<dhhead>MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</dhhead>
The following discussion is intended to convey management’s perspective on our financial condition and results of operations for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our Restated Consolidated Financial Information and the sections entitled "Summary of Restated Consolidated Financial Information " and "Restated Consolidated Financial Information " on pages 69 and 269, respectively. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 31. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer to the section entitled "Forward-Looking Statements" on page 29. Unless otherwise stated or unless the context otherwise requires, the financial information of our Company used in this section has been derived from the Restated Consolidated Financial Information. Unless noted otherwise, some of the industry related information in this section is obtained or extracted from the CRISIL Report (which is a paid report and was commissioned by us solely in connection with the Offer).
Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.
Overview
We are an Indian engineering, procurement and construction ("EPC") companies, ranked number 4 amongst its peers in the power transmission and distribution sector, in terms of operating revenue, for the Financial Year ended March 31, 2024. (Source: CRISIL Report) Our Company primarily focuses on power transmission and distribution business and integrated manufacturing facilities for lattice structures, conductors, and monopoles. We have a track record of four decades in providing comprehensive solutions in the power transmission and distribution sector, on a turnkey basis globally and have been a trusted and longstanding partner. We have completed more than 200 projects in power transmission and distribution vertical since our inception, along with comprehensive and extensive project execution capabilities in terms of manpower, supply of materials (including self-manufactured products) and availability of world class machinery, both in India and internationally (majorly across Asia and Africa). Our position in the power transmission and distribution sector is owing to the following factors:
Having a footprint in 58 countries like Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Finland, Poland, Nicaragua etc. including turnkey EPCs or supply projects.
As of June 30, 2024, we have undertaken EPC of 34,654 circuit kilometers ("CKM") transmission lines and 30,000 CKM distribution lines, domestically and internationally. We provide EPC services in relation to substations up to 765 kilovolts ("kV").
Our Company has presence in all the power transmission and distribution segments and majorly in high voltage (" HV") and extra high voltage ("EHV") segments. For details, see "- Strengths" on page 199.
Other than the power transmission and distribution business, we have other business verticals, such as, civil construction, poles and lighting, and railways. The details of contribution to revenue from operations by each vertical is set out below:
| Vertical | For the three months period ended June 30, 2024 |
For the Financial Year ended March 31, 2024 |
For the Financial Year ended March 31, 2023 |
For the Financial Year ended March 31, 2022 |
|||||
Revenue of operation s generated |
% of total revenue of operation s |
Revenue of operation s generated |
% of total revenue of operation s |
Revenue of operation s generated |
% of total revenue of operation s |
Revenue of operation s generated |
% of total revenue of operation s |
Financia l Year ended March 31, 2024- March 31, 2022 CAGR (%) |
|
| Power transmissio n and distribution | 7,460.30 |
83.18 |
33,611.20 |
83.83 |
24,065.58 |
77.98 |
15,359.16 |
67.24 |
47.93 |
| Civil construction | 1,040.25 |
11.60 |
3,741.21 |
9.33 |
3,317.82 |
10.75 |
4,420.31 |
19.35 |
(8.00) |
| Railways | 194.82 |
2.17 |
974.25 |
2.43 |
1,760.93 |
5.71 |
1,521.43 |
6.66 |
-19.98 |
| Poles and hgMing | 273.66 |
3.05 |
1,765.64 |
4.40 |
1,717.04 |
5.56 |
1,540.52 |
6.74 |
7.06 |
| Total | 8,969.03 |
100.00 |
40,092.30 |
100.00 |
30,861.37 |
100.00 |
22,841.42 |
100.00 |
27.01 |
Further the details for revenue generated from our business by geographical regions is set out below:
| Geography of client | For the three months period ended June 30, 2024 |
For the Financial Year ended March 31, 2024 |
For the Financial Year ended March 31, 2023 |
For the Financial Year ended March 31, 2022 |
| In India | 4,494.59 |
16,619.17 |
14,388.38 |
14,170.34 |
| Outside India | 4,474.44 |
23,473.13 |
16,472.99 |
8,671.08 |
| Total | 8,969.03 |
40,092.30 |
30,861.37 |
22,841.42 |
Market opportunity
The power transmission and distribution system across India has expanded extensively. The total length of domestic transmission lines rose from 413,407 CKM in Financial Year ended March 31, 2019 to 485,544 CKM in Financial Year ended March 31, 2024. To service a large generation installed base, the estimated investment in the transmission sector is expected to cumulatively reach approximately Rs.3.00 trillion for Financial Year 2025-2029. The distribution segment is expected to attract investments worth Rs 3-4 trillion over fiscals 2025 to 2029 vis-a-vis ~Rs 3.3 trillion between fiscal 2019-2024 led by the governments thrust on the Revamped Distribution Sector Scheme, improving access to electricity and providing 24x7 power to all. (Source: CRISIL Report) Further, internationally, the lack of access to electricity across the African region has influenced public and private investments in the deployment of new transmission and distribution networks across the region. For instance, at present, 43% of the total population in the African region, lack access to electricity, which displays the critical need for electrical infrastructure in Africa. Further, power sector investment in Latin America and the Caribbean is also expected to increase to meet rising electricity demand and to modernise and expand grid infrastructure. (Source: CRISIL Report)
Our journey
One of our Promoters, Digambar Chunnilal Bagde, has experience of more than 40 years in the EPC industry and was at the helm of affairs of our Company from its inception. Digambar Chunnilal Bagde was also associated with Transrail Engineering Company Limited and Associated Transrail Structures Limited as promoter of such entities. A brief journey of our milestones is delineated below:
For further details, see "History and Certain Corporate Matters - Details regarding material acquisitions or divestments of business/undertakings, mergers, amalgamation, any revaluation of assets, etc. in the last 10 years" on page 233.
As on the date of this Red Herring Prospectus, we have four operational manufacturing facilities including one tower testing facility. For details, see Manufacturing Facilities". Our key services and significant projects include:
• Supply as well as design, engineering, procurement and construction of transmission lines and distribution lines - As
of June 30, 2024, we have designed, engineered, procured and constructed 34,654 CKM transmission lines and 30,000 CKM distribution lines, respectively, both domestically and internationally. Our Company operates as EPC service providers and as a supplier of engineered products in the power transmission and distribution segment. We also provide EPC services in relation to air insulated and gas insulated substations. The table below sets forth the orders procured by our Company during the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022, in our domestic and international power transmission and distribution business:
| Geography of the client | For the three months period ended June 30, 2024 |
For the Financial Year ended March 31, 2024 |
For the Financial Year ended March 31, 2023 |
For the Financial Year ended March 31, 2022 |
||||
Amount (in Rs. million) |
% of total orders procured in the power transmissi on and distributio n business |
Amount (in Rs. million) |
% of total orders procured in the power transmissi on and distributio n business |
Amount (in Rs. million) |
% of total orders procured in the power transmissi on and distributio n business |
Amount (in Rs. million) |
% of total orders procured in the power transmissi on and distributio n business |
|
| Domestic | 525.52 |
6.21 |
20,003.25 |
51.06 |
16,847.30 |
26.19 |
6,693.72 |
25.12 |
| International | 7,943.57 |
93.79 |
19,175.23 |
48.94 |
47,487.73 |
73.81 |
19,951.66 |
74.88 |
| Total | 8,469.09 |
100.00 |
39,178.48 |
100.00 |
64,335.03 |
100.00 |
26,645.37 |
100.00 |
• Civil Construction - We provide EPC services including design in relation to bridges, tunnels, elevated roads and cooling towers. We have been awarded with the Kosi bridge project which is the largest civil construction project currently being executed in India by us. We are constructing some of the tallest natural draft cooling towers ("NDCT") in India. Our civil construction services are majorly provided domestically.
