soril infra resources ltd share price Management discussions

Economic Overview

The FY 2020-21 ended with hopes that the world will be able to control the COVID-19 pandemic with vaccination solutions and programme picking up. The year was an extraordinary experience, affected by the pandemic which disturbed the socioeconomic development globally. In FY 2020-21, the global economy contracted by 3.3%, the largest contraction on record, at least since World War II. Much of it was contracted in the first half of the financial year 2020-21, as several countries enforced strict lockdowns. Economies bounced back in varying speed- in subsequent quarters, on the back of large fiscal stimulus packages, across all developed countries.

As a result of the Central banks policy across countries, there was a surfeit of liquidity. This led to a strong rally in prices of many industrial commodities, stimulus-related demand and supply-side disruptions. The latest IMF forecast suggests a strong recovery of the economy in global GDP; however, the occurrence of second and third waves has created a downside risk to the outlook of a strong growth rebound.

The Indian economy, which was firmly on the path of recovery in the second half of FY 2020-21, was hit by a rather unexpectedly virulent second wave of COVID-19. That caused a severe strain on healthcare facilities in many parts of the country, which led to localized lockdowns and a fall in mobility to levels seen a year ago. This may lead to some reassessment of growth estimates for FY 2021-22. As a silver lining, disruptions to production and supply chains have been far less severe during the second wave than during the first wave.

However, the continued accommodative monetary policy of the RBI and the expected increase in CapEx from the Government are factors that will support growth recovery. The longer-term prospects for the Indian economy continue to be robust. Various initiatives driven by Atmanirbhar Bharat mission, privatization of public sector enterprises, monetization of assets, implementation of National Infrastructure Pipeline, targeted investment incentives through the Production-Linked Incentives Scheme and the new Labour Code, are likely to spur a virtuous cycle of investments and growth in the medium term.

Business Overview

The pandemic has tested the resilience ability of our businesses, people and financial strength. The businesses of the company worked on the framework of respond, recover and re-imagine to tide over the challenges. Our approach has reaffirmed our principles to create sustainable businesses directly and through its subsidiaries. The Company is engaged in the businesses of financing & related activities, equipment renting services, LED, management and maintenance services, etc. All businesses shall always imbibe technology, customer needs & have exceptional standards of governance.

During the year under review, the business operations of the Company faced macro-economic challenges. COVID-19 resulted in lockdown impacted revenue. The management team of the company took swift action to align the operational matrix and had a profit of Rs. 7.57 crores compared to a loss of Rs. 4.89 crores in FY 2020-21, with revenue being Rs. 134.85 crores in the current year compared to Rs. 174.32 crores in FY 2020-21.

Your Directors believe that all these businesses have huge potential and the Company shall focus on the following aspects as we sail through these unprecedented times:

1) Ensure that business leadership takes responsibility and builds trust with all stakeholders - employees, supply chain partners, and customers.

2) Focus on strengthening the value chain through an innovative and competitive approach towards products and services.

3) Balance risks and opportunities for all key issues.

The Board has geared itself to navigate the challenges posed by COVID-19. The Company is focused on capital preservation, balance sheet protection, and operating expenses management.

The Company continues to do an impact assessment of the pandemic, based on internal and external information available (up to the date of approval of financial results), of its liquidity position, recoverability, and carrying values of receivables and other assets including financial assets. It accordingly made provisions or impaired assets wherever required and accounted for it in the financial books. The impact assessment of COVID-19 is an ongoing process and the Company will continue to monitor any material changes.

The management teams of the respective businesses regularly assess policy and programs of the economy to evaluate the impact on income, operating costs, productivity, competitiveness and sustainability.


Financing & related activities, branded as "Indiabulls Rural Finance"

The Company forayed into financial services business in the financial year 2019 by acquiring a Non-Banking Finance Company registered with RBI.

