sanghvi movers ltd share price Management discussions


GLOBAL ECONOMY OVERVIEW

Right through 2022, the global economy faced several challenges including the Russia-Ukraine conflict, the resurgence of COVID-19 in China, fluctuations in commodity prices, and policy decisions by banking institutions, such as raising benchmark interest rates to control inflation. These macroeconomic factors caused significant fluctuations in the exchange rates of developing countries, resulting in an approximately 11 % depreciation throughout the year. Although the effects of the COVID-19 pandemic have eased, the impact of the Russia-Ukraine war on inflation continues. However, there are positive signs of recovery in the final quarter, with inflation easing and banks softening their stance on the matter.

The IMF World Economic Outlook has considered various factors that influence economic performance and has estimated a decline in the global growth rate from 3.4% in CY 2022 to 2.9% in CY 2023. The outlook highlights that advanced economies are likely to experience a significant reduction in growth, from 2.7% in CY 2022 to 1.2% in CY 2023. On the other hand, emerging markets and developing economies are expected to maintain a relatively steady growth rate of 4.0% in CY 2023 as compared to 3.9% in CY 2022. These projections are based on a comprehensive analysis of the economic landscape, and the various factors that could influence growth in the coming years.

OUTLOOK

Despite the headwinds and opportunities, the global economy faces this year, the outlook remains uncertain. On a positive note, strong monetary policy will aid in reducing inflation and the recent reopening of China after the rapid spread of Covid-19 in 2022 has set the stage for a faster-than-anticipated recovery. However, there is concern that emerging markets could be vulnerable to debt distress due to tightened global financial conditions. To mitigate these risks, there is a concerted effort to restore price stability and alleviate cost-of-living pressures. This is being done through a multi-lateral approach that involves international agreements and regulations as well as policies related to trade, investment and taxation. This approach is expected to aid in fast-tracking the economy.

INDIAN ECONOMY

According to the International Monetary Fund (IMF), India is poised to remain a significant contributor to the global economy, accounting for approximately 15% of global economic growth in CY 2023. While the Indian economy has rebounded from the COVID-19 pandemic, it is facing challenges from global factors. This has led to high inflation, resulting from escalating commodity, food and fuel prices.

Despite the RBIs efforts to manage inflation, it expects inflation to exceed its upper tolerance limit in the first three quarters of 2022-23. However, after six consecutive rate hikes, the RBI halted them in April 2023, setting the benchmark policy rate at 6.50% to provide stability and flexibility in the global climate.

Indian GDP grew at 6.1% (compared to 4% in the same quarter of 2021-22), making it the worlds fastest-growing economy. Private consumption has driven this growth, with consumer spending increasing as COVID-19 restrictions eased. The manufacturing and financial sectors are also experiencing growth. Additionally, the Governments increased investment in infrastructure projects has spurred economic activity. The Governments commitment to infrastructure development, as demonstrated by initiatives such as Postal Life Insurance (PLI), the National Monetisation Pipeline (NMP) and PM Gati Shakti, is expected to stimulate the economy further.

INDIA ECONOMY GDP PROJECTION (IN %)

OUTLOOK

India has firmly held its position as the worlds swiftest expanding economy, not only in the 2022-23 period but is expected to maintain this momentum throughout 2023-24. The Indian economy demonstrated remarkable growth in the fourth quarter of 2022-23, recording a robust growth rate of 6.1%, surpassing the 4.4% growth observed in Q3. Overall, the fiscal year 2022-23 witnessed an impressive growth of 7.2%, surpassing expectations. This underscores Indias resilience as one of the globes fastest-growing economies, especially in the face of global recession concerns in Western nations.

The Union Budget 2023-24 has presented the visionary blueprint of Amrit Kaal, aimed at fostering an empowered and inclusive economy. This vision aspires to create a prosperous and inclusive India, where the rewards of progress are shared by all regions and citizens, with a particular focus on empowering the youth, women, farmers, OBCs, Scheduled Castes and Scheduled Tribes. This noble objective will be achieved through the implementation of a wide array of government schemes, ensuring that the fruits of development permeate every segment of society and is expected to promote job creation and stimulate economic growth in India.