• Poles and Lighting - We have a diverse product manufacturing set-up, including high masts, street poles, luminaries, power transmission and distribution monopoles, stadium lighting, derrick structures, road gantries and signages, flag masts, solar streetlights, decorative poles etc. We operate as both manufacturers as well as supply, installation, testing and commissioning service providers in the poles and lighting segment. Our poles and lighting vertical primarily operates in the Indian markets with select projects internationally. Our products have been used in many landmark projects across India and have also been exported to many countries. A few examples include Mumbai Trans Harbour Link, M. Chinnaswamy cricket stadium in Bengaluru, Samruddhi Highway, LED traffic lights in Mumbai Qatar’s sports and decorative lightings, Zambia’s Lusaka city de-congestion project etc. Recently, we have expanded our factory by adding a dedicated facility for signages.
• Railway services - We provide several services in relation to railways including overhead electrification, signaling and telecommunication services, earthwork, track linking and other composite works. Our manufacturing units have supplied railway portals and overhead contact rods. Our railways vertical has operations only in India. We have provided services to government undertaking and corporations of the Ministry of Railways in India, in this segment.
Over a period of time, we have steadily invested into backward integration by adding manufacturing units for towers, conductors and poles to our business and have developed the ability to provide comprehensive solutions including designing, manufacturing, procuring, testing and supplying of conductors, towers etc. for our EPC projects and also towards direct supplies. Generally, these products and services cover a substantial part of the EPC value in a typical transmission line project, which reduces our dependency on third-party suppliers.
We cater to a wide client base in India including central public sector undertakings under the Ministry of Power of India, state government run and private power transmission and distribution companies. Further, we have actively diversified and expanded our business across the globe with our overall footprint of supply and service in 58 countries. We generally take export orders which are either funded by multilateral funding agencies (which include organisations like World Bank, African Development Bank, Asian Development Bank etc) or backed by letters of credit. As on June 30, 2024, our Order Book comprises of international projects and domestic projects and is a healthy client mix with typically governmental authorities of various countries such as India, Bangladesh, Kenya, Tanzania, Niger, Nigeria, Mali, Cameroon, Philippines, Suriname, Nicaragua etc. Internationally, some of our biggest clients have been Power Grid Company of Bangladesh and Da Afghanistan Breshna Sherkat in Asia and Kenya Power and Lighting Company, West African Power Pool, Electricidade De Mocambique, E.P. Mozambique etc. in Africa. Further, in the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022, our Company has completed more than 200 projects across the globe across power transmission and distribution business.
We have shown strong financial performance, which is evident from our growing revenues and increasing orders. Our total revenue increased to Rs.41,299.99 million in Financial Year ended March 31, 2024 from Rs.23,571.99 million in Financial Year ended March 31, 2022 at a CAGR of 32.37% while our profit for the year increased to Rs.2,332.05 million in Financial Year ended March 31, 2024 from Rs.647.07 million in Financial Year ended March 31, 2022 at a CAGR of 89.84%. Further our order intake and Unexecuted Order Book has shown stellar growth. Our Unexecuted Order Book has almost doubled to Rs.1,01,004.74 million as on March 31, 2024, from Rs.59,075.87 million as of March 31, 2022.
Significant Factors Affecting Our Results of Operations
Our results of operations have been, and will be, affected by many factors, some of which are beyond our control. The following is a discussion of certain factors that have had, and will continue to have, a significant effect on our financial condition and results of operations:
Government policies, macro-economic conditions and performance of the power generation, transmission and distribution sectors
Our business is substantially dependent on co-existence of power generation sector and transmission and distribution sector in India which is primarily undertaken or awarded by governmental authorities, entities funded by the central and state Governments which is undertaken through tariff based competitive bidding process. We currently derive and, in the future expect to derive a significant portion of our revenue from power generation, transmission and distribution business projects in India which are dependent on budgetary allocations made by central and state Governments, participation from multilateral agency sponsored developments, public bodies as well as significant access through private sector funding. We believe that sustained increase in budgetary allocation for and the participation of public bodies, multilateral agencies in and the development of comprehensive infrastructure policies that encourage greater private sector participation and funding will result in several power transmission and distribution business and other infrastructure projects being launched in India. Macroeconomic factors like increasing need of power for residential, industrial and commercial purposes, increased usage of electricity in rural economy, creation of green energy corridors higher focus on renewable energy and related governmental policies thereof, Indian government’s specific focus on transmission sector and related policies will have a significant impact on our prospects and results of operations. Other macroeconomic factors like global GDP growth, Indian foreign investment regulations, oil prices, financial stability may impact the economic environment of India and the policies of the government with respect to the infrastructure sector. A change in policy resulting from a change in government (including change in central government and/or state governments of regions where our projects are under construction) may also impact our business.
International Transmission and Distribution
We also service our customers outside India with the requisite execution skill gained over the course of years and typically undertake those projects along with our subsidiaries and joint ventures which are present outside India. Our ability to successfully expand our international operations, will, therefore, depend on our ability to deliver the projects on time, our ability to manage their operations and, in the event of any future acquisitions, successfully integrate such business with our operations. However, demand for our services would also depend upon the sustained economic development in the regions that we seek to expand and operate in and the government policies relating to the development of these sectors.
Our results of operations may be materially affected by conditions in the global capital markets and the economy generally in India and elsewhere around the world. Financial Year ended March 31, 2022 was full of perils and promises for the electric power sector as electricity consumption continued to rise as the pandemic recovery progressed. The costs also spiked, largely due to natural gas prices more than doubling due to global shortages, exacerbated by rising geopolitical tensions. Coal prices also rose as demand surged for alternatives to gas. Renewable energy prices followed suit due to supply chain disruptions, inflation, and rising interest rates. Significant slowdowns in economic growth could have a deleterious impact on power consumption and could result in shifts of government policy away from power transmission projects, which could affect our business and results of operations. To that extent, the performance of the power industry and the power transmission industry could be influenced by the general economic conditions.
Our bidding and execution capabilities
Most of our EPC contracts are obtained through a competitive bidding process. In selecting consultants and contractors for major engineering consultancy and EPC projects, clients generally limit the tender to consultants and contractors they have prequalified based on several criteria. These criteria include, among other factors, experience, technological capacity and performance, reputation for quality, safety record, financial strength and bonding capacity and size of previous contracts in similar projects, as well as price competitiveness of the bid. Our recent experience and the infrastructure initiatives by the Governments across the world indicate that the clients in the energy industry are expected to develop larger and more technically complex EPC projects. Accordingly, this is resulting into awarding the entire contract to a single EPC contractor in order to avoid lack of synergies between multiple contractors. Therefore, while we are usually eligible to bid for the transmission projects opened in and outside India on the basis of pre-qualification criteria, the execution and completion of such projects is dependent upon factors which may not be foreseeable at the time of bidding.