The NBFC operates in 11 branches with new age loan origination and management system; and has an AUM of Rs. 237.52 crores (Previous year Rs. 235.45 crores) comprising 2760 clients with very insignificant NNPA. The company had a pre-tax profit of Rs. 15.55 crores in FY 2020-21 as against Rs. 10.72 crores in the previous year. The Company has a capital adequacy ratio of 60.73% and a net worth of Rs. 135.93 crores as of March 2021. The management has been able to successfully align the operations matrix with revenue and conserve capital during the pandemic.

The Company shall continue to perform and transform credit delivery by the virtue of its people, technology, and understanding of the customer profile.

The Company is focused on providing largely secured term loans to MSME, small businesses, and traders for business purposes and also offers home loan in affordable and low ticket size categories, largely to the MSME sector employees and business owners in Tier II and Tier III cities, who are the drivers of economic growth in the country.

The announcement of countrywide lockdown dragged the MSME sector in unexpected times. From April to June 2020, the sector faced challenges related to debt repayments, wages/salaries, statutory dues, etc. Enterprises working in essential commodity businesses were better off in terms of interrupted but predictable cash flows. Some of the important relief measures declared by the government to empower MSMEs are

• Definition level change for MSME;

• Credit and finance scheme: Collateral-free Automatic Loans up to INR 3 lakh crores; along with subordinate debt up to INR 20,000 crores;

• Allocating funds for equity participation;

• Relief to non-performing assets;

• Clearing off dues to MSMEs; and

• Disallowing global tenders

Owing to the strong government support and the resilience shown by MSMEs, the sector has been able to take off, scripting a revival story.

A brief overview of the MSME sector:

The Micro, Small and Medium Enterprises (MSMEs) sector contributes significantly to the Indian economy in terms of GDP in exports and generating employment.

MSME Units (#) Jobs created Contribution to exports % of GDP
6.34 crores 11.09 crores 48.10% of total exports 30.27% of the GDP

The MSME sector has consistently maintained a growth rate of over 12%. More than 50% of the MSMEs are based in rural areas, which indicate a significant rural workforce in the MSME sector, and exhibits the importance of these enterprises in promoting sustainable and inclusive development.


(Source: GOI, Ministry of MSMEs Annual Report 2020-21)

Particulars ( lacs crores) Micro Small Medium Total
Debt demand 13,32,000 24,57,000 3,75,000 41,64,000
Debt Supply 13,54,000
Debt gap 28,10,000
Debt Demand Growth Debt Demand- sector wise
21% CAGR 47% Manufacturing
53% service sector


(Data Source:

The Company shall continue to progress with the above opportunity and imbibe an asset-light portfolio model.

Equipment renting services branded as "Indiabulls Store One"

"Indiabulls Store One" is the leading equipment rental solution provider with a pan India presence. The primary equipment in our rental fleet includes tower cranes, passenger hoists, piling rigs, excavators, dozers, motor graders, wheel loaders, mobile boom placers, transit mixers, dumpers, steel stir-up machines, concrete batching plants and many more. The equipment offered by your Company is of reputed global brands with unmatched productivity and efficiency.

We have our offices in Mumbai, Gurgaon, Kolkata, Hyderabad, Bangalore, Pune and Chennai. We have rental yards at key locations to serve on a pan India basis and ensure higher productivity. We are providing seamless services to our customers through a focused and professional team managing the business.

FY 2020-21 has been challenging in a lot of aspects due to COVID-19 lockdowns and its impact on real estate and construction companies. Despite strong headwinds in Q1FY20-21, our equipment rental business picked up its pace and executed new rental deployments in Q2 & Q3 of FY20-21, which helped our business to improve revenue in the respective quarters. Our Operations team ensured that equipment operated at project sites despite many supply chain disruptions and skilled manpower challenges. The culture and dedication of our team has been very critical for the customer service mission that we serve.

