Shashijit Infraprojects Ltd Management Discussions.

This chapter on Managements Discussion and Analysis (“MD&A”) is to provide the stakeholders with a greater understanding of the Companys business, the Companys business strategy and performance, as well as how it manages risk and capital.

The following management discussion and analysis is intended to help the reader to understand the results of operation, financial conditions of Shashijit Infraprojects Limited.

INDUSTRY STRUCTURE & DEVELOPMENT:

Construction and Infrastructure sector plays an important role in the growth and development of Indian economy. Nearly, 9% of Indias GDP is spent on Infrastructure services. It comprises of construction of Industrial, Residential, Commercials infrastructure development which also forms as base and supporting factor for other services sectors.

This Sector is highly responsible for propelling growth of other sectors and Indias overall development, Government of India is giving huge impetus for development of Infrastructure and construction services through focused policies such as open FDI norms, large budget allocation to Infrastructure sector, Smart cities mission, etc.

Being a labour intensive industry the industry has generated employment for about 38 million people in the country. The industry is expected to continue to expand over the forecast period (2017-2021), driven by government thrust of development in residential, infrastructure and energy projects under flagship programs by various governments.

Expected to account for 30.1% of the industrys total value in 2023, it is thought that construction and infrastructure industry will remain the largest market over the forecast period. It is also predicted that greater demand for residential construction will be created over the forecast period, due to the countrys rising population, urbanisation, and positive developments in regional economic conditions.

BUSINESS OVERVIEW

Shashijit Infraprojects Limited is an established name in industrial and infrastructural Contracting headquartered at Vapi, Gujarat. The company is in to Civil Project Management as well as Constructs, Designs, Procurements, Builds and Develops Industrial, Commercial, Residential, Public Utility Building & Infrastructure Development Projects. We have executed various industrial, Commercial and residential projects in Gujarat particularly in Vapi, Surat, Silvassa and Union Territory Daman. We have been focusing on venturing into new foray of Infrastructural development viz. Roads and rail infrastructure, bridges, dams and other government contracting related activities. We are equipped with a sound team of professionals and logistics support for executing of any such projects. We are also open to foray into newer geographies for any such opportunity coming our way. We have established a long standing relationship with our clients by rendering superior satisfaction in terms of services delivered, unmatched quality, most competitive price and timely completion of projects

OPPORTUNITIES AND THREATS

There is a direct correlation in between prospect of economic growth and political stability. Though the growth prospects for the current year are promising, there are certain down side risks such as pace and shape of global recovery, effect of withdrawal of fiscal stimulus etc. Our performance may also be impacted by increased competition mainly from the local players, regulatory changes & attrition of employees.

SEGMENT-WISE PERFORMANCE

The Company is into business of civil construction for industrial, commercial and residential projects, hence the segment wise reporting is not applicable. Financial Performance of the Company for the year under review has already covered under the Directors Report.

OUTLOOK

The outlook for 2019-20 seems promising, particularly when the company is working towards getting new projects from new clients. Company is exploring more ways to interact with different architects, civil consultants, structural engineers etc. for finding new opportunity in new localities. The Company shall continue to strive to acquire new projects to increase sales and profit of the Company.

The increasing demand in the industrial construction sector are exhibiting early signs of improvement and the Management is positive that the Company will be able to achieve better growth than previous year by executing industrial projects and other operations and taking advantage of potential revival in economic growth and its resultant positive effects on the construction sector over the medium term.

The thrust of the government to build up a robust industrially developed sector and further many big infrastructure projects coming up in public private partnerships along with Smart city program of the government is set up unleash huge opportunities for industrial and infrastructure construction. Riding on the government initiatives and our potential to grow makes the outlook for our business quite positive and stable.

RISKS AND CONCERNS

The liquidity crunch has been prevailing in the infrastructure market for over a year, and many owners / developers are financially stressed. To avoid any liquidity risk, robust screening of customer profiles and their liquidity position is undertaken before bidding for any construction contract as well as during execution. Labour unrest problems and shortage of labour may significantly affect our business. We face competitive pressures in recruiting skilled and unskilled labour and professionally qualified staff as and when we need them.

Our projects are exposed to various implementation and other risks and uncertainties. We may be further subject to regulatory risks, financing risks and the risks that these projects may ultimately prove to be unprofitable.

The Company has in place insurance cover for its assets & people to minimize the fallout of unforeseen calamities.

Monitoring, periodic review and reporting of applicable statutory and regulatory compliance requirements, strengthening of internal audit function and improved verification process, established work procedures, guidelines, quality assurance methodologies and structured internal disclosures mechanism.