A significant portion of our revenue and earnings is generated from large project awards. Revenue from operations of our Company for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022 are as follow:
| Sr. Particulars No. | Three months period ended June 30, 2024 |
Financial Year ended March 31, 2024 |
Financial Year ended March 31, 2023 |
Financial Year ended March 31, 2022 |
| 1. Revenue earned from top 5 projects of our Company | 2,816.36 |
13,126.40 |
12,845.62 |
9,092.21 |
| 2. Revenue earned from top 10 projects of our Company | 4,466.18 |
20,401.23 |
18,851.50 |
11,718.01 |
We are usually qualified to bid for most projects in India and up to a certain value for international projects. We operate in competitive markets where it is difficult to predict whether and when we will receive awards since these awards and projects often involve complex and lengthy negotiations and bidding processes. These processes can be impacted by a wide variety of factors including governmental approvals, our ability to show experience of working on similar projects, financing contingencies, commodity prices, investment bottlenecks such as environmental clearance and land acquisition issues, and overall market and economic conditions. During an economic downturn, many of our competitors may be more inclined to take greater or unusual risks or terms and conditions in a contract that we might not deem favourable or standard as per the market practice, since investment in such projects by the Governments or entities may be reduced significantly and be only acceptable if a bidder is accepting the terms prescribed by the employer. Since a significant portion of our revenue is generated from large projects, our results of operations can fluctuate from quarter to quarter and year to year depending on whether and when proj ect awards occur and the commencement and progress of work under awarded contracts.
Success of our diversification strategy into other sectors and geographies
Historically, significant portion of our revenue has been derived from the power transmission and distribution business in India. Our revenue from operations for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022 are as below:
| Particulars | Three months period ended June 30, 2024 |
Financial Year ended March 31, 2024 |
Financial Year ended March 31, 2023 |
Financial Year ended March 31, 2022 |
||||
(Rs.) in million |
(%) of Total Revenue from operations |
(Rs.) in million |
(%) of Total Revenue from operations |
(Rs.) in million |
(%) of Total Revenue from operations |
(Rs.) in million |
(%) of Total Revenue from operations |
|
| Revenue from operations (EPC) | 8,136.67 |
90.72 |
38,134.51 |
95.12 |
28,747.08 |
93.15 |
20,558.48 |
90.01 |
We constantly leverage our EPC capabilities and track record to selectively diversify into other potential project segments as part of our strategic initiatives for enhanced growth and diversification. We intend to focus on specific project segments and industries where we believe that there is a potential for growth and where we enjoy competitive advantages including in power transmission and distribution business, civil construction, railway services and poles and lightning. We continue to expand our international operations, including in Africa especially West and East Africa, SAARC. We also continue to expand our supply business focussing on newer markets like Middle East, South East Asia, Americas & Oceania. For further details relating to our diversification into other sectors and the expansion of our international operations, see section "Business - Strategies - Expanding our international business" on page 208. The success of our diversification strategy into these new sectors and into the international markets are linked to amongst others, our ability to leverage our existing track record in the transmission industry to provide cost and operational advantages to our clients. Demand for our services would also depend upon the sustained economic development in the regions that we seek to expand and operate in and the government policies relating to the development of these sectors.
Nature of contracts and the risks associated therewith
Our projects are typically fixed-price or lump-sum contracts, and under the terms of such fixed-price or lump-sum contracts. Under Lump-sum turnkey contracts ("LSTK") contracts are fixed price contracts in which the contractor fixes a lump-sum fee, based on the specific project requirements. The LSTK sets out project specifications with respect to designs, drawings, technical stipulations, quality of raw material, etc, based on which the contractor provides bids, stating a lump-sum fee for execution. In relation to our turnkey projects which are performed on a fixed price basis, we are susceptible to the risk of material cost variation from the assumptions underlying a bid for several reasons, including unanticipated changes in engineering design of the project; unanticipated changes in currency fluctuations, unanticipated variations in the cost of equipment, fuel, material or manpower; timing of delivery of equipment and materials to the project site; ability of the client to obtain requisite environmental and other approvals; and the performance of suppliers and sub-contractors.
Operational uncertainties
Our business is subject to various operational uncertainties that may affect our results of operations. These operational uncertainties including the availability of raw materials and retention of skilled manpower, could affect our ability to complete the project and/ or ensure delivery of our manufactured products on time, delays in meeting agreed milestones or ensuring commencement of operations of projects undertaken by us within the scheduled completion date. Further, EPC sector has witnessed many consistent changes over the past few years. Delay in project completion is one of the major challenges for the EPC market in India. EPC projects are large scale, time and cost sensitive. The gestation period of project also increases because of factors such as political risks in the country, liquidity crunch, and delay in getting environmental clearance, forest clearance, defence land handovers etc. Time and overrun and project inflationary cost escalations plague many large government-based projects. All projects have to be time bound to be profitable; however, the market still suffers from inherent delays owing to various reasons. These could lead to increased financing costs, delayed payments from the client, invocation of liquidated damages or penalty clauses by the client in accordance with terms agreed with the client, and in certain circumstances, even termination of the contract. We are typically required to provide bank guarantees for advances as well as performance guarantees. Our projects are typically fixed-price or lump-sum contracts, and under the terms of such fixed-price or lump-sum contracts, we generally agree on a fixed price for providing engineering, procurement and construction services for part of the project that is contracted to us. For further details of the nature of project related contracts entered into by us, see "Our Business - Description of our Business - Key highlights of our completed projects in the power transmission and distribution sector’’ on page 211. The actual expenditure incurred by us in connection with such contracts may, however, vary from the assumptions underlying our bid as a result of various project uncertainties, including unanticipated changes in engineering design of the project or any escalation or change in work scope of our ongoing projects, resulting in delays and increased costs. While most of these projects provide for cost escalation provisions and price escalation, there is no assurance that our clients will not dispute the increased costs, which may affect our results of operations and financial condition.
Accordingly, given the nature of our business, operating costs and efficiencies are critical to maintaining our competitiveness and profitability. Our profitability is partially dependent on our ability to spread fixed production costs over our production volumes. Accordingly, we continually undertake efforts to reduce our costs, such as negotiating discounts, outsourcing noncritical processes, reducing energy usage and rationalising our labour. Our ability to reduce our operating costs in line with customer demand is subject to risks and uncertainties, as our costs depend, in part, on external factors beyond our control.
Failure to meet high quality standards and stringent performance requirements of our customers.