Our primary customer segments are real estate, airports, precast, infrastructure, metro, mining, petroleum refinery, piling, industrial, and road. In Q1FY21-22, we have also secured orders for rental deployment into the power segment and cement plants; this will further strengthen our position as a leading equipment solution provider in the country.

The Company also offers new aerial work platforms which include Scissor lift and Boom lift. We expect to increase our penetration and increase our sales in the next financial year 2022. We have sold our machines to key customers in construction, oil & gas, auto and breweries segment. In FY21-22, we plan to increase our customer base and target new segments such as pharma, warehousing and cement industries. Our current product range includes electric scissor lifts, diesel scissor lifts, articulated boom lifts, and telescopic booms. We shall be gradually adding more variants of machines required by the construction and infrastructure sector. The products offered by the Company are of the highest safety standards and comply with European standards.

During FY20-21, the renting division had total revenue of Rs. 46.73 crores as against Rs. 75.65 crores in the previous year primarily due to COVID-19 related disruptions. We have been able to sail through the pandemic because a significant portion of our cash expenditure is variable in nature. We have also substantially leveraged our current engineering capacity to reduce the third party maintenance services and have successfully minimized other discretionary expenses across general and administrative expenses.

The equipment rental industry is highly fragmented and diverse. We have extensive resources and competitive advantages. This results in our customers increasing their reliance on our execution and management abilities. We have a sustainable business model in place as our fleet has breadth and depth to serve sectors with different trade cycles.

We continue to pursue excellence in the following areas:

• Customized leasing and rental solutions

• Ability to swiftly mobilize and execute projects across the country

• Design and execution capabilities to handle complex projects

• Professional team to manage O&M activities at project sites

• Highest safety standards

• Higher availability and reliability of rental machines, which helps customers to execute projects faster

Your company is fully poised to grow its equipment rental business in FY21-22, by taking advantage of the governments investment in the infrastructure sector and the revival seen in the real estate segment. In the Union Budget 2021-22, the Central government has made the highest ever budget outlay of Rs. 1.18 lakh crores for road transport and highway infrastructure, an increase of nearly 18% than what it is estimated to spend by March21. The Road Transport Ministry targets to build a record 11,000 Km NHs during the current financial year.

Similarly, the railways have been considered as a priority sector, wherein the Central Government has allocated Rs. 1.10 lakh crores with a capital outlay of Rs. 2.15 lakh crores, this is 33% more than the revised capital outlay expenditure for 2020-21. The Central Government will provide funding to key metro projects in Kochi, Chennai, Bengaluru, Nagpur and Nashik with an estimated budget outlay of Rs 88,060 crores.

The Governments focus on affordable housing and the taxation benefits offered to homebuyers will result in the revival of the housing real estate segment. In FY21-22, MoHUA has been allocated Rs 54,581 crores, comprising Rs 27,500 crores for Pradhan Mantri Awas Yojana (PMAY) and Rs 13,750 crores for Smart Cities Mission/Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and other urban missions.

Further, the ministry of Jal Shakti has received Rs 2,87,000 crore for five years to provide 2.87 crore tap-water connections in 4,378 statutory towns and liquid waste management in 500 AMRUT towns. In addition, SBM-2 has been launched with Rs 1,41,000 crore for five years to focus on safe sanitation, water harvesting and recycling. Further, urban bus transport received Rs 18,000 crores to include 20,000 additional buses in the city transport system.

We are optimistic that the pandemic will prove to be a watershed moment in equipment renting demand since the government will be compelled to work on a very strict monitoring mechanism of infrastructure projects implementation to restore the GDP growth of at least 9% in the near future.

LED lighting branded as "lb LED"

The COVD-19 pandemic challenged and tested our tenacity, resilience and compassion to the core. And the team sees that our vision requires us to walk several miles, more clearly, to fulfill the customer experience and harness the potential of technology for a more beaming, productive and connected spending on lighting and electrical in the near future.