INTERNAL CONTROL SYSTEMS & ADEQUACY

Your management attaches very high importance to safeguarding of internal control. The Independent Directors have full access and visibility to any details of the Company. Audit Committee recommendations are taken very seriously by the Board and implemented in letter and spirit. Commensurate with the size and scale of operations of the Company, the Company has well set processes and procedure for planning, review, revenue recognition, expenses authorization, capital expenditure approval, risk management, investments etc. Reorganisation of marketing, bidding and estimation team which enhanced the prequalification, estimation, tender evaluation, formal pre-bid risk assessment and also offered greater commercial oversight on the attractiveness of opportunities and also threats. Internal Control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources.

The internal control commensurate with the activities is supplemented by continuous review by the management. The internal control system is designed to ensure that every aspect of the companys activity is properly monitored.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

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

MATERIAL DEVELOPMENT IN HUMAN RESOURCES

Manpower is biggest strength in any Sector. The Company maintains its focus on its human resources as it believes that a motivated and empowered workforce is the key to sustained competitive advantage. The company has appointed professional individuals who are competent and qualified to take care of the various compliances of the company. The company has appointed full time qualified Company Secretary and Compliance officer to meet all the statutory compliances well within time.

The company continuous to lay emphasis on developing and facilitating optimum human performance. The Company has maintained excellent relations with its employees across all levels of the organization during the period under review. All efforts were made to ensure a high employee satisfaction. Adequate measures were undertaken to enhance the skill sets of the employees. The Company has always aimed to create a workplace where every person can achieve their optimum potential and add value to the organizational growth.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND RETURN ON NETWORTH

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 therefor are given below:

Sr. No. Particulars Current year ended on 31st March, 2019 Previous year ended on 31st March, 2018 % Changes Explanation
1. Debtors Turnover 2.65 4.18 -36.57% Decrease in Annual Turnover and receivables
2. Inventory Turnover 4.50 9.90 -54.58% Decrease in Annual Turnover
3. Interest Coverage Ratio 1.86 5.12 -63.66% Decrease in Annual Turnover
4. Current Ratio 1.46 1.47 -0.63% -
:5. Debt Equity Ratio 1.32 1.71 -22.05% -
6. Operating Profit Margin (In %) 1.17 3.44 -65.97% Increase in material consumption cost and decline in turnover
7. Net Profit Margin (In %) 0.73 2.42 -69.79% Increase in direct and indirect cost
8. Return on Net Worth (In %) 1.61 9.26 82.61% Dip in the net profit margins

DISCLOSURES BY MANAGEMENT TO THE BOARD

All disclosures relating to financial and commercial transactions where Directors may have a potential interest are provided to the Board and the interested directors do not participate in the discussion nor do they vote on such matters.

CAUTIONARY STATEMENT

This document contains statements about expected future events, financial and operating results of Shashijit Infraprojects Limited, which are forward looking. By their nature, forward looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause

assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of the Shashijit Infraprojects Limited Annual Report. The company assumes no responsibility to publically amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

For and on behalf of the Board of Directors
Shashijit Infraprojects Limited
Sd/-
(Ajit Jain)
Place: Vapi Chairman & Managing Director
Dated: 26th August, 2019 DIN:01846992

ANNEXURE-I

Statement of particulars as per rule 5 (1) of Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014

(i) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year

Sr. No. Name of the Director Designation Remuneration to the median Remuneration of the employees Ratio of the
1. Ajit Jain Chairman & Managing Director 17.60:1
2. Shashi Jain Whole-time Director 4.58:1
3. Aakruti Jain Whole-time Director 2.11:1

Note: Mr. Anil Jain, Mr. Dheeraj Khandelwal and Mr. Prabhat Gupta are the Non-Executive Independent Directors and were paid siting fees for attending the meetings.

(ii) The percentage of increase in remuneration of each director, chief financial officer, chief executive officer, company secretary or manager, if any, in the financial year

Sr. No. Name of the Director Designation Increase in remuneration (In %)
1. :Ajit Jain Chairman & Managing Director NIL
2. :Shashi Jain Whole-time Director NIL
3. :Aakruti Jain Whole-time Director NIL
4. :Manthan Shah Company Secretary 28.00%
5. :Ishwar Patil Chief Financial Officer 20.00%

(iii) The percentage increase in the median remuneration of employees in the financial year

During the financial year there was 7.58% increase in the median remuneration of employees.

(iv) The number of employees on the rolls of the company

There are 62 permanent employees on the rolls of the Company.

(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exception circumstances for increase in the managerial remuneration

There is 7.58% increase in the average salary of non-managerial employees due to higher and additional responsibility taken by them and there is 17.92% decrease in the average remuneration of managerial employees.

(vi) Affirmation that the remuneration as per the remuneration policy of the company

Remuneration paid during the year ended 31st March, 2019 is as per the Remuneration Policy of the Company.

For and on behalf of the Board of Directors
SHASHIJIT INFRAPROJECTS LIMITED
Sd/-
(Ajit Jain)
Place: Vapi Chairman & Managing Director
Date: 26th August, 2019 DIN:01846992