Our products and engineering processes are measured against, high quality standards and stringent specifications of our customers, due to the critical industries they find applications in. Most of our orders are awarded to us through a competitive bidding process, where we compete on various factors including our technical capabilities. Depending on the terms under which we supply products or services, if we supply products or services that do not comply with the specifications provided by our customers, our customers may hold us responsible for (i) some or all of the repair or replacement costs of defective products or services; and (ii) all losses incurred due to injury, illness or death to third party or violation of laws due to defective products or services, and the costs of claims, suits and actions in relation to such losses. We cannot assure you that we will be able to meet such technical specifications and quality standards imposed by our customers, at all times. The failure by us or to achieve or maintain compliance with these requirements or quality standards may disrupt our ability to supply products to our customers until compliance with such quality standards is achieved. Such instances could adversely affect our reputation and business and, to the extent not covered by insurance, our results of operations, financial condition and cash flows.
Our contracts require us to indemnify our customers from any liabilities and expenses incurred due to defects and damages found in the products or in connection with performance of engineering service and supplies. Customers can enforce such indemnities against us, unless such defect, damage, or delay is caused due to the customer’s wilful misconduct, fraud, gross negligence or wilful misrepresentation. Under our agreements with our customers, we are liable to pay liquidated damages for any delay in the supply of products and services. These liquidated damages typically range from 0.1% to 1.5% of the total contract or purchase order value, per week of delay, and are typically capped at 5% to 10% of the total contract or purchase order value. We are also liable to pay liquidated damages for any delay in providing documents to our customers in connection with the work which we undertake. There have been instances in the past where we were not able to meet the scheduled timelines of delivery and consequently, we had to pay liquidated damages to certain customers.
Our contracts also require us to provide warranty against the products and engineering services which we have provided, which requires us to repair or replace the goods or services furnished, which fail to comply to the specifications prescribed by our customers, during the warranty/ defect liability period. Accordingly, our customers require us to undertake or provide performance bank guarantees for such quality and delivery related obligations which can be enforced against us in case of defective or damaged products or delay in delivery of the products or services supplied by us. The performance bank guarantees which we are required to furnish to our customers typically range from 3% to 10% of the total contract value of the order.
If we default on any of the existing terms, delivery timelines, specifications or quality standards prescribed by our customers, it may result in the cancellation of existing and future orders, recalls, liquidated damages, invocation of performance bank guarantees or warranty, indemnity and liability claims. Further, such delays in the execution of orders results in the cost overruns and affects our payment milestones subsequently impacting our revenue. Such instances could adversely affect our reputation and business and, to the extent not covered by insurance, our results of operations, financial condition and cash flows.
Competition
We operate in a highly competitive environment in both in the Indian and overseas markets. The industry is highly fragmented, both domestically and globally. Success of our operations depends on our ability to effectively compete, including by continuing to distinguish our brand and products from competition by maintaining our brand perception centred around the values of trust and transparency and by continuing to optimize our product assortment and marketing campaigns to cater to preferences in the markets in which we operate. As a result, to remain competitive in the market we must, in addition, continuing to meet exacting quality standards, continuously strive to reduce our production and distribution costs and improve our operating efficiencies and innovate our products offering. If we fail to do so, it may have an adverse effect on our market share and results of operations. Many of our competitors may be larger than us and may benefit from greater economies of scale and operating efficiencies. There can be no assurance that we can continue to effectively compete with such manufacturers in the future, and failure to compete effectively may have an adverse effect on our business, financial condition, and results of operations. Moreover, the competitive nature of the manufacturing industry may result in lower prices for our products and decreased profit margins, which may materially adversely affect our revenue and profitability.
Exchange rates
Although, our Company’s reporting currency is in Indian Rupees, we transact a significant portion of our business in several other currencies. Further, a large part of our revenues is derived from projects based outside of India. In the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022, our revenues from operations to customers based outside of India were Rs.4,474.44 million, Rs.23,473.13 million, Rs.16,472.99 million, and Rs. 8,671.08 million, respectively, which represented 49.88%, 58.55%, 53.38 %, and 37.96% of our total revenue, respectively.
The exchange rate between the Indian Rupee and the currencies in which we receive payments for such exports, i.e. primarily the USD and Euro, has fluctuated in the past and our results of operations have been impacted by such fluctuations in the past and may be impacted by such fluctuations in the future. For example, during times of strengthening of the Indian Rupee, we expect that our overseas sales and revenues will generally be negatively impacted as foreign currency received will be translated into fewer Indian Rupees. However, the converse positive effect on depreciation of the Indian Rupee may not be sustained or may not show an appreciable impact in our results of operations in any given financial period due to other variables impacting our results of operations during the same period. Moreover, we expect that our cost of borrowing as well as our cost of imported raw materials, overseas professional costs, freight and other expenses incurred by us may rise during a sustained depreciation of the Indian Rupee against USD or Euro.
Certain portions of our income and expenses are generated or incurred in other currencies and certain portions of our assets (trade receivables and cash and cash equivalents) and liabilities (trade payables and borrowings) are in other currencies, such as BDT, Cfa, Naira etc. Therefore, our exchange rate risk primarily arises from currency mismatches between our income and our expenditure which we seek to mitigate by matching income currency to expenditure currency to the extent possible.
We have a formal hedging policy and accordingly, may be subject to foreign currency exposure and fluctuations in the exchange rates between the Indian Rupee and other currencies.
Our Critical Accounting Policies
The significant accounting policies followed by us in the preparation of our Restated Consolidated Financial Information are set out below.
a) Revenue Recognition
The Group derives revenues primarily from Engineering, Procurement and Construction business. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Revenue from Operations, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. The Group determines the percentage-of- completion on the basis of direct measurements of the value of the goods or services transferred to the customer to date relative to the remaining goods or services promised under the contract. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.
Revenue from the sale of distinct manufactured / traded material is recognised upfront at the point in time when the control over the material is transferred to the customer. Revenue from rendering of services is recognized in the accounting period when the service is rendered and the right to receive the revenue is established. Revenues in excess of invoicing are classified as Contract assets while invoicing in excess of revenues are classified as contract liabilities (which can be referred as Advances from Customers).
‘Advance payments received from customers for which no services are rendered are also presented under ‘Advance from Customers’ . In arrangements for supply and erection contracts performed over a period of time, the Group has applied the guidance in Ind AS 115, Revenue from contract with customer, by applying the revenue recognition criteria
for each distinct performance obligation. Although there may be separate contracts with customers for supply of parts and erection of towers, it is accounted for as a single contract as they are bid and negotiated as a package with a single commercial objective and the consideration for one contract depends on the price and performance of the other contract. The goods and services promised are a single performance obligation. The Group presents revenues net of indirect taxes in its Statement of Profit and Loss.
Interest Income
Interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.
Export Benefits
Duty Drawback claims are recognized based on the entitlement under relevant scheme / laws.
Other Revenues
All other revenues are recognized on accrual basis.
b) Property, Plant and Equipment (PPE)
The Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment, if any. The Group depreciates the assets on straight line method in accordance with the useful life prescribed in Schedule II of the Act except for erection tools and tackles which are depreciated over the period of 2 and 5 years based on the technical evaluation of the same. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized. The residual values and useful lives of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Non-current Assets held for sale
A Non-Current Asset is classified as held for sale if its carrying amount will be recovered principally through sale rather than through its continuing use, is available for immediate sale in its present condition, subject only to terms that are usual and customary for sale, it is highly probable that sale will take place within next 1 year and sale will not be abandoned.
c) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Intangible assets consist of rights and licenses which are mortised over the useful life on a straight line basis.
d) Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a year of time in exchange for consideration.
