserve Bank of India, which have resulted in tighter financial conditions in these economies. Although these actions have led to a slower economic growth, the intended outcome of cooling inflation has been realized. This is expected to ease some of the challenges faced previously and provide some respite to the global economy.

Outlook

According to the International Monetary Fund (IMF), global growth is projected to fall from an estimated 3.5% in 2022 to 3% in both 2023 and 2024. Recent tensions in the banking system, which were triggered by the collapse of Silicon Valley Bank and Signature Bank in the U.S. could have complicated matters for central banks, but the recent resolution of the US debt ceiling standoff and, earlier this year, strong action by authorities to contain turbulence in US and Swiss banking reduced the immediate risks of financial sector turmoil. Nevertheless, some positive growth momentum is expected this year from the relatively smooth reopening of the Chinese economy following the lifting of Covid-19 related restrictions in December last year. The pressure on global supply chains has eased significantly in recent months, while shipping costs have dropped too. This should help alleviate some inflationary pressures and improve supply capacity. Consumer demand is also expected to pick up this year, with excess savings – money saved during the pandemic when spending on certain services was not possible – still relatively high in China and Europe which could potentially be deployed once confidence returns.

INDIAN ECONOMY

The effects of the slowdown in global economic growth resulting from high inflation and the continuing war between Russia and Ukraine are seen to be impacting the finances of many nations. But in midst of all these, during FY 2022-23, the countrys nominal GDP growth is projected to be 7.0%. Certain demand indicators continue to bolster economic growth. For instance, the passenger vehicles sector reported record sales of 3.8 million in 2022. In addition, the year also saw robust growth in tractor sales and an increase in domestic air travel. The growth was driven by a combination of factors, including strong consumption, increased investment activity supported by government policies, and a push to enhance transport infrastructure, logistics, and the overall business ecosystem. These measures stimulated demand and private consumption, contributing to the countrys economic growth. Despite global economic challenges, India achieved a significant milestone by becoming the worlds fifth-largest economy with a nominal GDP of US$ 3.5 Trillion.

INDIA GROWTH PROJECTIONS

	2022	2023	2024
GDP	7.0	6.4	6.9
Inflation	6.5	5.3	4.4
Unemployment rate	7.5	6.0	5.4

(Source: Ministry of Statistics and Programme Implementation, CMIE, KPMG forecasts) Note: The years represent the April-March period, for instance, 2022 spans from April 2022 to March 2023.

Outlook

India to be one of the major beacons of growth in 2023, driven by strong domestic demand and government expenditure. The efforts of the Union Budget 2023-24 to improve the disposable income of taxpayers in the country is expected to boost consumption via an increase in discretionary spending. In addition, the strong capital expenditure push provided by the Union Budget, with an increased outlay of 37.4% in comparison to the fiscal year 2022-23, is expected to drive growth, investments, and job creation. The governments reduction of over 39,000 compliances and decriminalization of over 3,400 legal provisions will also foster the ease of doing business in the country. Strong credit growth and resilience in financial markets are further expected to create an environment that supports investments. A high unemployment rate, however, remains a concern for India. As per the RBI, inflation is projected at 6.5% for 2022-23 and 5.3% for 2023-24. A robust domestic demand and favourable government initiatives are expected to help India remain as one of the fastest growing major economies globally.

INDUSTRY OVERVIEW

TELECOM INDUSTRY Overview

The Telecom industry in India is the second largest in the world with a subscriber base of 1.17 bn as of September 2022 (wireless + wireline subscribers). India has an overall tele-density of 84.86%, of which, the tele-density of the rural market, which is largely untapped, stands at 58.01% while the tele-density of the urban market is 134.62%. According to the count of mobile towers provided on the Department of Telecommunications Dashboard, the four operators running the telecom network utilised 7.37 lakh towers and 23.7 lakh base stations as of November 2022. Since 2017, the country has seen approximately 45,000–55,000 year-on-year addition on the telecom tower side and 50,000–65,000 net adds on the BTS side. The Government of India, under the Union Budget 2023, has allocated Rs. 975.79 billion for the Department of Telecommunications. As per the Budget, Bharat Sanchar Nigam Limited (BSNL), which is expected to roll out 4G and

