starlog enterprises ltd Management discussions

Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation, according to the World Banks latest Global Economic Prospects report.

COMPANY PERFORMANCE

Starlog is on the road to becoming a debt free Company and there are plans to further enhance the range and limits of our capacity to meet Indias growing needs for energy, infrastructure and natural resources.

Financial Year 2022-23 was beneficial to the Company as it successfully reduced debt and as on 31.03.2023, received "no-dues certificates" from 7 out its 8 banks/lenders, whereas, on the other hand, the Companies revenues and assets came down as it had to sell assets to reduce/clear its debts.

INDIAN ECONOMY OVERVIEW

The Economic Survey 2022-23 highlighted that Indias economic recovery from the pandemic is complete and the economy is expected to grow in the range of 6% to 6.8% in the coming financial year 2023-24

OPPORTUNITIES AND THREATS

The Central Governments emphasis on the renewable energy more particularly on wind power generation and solar energy will bound to increase the demand for the crane rental business. In view of the increased investments in the renewable energy sector and upcoming projects in refinery and gas, cement, power and steel sector, the company expects increase in demand and rental for the cranes. Your Company has been providing heavy lift, plant erection and maintenance services to various large-scale projects. Your Company has maintained a good track record in terms of effective deployment of cranes at competitive rates with due regard to time schedule as well as safety and efficiency in operations.

The growth of crane rental business could be constrained due to the high capital cost required in large scale projects. Furthermore, there may not be suitable cranes available for specific jobs.

RISKS AND CONCERNS Regulatory Risk

Our Company is often required to obtain various licenses, approvals, permissions and registrations for operating, any changes in the regulations or norms by authorities might affect the operations of the Company. In light of various initiatives taken by Government of India to encourage logistics sector and make considerable Investment in this sector, we are likely to predict positive position in near future.

Economic Risk

The Present Global Economic conditions are major factor on which business sustainability is dependent, which in wider aspects have an impact on the Indian Economy as a whole.

Market & Industry Risk

In respect of crane rental business, issues of concern are inter-state movement of cranes and imposition of entry tax for transiting cranes. Delays in realization of payments from the Companys clients both in private and public sectors is a cause of concern. Payment of service tax on the basis of billing, is a drain on the cash flow of the Company. The demand for cranes will grow once the investments in Infrastructure Sector picks up but it will be challenging at prevailing low rental rates. In respect of ports business while port terminal capacity is going up, corresponding enhancements have not taken place in road and rail connectivity causing congestion due to slow evacuation. There is hope that the Government will ensure that the development of ports is matched with an efficient system of evacuation through proper development of railways and highways.

Financial Risk

Our Company operates in the business of cranes rental which is part of infrastructure sector, one of the core sectors of Indian economy. Thus, any changes in the capex shall have effect on our business operations and revenue generation.

Liquidity Risk

The principal source of liquidity of our Company is cash and cash equivalent being generated from the operations of the Company which shall have direct variation with the Companys operating profits.

Interest Rate and Foreign Exchange Risk

The Company has its entire borrowings in Indian Rupee at variable rates of interest. It does not have any significant foreign exchange risk.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The organization is well structured. The Company has adequate system of internal controls commensurate with size and the nature of operation. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions, proper authorization and ensuring compliance of corporate policies. The Company has an Audit Committee and it meets the Statutory Auditors to ascertain, inter alia, their views on the adequacy of internal control system in the Company and keeps the Board of Directors informed of its major observations from time to time. It also evaluates the Companys strategic risk management system and suggests risk mitigation measures for all the key operations.

The company periodically inspects its cranes and is monitoring operations on a daily basis.

FINANCIAL PERFORMANCE REVIEW

Financial statements have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified Section 133 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act. The key highlights of financial performance of standalone business is as under:

During the year under review, your Company recorded Gross Receipts of Rs 9.95 Crores vis-a-vis Rs 21.25 Crores in the previous year. Your Company has recorded profit of Rs 35.64 Crores vis-a-vis a loss of Rs 26.71 Crores in the previous financial year.

INDUSTRIAL RELATIONS

The industrial relation was harmonious and cordial throughout the year.

HUMAN RESOURCE DEVELOPMENT

The Company has made serious efforts in identifying and employing a team of professionally qualified personnel to look after the technical, commercial and regulatory operations of the Company. Moreover, your Company is taking vigilant steps in developing Employees welfare policies for present and future staffs on the ground level as well as HO level. During the year employee relations have been cordial.

DISCLAIMER

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or