(Source: https://www.forbesindia.eom/article/explainers/gdp-india/85337/1

https://www.indiatimes.com/worth/news/india-fastest-growing-country-among-worlds-top-5-economies-604528.

html#:~:text=lndias%20GDP%20grew%206.1%20percent,spot%20in%20the%20global%20economy.)

INDUSTRY STRUCTURE AND DEVELOPMENT Crane Market

Cranes are a vital piece of construction equipment widely used in the transport, construction, and manufacturing industries tor loading, unloading and assembling heavy machinery. Cranes are equipped with hydraulics and internal combustion engine systems and otter exceptional lifting power. In India, cranes are crucial in building various structures, including high-rise office buildings and modular homes.

The Indian crane market witnessed impressive growth in recent years, with a market size of USD 3.3 billion in 2022. According to IMARC Group, moving forward, the market is expected to reach USD 4.6 billion by 2028 at a Compound Annual Growth Rate (CAGR) of 5.3% during 2023-2028.

The market is witnessing significant growth propelled by several factors such as the upsurge in construction activities, advancements in crane designs with high load-lifting capacity, and their utilisation in diverse industries including telecommunications, shipbuilding, and manufacturing. Furthermore, initiatives like Make in India, the Smart Cities Mission and the Bharatmala Pariyojana have spurred substantial investments in infrastructure by both the Government and private firms, driving the expansion of the crane market in India. Another key contributing factor to the growth of the crane market in the country is the development of smart factories for manufacturing. The adoption of technological advancements to establish smart factories for manufacturing is also fuelling the growth of the crane market in India.

Moreover, the increasing popularity of crane rental services throughout the country is driving the market, with end- user industries, including oil and gas, mining, automotive and transportation, utilising cranes, further spurring market growth. In addition, the substantial growth of the Indian real estate sector is generating a surge in demand for crane products.

Source: https://www.imarcgroup.com/india-crane-market

Construction Industry

The Indian construction market is a rapidly growing sector, with a current value of USD 701.7 billion in 2022 and an expected AAGR of over 6% from 2024 to 2027. By 2024, this market is expected to rank as the third-largest in the world, driven by the infrastructure sector which is a vital contributor to the nations economy. A variety of factors is propelling the growth of the market. These include increased public-private partnerships, global economic expansion and advancements in the commercial, residential, and industrial segments. In addition, the integration of cutting- edge technology and the digitalisation of equipment enhance the markets overall efficiency, demonstrating positive indications of recovery in India. Furthermore, investments in the renewable energy sector will strengthen the industrys production, aligned with the Governments objective of increasing renewable energy capacity by 2030.

(Source: https://www.globaldata.com/store/report/india-construction-market-analysis/)

Power Sector

Power is a crucial infrastructure component that drives economic growth and the welfare of nations. As of 31 January 2023, India ranks as the worlds third-largest producer and consumer of electricity, boasting an installed power capacity of 411.64 GW. Its diversified power sector includes conventional sources, such as coal, natural gas, oil, hydroelectricity and nuclear power. It also includes non-conventional sources like wind, solar, agriculture and domestic waste.

Currently, Indias installed renewable energy capacity, including hydro, stands at 168.96 GW, accounting for 40.9% of the overall installed power capacity. The majority of this capacity comes from solar and wind power. Further, to tackle the issue of greenhouse gas emissions caused by burning coal, oil, or gas for electricity, India aims to have 500 GW of non-fossil-based electricity installed capacity by 2030. This represents 50% of the total installed capacity mix.

Moreover, India enables 100% foreign direct investment in the power sector to encourage investment in the industry. This rule applies to electricity generation from all sources (excluding atomic energy), electric energy transmission and distribution and power trading under the automatic route.

(Source: https://www.ibef.org/industry/power-sector-india https://pib.gov.in/PressReleasePage.

aspx?PRID = 1881484#: ~:text=lndia%20has%20huge%20ambitions%20in,installed%20capacity%20mix%20by%202030.)

Renewable Energy Sector

As of February 2023, Indias renewable energy capacity had reached 168.96 GW with an additional 82 GW under implementation and 41 GW under tendering. This includes solar (64.38 GW), hydro (51.79 GW), wind (42.02 GW) and bio (10.77 GW) power and 59 solar parks approved with a total capacity of 40 GW.

