Tivoli Construction Ltd Management Discussions.

Macroeconomic Review:

In a backdrop of global uncertainty and slowing economic growth, India was a bright spot in 2016-2017 with robust macroeconomic fundamentals. The year was marked by two major domestic policy developments: passage of the Constitutional amendment which paved way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the Rs. 500 and Rs. 1,000 bank notes in the country. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth. It is also a bold new experiment in the governance of Indias cooperative federalism. GST has been implemented w.e.f. 1st July, 2017. The initial figures of taxes collected for the month of July 2017 is at Rs. 92,283 Crores and are quite encouraging.

Demonetization had short-term costs. Contemporary evidence tended to suggest significant disruption for the first six to eight weeks due to unprecedented cash constraints throughout the economy. However, the national income data published by the Central Statistics Office (CSO) does not suggest any significant reduction in growth in the third quarter of 2016-2017, which coincided with demonetization. The third quarter tends to be muted. In 2015-2016, the growth rate of real gross value added (GVA) in Q2 was 8.4 %; while in Q3 it was 7 %, or a sequential drop of 1.4 percentage points. In 2016-2017, GVA growth in Q2 was 6.7 %, and in Q3 it was 6.6 %. Thus, despite the effects of demonetization for much of Q3 financial year 2017, the negative effect - as reported by the CSO - has been only 10 basis points. What the data so far suggests is that the demonetization effect was more moderate than what the critics claimed it would be. And it looks as if its effects have been transitory.

Indias Construction and Infrastructure Sector

The infrastructure sector is at the heart of growth of India. Estimates suggest that the country needs close to Rs. 31,000 billion (US$455 billion) to be spent on infrastructure development over the next five years, with 70 % of funds needed for power, roads and urban infrastructure segments. Despite this need, Indias rank on infrastructure development in the Global Competitive Index was at 68 in 2016-2017 - an improvement of only 19 places compared to 2014-2015. Notwithstanding an enormous demand for physical infrastructure, the sector is facing significant challenges, as the developers, the financial community and the government grapple with stalled projects, non-performing loans and widening gap between performance and targets.

Consequently, Indias construction growth in GDP terms has tapered off substantially since 2011-12.

After an impressive 10.8 % growth in 2011-12, the sector has seen much lower activity since and grew by only 3.1 % in 2016-2017. The worrying factor is that growth in overall Gross Fixed Capital Formation (GFCF) has also reducted significantly from 6.1 % in 2015-2016 to 0.6 % in 2016-2017.

Opportunities and Threats:

Various factors affecting the business and economic environment may turn into an opportunity or challenge for the Company.


The overall outlook on economic growth of the country has improved with the Goods and Services Tax coming into force from July, 2017 and the effects of demonetization getting over. It is expected that this will facilitate the industry to grow at a faster rate in the medium and long term. The forecast is that the economy will grow more than 7.2 % in the financial year 2017-2018.

The interest rates have softened and inflation is under control. The industry and infrastructural sectors are expected to benefit out of this in the coming years.

There was also some improvement in Governments fiscal condition. Revised estimates suggest that with gross tax revenues increasing from 10.6 % in 2015-2016 to 11.3 % in 2016-2017. The fiscal deficit has reduced from 3.9 % of GDP in 2015-2016 to 3.5 % in 2016-2017.

On the external economic front, the trade deficit declined by 23.5 % in April-December 2016 over the corresponding period of 2015-2016. This was driven by a contraction in imports, which was far steeper than the fall in exports. Thereafter, during October to December, both exports and imports started a long- awaited recovery, growing at an average rate of more than 5 %.

In 2016-2017, therefore, not only has India established itself as the worlds fastest growing major economy, underpinned by a stable macro-economy with declining inflation and improving fiscal and external balances, but it has also emerged as one of the few economies enacting major structural reforms that have strong longer term implications.

Risks and Concerns:

GST has been implemented from 1st July 2017 hence the filing of different forms and returns has added to the short term challenges. The Company evaluates the associated risks while making an investment decision.

Internal Control Systems and their adequacy:

The Company has satisfactory internal control system. The Company has an adequate system of internal controls to ensure accuracy of accounting records, compliance with the applicable laws & regulations.

Financial Performance with respect to Operational Performance:

Revenue from Operations showed same earnings of Rs. l,49,625/-compared to last year.

Human Resources:

There has been no material development on the Human Resource front during the year. The Company had 2 employees as on March 31,2017.