Steel Strips Infrastructures Ltd Management Discussions

Infrastructure sector is a key driver for the Indian economy. It has witnessed considerable progress in the past few decades. Most of the infrastructure development sectors moved forward, but not to the required extent of increasing growth rate up to the tune of 8 to 10 per cent. In the years ahead, the construction industry in India has to overcome various challenges with respect to housing, environment, transportation, power or natural hazards.

India offers a favorable business environment and a stable political system. The one and five-year risks of investing in the Indian infrastructure sector are less than the world average. The countrys infrastructure sector presents lower risks than the other sectors of the economy.

Indian infrastructure and construction industry has grown exponentially, in part due to massive government impetus and in part due to high market sentiments. The country, which has initially targeted the low-hanging fruits, is now poised to take up more complex and technologically intense projects. The focus has moved from cost efficiency to time and competence. The Indian regulatory environment is expected to further boost the construction industry in order to provide the basic physical infrastructure for the nation. Careful selection of project, in-depth understanding of taxation structure, proper feasibility analysis and tie-up of funding would considerably smoothen the way forward.

The infrastructure sector has become the biggest focus area for the Government of India. Indias GDP is expected to grow by 8% over the next three fiscal years, one of the quickest rates among major developing economies, according to S&P Global Rating. Despite global challenges, including low productivity and geopolitical tensions, Indias comprehensive infrastructure approach positions it as a beacon of resilience and economic vitality.

With the present emphasis on creating physical infrastructure, massive investment is planned in this sector. This requirement is of an immense magnitude. Better construction management is required for optimizing resources and maximizing productivity and efficiency. The outstanding performance under demanding situations in the past will stand in good stead and give confidence to the Indian construction industry to bring about an overall development in the infrastructure of the nation.

Indias infrastructure sector is poised for strong growth, with planned investments amounting to US$1.4 trillion by 2025. 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. NIP program outlines the injection of massive capital into various sub-sectors, including energy, roads, railways, and urban development. This unprecedented push is expected to spawn associated industries, create jobs, and stimulate the economy. Specific focus areas are the expansion of public digital infrastructure, clean and renewable energy projects, and establishing resilient urban infrastructure. This ambitious undertaking seeks to enhance Indias global competitiveness and improve the quality of life across its vast populace. However, Companies also face challenges related to financing, Land acquisition and environmental clearances.

India is witnessing significant interest from international investors in the infrastructure space. Emphasizing the importance of investment for creating modern infrastructure, seven engines of growth have been identified roads, railways, ports, airports, mass transport, waterways and logistics infrastructure, Indian government has given the much-needed push to the infrastructure sector. As per the Department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the development and construction sector stood at US$ 26.54 billion and US$ 33.52 billion, respectively, between the period of April 2000 and December 2023.

Govt. Initiatives for the Sector

India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion. The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. 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, which is a 100 lakh-crore project has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway.

Indias government has announced plans to increase its capital expenditure on infrastructure projects to rupees ()11.11 trillion ($134bn) in its interim budget for 2024-2025, up 11% from the previous fiscal year, boosting the funds available for the sector for the fourth consecutive year.

The earmarked spending for infrastructure for the next fiscal year is expected to account for 3.4% of the south Asian economys GDP.

The full and final budget for financial year 2024-25 will be presented in July, after the Indian general elections and formation of a new government in June 2024.

Government has allotted Rs2.78 trillion to the Ministry of Transport & Highways for the development of road infrastructure across the country.

The revenue from operations during the year under review has improved to 122.36 lakh as against 111.30 lakh during the previous year. The net loss from operations after tax worked out to 132.90 lakh as compared to net loss of 136.64 lakh in the previous year. Company is continuously striving to strengthen its operations in near future.

The Company has effective and robust system of internal controls to help management review the effectiveness of the financial and operating controls and assurance about adherence to companys laid down systems and procedures. Proper controls are in place, which are reviewed at regular intervals to ensure that transactions are properly authorized & correctly reported and assets are safeguarded. The Audit Committee periodically reviews the findings and recommendations of the Auditors and takes necessary corrective actions as deemed necessary.

Risks and Concerns

The Company has a robust Enterprise Risk Management process in place, which is a holistic, integrated and structured approach to manage risks with the objective of maximizing shareholders value.

The risk management process broadly consists of identification, assessment, mitigation, prioritization and monitoring of risks. The ERM process allows the Company to:

Enhance confidence in achieving its desired goals and objectives

Effectively restrain threats to acceptable levels

Take informed decisions about exploiting opportunities

Owing to the nature of the industry the Company operates in, it is exposed to a variety of risk factors which are broadly categorized into technical, physical, construction, performance and legal risks.

A tight risk process is carried out from pre-bid to project completion stage to manage, mitigate and monitor these risks by adopting specific risk mitigation measures. During the year, the Board has reviewed the process and the Risks that have been identified for the business. Some of these key risks that the Company faces along with their mitigation strategies adopted are listed below:

The infrastructure sector has become the biggest focus area for the Government of India to fulfill its US$ 5 trillion economy dream The Government has suggested investment of 50,00,000 crore (US$ 750 billion) for railways infrastructure from 2018-30.

(References: Media Reports, Press releases)

We have examined the Companys compliance of conditions of Corporate Governance by Steel Strips Infrastructures Limited for the year ended on 31 March 2025 as stipulated in Schedule V of SEBI (LODR) Regulations, 2015.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance with the conditions of the Corporate Governance as stipulated in the said clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

On the basis of our review of the relevant records and documents maintained by the Company and furnished to us for review and the information and explanations given to us by the Company, we certify that the Company complied with the conditions of Corporate Governance as stipulated in Regulation 27 of SEBI (LODR) Regulations, 2015 of the above mentioned Listing Agreement with the Stock Exchanges.