India ranks third globally in installed renewable energy capacity and as a market for new solar PV capacity. These numbers demonstrate the countrys potential to become a leader in renewable energy leader. The renewable energy industry is expected to play a vital role in meeting Indias energy needs while reducing its carbon footprint.

The Government has prioritised establishing a solar city per state, setting up 59 solar parks with a combined capacity of 40 GW across the country and producing five metric million tonnes of green hydrogen by 2030. Indias electrolyser manufacturing capacity is projected to reach 8 GW per year by 2025, supporting its green hydrogen target. The cumulative value of the green hydrogen market in India could reach USD 8 billion by 2030 and at least 50 GW of electrolysers will be necessary to ramp up hydrogen production. With the right investments and policies, the renewable energy industry in India is poised for even greater success in the future.

(Source: https://www.investindia.gov.in/sector/renewable-energy https://www.ibef.org/industry/renewable-energy)

WIND ENERGY SECTOR

Globally, offshore wind has a history of about two decades, with the first offshore wind turbine in Denmark in 1991 which was decommissioned in 2017.

Indias wind energy sector is poised for significant growth in 2023, with a particular emphasis on offshore wind power. To support this expansion, the Indian Government has set a target of achieving 37 GW of offshore wind power capacity by 2030. This goal is expected to substantially boost the countrys renewable energy sector. The Ministry of New and Renewable Energy (MNRE) has already opened bids for offshore wind energy blocks. They plan to tender an aggregate capacity of 4 GW per year tor three years starting in 2022 and a 5 GW per year will be offered for five years, starting in 2025.

Gujarat and Tamil Nadu have been identified as potential offshore zones for the exploitation of offshore wind energy. To support the development of offshore wind projects off the coast of Tamil Nadu and Gujarat, the Indian Government is also implementing Production-Linked Incentive (PLI) schemes that provide direct subsidies to manufacturers interested in building offshore wind turbines in India. Developing the local supply chain, logistics and port infrastructure is another critical requirement to unlock the potential of offshore wind in India. Repowering wind projects that have completed their 25-year lifecycle is a priority for the Government and auctions are being held to incentivise repowering efforts.

(Source: https://mnre.g ov.in/wind/offshore-wind/ https://pib.gov.in/PressReleasePage.aspx7PRID = 1885147)

ROAD SECTOR

Indias extensive road network spanning 6.3 million kilometres is the second-largest globally, transporting 64.5% of all goods and serving 90% of the countrys passenger traffic. The road sector has seen significant growth, with highway construction increasing at a 17% CAGR between 2016-2021 and 10,457 kilometres of highways constructed in 2021-22. The Government has allocated substantial funds for the sector. This includes Rs. 2.7 lakhs Crores (USD 33 billion) to the Ministry of Road Transport and Highways under the Union Budget 2023-24. Additionally, Rs. 111 lakhs Crores (USD 1.4 trillion) has been allocated under the National Infrastructure Pipeline for the year 2019-25.

Infrastructure development, technological advancements and policy initiatives are the driving trends in the sector. The Government has launched several programmes such as the NHAI InvIT and Sukhad Yatra mobile apps, to boost the road sector. The Bharatmala Pariyojana is another initiative aimed at improving the countrys highways and roads. The NHAI plans to construct 25,000 kilometres of national highways in 2022-23 at a pace of 50 kilometres per day. With such promising prospects, the road sector in India is poised for continued growth and development.

(Source: https://www.ibef.org/industry/roads-india)

INFRASTRUCTURE SECTOR

India is the second-largest producer of cement in the world. It accounts for more than 8% of the global installed capacity. The country has a lot of potential for development in the infrastructure and construction sectors. Infrastructure development has emerged as a crucial factor in Indias journey towards becoming a USD 5 trillion economy. The Government has been keen on improving physical infrastructure which is vital to boost efficiency and reduce costs, especially when combined with efforts to simplify doing business in the country.

Moreover, the national master plan for infrastructure, Gati Shakti is a prime example of the Governments focus on building the infrastructure of the future. With a projected investment of USD 1.3 trillion, this plan aims to bring about significant reforms in the sector and has made substantial progress in 2022.