The Group, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset. The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Group has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement
of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Group measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses incremental borrowing rate. For shortterm and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the lease term.
e) Financial Instruments
Initial Recognition
The Group recognizes financial assets and financial liabilities when it becomes a party to the contractual provision of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are recorded at transaction price. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
(i) financial instruments at mortised cost;
(ii) financial instruments at fair value through other comprehensive income (FVTOCI); and
(iii) financial instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)
Financial Assets at amortized cost
A Financial instrument is measured at the amortized cost if both the following conditions are met:
(i) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Group. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit or loss. The losses arising from impairment are recognized in the statement of profit or loss.
Financial Assets at FVTOCI
A financial asset is classified as at the FVTOCI if both of the following criteria are met:
(i) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets; and
(ii) The asset’s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Group recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit & loss. On de-recognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to statement of profit & loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Financial Asset at FVTPL
Any financial asset which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
De-recognition
A financial asset is derecognized when:
(i) The rights to receive cash flows from the asset have expired; or
(ii) The Group has transferred its rights to receive cash flows from the asset and the transfer qualifies for derecognition under Ind AS 109.
f) Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognized in the statement of profit & loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to the statement of profit & loss. However, the group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Group has not designated any financial liability as at fair value through the statement of profit & loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
Hedge accounting
The Group designates certain hedging instruments, which include derivatives, embedded derivatives and nonderivatives in respect of foreign currency risk, commodity price risk as cash flow hedges. Hedges of foreign exchange risk and commodity price risk for highly probable forecast transactions are accounted for as cash flow hedges. Hedges of the fair value of recognised assets or liabilities or a firm commitment are accounted for as fair value hedges.
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk. Note 42 sets out details of the fair values of the derivative instruments used for hedging purposes.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss is recognised in profit or loss.
Where the hedged item subsequently results in the recognition of a non-financial asset, both the deferred hedging gains and losses and the deferred time value of the option contracts, if any, are included within the initial cost of the asset. The deferred amounts are ultimately recognised in profit or loss as the hedged item affects profit or loss through cost of material consumed.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to the Statement of Profit and Loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity (but not as a reclassification adjustment) and included in the initial measurement of the cost of the non-financial asset or nonfinancial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Profit and Loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another liability from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Fair Value Measurement
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
g) Impairment
Impairment of Financial Assets
The Group recognizes the loss allowance using the expected credit loss (ECL) model for financial assets which are not valued through the statement of profit and loss account.
The Group follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables or contract revenue receivables. The application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head ‘other expenses’ in the statement of profit and loss.
h) Impairment of Non-Financial Assets
Assets with an indefinite useful life and goodwill are not amortized / depreciated and are tested annually for impairment. Assets subject to amortization / depreciation are tested for impairment provided that an event or change in circumstances indicates that their carrying amount might not be recoverable. An impairment loss is recognized in the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the difference between asset’s fair value less sale costs and value in use. For the purposes of assessing impairment, assets are aggregated at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Nonfinancial assets other than Goodwill for which impairment losses have been recognized are tested at each balance sheet date in the event that the loss has reversed.
The Group, on an annual basis, tests Goodwill for impairment, and if any impairment indicators are identified tests other non-financial assets, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates and sensitivity analysis is performed on the most relevant variables included in the estimates, paying particular attention to situations in which potential impairment indicators may be identified.
i) Provisions, Contingent Liabilities, Contingent Assets General
The group recognizes a provision when it has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required to settle the obligation is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are carried at the present value of forecast payments that are expected to be required to settle the obligation, using a rate before taxes that reflects the current market assessment of the time value of money and the specific risks of the obligation. The increase in the provision due to passage of time is recognized as interest expense.
Provision for Contractual Obligation
The group is exposed to shortages in the supply and rectification of erection services of the materials which generally are identified during the course of the execution of the project. These shortages are due to various aspects like theft, pilferage and other losses. The group therefore records the costs, net of any claims, at the time related revenues are recorded in the statement of profit & loss.
The group estimates such costs based on historical experience and estimates are reviewed on an annual basis for any material changes in assumptions and likelihood of occurrence.
Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the financial statements. Contingent assets are only disclosed when it is probable that the economic benefits will flow to the entity.
j) Foreign Currencies Transactions and Balances
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss with the exception of the following:
(i) Exchange differences arising on monetary items that forms part of a reporting entitys net investment in a foreign operation are recognized in Other Comprehensive Income (OCI) in the Consolidated financial statements of the reporting entity. The foreign operations are accounted in the Consolidated financial statements as a non-integral operation;
(ii) Exchange differences arising on monetary items that are designated as part of the hedge of the Groups net investment of a foreign operation are recognized in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to statement of profit & loss; and
(iii) Tax charges and credits attributable to exchange differences on those monetary items are also recorded in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss, respectively).
k) Share based payments
The Group operates equity-settled share based remuneration plans for its employees. For share settled share based payments, a liability is recognised for the services acquired, measured initially at the fair value of the liability. All goods and services received in exchange for the grant of any share based payment are measured at their fair values on the grant date. Grant date is the date when the Group and employees have shared an understanding of terms and conditions on the arrangement.
Where employees are rewarded using share based payments, the fair value of employees services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions All share based remuneration is ultimately recognised as an expense in profit or loss. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
l) Taxes
Current Income Tax
Current income tax assets and liabilities are measured at the amount expected to be refunded from or paid to 0the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the domicile country. Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). The management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and makes provisions wherever appropriate.
Deferred Tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and the tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
m) Inventories
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:
(i) Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average;
(ii) Work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost of direct material is determined on weighted average. Work In Progress on construction contracts reflects value of material inputs and expenses incurred on contracts including profits recognized based on percentage completion method on estimated profits in evaluated jobs;
(iii) Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average;
(iv) Consumable Stores and construction materials are valued and stated at lower of cost or net realizable value;
(v) Finished Goods are valued at cost or net realizable value, whichever is lower. Costs are determined on weighted average method; and
(vi) Scrap are valued at net realizable value.
n) Retirement and other employee benefits
Retirement benefit in the form of provident fund, family pension fund and employee state insurance contribution is a defined contribution scheme. The Group has no obligation, other than the contribution payable to the provident fund, family pension fund and employee state insurance contribution. The group recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund. The Group operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund and / or creation of provision for unfunded portion of defined gratuity.
The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in the statement of profit & loss on the earlier of:
(i) The date of the plan amendment or curtailment; and
(ii) The date that the Group recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognizes the following changes in the net defined benefit obligation as an expense in the Consolidated statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and
- Net interest expense or income Termination Benefits
Termination benefits are payable as a result of the group’s decision to terminate employment before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognizes these benefits when it has demonstrably undertaken to terminate current employees’ employment in accordance with a formal detailed plan that cannot be withdrawn, or to provide severance indemnities as a result of an offer made to encourage voluntary redundancy. Benefits that will not be paid within 12 months of the balance sheet date are discounted to their present value.
o) Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits in banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within bank borrowings in current liabilities on the balance sheet.
p) Trade and Other Receivables
Trade receivables are amounts due from customers related to goods sold or services rendered in the ordinary course of business. If the receivables are expected to be collected in a year or less (or in the operation cycle if longer), they are classified as current assets. Otherwise, they are recorded as non-current assets.