5G services during the current year, is expected to get Rs. 529.37 billion capital infusion from the government in 2023-24. The Government plans to set up one hundred labs for developing applications using 5G services in engineering institutions to realize a new range of opportunities, business models, and employment potential. The DoT is targeting a combination of 100% broadband connectivity in the villages, 55% fiberisation of mobile towers, average broadband speeds of 25 mbps and 30 lakh kms of optic fibre rollouts by December 2022. Broadband connections rose to 816 million in September 2022. By December 2024, DoT is looking at 70% fiberisation of towers, average broadband speeds of 50 Mbps and 50 lakh kms of optic fibre rollouts at a pan-India level. In the current budget, the government has also allocated Rs. 21.58 billion for optical fibre cable-based network for defence services and Rs. 7.16 billion for telecom projects in the north-eastern states.

The industrys exponential growth over the last few years is primarily driven by affordable tariffs, wider availability, roll-out of Mobile Number Portability (MNP), expanding 4G and 5G coverage, evolving consumption patterns of subscribers, Governments initiatives towards bolstering Indias domestic telecom manufacturing capacity, and a conducive regulatory environment.

Challenges

With providing infrastructural support and being the backbone of the communications sector, the telecom tower industry faces challenges such as restricting the installation of towers in the residential or nearby residential areas due to distrusts regarding its effects on health, this sometimes leads to authorities taking disruptive actions by halting the operational sites, frequent fiber cuts, etc. the situation gets challenging with the reduction in the trained and skilled workforce which requires the technicians to climb the tower for maintenance purposes. Also, the prolonged weakness in the credit profile of some telecom service providers has resulted in the working capital cycle of tower companies stretching, impacting the liquidity profile of the downstream tower manufacturers and EPC players in the industry.

Outlook

Today, with data growth and the launch of next gen 5G technology taking center stage, plenty of new opportunities are arising for tower companies due to shift of attention by leading telcos and towercos from a macro tower focused business, towards new business models hinged on fiber, small cells, data centers, Wi-Fi, smart cities and beyond. Also the Bharat 6G vision document aims to facilitate R&D, design and development of 6G technologies by Indian start-ups and enable India to become a leading global supplier of IP, products and solutions for affordable 6G telecom solutions. Thus on back of these domestic prospects, the next decade holds exciting new prospects for tower manufacturing and EPC players.

Company overview

The Company is operating in the telecommunications towers sector for over a decade, providing exceptional telecommunication towers designed to international standards. Alongside this, the Company also provide Towers & Poles, smart city tech solutions, portable towers, and various other accessories. The Companys technical collaboration with Danish design giant Ramboll along with its prowess in EPC, guarantees state-of-the-art Monopoles capable of enduring all types of soil and wind conditions. As testament to the capabilities of the Company, it has manufactured over 50,000 towers since its inception.

POWER TRANSMISSION AND DISTRIBUTION INDUSTRY Overview

Indias power transmission market is a crucial component of the countrys energy sector, which is growing rapidly to meet the rising electricity demand. The countrys transmission system plays an important role in supply of power to the consumers through the vital link between the generating stations and the distribution system. The energy resources like coal, hydro and renewable have a skewed distribution in the country This skewed distribution of resources necessitated development of robust transmission system including establishment of inter-regional corridors for seamless transfer of power from surplus to deficit regions/areas. In this process, it enables access to power generation from anywhere in the country to various consumer spread throughout the country. The progressive integration of regional grids started in 1992, and on 31st December 2013, our country achieved ‘ONE NATION-ONE GRID-ONE FREQUENCY with synchronous interconnection of Southern Region Grid with rest of the Indian Grid with the commissioning of 765kV Raichur-Solapur Transmission line. The Central Government has given emphasis to have congestion free transmission network, so that there is no constraint in flow of power from surplus region to deficit region. Accordingly, transmission system in the country has been continuously strengthened with addition of transmission lines and inter-regional capacity. During FY 22-23 the country added 14,625 ckm of transmission lines and added 75,902 MVA in its transformation capacity. With this the country has become one of the largest synchronous interconnected electricity grids in the world with 4,71,817 ckm of transmission line and 11,85,058 MVA of transformation capacity (as on Apr23). Besides, the countrys inter-regional capacity also increased by whopping 212% to 1,12,250 MW since 2014.The above transmission capacity addition has benefitted in development of power sector in the country.