Additionally, the Government has also proposed investing USD 750 billion to enhance railway infrastructure. The Government has outlined the Maritime India Vision 2030 which envisions massive investments in developing world- class infrastructure at Indian ports. The infrastructure sector in India will continue to attract strong capital inflows. This is due to the introduction of structural reforms, logistics digitisation and infrastructure-focussed wealth funds to attract investments. However, such investments have the potential to create a multiplier effect, leading to higher economic growth in the country.

(Source: https://www.ibef.org/industry/infrastructure-sector-india)

REAL ESTATE SECTOR

The real estate sector comprises housing, retail, hospitality and commercial sub-sectors. It is a globally recognised industry with direct, indirect and induced economic effects. In India, it is the second-highest employment generator after agriculture. It is expected to attract more Non-Resident Indian (NRI) investment in the short and long-term. By 2040, the real estate market in India is projected to grow to Rs. 65,000 Crores (USD 9.30 billion) contributing 13% to the countrys GDP by 2025.

To encourage investment in affordable housing and green growth, the Government has implemented measures such as tax code reforms and increased infrastructure spending. Furthermore, NRI investment significantly contributes to the real estate markets expansion with an anticipated investment of USD 14.9 billion in 2022-23. Tier 2 and 3 cities are also becoming real estate hubs, supporting overall infrastructure development in the country. Home rates and rental yields are expected to increase in 2023 with holiday destinations and major cities continuing to experience notable growth. Moreover, holiday destinations and major cities will continue to experience notable growth.

(Source: https://www.ibef.org/industry/real-estate-india)

OIL & GAS SECTOR

The Indian economys growth is closely tied to its energy demand, particularly oil and gas. As such, the sector presents a promising investment opportunity, supported by the Governments policies that allow 100% foreign direct investment (FDI) in various industry segments, such as natural gas, petroleum products and refineries.

The Indian oil and gas market is anticipated to expand at a CAGR of 3% by 2027, driven by the expansion of refinery projects and the increasing demand for petroleum products. India aims to increase its refining capacity to ~ 500 million metric tonnes by 2030, up from 250 million metric tonnes at present as stated by Prime Minister Narendra Modi. The countrys potential to raise its oil demand share to 11 % in the global market from the current 5% is a positive indicator for investors.

The diesel demand in India is projected to double to 163 MT by 2029-30 with diesel and gasoline accounting for 58% of Indias oil demand by 2045. Furthermore, natural gas consumption in India is expected to grow by 25 billion cubic metres (BCM), registering an average annual growth of 9% until 2024. These trends are fuelled by increasing natural gas pipeline capacity, exploration efforts and rising demand for petroleum products.

Indias oil and gas infrastructure market is anticipated to reach a 25 billion cubic metres (BCM), registering an average annual growth of 9% until 2024.

(Source: https://www.ibef.org/industry/oil-gas-india)

CEMENT INDUSTRY

The cement industry in India is poised for continued growth due to various factors, including infrastructure-led investments, mass residential projects and broad-based economic growth. Moodys Investors Service predicts that cement production will increase by approximately 6%-8% over 2022-2023 and 2023-2024, following a 21% jump for the fiscal year ended March 2022. This growth is driven by strong demand from housing, commercial construction and industrial development sectors. In particular, the housing and real estate sectors account for 65% of cement demand while public infrastructure and industrial development make up 20% and 15%, respectively.

Indias ready availability of raw materials for cement production, such as limestone and coal, is another factor contributing to the industrys growth. Large investments in roads and infrastructure projects are expected to fuel further demand for cement. Flowever, the industry is also facing challenges such as elevated pet coke, coal and diesel costs which have impacted profitability.

Despite these challenges, the Governments initiatives including the Bharatmala Project for the construction of cement concrete roads and highways, the Pradhan Mantri Gram Sadak Yojana for rural road construction and the metro rail are expected to play a crucial role in driving the industrys growth. Overall, the growth of the Indian economy and its construction and infrastructure sectors will continue to drive cement demand in the country. Consumption is projected to reach approximately 419.92 million tonnes by 2026-27.

(Source: https://www.fortuneindia.com/enterprise/indian-cement-makers-will-outperform-over-next-12-18-months- moodys/111606)

STEEL INDUSTRY

Indias steel industry is experiencing strong and dynamic growth, fueled by abundant domestic raw materials and rising demand across sectors. As of 2022, India proudly held the position of the worlds second-largest steel producer, achieving an impressive output of 124.5 million metric tons of crude steel and 117.6 million metric tons of finished steel. Looking ahead, the countrys finished steel consumption is projected to soar to 230 million metric tons by 2030-31, a significant increase from 133.596 million metric tons recorded in 2021-22.

