SORIL Infra Resources Ltd Management Discussions.


The financial year 2020 started off with rising issues in trade between the worlds two largest economies - the U.S. and China. The U.S. and China together account for 40% of the global GDP, and trade disputes between the countries had an adverse effect on the global economy. This impact was not only seen in the commodities and financial markets (equities, bonds, currencies), but also in the output and profitability of firms, which led to businesses deferring investment decisions. The year ended with the outbreak of the Covid-19 global pandemic, which has had a material impact on the world economy, including on the Indian economy. In most countries, including India, there has been severe disruption of regular business operations due to lock down restrictions and safety measures: the impact of which will be felt for a long time to come. However, to prevent a complete economic breakdown, several governments, including the Indian government, have released unprecedented monetary support. The global trade volumes are projected to decline between 13% to 32% in the financial year 2021 as a result of the economic impact of Covid-19.

The Indian economy started financial year 2020 on a cautious note, owing to the ongoing liquidity crisis and initial anxiety around the outcome of the general elections. In May, the NDA coalition was renewed for another term. The government announced a bold vision of making India a USD 5 trillion economy by 2025. Midyear, the finance ministry slashed domestic corporate tax rates to 25%. The Union Budget 2020 estimated the real GDP growth at 5.5% for the financial year 2020. Before the outbreak of Covid-19, the economy was on a recovery path from lower demand positions.

To combat the pandemic, the government ordered a phase-wise lockdown of the country starting March 2020. On the one hand, government measures for safety have relatively contained the pandemic. On the other hand, the lockdown impacted distribution channels and sales. Core industries output contracted by 15% in June, 2020, when the lockdown started being lifted.

To reduce the impact of the pandemic, the government and RBI announced a slew of measures to address the liquidity concerns of financial institutions by means of liberalizing sectors to attract foreign direct investments, upfront capital infusion in public sector banks to alleviate liquidity concerns, reduced corporate tax rates to revive private investment, and targeted long term repo operations to help ease liquidity of NBFCs. The government unveiled Rs 20.9 lakh crore relief package under the Atma Nirbhar Bharat Abhiyan. The five pillars of the package are economy, infrastructure, system, vibrant demography, and demand. With the easing of lockdown conditions, early signs of recovery are visible in the most recent economic data.

As the impact of the pandemic recedes, the Indian economy is expected to rebound in the second half of 2020. High consumer spending of the young and working population coupled with rapid urbanisation of one of the largest fast-growing middle class shall be key indigenous advantages in achieving a stronger economic growth rate.


The Company endeavours to create sustainable business for the benefit of its stakeholders. Currently, directly and through its subsidiaries, the Company is engaged in the businesses of equipment renting services, LED lighting, financing & related activities, management and maintenance services, etc.

During the year under review, business operations of the Company were progressive. The Company established distribution channels of LED Lighting business across the country, completed the first full year of operations of the financial services business, and performed reasonably well in equipment renting services during a tough year for the real estate and infrastructure sectors inflicted by the credit crisis.

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

1) Ensuring that all business operations are gradually restored while supporting all stakeholders - employees, supply chain partners, and customers.

2) Focusing on triggering the next wave of business growth through an innovative and competitive approach towards products and services.

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

The Company has made a detailed 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 has accordingly made provisions or impaired assets wherever required and accounted for it in the financial books. The impact assessment of Covid-19 is an on-going 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 impacts on income, operating costs, productivity, competitiveness and sustainability.


Equipment renting services branded as "Indiabulls Store One"

The Company is pioneer in the field of equipment rental solutions in India. Primary equipment in the rental fleet are 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. All equipment is of reputed international & Indian manufactures.

Indiabulls store one is working with most of the reputed corporate infrastructure companies and providing them end to end solutions in operations and maintenance of rental equipment. The business operates from offices in Mumbai, Gurgaon, Kolkata, Hyderabad, Bangalore, Ahmedabad, Pune and Chennai. Its pan India presence helps to provide seamless services to customers and gives competitive advantage in the market. The professional team managing the business has vast experience and is committed to providing the best customer service.

Renting division started with sales and service of aerial work platform in financial year 2020 and received encouraging orders from eclectic customers. We are initially trading in 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. Aerial work platform equipment segment has huge potential in manufacturing, warehousing, airports, power, ports, and metro. The products offered by the Company are of highest safety standards and comply with European standards.

We are currently serving industry segments such as real estate, precast, infrastructure, metro, cement, mining, petroleum refinery, piling, industrial, and road. Our endeavour is to expand the customer base into new segments such as airports, steel, power, and ports. This will further strengthen our position as a leading equipment solution provider in the country.

During the year end, the renting division had a revenue of Rs 75.37 crores which is a decrease of 11.32% in reference to the previous year primarily due to management adopting stricter credit controls policy in view of the liquidity position in the market.

We continue to pursue excellence in following areas:

• Customised leasing and rental solutions

• Ability to swiftly mobilise 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 take advantage of government investment in the infrastructure sector. In Union Budget 2020-21, the Government has given a massive push to the infrastructure sector by allocating Rs 1.82 lacs crore (US$ 24.27 billion) to enhance the transport infrastructure. The logistics sector in India is growing at 10.5% annually and is expected to reach Rs 16.13 lacs crores (US$ 215 billion) in 2020.

India is expected to become the third largest construction market globally by 2022. India has a investment requirement of Rs 58.32 lacs crores (US$ 777.73 billion) towards infrastructure by 2022 for a sustainable development in the country.

