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