The Governments initiatives for infrastructure development such as the construction of roads, highways and metro rail are expected to benefit the steel industry. The industry is also benefitting from the rising preference for pre-engineered buildings and components. Steel consumption across various sectors like automotive & transportation, and building & construction, among others is driving the growth of the industry.

In recent years, the Indian steel sector has seen large investments and the Government has passed reforms to boost the industrys growth including the National Steel Policy. The Government has also been approving investment schemes to help private-sector companies thrive in the industry.

The growth of the Indian steel sector is expected to continue due to the availability of domestic raw materials and the potential to supply steel products to the world. By 2025, the steel industry will play an integral role in steering India towards a USD 5 trillion economy.

(Source: https://www.ibef.org/industry/steel)

COMPANY OVERVIEW

Sanghvi Movers Limited (referred to as Sanghvi Movers or The Company) is a prominent crane rental Company based in India, providing heavy lifting solutions to various businesses in need since its establishment in 1989. According to the June 2023 rankings by Cranes International Magazine, the Company has solidified its position as Indias largest crane rental Company and the sixth-largest globally. It serves private and public sector industries in the infrastructure sector, with a fleet of over 394 hydraulic and crawler cranes, ranging in lifting capacity from 20 to 1000 tonnes. These infrastructure sectors include power, refinery, steel, cement and other core sectors. Sanghvi Movers dominance in the Indian crane rental market is evident. The Company holds over 40-45% of the overall domestic market share and an impressive 60-65% market allocation in the high-end crane market of >400 MT. With over thirty-three years of experience in the crane rental industry, it has established itself as a reliable and trustworthy partner.

OPPORTUNITY

The heavy equipment and machinery industry stands to benefit significantly from the reopening of the economy following the COVID-19 pandemic. As construction projects and infrastructure development initiatives resume, the demand for heavy equipment, particularly cranes have surged. Moreover, the Government has announced a 33% increase in capital expenditure to Rs.10.68 Lakhs Crores in the Union Budget. This is expected to result in a substantial increase in the demand for heavy equipment, presenting a lucrative opportunity for companies in this industry.

Additionally, the Indian Governments target of achieving 500 GW of clean energy by 2030 with wind power contributing 140 GW, presents an opportunity for the heavy equipment and machinery industry to expand its business in the wind power sector. The increase in demand for wind turbines and related equipment creates a potential market for companies to offer crane rental services for installing, maintaining and repairing wind turbines.

THREATS

Indias heavy equipment and machinery industry faces several potential threats which can impact its growth and success. Economic downturns which can lead to companies reducing their capital expenditures could significantly impact the industrys demand for heavy equipment and machinery. Moreover, the industry faces competition from international players who often have greater resources and expertise. As a result, domestic companies struggle to compete and lose market share.

The industry relies heavily on a complex supply chain vulnerable to disruptions caused by natural disasters, geopolitical tensions or any pandemic. The rise of automation and robotics also poses a threat, reducing demand for certain types of heavy equipment and machinery. Environmental regulations and compliance requirements are another challenge faced by the industry. Failure to comply with these regulations and requirements could result in fines and legal action.

The Governments actions also represent a significant threat to Indias heavy equipment and machinery industry. Regulatory changes, taxation and import/export regulations could potentially increase compliance costs, limit profitability or restrict a Companys ability to operate in certain markets. Finally, a shortage of skilled workers to design, manufacture and maintain heavy equipment and machinery could impact the industrys growth and innovation.

Furthermore, the Governments shifting infrastructure investment priorities or political instability can create an unpredictable business environment. This may result in delays and disruptions that could negatively impact the industrys financial performance. These threats highlight the need for the industry to remain adaptable and vigilant to ensure its continued growth and success.

