Semac Consultants Ltd Management Discussions

for the Financial Year ended 31st March 2025

Developments

From our founding in 1969 till 2015, we were purely design consultants. However, over the past decade, we extended our offering to design and build services to our esteemed clients.

During the year, the company?s revenue increased by 33% as compared to the previous year and we incurred a loss of INR 5 crores as compared to one of INR 32 crores in the previous year.

This year we focussed on four key areas, i.e., business development, cash flow management, team building and strengthening systems and processes.

1. Business development: We worked on deepening our relationships with the influencers inside the organisation of target clients. This allowed us to begin participating in tenders floated by reputed corporates with upcoming capex plans. Additionally, we also won repeat orders from existing clients, which is a testament to the trust we have built with them over the years.

2. Cash flow management: To cover the gap in our treasury caused by the losses incurred last year, we had taken an inter-corporate deposit from our Promoter Group, part of which was also repaid during the year using internal accruals. This was achieved to ensure we have sufficient working capital for executing all ongoing projects. We plan to repay the balance owed, over the next two years.

3. Team building: Since we now execute projects ourselves, we needed to build a team with rich project execution experience. As such, we spent a significant amount of time building a team for the future and have got a good mix of experience and youth. This process is ongoing, and I am happy to report that we made significant headway on this front this year.

4. Strengthening business processes: Since we started executing projects directly, we needed to work on strengthening our systems and processes to ensure transparencyandoversightacrossourentireworkflow.As a part of building these systems, we decided to digitise our workflows by implementing a software solution. Of course, it is very early days and a lot of work remains to be done in this area.

Performance

Risks and Concerns

We operate in a dynamic environment influenced by a range of external factors. While we remain confident in our strategy and capabilities, the following macro risks and industry-wide concerns merit attention: a) Economic and Investment Cycles: The construction industry remains sensitive to changes in the broader economic climate. A slowdown in capital expenditure may impact the pace of new projects. b) Raw Material Price Volatility: The prices of key inputs such as steel, cement and aggregates are subject to market fluctuations, which may impact our margins in fixed price contracts. c) Regulatory Landscape: The business is subject to multiple regulatory compliances, including environment, safety, labor, etc. Any changes in laws could have an impact on project timelines and costs. d) Supply Chain Disruptions: Delays or constraints in the availability and logistics of key materials or equipment due to external factors such as geopolitical tensions, transport bottlenecks, or vendor-side challenges may pose risks to timely execution.

We proactively monitor these risks and maintain robust planning and contract management practices to mitigate their potential impact.

Our focus remains on delivering high-quality outcomes while preserving execution efficiency and financial discipline.

Internal Control Systems

Internal control systems serve as a fundamental pillar of corporate governance. We have implemented internal control mechanisms that align with our evolving needs. This mechanism operates to safeguard our resources, ensuring operational efficiency, monitor systems, and comply with laws and regulations. Our internal control systems are commensurate with the magnitude of our operations. Internal Audit functions directly under the guidance and supervision of Audit Committee. We have suitable internal control systems for major operational activities.

The Audit Committee defines the scope of internal audit including areas tobecoveredeachyear,theefficacy of the audit process and its effectiveness, and concerns if any arising out of the audit carried out, etc. The reports of the internal auditors are placed before the Audit Committee on a quarterly basis. The decisions arising from the discussion are implemented and monitored by the Audit Committee via "action taken reports".

Financial Performance

Though our topline is back on a growth trajectory, we have continued to keep a tight watch on costs, both project-related and overheads.

Major Heads of Expenditure

Key Financial Ratios

Material developments in human resources

People are the backbone of any organisation, in any arena of human endeavour. Development of our people is one of the key objectives at Semac. People join an organisation for a variety of reasons. In our view the primary drivers are professional growth and getting compensated well for your skills. We address both these needs for our people. We help them grow by giving them increasingly challenging assignments, sometimes in areas outside their comfort zone. We also expose them to areas outside their area of core expertise to help them grow from being a functional specialist to a generalist, thereby taking steps to build our future leadership. We strive to build a culture of trust and transparency and aim to develop Semac into a home away from home for our team.

Industrial Relations front

Industrial Relations in our company continue to be cordial and harmonious. The participative way of management decision making facilitates building trust and resolving differences amicably through discussions, relationships at Semac.