With the greater focus on the transmission sector, the importance of critical infrastr ucture in this space has become even more significant, particularly with regard to lines/cables and towers. In dia has emerged as the second largest transmission market after China. India ac counts for 15% of the global transmission tower market. Further, In-dia will be consuming 1.8 trillion units by 2025. The Central Governments vision of a $5 trillion economy will require an estimated investment of Rs. 5 trillion in the transmission sector over the next few years. As per the National Infrastructure Pipeline, a capital expenditure of Rs. 3,040 billion is expected in the transmission segment from 2020 to 2025. The transmission tower market exceeded $17 billion in 2021 and is expected to grow over a compound annual growth rate (CAGR) of 4% from 2022 to 2028 (Source: Global Market Insights). Furthermore, the market size valuation is expected to reach $24 billion by 2028. There have been significant improvements in transmission tower designs and these developments have reduced the RoW requirement, minimised the visual impact, enabled faster execution and provided ease of installation. With new designs it has become easier to expand the transmission network to remote areas. There have been significant improvements in transmission tower designs and these developments have reduced the RoW requirement, minimised the visual impact, enabled faster execution and provided ease of installation. With new designs it has become easier to expand the transmission network to remote areas.

Challenges

Critical transmission projects are not simple to commission. In India, it is hard to acquire land and to secure rights-of-way (ROW) for a transmission projects. It is getting equally difficult to negotiate new corridors in metropolitan areas and densely populated cities. Thus, most of the transmission tower projects and EHV sub-stations projects in India are grossly delayed.

The industry ascribes the cause of these delays to the necessity of extensive co-ordination and co-operation between various stakeholders like state owned companies, individual landowners and contractors. This leads to stand-offs on critical issues like ROW (right of way), design, land acquisition, environmental approvals etc. and consequently to unpredictable time overruns.

Outlook

The expansion potential in the transmission sector is chiefly fueled by an increased focus on grid reliability and the development of new urban and rural power grids resulting from urbanization and rural electrification. In addition, the renewable energy sector will create new opportunities for the transmission sector, contributing to rising demand for transmission towers in upcoming years. Given the large distances between energy generation sites and consumers, especially in remote areas, there will be substantial requirements for transmission lines and substations infrastructure. Growth in the transmission tower market correlates directly with the expansion of transmission lines nationally. Therefore, factors such as growing energy demand, the need to replace worn-out infrastructure, and the establishment of new transmission and distribution infrastructure, are anticipated to propel the transmission tower markets growth. However, varying raw material prices, especially steel, and export and import restrictions may hinder the future potential of this market.

Company overview

Being a leader in Transmission & Distribution Line Towers, the Company manufactures various categories of such towers approved by PGCIL and other power utilities and corporations, with long durability, aesthetic design, and excellent functionality. The Company also manufactures and source components as required for the installation of sub-stations and are also experienced at planning, and carrying out turnkey projects in any terrain and geographical condition. Additionally, the Company also manufactures Monopoles for overhead DC/AC transmission lines.