Trade receivables are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due in accordance with the original terms of the receivables. The existence of significant financial difficulties on the part of the debtor, the probability that the debtor will become bankrupt or undertake a financial restructuring, and late payment or default are considered to be indicators of the impairment of a receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The asset’s carrying amount is written down as the provision is applied and the loss is recognized in the statement of profit and loss. When a receivable is uncollectable, the provision for receivables is made in statement of profit & loss. Subsequent recoveries of receivables written off are recognized in the statement of profit & loss for the year in which the recovery takes place.
q) Cash Flow Statement
Cash flows are reported using the indirect method, whereby the profit for the period is adjusted for the effects of the transactions of a non-cash nature, any deferrals or past and future operating cash flows, and items of incomes and expenses associated with investing and financing cash flows. The cash flows from operating and investing activities of the group are segregated.
r) Operating Cycle
Assets and liabilities relating to long term projects/ contracts are classified as current/non-current based on the individual life cycle of the respective contract / project as the operating cycle. In case of pure supply contracts and other businesses, the operating cycle is considered as twelve months.
s) Borrowing Costs
Borrowing costs attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for its intended use are added to the cost of those assets. Interest income earned on temporary investment of specific borrowing pending their deployment is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.
t) Onerous Contracts
If the Group has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Group recognises any impairment loss that has occurred on assets dedicated to that contract. An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities)."
u) Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Group by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares and the weighted number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Principal Components of our Consolidated Statement of Profit and Loss
The following descriptions set forth information with respect to the key components of our consolidated statement of profit and loss.
Our Income
Revenue from operations
Our revenue from operations primarily consists of sale of products, sale of services, income from EPC contracts and other operating revenue including sale of scrap, job work, export incentive, sundry credit balances written back and others. Sale of services is categorized as sale of products by us, where such products have been manufactured by us pursuant to the same being procured by our Company and then manufactured as per the designs and specifications of our customers.
The sale of products consists of sale of Poles and High masts, Towers & Conductor, Wind Mills and Bought out Sales. Sale of services includes testing services provided by our Company.
Other income
The key components of our other income are: (i) interest income; (ii)profit on sale of assets; (iii) reversal of provision; (iv) gain on mutual fund; and (v) miscellaneous income.
Our Expenses
Our expenses primarily consist of the following:
• Cost of materials consumed consists of raw material such as steel including tower steel, being angles, channels and plates, steel wires aluminium, zinc, copper, etc., required for the manufacturing of reinforcement steel and cement etc. required for the construction of lattice towers;
• Changes in inventories of finished goods, work-in-progress and stock-in trade reflects the change in inventory maintained by us at the end of the period / financial year;
• Sub-contracting expenses consists of sub-contracting expenses, Piece Rate Workmen("PRW") contractors required by us to undertake construction activities and payment of wages to contract labor towards the manufacturing activities undertaken by our Company;
• Employee benefits expense consists of salaries, bonus perquisites etc., contribution to employees’ welfare funds, expenses on employee stock option scheme and staff welfare;
• Finance costs includes interest expense, interest on lease liability, interest on direct and indirect tax, interest- others and other borrowing costs;
• Depreciation and amortisation comprises of depreciation on property, plant and equipment, depreciation on right-of- use assets and amortization; and
• Other expenses primarily includes consumption of stores and spares, bank charges and bank guarantee charges, power and fuel, rent, rates and taxes, repairs and maintenance, security expenses, printing and postage, sundry debit balance written off, bad debts written off, allowance for expected and lifetime credit loss, provision for doubtful debts, assets discarded, corporate social responsibility expenditure, insurance, director sitting fees and commission, donation, travelling expenses, vehicle expenses, project consultancy charges, freight and other expenses, net foreign exchange, professional fees, foreign branch auditor fees, loss on sale of property, plant and equipment, component auditors fees and other expenses.
Profit before share ofprofit of Joint venture and Tax consists of share of loss of joint venture and associate accounted by using the equity method.
Our Tax Expenses
Elements of our tax expense are as follows:
• Current tax- domestic: Our current tax is the amount of tax payable based on the taxable profit for the year / period as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.
• Deferred tax liability / (Asset): Deferred tax liability / (Asset) is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Our deferred tax is measured based on the applicable tax rates and tax laws that have been enacted or substantively enacted by the relevant balance sheet date.
• Excess/short provision of earlier years: Our tax pertaining to earlier years is due to excess / short provisions of tax pertaining to earlier years as compared to actual.
Other Comprehensive Income for the period / year
The other comprehensive income consists of items that will be reclassified to profit or loss in subsequent period and exchange differences on translation of financial statement of foreign operations.
Total Comprehensive Income for the period / year
Total comprehensive income for the period / year consists of profit for the period / year and other comprehensive income for the period / year.