Indiabulls LED has created an exciting story in institutional and consumer LED Lighting segments in India with a primary focus on providing reliable, sustainable and technologically advanced LED lighting products to Indian consumers and institutional buyers. All products are designed, developed and manufactured in India.

During the year, we enhanced our product portfolio to meet the needs of a new market environment and consumers. Our product team focuses on generating significant energy savings for our consumers and rolling out multiple variants of energysaving products.

Indiabulls LED completed the year with a comprehensive product range; creating reach and presence in pan India markets. The revenue of Rs 50.16 crores in the current year was lower as compared to the previous year, due to countrywide lockdowns and business disruptions. Our companys financial flexibility supported us to navigate the current environment, support our operations and pursue our goals.

We continued to expand our geographies and distribution network across the country. As on March, 21, we are present in over 600 towns/cities of India through 650 plus channel partners and more than 15000 retailer points for customers and consumers.

The lighting division possesses one of the best talent pools in the LED Industry in R&D, development, design, supply chain management, and sales functions. We are determined to offer appropriate lighting solutions with an underlying emphasis on "Lights that understand you".

The words "Lights that understand you" inspires us to create a palette for our partners - architects and designers. Lights should be innovative to kill bacteria; mirror circadian rhythm; contribute to positive patient outcomes in health centers; create vibes of confidence and positivity in all lighted spaces to perform better. We shall be more sensitive to GHG and make the future more productive.

The Company has state of the art contract manufacturing facilities located in the Mumbai region, Daman, Hyderabad, Baddi, and Bangalore, and has set up a technologically advanced Lighting Innovation Centre in Mumbai, which aspires to be the best in class in the industry.

Our growth drivers:

• Our commitment to doing business the right way. Our customers and supply chain partners have to align with ethical practices.

• State of the art Centre of Excellence in product innovation, adapting new technologies and providing cost-effective LED lighting solutions to customers.

• Consistency of quality. We shall continue to adopt the best practices for product reliability. We are an ISO 9001:2015 certified Company.

• Delivering customer service as per promise.

• Culture of openness, tolerance and collaboration.


In the previous years, the team had many celebrations on winning prestigious accounts. In the midst of the COVID pandemic, demand of office space lighting sinked. The frontend and back end teams of Institutional Project Lighting changed gear to focus more on pharmaceuticals and food & beverage plant lighting, where demand cropped up and met the expectations of these new set of customers in spite of all disruptions.

We shall strive to grow further in IT/ITES, banking and financial institutions, real estate, manufacturing, pharmaceutical industries and infrastructure projects in the institutional LED segment and service residential consumers through the consumer LED segment.

Management and maintenance services:

The Company has developed expertise in all avenues of management and maintenance of properties. The Company currently manages and maintains residential properties in Mumbai and NCR for which the revenue was Rs 37.96 crores as against Rs 26.85 crores in the previous year.

The management commends the commitment of the maintenance team which continued to provide all services by staying in the residential campuses for long duration during the pandemic.

companys strengths - distinguishing attributes of our business operations

• Deep domain knowledge in every business undertaken to exceed customer expectations.

• Emphasis on better project management through continuous development of domain expertise in all businesses.

• Endeavour to lower costs while maintaining quality and managing complexity.

• Focus on improving the working capital level and optimum treasury activities.

• Continued focus on reducing working capital levels by an emphasis on speedy customer collections, accelerating invoicing of work and supplies completed, and reducing inventory levels.

• Promoting innovative disruptions of business models through digitization and technology.

• Actively investing in people, products and processes to accelerate business vision.


Financing & related activities Opportunity drivers:

• The market share of NBFC compared to banks continues to expand due to the speed of delivery. The expansion will be supported by NBFCs ability to customize products, price the risk and manage ultimate credit costs, especially related to small-ticket loans viz small ticket housing loans and loan against property.

• Increasing aspiration of people to own homes and expand business due to rapid change in social and physical infrastructure across the country.

• Low credit penetration in semi-urban and rural India.