RAILWAY ELECTRIFICATION INDUSTRY Overview

The Indian Railways has committed itself to achieving 100% electrification, as a part of its goal of becoming a net zero carbon emitter before 2030. This is in tandem with the Indian governments stated mission of achieving Net Zero carbon emissions by 2070 as pledged to at the COP26 in Glasgow. On successfully completing this journey, the Indian Railways will achieve the remarkable feat of becoming the worlds largest green railway system. This large-scale effort is also in line with the United Nations Sustainable Development Goals which is an urgent and collaborative call for action by all countries. By modernizing its infrastructure and electrifying its lines, the railways are covering SDG 9 – which is a push towards building resilient infrastructure and fostering innovation. Further, this will help the Railways in substantially reducing their carbon emissions, tying it to SDG 13 which emphasizes the need to take urgent action to battle climate change and its adverse impacts. On average, the Indian Railways with track length spanning 126,366 km contains 7,335 stations operate 11,2831 trains daily and had transported 1512 MT of freight during 2022-23. Given that the operations are this widespread, the energy needs of the railways are also equally massive. As opposed to the high-emitting diesel engines, country-wide electrification would then introduce a more efficient and centralized power system. Indian Railways has planned to electrify a total of 28,810 km of broad-gauge route by December 2023. As of March 2023, 100% electrification has been completed in 14 states & UTs including Haryana, Uttrakhand, Meghalaya, and Uttar Pradesh. In line with the Centres seven priorities or Saptarshi, as called out during the Union Budget – a significant milestone was the completion of railway track electrification in the Union Territory of Jammu and Kashmir.

Challenges

Completely electrifying involves high capital costs that may be uneconomic on lightly trafficked routes, a relative lack of flexibility (since electric trains need third rails or overhead wires), and a vulnerability to power interruptions. As said earlier, electrification of the Indian Railways is a massive undertaking that requires significant financial resources. The cost of electrification is estimated to be around Rs. 12 Lakh Crores (approximately $162 billion). Securing funding for such a large-scale project is a significant challenge. Electrification of the Indian Railways requires the acquisition of land for laying down the electrical infrastructure, including overhead electrification lines and substations. The acquisition of land is a complex and time-consuming process in India.

Outlook

First and foremost, being able to achieve 100% Railway electrification in India would mean eliminating emissions of 7.5 million tonnes of CO2 equivalent each year, about the same as two coal power plants, according to the United Nations Environment Programme (UNEP). Further, electrification on such a large scale is bound to bring forth various cross-sectoral opportunities. Rolling stock companies, particularly electric locomotives will also benefit from this wide-scale transformation. With railway electrification, electric locomotives can draw power directly from the electric grid, resulting in lower operating costs. In 2024, the annual requirement for electricity to enable electrification will be approximately 30 billion units. This presents excellent opportunities for renewable power generation. Agreements for direct power purchases are also likely to go up with wind and solar power installations. With a strategic and coordinated approach, the electrification of the Indian Railways can transform the railway network into a world-class system that meets the demands of the 21st century.

Company Overview

The Company provide end-to-end solutions from designing the engineering plan to supply, erection, testing and commissioning of railway electrification projects including Overhead Equipment ("OHE") and Traction Sub Station ("TSS") installations. The Companys Railway Overhead Electrification structures are manufactured under expert guidance and strict quality control for top notch functionality and endurance and are approved by Central Organization for Railway Electrification (CORE).

RENEWABLE INDUSTRY Overview

India stands 4th globally in Renewable Energy Installed Capacity (including Large Hydro), 4th in Wind Power capacity & 4th in Solar Power capacity (as per REN21 Renewables 2022 Global Status Report).The country has set an enhanced target at the COP26 of 500 GW of non-fossil fuel-based energy by 2030. This has been a key pledge under the Panchamrit. This is the worlds largest expansion plan in renewable energy. The countrys installed non-fossil fuel capacity has increased 396% in the last 8.5 years and stands at more than 179.322 Giga Watts (including large Hydro and nuclear), about 43% of the countrys total capacity. The Country saw highest year-on-year growth in renewable energy additions of 9.83% in 2022.The installed solar energy capacity has increased by 24.4 times in the last 9 years and currently stands at 67.07 GW. The installed Renewable energy capacity (including large hydro) has increased by around 128 % since 2014. India has set a target to reduce the carbon intensity of the nations economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. India aims for 500 GW of renewable energy installed capacity by 2030 and aims to produce five million tonnes of green hydrogen by 2030. This will be supported by 125 GW of renewable energy capacity. 57 solar parks with an aggregate capacity of 39.28 GW have been approved domestically. The Government has also set an off-shore target of 30 GW by 2030 through Wind Energy.