Our Results of Operations
The following table sets forth a breakdown of our restated results of operations for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022:
| Particulars | Three months period ended June 30, 2024 |
Financial Year ended March 31, 2024 |
Financial Year ended March 31, 2023 |
Financial Year ended March 31, 2022 |
||||
(Rs.) in million |
(%) of Total Revenu e |
(Rs.) in million |
(%) of Total Reven ue |
(Rs.) in million |
(%) of Total Revenu e |
(Rs.) in million |
(%) of Total Reven ue |
|
| Revenue from operations | 8,969.0 3 |
96.47 |
40,092. 30 |
97.08 |
30,861. 37 |
97.29 |
22,841. 42 |
96.90 |
| Other operating revenue | 188.75 |
2.03 |
672.94 |
1.63 |
660.19 |
2.08 |
658.73 |
2.79 |
| Other income | 139.26 |
1.50 |
534.75 |
1.29 |
198.78 |
0.63 |
71.84 |
0.30 |
| Total revenue | 9,297.0 4 |
100.00 |
41,299. 99 |
100.00 |
31,720. 34 |
100.00 |
23,571. 99 |
100.00 |
| Expenses | ||||||||
| Cost of materials consumed | 4,801.6 9 |
51.65 |
22,453. 98 |
54.37 |
18,214. 11 |
57.42 |
12,059. 66 |
51.16 |
| Change in inventories of finished goods, work-inprogress and stock-in trade | (312.95 ) |
(3.37) |
(370.82 ) |
(0.90) |
(82.08) |
(0.26) |
(178.14 ) |
(0.76) |
| Sub-contracting expenses | 1,322.1 2 |
14.22 |
4,996.4 7 |
12.10 |
3,471.5 7 |
10.94 |
3,540.4 0 |
15.02 |
| Employee benefits expense | 551.76 |
5.93 |
1,985.0 4 |
4.81 |
1,790.3 7 |
5.64 |
1,594.5 8 |
6.76 |
| Finance costs | 438.70 |
4.72 |
1,626.0 7 |
3.94 |
1,196.9 4 |
3.77 |
848.43 |
3.60 |
| Depreciation and amortisation | 126.68 |
1.36 |
503.04 |
1.22 |
458.26 |
1.44 |
378.39 |
1.61 |
| Other expenses | 1598.4 6 |
17.19 |
6,948.0 8 |
16.82 |
5,197.9 7 |
16.39 |
4,422.0 0 |
18.76 |
| Total expenses | 8,526.4 6 |
91.71 |
38,141. 86 |
92.35 |
30,247. 14 |
95.36 |
22,665. 32 |
96.15 |
| Profit before share of profit of Joint Venture an d tax | 770.58 |
8.29 |
3,158.1 3 |
7.65 |
1,473.2 0 |
4.64 |
906.67 |
3.85 |
| Share of Profit/ (Loss) of Joint Venture and Associate accounted by using the equity method | 4.36 |
0.05 |
23.09 |
0.06 |
9.74 |
0.03 |
(4.97) |
(0.02) |
| Profit Before Tax | 774.94 |
8.34 |
3181.2 2 |
7.70 |
1,482.9 4 |
4.68 |
901.70 |
3.83 |
| Tax Expenses | ||||||||
| Current tax | 257.50 |
2.77 |
849.17 |
2.06 |
389.96 |
1.23 |
237.03 |
1.01 |
| Deferred tax | - |
- |
- |
- |
- |
- |
- |
- |
| (Excess) /short provision of tax | - |
- |
- |
- |
17.30 |
0.05 |
17.60 |
0.07 |
| Total tax expense | 257.50 |
2.77 |
849.17 |
2.06 |
407.26 |
1.28 |
254.64 |
1.08 |
| Profit for the period / year | 517.44 |
5.57 |
2,332.0 5 |
5.65 |
1,075.6 8 |
3.39 |
647.07 |
2.75 |
| Other Comprehensive Income | ||||||||
| Other Comprehensive Income to be reclassified to profit or loss in subsequent periods | ||||||||
| Exchange differences on translation of the Financial Statements of Foreign Operations | 128.20 |
1.38 |
(57.65) |
(0.14) |
(1.62) |
-0.01 |
(0.20) |
-0.00 |
| Net other comprehensive income not to be reclassified to profit or loss in subsequent periods | 2.21 |
0.02 |
(7.27) |
(0.02) |
1.55 |
0.00 |
2.01 |
0.01 |
| Re-measurement gains/ (losses) on defined benefit plans | 2.21 |
0.02 |
(7.27) |
(0.02) |
2.07 |
0.01 |
2.69 |
0.01 |
| Tax thereon | - |
- |
(0.52) |
(0.00) |
(0.68) |
(0.00) |
||
| Total other comprehensive income | 130.41 |
1.40 |
(64.92) |
(0.16) |
(0.07) |
(0.00) |
1.81 |
0.01 |
| Total comprehensive income / (loss) for the period / year | 647.85 |
6.97 |
2,267.1 3 |
5.49 |
1,075.6 1 |
3.39 |
648.88 |
2.75 |
Three months period ended June 30, 2024
Total revenue: Our total revenue was Rs.9,297.04 million for the three months period ended June 30, 2024.
• Revenue from operations: Our revenue from operations from (a) sale of products, (b) sale of services, (c) income from EPC contracts and (d) other operating revenue was Rs.770.06 million, Rs.62.30 million, Rs.8,136.67 million and Rs.188.75 million, respectively for the three months period ended June 30, 2024. Sale of products primarily comprised of pole, tower and conductor and bought out sale. Sale of services primarily comprised of income generated from providing testing services. Other operating revenue includes sale of scrap, job work income, export incentives, sundry credit balances written back.
• Other income: Our other income was Rs.139.26 million for the three months period ended June 30, 2024. Other income comprised mainly of (i) interest income; (ii) profit on sale of assets; (iii) gain on mutual fund; and (iv) miscellaneous income.
• Total expenses: Our total expenses were Rs.8,526.46 million for the three months period ended June 30, 2024.
• Cost of materials consumed: Our cost of materials consumed totaled Rs.4801.69 million for the three months period ended June 30, 2024. Cost of materials consumed primarily comprised of raw materials and intermediates such as steel, aluminium, zinc, cement etc., for the manufacture of our products.
• Changes in inventories of finished goods, work-in-progress and stock-in trade: Changes in inventories of finished goods, work-in-progress was Rs.(312.95) million in the three months period ended June 30, 2024. This was due to increased purchases of the Company to meet-out future growth.
• Sub-contracting expenses: Our sub-contracting expenses totaled Rs. 1,322.12 million for the three months period ended June 30, 2024. Sub-contracting expenses primarily comprised of costs towards the sub-contractors, piece rate workmen ("PRW") contractors required by us to undertake construction activities and payment of wages to contract labor towards the manufacturing activities undertaken by our Company.
• Employee benefits expense: Our employee benefits expense totaled Rs.551.76 million for the three months period ended June 30, 2024. Employee benefits expense primarily comprised consists of salaries, bonus perquisites etc., contribution to employees welfare funds, expenses on employee stock option scheme and staff welfare.
• Finance costs: Our finance cost totaled Rs.438.70 million for the three months period ended June 30, 2024. Our finance costs primarily comprised of interest expense of Rs.364.77 million, interest on lease liability Rs.6.32 million, interest on direct and indirect tax of Rs.20.34 million, other interests and other borrowing costs (including loan processing charges) of Rs.47.26 million.
• Depreciation and amortisation expense: Our depreciation and amortisation expense totaled Rs.126.68 million for the three months period ended June 30, 2024. Depreciation and amortisation primarily comprised of depreciation on property, plant and equipment of Rs.106.81 million, depreciation on right-of-use assets of Rs.19.85 million and amortization of Rs.0.02 million.
• Other expenses: Our other expenses amounted to Rs.1,598.46 million for the three months period ended June 30, 2024, which comprised primarily of freight, professional expenses, consumption of stores and spares, bank charges and bank guarantee charges, power and fuel, rent, sundry debit balances written off, bad debts written off, insurance expenses, rates and taxes, repairs and maintenance.
Share ofprofit of Joint venture and Tax amounted to Rs.4.36 million for three months period ended June 30, 2024. This consists of share of profit of joint venture and associate accounted by using the equity method.
Profit before tax: As a result of the factors outlined above, our restated profit before tax was Rs.774.94 million for the three months period ended June 30, 2024.
Tax expense
• Current tax: We recorded a current tax expense of Rs.257.50 million in the three months period ended June 30, 2024.
• Deferred tax: We recorded NIL deferred tax expense for the three months period ended June 30, 2024. Our Company has accounted for deferred tax asset on tax disallowances on a prudent basis only to the extent of deferred tax liability as there is reasonable probability of future taxable income to the extent of reversal of temporary tax differences.
• Excess/short provision of earlier years: We do not have any such excess / short provision of earlier years in three months period ended June 30, 2024 accounts.
Profit for the period / year: As a result of the factors outlined above, our profit for the year was Rs.517.44 million in the three months period ended June 30, 2024.
Total other comprehensive income for the period /year: Our total other comprehensive loss for the year was Rs.130.41 million in the three months period ended June 30, 2024, was primarily due to foreign exchange difference on translation of financial statement of foreign operation.