RISK & CONCERNS

Sanghvi Movers recognises that it faces various risks which must be managed effectively to avoid any negative impacts on itself. Therefore, the Company has implemented a comprehensive risk management framework that operates at different levels across the organisation. At the top level, the Board of Directors sets the risk management strategy and approves policies to be followed. This ensures that risk management aligns with Sanghvi Movers overall objectives and values. The Risk Management Committee then oversees the implementation of the strategies and periodically reviews the risk level. This helps to identify emerging risks and ensures that the Companys risk management practices remain effective and relevant.

By implementing this framework, Sanghvi Movers minimises the volatility in earnings and enhances shareholder value. This proactive approach to risk management ensures that the Company is well-prepared to address any challenges that may arise while also enabling it to seize opportunities that may arise in the future.

1. Economic Risks: Economic risks refer to losses due to macroeconomic factors. Sanghvi Movers faces economic risks such as a slowdown in the construction industry, inflation and exchange rate fluctuations. These risks could lead to decreased demand, increased operating costs and financial losses if the Company is unable to manage them effectively. It mitigates economic risk by serving a diverse customer base, following flexible pricing policies, optimising costs, investing in technology and maintaining a strong financial position with low debt and healthy cash reserves. These measures enable Sanghvi Movers to weather economic downturns and take advantage of opportunities.

2. Market Risks: Market risk refers to the risk of losses due to changes in market conditions. It includes changes in demand for crane rental services, competition from other crane rental companies and changes in equipment pricing, all of which can impact Sanghvi Movers financial performance. The Company has mitigated these risks by diversifying its client base across industries and geographies. It entered into long-term client contracts and used financial hedging instruments to manage risks. Sanghvi Movers also optimises operating costs and continuously monitors market conditions to make informed decisions.

3. Operational Risks: Sanghvi Movers operates in a high-risk environment where any error or mistake could lead to significant financial and reputational losses. To mitigate operational risks, the Company implements robust safety protocols, invests in equipment maintenance and provides regular training to its employees.

4. Cyber security Risks: Sanghvi Movers digital assets and data could be vulnerable to cyber threats such as hacking, data breaches and ransomware attacks. The Company has implemented strong security measures to mitigate cybersecurity risks such as firewalls, antivirus software and data encryption. It also conducts regular security inspections and provides regular cybersecurity training to its employees.

5. Financial Risks: Sanghvi Movers revenue and profits heavily depend on the demand for its services. Any changes in the economic environment or industry dynamics could impact the Companys financial performance. To mitigate financial risks, it diversifies its revenue streams, maintains a healthy cash flow and regularly reviews its financial statements to identify potential risks and opportunities.

6. Regulatory Risks: Sanghvi Movers is subject to various regulatory requirements including licensing, permits, and compliance with safety and environmental regulations. Non-compliance could result in fines, penalties or legal action. To mitigate regulatory risks, the Company stays up-to-date with regulatory changes, maintains a compliance programme and conducts regular audits to ensure compliance with applicable laws and regulations.

7. Reputation Risks: Sanghvi Movers reputation is critical to its success. Any negative publicity or adverse incidents could impact its image and result in loss of business. To mitigate reputation risks, the Company maintains transparent communication with its stakeholders, invests in public relations and takes proactive steps to address any concerns or issues its customers or employees raise.

8. Sustainability Risks: Sustainability risks refer to the potential negative impacts that a Companys operations can have on the environment and society as well as the potential negative impacts of climate change on Sanghvi Movers operations. Examples of sustainability risks for Sanghvi Movers could include increased regulatory pressure to reduce greenhouse gas emissions, reputational damage due to its impact on the environment or society and physical risks such as damage to its equipment and facilities due to extreme weather events. To mitigate sustainability risks, companies are implementing sustainability strategies that focus on reducing their environmental and social impact such as reducing greenhouse gas emissions, increasing energy efficiency, improving waste management and implementing sustainable supply chain practices. Additionally, the Company is engaging with stakeholders such as investors, customers and local communities, to understand their concerns and expectations related to sustainability and is building stronger relationships based on transparency and trust.

9. Technology Risks: Sanghvi Movers relies heavily on technology to operate and manage its cranes. Any failure or disruption in technology could impact its business operations. To mitigate technology risks, the Company invests in reliable and secure technology infrastructure, maintains regular data backups and implements a disaster recovery plan.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Sanghvi Movers, as Indias largest crane rental Company is highly reliant on the overall state of the Indian economy which includes the level of investments made in infrastructure and key sectors by public and private organisations. These external factors significantly influence the Companys operational performance and any changes in investment patterns or economic conditions may impact its ability to perform optimally. As a result, it is imperative to closely monitor the macroeconomic landscape and its potential impact on its operational performance when evaluating its financial performance.