Challenges

Fluctuations in sunlight levels and wind mean that supplies are less consistent than those derived from fossil fuel plants. Owners, therefore, require batteries to store energy for later. And to even out discrepancies in the energy supply. Another big challenge faced by the renewable energy sector is economics. Specifically, the financial issues involved in bringing renewable technologies and renewable energy to the masses. Over the last few years, investment in renewables has resulted in a surge of innovation and emerging technologies. But economic pressures do still stifle innovation. With these challenges for renewable energy in mind, it may seem difficult to foresee a future with clean energy. However, it is possible if the governments and organisations all take a collaborative approach then a pathway can be achieved through a transition to the clean energy.

Outlook

For the GDP growth to be sustainable and robust, there, clearly, is a need to install power plants to meet a heavy power requirement that ensues. And to balance GDP growth with environment, the need is to install renewable power plants. Therefore, to enhance energy security becomes renewable power plants. Therefore, to enhance energy security becomes a vital requirement for India. Given this, solar and wind come in as promising agents.

Company overview

The Company is passionately working towards creating a sustainable and environmentally-friendly future through the development of innovative green solutions. With over a decade of experience in the industry and a diverse client base, the Company now provides comprehensive solutions for wind and solar energy projects. Due to our commitment to delivering high-quality products and services, we have cultivated strong relationships with our clients and are contributing to creating a more sustainable future.

HEAVY STEEL STRUCTURE INDUSTRY Overview

Heavy Steel Structural segment Mainly includes Bridges, pre-engineered buildings and other Heavy Industrial Structure. Structural Steel Fabrication Market was valued at $ 6.111 Billion in 2020 and is projected to reach $ 9.78 Billion in 2028, growing at a CAGR of 5.36% from 2021 to 2028. The Indian structural steel market is expected witness significant growth during the forecast period, owing to factors, such as the increasing demand from manufacturing sector, the rising preference toward pre-engineered buildings and components, and government initiatives for infrastructure development activities. Additionally, the booming commercial building sector, along with Indian governments initiatives, such as increasing the construction of green buildings, smart cities, and make in India scheme, is expected to boost the structural steel fabrication market in India. Currently global manufacturing companies are focusing to diversify their production by setting-up low-cost plants in countries other than China, is expected to drive the Indias manufacturing sector to grow more than six times by 2025, to USD 1 trillion. Thus, this is driving the demand in the structural steel fabrication market in the country. Government initiatives, such as the construction of metro stations, new no frill airports, international terminals, industry corridors, power plants, and ports, require heavy steel structures. Also, in renewable energy generation like Wind and Nuclear Energy, structural steel finds its use. This is further increasing the demand of the market.

Challenges

Any expected increase in steel prices due to the increase in the price of coking coal (primary raw material used to manufacture steel) or any other raw material and the governmental regulations and restrictions on the manufacturing of steels to reduce adverse effects on the environment have been identified to be few of the major challenges faced by the structural steel fabrication market in India.

Outlook

After demolition, pre-engineered buildings and components, which are 90% recyclable, do not have a significant impact on the environment to that of wastages, like asphalt, concrete, brick, and dust. Further the expected infrastructure & industrial growth in coming years will increase demand of Rail Bridges and complex industrial structure. Thus, these factors are expected to drive the growth of the structural steel fabrication market in India and create a sustainable future.