• Government policy support on affordable housing. India still faces a huge shortage of houses. The increasing urbanization will enhance financial literacy and quality of living, which will boost demand for housing in urban areas. Apart from the urban segment, Tier II and III cities and rural areas are also likely to witness considerable improvement in finance coverage mainly due to the governments efforts to provide housing for all.

• Faster growth in demand for financial products from semi-urban and rural areas will be seen, because of increasing financial literacy and awareness, mobile penetration, and the Pradhan Mantri Jan Dhan Yojana bank accounts (the scheme is aimed at bringing the unbanked under the formal banking system).

Government and regulators continuously supporting the sector through various measures. RBI announced several measures to improve liquidity and mitigate the impact on credit quality due to the lockdown.

Equipment renting services

Opportunity drivers:

• Infrastructure demand of the young demographic in India and impetus to develop new areas.

• Continuously adopting new technologies to achieve better productivity in project execution space.

• Companys presence in all regions and opening branches in major cities of the country.

• Service differentiation by keeping simple performance matrices.

Although the equipment rental industry is highly fragmented and diverse, the Company believes that it is well-positioned to take advantage of this environment. As a large company, it has extensive resources and compelling advantages. The Companys size gives it greater purchasing power and the resources to provide customers with a broader range of equipment and services. The Company is also able to transfer equipment across various regions and sites to satisfy customer needs.

LED Lighting business:

Opportunity drivers:

• Expected market growth by virtue of government push on electrification and improvement of infrastructure and housing.

• Pan India distribution network of products ensure that the Company is able to increase its market position and introduce varied products for all segments.

• Under saturation of LED product range. With changes in demographic patterns and urbanization, there is a lot of opportunity to grow in this market.

• Wide product portfolio in both consumer and institutional categories.


Risk is an essential part of business and taking risk is a fundamental driving force in business. In fact, it is the unique differentiator between companies who thrive and those who merely survive or otherwise. This has never been more important than in todays VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world. There are several rapid, unprecedented and unpredictable changes taking place all the time. The size, scale and scope of these changes in todays world are enormous. Many of these are driven by changes in technology and have consequential impacts on the supply chain, logistics and costs. The aforementioned uncertainties warrant a robust process and framework to minimize threats and capture opportunities that create sustainable value for the organization. The risk horizon considered includes long term strategic risks, short to medium term risks, as well as single events.

Key business risks identified and its mitigation approach by the Company:

Credit risk

This is the risk of loss arising from default and is also known as default risk. Each of the businesses has distinct policies and monitoring mechanisms for managing credit risk.

Credit risk is managed by capping exposures on the basis of customer profile and security offered. The Company ensures portfolio diversification, stringent approval processes, and periodic remedial measures to maintain the asset quality. The

Companys NBFC has a strong framework for the appraisal and execution of credit facilities that involves a detailed evaluation of industry, business, financial (including sponsors financials strengths), and defined approach to risk identification and mitigation.

Interest rate risk

Interest rate risk is the risk of changes in market interest rates and its impact on net interest income or net operating income as per the business model.

The Company manages the interest rate risk by regularly reviewing the re-pricing characteristic of balance sheet positions. The management keeps a good balance of floating rate and blended rate structures to manage the market dynamics.

Business/ Strategy risk

Business/ strategic risk is the current or prospective impact on the Companys earnings, capital or reputation arising from faulty decisions, improper execution of decisions, or lack of responsiveness to industry, regulatory, economic, or technological developments.

The Companys management of this risk is guided by certain core principles:

1) Diversification - The Company constantly maintains a diversification in its business through various products, customer segments, and geographies.

2) Technology risk - The Company continuously reviews the potential losses due to technology obsolescence in LED inventory and EHB machines.

3) Balanced growth - The Company strives to grow and gain market share while maintaining asset quality and margin.

4) Prudent Provisioning - The Company management ensures that the books reflect the true financial position by estimating the correct provision for bad assets.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, systems, or external events.

