Steel Strips Infrastructures Ltd Management Discussions

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. India stands out as the fastest-growing large economy, projecting robust real GDP growth around 7 percent in the fiscal year 2024-25, which is expected to be sustained in the next fiscal year Despite global challenges, including low productivity and geopolitical tensions, Indias comprehensive infrastructure approach positions it as a beacon of resilience and economic vitality.

Being one of the most resilient sectors, it plays a crucial role in accelerating Indias overall development, thereby driving its economic growth. India has to enhance its infrastructure to reach its 2025 economic growth target of US$ 5 trillion. Increased government spending on more extensive scale projects offers strength to Indias competitiveness across the globe. Infrastructure is a key enabler in helping India become a Us$ 26 trillion economy.

Investments

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.

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 2.78 trillion to the Ministry of Transport & Highways for the development of road infrastructure across the country.

OPERATIONAL PERFORMANCE

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:

Road Ahead

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)