Total revenue from operations was Rs. 48,555.35 Lakhs for the year ended on 31 March 2023 as against Rs. 37,225.15 Lakhs for the Year ended on 31 March 2022. The Company has earned Profit After Tax of Rs. 11,204.07 Lakhs for the Year ended on 31 March 2023 as against Rs. 2,942.63 Lakhs for the Year ended on 31 March 2022.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS, INCLUDING THE NUMBER OF PEOPLE EMPLOYED

Sanghvi Movers believes that its employees are its most valuable assets. Thats why the Company is committed to investing in their professional development and providing opportunities for them to grow and succeed within the organisation. To ensure its business is prepared for any challenges that may arise, it has established a team of highly qualified professionals who oversee the technical and commercial aspects of its operations. This team include qualified engineers, skilled operators and experienced maintenance staff who work together to ensure Sanghvi Movers operate efficiently and effectively. The Company is proud of its reputation for maintaining a cordial and harmonious work environment, which it has achieved through a combination of good communication practices, fair employment policies and an emphasis on employee well-being. It is dedicated to fostering a diverse and inclusive workplace that provides equal opportunities for all its employees to succeed. In recent years, it has continued to expand its workforce by employing a growing number of skilled professionals across various roles and departments. Sanghvi Movers is committed to providing its employees with the resources they need to develop their skills and advance their careers. The Company has also implemented innovative employee engagement programmes to help foster a positive workplace culture and promote employee satisfaction. It is constantly seeking new ways to support its employees and create a workplace where everyone feels valued, respected and empowered to achieve their full potential. Sanghvi Movers had 1,774 employees including indirect labour as on 31 March 2023.

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios along with detailed explanations therefore required vide part B of Schedule V to SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018:

No. Particulars 2022-23 2021-22 % Change Explanations if Any
1 Debt Service Coverage Ratio 4.09 2.74 49.16 Refer Note 1
2 Net Working Capital Turnover Ratio 5.98 3.95 51.44 Refer Note 2

Note 1: Variation in Debt Service Coverage Ratio

The Companys DSCR significantly improved in 2022-23, primarily because of the Companys profit during the year. Furthermore, due to the substantial amount of debt reduction, interest costs also came down.

Note 2: Net Working Capital Turnover Ratio

The working capital turnover ratio is a formula that calculates how efficiently a company uses working capital to generate sales. The net working capital turnover ratio was 5.98 times the total turnover in 2022-23 as compared to 3.95 times in 2021 -22. It means that in 2022-23, Sanghvi Movers used its working capital more efficiently to generate more sales. This was primarily because of the increase in sales turnover and higher capacity utilisation of the crane fleet. The increase in sales turnover, resulting into an increase in receivables, better collection from our clients through rigorous follow-up, better monitoring of the receivables position by the management and strict adherence to the credit period allowed to the customers.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal control systems refer to the policies and procedures that a company has in place to ensure that its financial statements are accurate, reliable and complete. Sanghvi Movers has implemented a comprehensive system of internal controls tailored to the size and nature of its business. This system is designed to ensure the efficient and effective use of the Companys resources while protecting its assets from unauthorised use or disposition. It has put measures in place to authorise, record and report all transactions accurately. This guarantees the accuracy of its financial and other data used to prepare financial reports and maintain asset accountability. To enhance Sanghvi Movers internal control system, it has established an extensive programme of internal audits. Independent auditors conduct these audits to review its operations and procedures. The Companys management team also regularly reviews its internal control system to identify areas for improvement. It has established documented policies, guidelines and procedures to ensure that all its employees understand their responsibilities and are aware of its expectations for their conduct. These policies ensure that Sanghvi Movers internal control system is consistently applied throughout its organisation. The Company is committed to ensuring the accuracy and dependability of its financial statements and its internal control system plays a crucial role in achieving this goal.

CAUTIONARY STATEMENT

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified and unidentified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, a global pandemic like COVID-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions, relying on available internal and external information are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.