Shree Krishna Infrastructure Ltd Management Discussions

Shree Krishna Infrastructure Limited firmly believes that good Corporate Governance results in regulation of the affairs of your Company in a most transparent, ethical and accountable manner. Adherence to Corporate Governance ensures greater level of transparency and accountability, fairness in operations, full disclosure, integrity and compliance of laws.

Business continuity plans: The Company activated business continuity plans to respond effectively to the constantly evolving situation. Response plans were developed and continually monitored to protect the health and long-term sustainability of the company.

GLOBAL ECONOMIC OVERVIEW

The global economic outlook has improved. The world economy is now forecast to grow by 2.7 per cent in 2024 (an increase of 0.3 percentage points from the forecast in January) and 2.8 per cent in 2025. Several large developing economies – India, Indonesia, and Mexico – are benefiting from strong domestic and external demand. In comparison, many economies in Africa and Latin America and the Caribbean are on a low-growth trajectory, facing high inflation, elevated borrowing costs, persistent exchange rate pressures and lingering political instability.

Global investment has been on a downward trajectory since 2021, with growth of investment –measured by real gross fixed capital formation – estimated at 2.8 per cent in 2023. This reflects the sharp decline in investment growth in the developing economies from 5.1 per cent in 2022 to 3.7 per cent in 2023. High real interest rates, tight fiscal space, and geopolitical risks undermined investment growth.

Inflation receded significantly in most major economies, recession was mostly avoided, supply chain disruption eased considerably, and labor markets remained historically tight. During the year of 2024, major central banks appear on the verge of loosening monetary policy, confident that inflation is largely beaten. Although the global economy has slowed, the outlook is somewhat more benign than anticipated. But new problems emerged over the past year. The Russia-Ukraine conflict continues, there is a new war and crisis in the Middle East, tensions between the worlds two largest economies remain significant, and patterns of trade and cross-border investment are shifting.

INDIA ECONOMY:

Indias high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress.

Infrastructure is a key enabler in helping India become a US $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Mr. Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors.

The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway.

Infrastructure support to the nations manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical.

The "Smart Cities Mission" and "Housing for All" programmes have benefited from these initiatives. Saudi Arabia seeks to spend up to US$ 100 billion in India in energy, petrochemicals, refinery, infrastructure, agriculture, minerals, and mining.

The infrastructure sector is a key driver of the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from the Government for initiating policies that would ensure the time-bound creation of world-class infrastructure in the country. The infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure, and construction development projects.

The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India and the production-linked incentives (PLI) scheme to augment the growth of the infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water, and irrigation.

In Interim Budget 2024-25, capital investment outlay for infrastructure has been increased by 11.1% to Rs. 11.11 lakh crore (US$ 133.86 billion), which would be 3.4 % of GDP. As per the Interim Budget 2023-24, a capital outlay of Rs. 2.55 lakh crore (US$ 30.72 billion) has been made for the Railways, an increase of 5.8% over the previous year. FDI in construction development (townships, housing, built-up infrastructure, and construction development projects) and construction (infrastructure) activity sectors stood at US$ 26.54 billion and US$ 33.52 billion, respectively, between April 2000-December 2023

While these sectors still remain the key focus, the government has also started to focus on other sectors as Indias environment and demographics are evolving. There is a compelling need for enhanced and improved delivery across the whole infrastructure spectrum, from housing provision to water and sanitation services to digital and transportation demands, which will assure economic growth, increase quality of life, and boost sectoral competitiveness.

FUTURE OUTLOOK

Electric Vehicles are a boon to India in the sense of Economy development and Environment Concerns. Moreover, in the upcoming generations, Company will be moving forward to overpower the Electric Vehicles

We also expect a positive impact on the economy, including the real estate sector. Even though there were limited announcements for the real estate sector, there are likely to be indirect benefits.

OPPORTUNITIES AND THREATS

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. In order to meet Indias aim of reaching a US $ 5 trillion economy by 2025, infrastructure development is the need of the hour. India being a developing nation is set to take full advantage of the opportunity for the expansion of the infrastructure sector, and it is reasonable to conclude that Indias infrastructure has a bright future ahead of it.

Investment in infrastructure contributed around 5% of the GDP in the tenth five-year plan as against 9% in the eleventh five-year plan. Further, US$ 1 trillion investment in infrastructure was proposed by the Indias planning commission during the 12th five-year plan, with 40% of the funds coming from the private sector. Indias logistics market is estimated to be US$ 317.26 billion in 2024 and is expected to reach US$ 484.43 billion by 2029, growing at a CAGR of 8.8%.

Electric Vehicles are growing rapidly as they play a central role in the ambitious objective of zero emission targets set by nations around the world. EV sales have been growing steadily over the past few years. The segment started to see a wide range of offerings from the manufacturers like more affordable models, various choices across different brands and in different segments, enabling rise in sales. The prospect of EV adoption is getting brighter, driven by a combination of factors of policy support, improvements in battery technologies, more charging infrastructure being built, and rising commitments from automakers. Major Government initiatives such as ‘Digital India, ‘Make in India and supportive policies including favorable FDI Policy for electronics manufacturing have simplified the process of setting up manufacturing units in India.

KEY INITIATIVES:

The company has launched the platform for the buy and sell of Second Hand.

The Company has also started Digital EV Newspaper that focuses on latest updates of EV Segment.

CHALLENGES, RISK AND CONCERN

The Company faces normal business challenges of market competition in its business and needs to continuously seek attractive growth opportunities. The Company adopts suitable business strategies to counter these challenges. As a part of the overall risk management strategy, the Company consistently insures its assets and generally follows a conservative financial profile by following prudent business practices.

EV start-ups working extensively on electric vehicles. However, this increase still amounts to less than 1 percent of the sales. Hence the potential for growth remains immense. But then, the companies and the industry have to overcome some obstacles to capitalize on the market entirely. The EV customers are often worried about the vehicles capability to reach the destination before the battery dies out and the absence of charging infrastructure. The EV industrys biggest challenge is vehicle purchase cost and EV maintenance is one of the major causes of this challenge. Battery issues, climate control, and in-car electronics are among the biggest problems in electric vehicles

INTERNAL CONTROL

The Company has an adequate internal control system commensurate with its size and the nature of its business in order to achieve efficiency in operation and optimum utilization of resources. The Companys internal control systems comprises policies and procedures designed to ensure sound management of its operations, safekeeping of its assets, optimal utilization of resources, reliability of its financial information, and compliance. Internal audits are conducted in the Company on regular basis.

HUMAN RESOURCE/INDUSTRIAL RELATIONS:

Human resources are the Companys most valuable asset. The Company invests in its employees through education and training programs, with an emphasis on improving production quality and level. The Company has always prioritized individual and team development. With regards to human resources, the business key focus is on creating ambitious prospects for personal and professional progress through training and ample career advancement assignments. The Management and the employees are dedicated to achieve the corporate objectives.

CAUTIONARY STATEMENT

This report may contain certain forward looking remarks within the meaning of applicable Securities Law and Regulations. Many factors could cause the Companys actual results, performances, or achievements to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in Government regulations, tax regimes and other statutes.

Disclaimer: All the data used in the initial sections of this report has been taken from publicly available resources and discrepancies, if, any, are incidental and unintentional.