Company overview

Structural steel is widely used in large-scale construction projects. The Company has set up a dedicated facility to contribute towards the development of national infrastructure powered by technology. The Company is also approved by the Research Designs and Standards Organisation (RDSO) and always relentlessly strives towards accelerating the pace of infrastructure development in India with its reliable and meticulously crafted heavy steel structures. Additionally, the Company incorporates new technologies to provide smart solutions for customized steel fabrication and infrastructural development in India. One of USP of the Companys Heavy Steel Structure comes through its manufacturing facility which complies to rigorous industry standards, and thus infrastructure built with its steel structures can are also poised to withstand adverse weather conditions; it requires low maintenance, and these structures also supports reuse and recycling.

OPERATIONAL AND FINANCIAL OVERVIEW

During the year, the Company received two orders from PVVNL for Development of Distribution Infrastructure for loss reduction worth Rs.75,000 Lakhs. During the year, the Company also Secured a Letter of Intent worth Rs.14,300 Lakhs From Nepal Electricity Authority (NEA) for procurement Of material, equipments, associated accessories, and necessary installation services including design, erection, testing, and commissioning of 33/11 KV substations and 33 KV, 11 KV, 400 V Line and Distribution System Network in Dang, Rukum East and Baitadi districts of Nepal. Currently, the Companys Order Book consists of work of various domestic and international EPC orders and manufacturing of various Poles, Monopoles, Telecom towers and Heavy Steel Structure worth Rs.1,52,200 Lakhs.

During the year, Revenue from Operations generated by the Company stood at Rs. 1,00,489.50 Lakhs registering a growth of 39.79%. This growth was led by an increase in demand for its diversified EPC solutions services and efficient execution of the order book. The Companys EBIDTA stood at Rs. 9181.20 Lakhs thereby registering a growth of 33.19%. During the year, the Company also achieved an EBIDTA margin of 9.14%, PAT margin of 4% and its Profit after Tax (PAT) stood at Rs. 4017.50 Lakhs.

Currently the Company is also setting up a new zinc plant at its existing Unit-3 with a total capex of around Rs. 5,000 Lakhs out of which Rs. 3,700 Lakhs are funded through term loans and rest is being funded through internal accruals. This expansion will be a two way benefit to the Company, firstly it will help in saving on account of more of zinc consumption and secondly the company will be able to manufacture the monopoles of up to 3 meter diameter (as of now company can only manufacture monopoles of up to 1.6 meter diameter) which are used in high KVA transmission line which will give additional revenue to the company. This expansion is expected to be completed in third quarter of FY2023.

During the year, Informerics Valuation and Rating Private Limited (IVR) has assigned Issuer rating of IVR A (Is) with a Stable outlook to the Company due to its established track record of operations and experienced management, diversified product portfolio and geographical presence, healthy order book, reputed clientele with low counterparty risk and improved financial risk profile and profitability.

Its brief financial performance of consolidated basis for 2022-23 is given below:

Particulars	Year ended March 31, 2023	Year ended March 31, 2022
Revenue from Operations	1,00,489.50	71,886.20
PBDIT	9,181.20	6,893.10
Interest and Financial Charges	3,156.10	2,181.00
Depreciation and amortization	795.00	709.70
Tax expenses	1,380.10	1,079.50
Net Profit	4,025.40	3,145.70

RISKS AND CONCERNS

The Company works predominantly in the Steel Fabrication, EPC services and Infrastructure construction services and has developed robust risk management processes. With widespread operations both domestically and internationally as well, the Company faces various risks, the long-term success of which largely depends on the existence of a robust risk identification and management system that helps identify and mitigate various risks. The Companys risk management framework works at various levels across the business. It reviews its systems periodically to ensure they are in line with current internal and external environments. Some of the enterprise-level risks identified by the Company and the mitigation measures being implemented are:

Economy Risk

A slowdown in the economy can potentially impact the growth of the Company.

Companys response:

Over the past few years, the Indian economy has been posting strong growth. India is the fastest-growing trillion-dollar economy and the fifth-largest with a nominal GDP of USD 3.5 trillion. India is poised to become the third-largest economy as per the ambitious vision laid down by the Prime Minister of India.

Business Risk

Infrastructure investment slowdown can lead to lower order intake and lower sales.

