Sharika Enterprises Ltd Management Discussions

Industry structure & developments:

Incorporated in 1998, our company started with a business of engineering procurement construction (epc) contracts, specialized assembling, trading activities, erection services, representation services to major global players in power generation, transmission and distribution sector. We have grown consistently over the years and widened our portfolio.

Our company is headquartered in noida, uttar pradesh and with having assembling unit at b-72, sector 80, noida, uttar pradesh. Also, our company is an iso 9001:2015 certified for providing consultancy, project management, epc contracts in field of power generation, transmission and distribution. We operate in the infrastructure sphere in india focusing on the power sector and work with key international and indian oems and technology owners and involved in project man- agement/epc contracts. We have a demonstrated history of delivering complex projects outside india as well now providing bundled turn key solutions involving remote telemetry & control, scada/dms, city-wide fibre optic & private radio network for real time operations of distribution network.

During the year, sharika enterprises limited continued its strategic transition from an epc and system integration background to becoming a front-runner in the digitalization of infrastructure. Leveraging our deep understanding of power distribution utilities, their operational dynamics, and business challenges, we have repositioned ourselves in a market-driving role. Our focus has been on delivering india-made scada/ adms solutions, filing patents in reactive power management, and developing innovative tools that enable dispatchability of reactive power for more efficient distribution system operations.

In parallel, we have accelerated our efforts in indigenization of iot-embedded intelligent switchgear, advanced fault detection systems, and digital grid enablers, aligning with the nations vision of self-reliance in critical infrastructure. Supported by strong demand for modernization of distribution networks and growing emphasis on digital technologies, the company is now entering a new phase of growth. With innovation, localization, and customer-centricity at the core, sharika enterprises limited is well positioned to lead the digital transformation of indias power distribution sector.

Sharika has a robust team of technocrats with and accumulated experience of more than 150 years, including doc- trates. With learning & innovation as one of the major pillars of "sharika values”, we have a sharp focus on education, and hence have made "centre of excellence” at msrit, bangalore a reality, where utilities and fellows from power fraternity can come and do research and utilize state of the art grid simulation tools. We hope to train utilities on digital solutions that can help them manage their power systems in more efficient and effective manner.

Opportunities & threats:

Capital markets at present are going through turbulent times. Although the inflation has remained steady during the year but

It is still under pressure due to hike in petrol prices, burden of diesel subsidies, high fiscal deficit, etc. However, we feel that the opportunities will soon arise in the markets upon the corrective policies by the government and better fiscal management which will strengthen the economy. Especially in power & infrastructure sector, governments push for "make in india” will create good opportunities for local players in technology segment.

However, due to surge in renewable generation, rapid infrastructure growth, surge in grid scale battery storagae, evs and demand for local manufacturing, the energy markets are expected to have a strong growth for next 10 years. Sharika is going to be among top 5-6 players in field of advanced distribution management systems in india.

Details of significant changes in the key financial ratio & return on net worth:

As per the amendment made under schedule v to the listing regulations read with regulation 34(3) of the listing regulations, details of significant changes (i.e. Change of 25% or more as compared to the immediately previous financial year) in key financial ratios and any changes in return on net worth of the company including explanations therefore are given below:

Segment wise or product wise performance

The company is engaged only into single reportable segment during the year under review.

Outlook

Company has expanded and diversified its operations from engaging in the transmission and distribution of power, along with providing consultancy services in power and energy projects to engaging in automation, supervisory control and data acquisition (scada) systems, advanced distribution management systems (adms), smart grid technologies,

And engineering, procurement & construction (epc) and other works related to power distribution and transmission networks.

Risks & concerns

Your company at present is exposed to the normal industry risk factor of volatility in interest rate, economic cycle and credit risk. A brief of the risks the company is exposed to is enumerated below:

The competition risk

Power and electrical industry is capital intensive industry. In a free market environment, new capacities are created depending upon demand supply situation and return on investment. Industry is cyclical in nature and at times there is over supply situation leading to decline in operating margins.

We are mitigating the above risk by increasing our exports presence, developing niche products, exploring new markets and new customers. The company has a good image with local customers.

Customer attrition risk

All customers are sensitive to quality, delivery and price.

The above risk is mitigated by developing value added niche products, customer schedule adherence and improved quality standards. This enables us to build long term relationship with various customers by providing them good value proposition.

People risk management

High quality human resources are vital to the success of our business. People are valuable assets of the company.

The company has been working towards providing challenging high growth environment for its employees. The company follows good hr practices, which include various schemes for employee welfare and motivation.

The company has strong appraisal system. It has successfully worked its compensation policy to team and individual performances. The company provides good opportunity to deserving candidates. The company believes in growth of its managers to leaders and has structured training programs to that effect.

With excellent performance track record as well as best hr practices we are able to attract and retain people for growth of our business.

Security risk management

Operations could be disrupted due to natural, political and economic disturbances. Running a business exposes the company to a number of risks. The company has taken adequate insurance cover on its insurable interests. These include:

I) fire risk

Ii) marine risk

Iii) burglary risk

Iv) group personal accident policy

V) other miscellaneous policies.

The company has also taken steps to strengthen it security system as well as physical security system at all our locations

Foreign exchange risk

The company is exposed to foreign exchange risk mainly due to imported raw materials and finished products. Since we are a net foreign exchange earner on an overall basis it may be stated that there is an exposure to the risk of indian rupee appreciating against other foreign currencies.

Adequacy of internal control

The established internal control system of your company are adequate to ensure that all the activities are monitored and controlled against any misuse or misappropriation of asset and that the transactions are authorized, recorded and reported correctly. More so, these internal control systems are regularly monitored by the audit committee of your company and are improved upon on regular basis.

Operational & financial performance

The details of the financial performance are appearing in the financial statements appearing separately. The highlights of the same are also mentioned in the directors report.

Internal control systems & their adequacy

The statutory auditors assess the adequacy of internal control every quarter and report to the board of directors accordingly. The company has adequate internal control procedures commensurate with size of the company and nature of its business.

Human resources /industrial relations front

Human resource is considered as vital strength of the company. There was unity of purpose among all level of employees i.e. To continuously strive for the improvement in work practices & productivity.

Cautionary statement

Certain statements in the management discussion & analysis describing the companys views about the industrys expectations/ predictions objectives etc. May be forward looking within the applicable laws and regulations. Actual results may differ materially from those expressed in the statements. Companys operations may be affected with the demand and supply situations, input prices and their availability, changes in government regulations, tax laws and other factors such as industrial relations and economic developments etc. Investors should bear the above, in mind.