In April 2020, the government set a target of constructing roads worth Rs 15.96 lakh crore (US$ 212.80 billion) in the next two years. Rs 2.39 lacs crores ( US $ 31.81billion) will be invested in smart cities mission.

We are optimistic that the pandemic will prove to be a watershed moment in equipment renting demand as 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 "Ib LED"

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

Having successfully positioned itself in the first two years of operations, Indiabulls LED completed the third year with a comprehensive product range, creating reach and presence in pan India markets. The revenue of Rs 68.24 crores in the current year is an increase by 46.72% as compared to the previous year.

Business strategy has been to establish the distribution network across the country. The vision of the Company is to establish itself in the consumer product segments through LED Lights and scale up the operations to other products at the appropriate time.

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 Company has state of the art contract manufacturing facilities located in 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:

• Very active centre of excellence in product innovation, adapting new technologies and providing cost effective LED lighting solutions to customers.

• Presence in over 150 town/cities of India through 300 channel partners and more than 9000 retailer points for customers and consumers.

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

• Delivering on customer service as per promise.


In the previous year, the team had many celebrations on winning prestigious accounts. We shall strive to grow further in IT / ITES, banking and financial institutions, real estate, manufacturing, pharmaceutical industries, and infrastructure project space in the institutional LED segment and service residential consumers through the consumer LED segment.

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

The Company forayed into financial services business in financial year 2019 by acquiring 100% stake in Littleman Fiscal Services Limited, a Non-Banking Finance Company registered with RBI. Subsequently the name of the company was changed to Indiabulls Rural Finance Private Limited on 24th April, 2019.

The NBFC was acquired on 25th January 2019. Upon acquisition, we started operations and in a short span of time, the management proved its profound capabilities by establishing 24 branches; recruiting 285 employees; implementing new age loan origination and management system; and building a loan portfolio of Rs 235.45 crores comprising 3200 clients with very insignificant NNPA. We had above average profitability in first year of operations. The Company has a capital adequacy ratio of 59.88% and networth of Rs 123.96 crores as on March, 20.

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

The Company is focused on providing largely secured term loans to MSME, small business, and traders for business purposes. We will also offer home loans 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 drivers of economic growth in the country.

Brief overview of 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 12 crores 48.10% of total exports 30.74% of the GDP

The MSME sector has consistently maintained a growth rate of over 10%. About 20% of the MSMEs are based in rural areas, which indicates a significant rural workforce in the MSME sector, and exhibits the importance of these enterprises in promoting sustainable and inclusive development. (Source: CII Website)

Particulars Micro Small Medium Total
Debt demand 13,32,000 24,57,000 3,75,000 41,64,000
Debt Supply 11,68,000 11,68,000
Debt gap 29,96,000 29,96,000
Debt Demand Growth Debt Demand- sector wise
21% CAGR 47% Manufacturing
53% service sector

(Data Source:

The Company shall pursue the above opportunity and is confident in ability to capitalise on the present NBFC environment through its approach to business and abrestness on governance of rural economies and MSME credit policies.

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 24.76 crores.


• 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 working capital level and optimum treasury activities.

• Continued focus on reducing working capital levels by 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.


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:

• Favourable macroeconomic conditions and 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.

• Undersaturation of LED product range. With change in demographic pattern and urbanisation, there is a lot of opportunity to grow in this market.

• Wide product portfolio in both consumer and institutional categories.

Financing & related activities

Opportunity drivers:

• The market share of NBFC compared to banks continues to expand due to speed of delivery. The expansion will be supported by NBFCs ability to customise 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 urbanisation 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 impact on credit quality due to the lockdown.


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 supply chain, logistics and costs. The aforementioned uncertainties warrant robust process and framework to minimize threats and capture opportunities to 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 by the Company:

Credit risk

This is the risk of loss arising from a 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 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 of 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, reputation, or standing 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 ensuring correct provision of bad assets.

Operational risk

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

The company has built into its operations process proper segregation of functions, clear reporting structures and well- defined processes. The risk that the purchase of various goods and services is not managed at economical cost. 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 value centric 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 effectiveness of managing compliance.

Competition Risks

The risk that the Company may face stiffer completion for 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 consistent cash conversion cycle.

Information Technology Risks

Risks related to Information Technology systems, data integrity, and physical asset. 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 unavailability of systems and/or loss or manipulation of information.

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


The Companys human resources provide a business edge. The Company continuously builds a talent pipeline at the entry, junior and middle level for its businesses. Further the Company has initiated various training and development programmes 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 on March 31, 2020, the Company had a strong team of 278 employees, who are aligned and dedicated towards 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 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 Networth of the Company (on standalone basis) including detailed explanations therefor are as under:

Ratios 2019-20 2018-19 Explanation to major change
Debtor Turnover Ratio 2.28 2.37 No significant change
Inventory Turnover 6.18 8.97 Improvement due to better working capital focus
Current Ratio 0.85 0.84 No significant change
Interest Coverage Ratio 0.46 3.45 The reason is lower profit margin which was due to multiple factors viz COVID; Led channel establishment and liquidity situation in market forced us to take hard credit decisions.
Debt Equity Ratio 0.22 0.02
Operating Profit Margin 36% 50%
Net Profit Margin (-)3% 9%
Return on net worth (-)2% 13%
Change in net worth: 2019-20 2018-19 Explanation to major change
Net worth ( Rs Cr.) 226.78 229.95 No significant change


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.