Companys response:

The companys strong presence across multiple geographical areas assists in mitigating the effects of a downturn in investments in any particular country or region. The Company has a notable domestic and international presence, where investments in infrastructure is regarded as one of the essential drivers for sustainable growth. Further, the Company has diversified its business portfolio to include manufacturing of transmission line towers including monopoles, telecom towers, railway electrification projects, heavy steel structure, all of which provide ample growth opportunities in the future. With more than Fifteen years of sectorial experience, the Company enjoys deep terrain familiarity. The Companys integration measures which includes fabrication and galvanisation has enhanced business competitiveness.

Foreign Currency Risk

Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company.

Companys response:

The Companys management has set a policy wherein exposure is identified, a benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. The policy also includes mandatory initial hedging requirements for exposure above a threshold.

Credit risk

The Companys customer profile include public sector enterprises, state owned companies and large private corporates. Accordingly, the Companys customer credit risk is low.

Companys response:

The Companys average project execution cycle is around 18 to 36 months. General payment terms include mobilisation advance, monthly progress payments with a credit period ranging from 45-90 days and certain retention money to be released at the end of the project. The Company has a detailed review mechanism of overdue customer receivables at various levels within the organisation to ensure proper attention and focus for realisation.

Execution risk

The Company faces execution challenges such as geological surprises, land acquisition, pending approvals and clearances from Government agencies, working in difficult weather conditions, manpower issues, etc.

Companys response:

The Company closely monitors the risks for each project and deploys suitable strategies to effect timely mitigation.

The board of directors at the company manages an extensive internal control system. This includes all company plans and policies designed to ensure smooth and effective business operations. The company demonstrates a firm commitment to an all-encompassing and robust risk management framework, reinforced by a carefully planned internal control system. This commitment is a key feature of the companys corporate culture and signifies a deep commitment to excellence and foresight. At the heart of this robust risk management strategy is the creation of a highly skilled internal audit committee, comprised of respected independent directors. This committee works diligently to maintain transparency and robustly protect the organization from any potential manipulations. The committee reports its findings to the board conscientiously, allowing stakeholders to make informed decisions in a constantly changing risk environment.

Complementing this structure, the Company conducts executive committee meetings at regular intervals, where visionary leaders collaborate harmoniously, and devising ingenious strategies to proactively mitigate emerging risks. This collective genius enables the Company to anticipate challenges, pre-empt threats, and navigate complexities with unparalleled acumen. The committees dedication extends to addressing compliance concerns, fortifying the Companys operational resilience. This commitment to ethics, responsible governance, and sagacious decision-making is woven into the fabric of the organization.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES At Salasar Techno Engineering Limited, the Company always take pride in upholding its diverse workforce of about 1,417 team members. The Companys diversified, harmonious work culture is nurtured by an open and transparent environment. The Companys recruitment, reward, and recognition procedures are all based on merit, which enables it to consistently attract and retain world-class talent. Today the Company place significant emphasis on promoting growth through continuous learning, and inspiring its employees to align their personal ambitions with the companys objectives. To ensure strong communication and engagement, even the top management regularly interacts with its global team through various communication sessions held throughout the year. This direct link between management and staff demonstrates its dedication to maintaining transparency within the organization.

The Company also encourages open dialogue within its organization via employee feedback. Strictly compliant with the highest standards of ethical, moral, and legal conduct in its business undertaking, the Company have a firm commitment to its moral values and standards. Moreover, the Company have also introduced a Whistle Blower Policy. This policy provides an accessible platform for the esteemed directors, staff, and stakeholders, allowing the reporting of any probable breaches of legal or regulatory standards, inaccuracies on financial reports, or other important issues. The Company also prioritise the safety and well-being of its employees. It conducts adequate trainings, workshops for the personal development of the employees, and also creates awareness programmes to prevent sexual harassment at the workplace.

CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and domestic demand supply conditions, finished goods prices, raw material cost and availability, changes in Government regulations, tax regimes, economic developments within India and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.