tarang projects consultant ltd Management discussions

As per latest World Economic Outlook report, global growth still remains in low gear. For FY 2015, it is projected at 3.5%. In USA, growth is expected to rise from 2.7% in 2014 to around 3.6% in 2015. In Euro area, growth in the third quarter of 2014 was modestly weaker than expected and continues to decline. In Japan, the economy fell into technical recession in the third quarter of 2014 but it may strengthen in 2015–16. Russia’s sharp slowdown and depreciation of the Rouble have also severely weakened the outlook for other economies in the Commonwealth of Independent States (CIS) group. China’s economic growth is expected to reduce from 7.4% to 6.8% in 2015. Sizable uncertainty about oil prices in the future and the underlying drivers of the price decline have added a new risk dimension to the global growth outlook in Sub-Saharan Africa, Nigeria and South Africa.

Indian GDP at Constant prices (2011-12) in Q3 has registered a growth of 7.5% (at factor cost it is 5.8%) during the year 2014- 15. The growth in the ‘construction’ and ‘manufacturing’ sector is estimated to be 4.5% and 6.8% respectively. India’s position in the global economy is showing signs of stabilizing and is expected to improve in the coming years. With the drop in Crude Oil Price, the current account deficit is also under control.

CONSTRUCTION SERVICES

The Company is entrusted with the key activities involving translation of the physical manifestation of design, meeting all the safety and quality standards within the agreed time schedule of the project. We provide Construction Management Services for various clients in India at diverse project locations.

Our services for total Construction Management of a project include:

• Pre-construction activities such as bid management process, constructability study including plot plan review/heavy lift study, etc.

• Site construction management

• Liaison with statutory authorities

• Management of construction quality

• Warehouse management

• Contracts administration

• Pre Commissioning and commissioning assistance

• Contract closing followed by site closing

We believe our technology portfolio and experience in the commercial application of these technologies and related know-how differentiates us from other engineering constructions companies.

PROJECT MANAGEMENT

Project Owners turn to us when they wish to engage the services of a reliable, trustworthy and competent project management consultant, who would steer the project through various undulating terrains in the course of its implementation. Our services are much sought after due to a high degree of mutual trust and confidence reposed by clients, our ability to scale up resources to meet project demands and greater focus on value based engineering, delivering fast track projects within schedule and budgeted cost. Company’s proven track record of project implementation and the ability to provide design, engineering, procurement, construction, and integrated project management and EPC services provides a distinct competitive advantage. Project management services include developing project execution plans, detailed schedules, cost forecasts/ controls, progress tracking & reporting, and the integration of design, engineering, procurement, logistics and construction efforts.

Our core values and fundamental business strategy include constant pursuit of high standards of Quality. We ensure meticulous compliance to Health, Safety and Environment requirements/ regulations during design and delivery of products/services.

Our service offerings range from concept to commission activities, often from the early stages of a project, to complete, total-responsibility, design-build contracts.

FUTURE PROSPECTS

On macroeconomic front, the sign in US’s growth numbers and Euro Zone’s liquidity measures look positive for the global economy. While on Domestic front, Inflation still remains the main driver for monetary and fiscal measures. With the high volatility and sticky nature of inflation, policy level reforms facilitating growth remains a challenge for the policy makers. The tight liquidity conditions which was prevalent during most part of previous fiscal now looks easing with various monetary measures being taken in the form of policy rate cuts at appropriate intervals.

OPPRTUNITIES AND THREATS

Opportunities

The Regulatory level clarity on account of overhauled development regulations is expected to expedite the pace of activity in the sector which had been subdued over last few quarters. Although the sector may experience certain margin pressure on account of increased cost, it may get compensated to some extent through enhanced level of approvals and better inventory absorption. The softening of interest rate on loans, speedier execution and new launches coupled with moderated real estate prices is expected to trigger the inherent demand in the market.

Threats

Any delay in the construction or prolonged construction period will lead to increased cost and the same will affect our profitability. Our projects are subject to risks from natural disasters like earthquake, floods, etc.

OUTLOOK, RISKS AND CONCERNS

The Company has a Risk Management policy with a robust supporting risk management framework which facilitates identification and assessment of new risks and review of presently identified risks. The process is based on identified risks and the risk events or factors which require regular assessment and quick response. Based on the probability and impact of the risk, the requisite controls and action plans have been designed and implemented. The objective of risk management in the Company is to act as enabler in maintaining its knowledge edge, sustaining and expanding the business, being competitive and ensuring execution of projects within budgeted cost and time, resulting in improved turnover and profitability. The Company is committed to further strengthen its risk management capabilities in order to protect and enhance shareholder value. Continuous efforts in creating new opportunities, improving competencies/knowledge in various areas leading to improved performance and leveraging existing knowledge resources, in line with the risk appetite of the company, helps to protect the shareholders’ interests.

Geographical Concentration

Our strategy of being focused to certain geographical region exposes us to, concentrated risks and significant exposure in case of any adverse changes in demand in the region , adverse changes in local development control regulations or local political situation, adverse weather conditions, etc.

Regulatory & Policy Change

Changes in the policies of Government related to environment, FSI and implementation of infrastructure projects and other matters can adversely impact the real estate scenario and hence our business and prospects.

Creditworthiness

Sudden deterioration in the creditworthiness of our clients / debtors can adversely affect our collections and impact financial performance. Our profitability may be impaired if credit terms with our vendors change adversely depending on the type of risk. The Company is combating each risk by various means like strategic tie-ups in construction, qualitative market research, quicker decision making and strategizing the sales and prices with timelines. Moreover, the Company has strengthened its processes related to legal due diligence so as to reduce the risks of getting into projects with longer gestation period mainly due to legal intricacies.

INTERNAL CONTROL SYSTEM

The Company has in place adequate systems of internal controls and documented procedures covering all financial and operating functions. These have been designed to provide reasonable assurance with regard to maintaining proper accounting controls, monitoring economy and efficiency of operations, protecting assets from unauthorized use or losses and ensuring reliability of financial and operational information. The Company has continued its efforts to align all its processes and controls with global best practices.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis describing the Company’s objectives and 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 implied as these statements may be based on certain assumptions of future events over which the company exercises no control. Such risks and uncertainties include, but are not limited to our ability to manage growth, competition, attracting and retaining skilled professionals, time regimes and exchange control regulations.