The company has built into its operations process proper segregation of functions, clear reporting structures and well- defined processes. The risk is that the purchase of various goods and services is not managed at an economical cost. The efficiency of operations is a key thrust area for the Company. The Company continuously develops and collaborates with suppliers to ensure that operations are not affected by any delays and optimum schedule of procurement and payment is followed to manage the operations. The Companys technology team ensures that all procurements are futuristic and valuecentric to the Company.

The Company has a well-designed business continuity plan to meet any operational exigencies.

Legal and Compliance

The risk that the Company is found to have inadvertently violated laws covering business conduct. The countrys regulatory framework is ever-evolving and the risk of non-compliance and penalties may increase for the Company, leading to reputational risks.

Hiring professionals & experts and periodic and ad-hoc reporting to the management for oversight ensures the effectiveness of managing compliance.

Competition Risks

The risk is that the Company may face stiffer competition for the growth of its businesses. With the expanding capacities of existing players and also the emergence of new entrants, competition is a sustained risk.

Strategic initiatives to enhance brand equity through enhanced marketing activities and continuous efforts in enhancing the product portfolio and value-adding services have been the thrust areas of the Company.

Financial Risks

The risk of exposure to interest rates, foreign exchange rates, and the requirements of cash for operations.

The Company has elaborate financial risk management policies which are followed for every transaction undertaken. The Companys policies to counter such risks are reviewed periodically and keep a track of the operations to ensure a consistent cash conversion cycle.

Information Technology Risks

Risks related to information technology systems, data integrity, and physical assets. The Company deploys information technology systems including ERP, SCM, CRM and Mobile Solutions to support its business processes, communications, sales and logistics. Risks could primarily arise from the unavailability of systems and/or loss or manipulation of information.

To mitigate these risks, the Company uses backup procedures and stores information at two different locations. Systems are upgraded regularly with the latest security standards.


The Companys human resources provide the business edge. The Company continuously builds a talent pipeline at the entry, junior and middle levels of its businesses. Further, the Company has initiated various training and development programs for its employees to capitalize on business opportunities.

The Company is enhancing its HR processes for scale, agility, and consistent employee experience. The HR environment ensures that the Company houses P&L and operations leaders. As of March 31, 2021, the Company had a strong team of 263 employees, who are aligned and dedicated to the Companys goals.


The Company has a sound and adequate system of internal controls commensurate with the size of the Company and the nature of its business to ensure that all the assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded, and reported correctly and adequately by appropriate empowered authorities. These are routinely tested and certified by statutory and internal auditors and cover all offices, warehouses and key business areas. Significant audit observations and follow up actions thereon are reported to the audit committee. The audit committee reviews the adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems.


In compliance with the requirements of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with other key financial ratios and changes in return on net worth of the Company (on a standalone basis) including detailed explanations therefor are as under:

Ratios 2020-21 2019-20 Explanation of the major change
Debtor Turnover Ratio 1.78 2.28 Due to the COVID-19 pandemic, collection was affected.
Inventory Turnover 3.81 6.18 Due to the COVID-19 pandemic, market demand types changed.
Current Ratio 0.95 0.85 No significant change
Interest Coverage Ratio 1.86 0.46 The performance improved due to alignment and reduction in operational costs and old loans getting paid.
Debt Equity Ratio 0.12 0.22
Operating Profit Margin 34% 36%
Net Profit Margin 4.71% (-)3%
Return on net worth 3.28% (-)2%
Net worth ( Cr.) 235.44 226.78 Management matched the operations matrix with revenue during the COVID-19 times.



Statements in this Report on Managements Discussion and Analysis describing the Companys objectives, estimates and expectations may be forward-looking statements based on certain assumptions and expectations of future events. Actual results may differ substantially or materially from those expressed or implied. The Company here means the consolidated entity consisting of its subsidiary (ies).

The Company assumes no responsibility nor is under any obligation to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events.