Total comprehensive income for the period /year: As a result of the factors outlined above, our total comprehensive income for the period was T647.85 million in the three months period ended June 30, 2024.
Financial Year ended March 31, 2024 compared to Financial Year ended March 31, 2023
Total revenue: Our total revenue increased by 30.20% from Rs.31,720.34 million in Financial Year ended March 31, 2023 to Rs.41,299.99 million in Financial Year ended March 31, 2024. This increase was primarily due to an increase in revenue from operations. This increase was mainly due to the following:
• Revenue from sale of products: Our revenue from sale of products decreased by 11.54% from Rs. 2,007.77 million in Financial Year ended March 31, 2023, to Rs.1,776.03 million in Financial Year ended March 31, 2024. This marginal reduction was primarily due to reduction in the volume of products sold since our facilities were deployed in the completion of ongoing large scale domestic and international power transmission and distribution projects which required higher volumes of towers and conductors
• Revenue from sale of services: Our revenue from sale of services increased by 70.63% from Rs.106.52 million in Financial Year ended March 31, 2023, to Rs.181.76 million in Financial Year ended March 31, 2024. This was primarily due to increase in revenue of testing services.
• Income from EPC contracts: Our revenue from income from EPC contracts increased by 32.66% from Rs.28,747.08 million in Financial Year ended March 31, 2023, to Rs.38,134.51 million in Financial Year ended March 31, 2024. This was primarily due to increased executions of the projects mainly lead by international projects.
• Revenue from other operating revenue: Our revenue from other operating revenue increased by 1.93% from Rs.660.19 million in Financial Year ended March 31, 2023, to Rs.672.94 million in Financial Year ended March 31, 2024. This was primarily due to increase in sale of scrap from Rs.392.82 to Rs.438.93 million.
• Other income: Our other income increased by 169.02% from Rs.198.78 million in Financial Year ended March 31, 2023, to Rs.534.75 million in Financial Year ended March 31, 2024. This increase was primarily due to increase in interest income from Rs.81.63 million to Rs.211.43 million and profit on sale of investment in Burberry Infra Private Limited shares of ^31.95 million.
• Total expenses: Our total expenses increased by 26.10 % from Rs.30,247.14 million in Financial Year ended March 31, 2023, to Rs.38,141.86 million in Financial Year ended March 31, 2024. This increase was mainly due to the following factors:
o Costofmaterials consumed: Our cost of materials consumed increased by 23.28% from Rs. Rs.18,214.11 million in Financial Year ended March 31, 2023 to Rs.22,453.98 million in Financial Year ended March 31, 2024. The was mainly due to increase in sales volume. However, as a percentage of turnover, it has gone down from 57.42% in Financial Year 2023 to 54.37% in Financial Year 2024 due to rationalization in commodity pricing.
o Changes in inventories of finished goods, work-in-progress and stock-in trade: Changes in inventories of finished goods, work-in-progress was Rs.(370.82) million in Financial Year ended March 31, 2024, as compared to Rs.(82.08) million in Financial Year ended March 31, 2023. This was due to increased purchases of the Company to meet-out future growth.
o Sub-contracting expenses: Our sub-contracting expenses increased by 43.93% from Rs.3,471.57 million in Financial Year ended March 31, 2023, to Rs.49,96.47 million in Financial Year ended March 31, 2024, due to increased execution of work as compared to previous year.
o Employee benefits expense: Our employee benefits expense increased by 10.87% over Rs.1,790.37 million in Financial Year ended March 31, 2023 to Rs.1985.04 million in Financial Year ended March 31, 2024. This increase was primarily due to a 10.45 % increase in salaries, bonus, perquisites etc. from Rs.1,708.35 million in Financial Year ended March 31, 2023 to Rs.1,886.90 million in Financial Year ended March 31, 2024. This increase was due to an increase in the number of employees employed by us and annual compensation increments.
o Finance costs: Our finance cost increased by 35.85% from Rs.1,196.94 million in Financial Year ended March 31, 2023, to Rs.1,626.07 million in Financial Year ended March 31, 2024. This was primarily due to increased short term borrowing including acceptances.
o Depreciation and amortisation expense: Our depreciation and amortisation expense increased by 9.77% from Rs.458.26 million in Financial Year ended March 31, 2023, to Rs.503.04 million in Financial Year ended March 31, 2024. This was primarily due to increased capital expenditure to meet increased business volume.
o Other expenses: Our other expenses increased by 33.67% from Rs.5,197.97 million in Financial Year ended March 31, 2023 to Rs.6,948.08 million in Financial Year ended March 31, 2024. This was primarily due to an increase in (i) insurance expenses increased from Rs.204.23 million in Financial Year ended March 31, 2023 to Rs.586.47 million in Financial Year ended March 31, 2024 (ii) professional fees increased from Rs.241.02 million in Financial Year ended March 31, 2023 to Rs.610.04 million in Financial Year ended March 31, 2024 (iii) stores and spares consumed from Rs.629.33 million in Financial Year ended March 31, 2023 to Rs.840.37 million in Financial Year ended March 31, 2024; (iv) Net foreign exchange Gain of Rs.171.33 million in Financial Year ended March 31, 2023 to Net foreign exchange loss Rs.38.11 million in Financial Year ended March 31, 2024 (v) freight and other expenses increased from Rs.1,727.76 million in Financial Year ended March 31, 2023 to Rs.1916.78 million in Financial Year ended March 31, 2024; (vi) bank charges and bank guarantee charges increased from Rs.690.34 million in Financial Year ended March 31, 2023 to Rs.836.69 million in Financial Year ended March 31, 2024; (vii) rent expense increased from Rs.244.93 million in Financial Year ended March 31, 2023 to Rs.355.20 million in Financial Year ended March 31, 2024; The increase in other expenses was in line with the increase in revenues from operations.
Share of profit of Joint venture amounted to Rs.23.09 million for Financial Year ended March 31, 2024. This was mainly due to the profits made by Burberry Infra Private Limited and ALTIS TLL JV in Financial Year ended March 31, 2024 as against the loss in Financial Year ended March 31, 2023.
Profit before tax: As a result of the factors outlined above, our profit before tax was Rs.3,181.22 million in Financial Year ended March 31, 2024, as compared to the profit before tax of Rs.1,482.94 million in Financial Year ended March 31, 2023.
Tax expense
• Current tax: We recorded a current tax expense of Rs.849.17 million in Financial Year ended March 31, 2024, as compared to a current tax expense of Rs.389.96 million in Financial Year ended March 31, 2023. This increase was primarily due to increase in profit before tax.
• Deferred tax: We recorded a Nil deferred tax expense for Financial Year ended March 31, 2024, and Financial Year ended March 31, 2023. Our Company has accounted for deferred tax asset on tax disallowances on a prudent basis only to the extent of deferred tax liability as there is reasonable probability of future taxable income to the extent of reversal of temporary tax differences.
• Excess/short provision of earlier years: We recorded short of tax provisions for earlier years by NIL in Financial Year ended March 31, 2024, as compared to Rs.17.30 million in Financial Year ended March 31, 2023.
Profit for the period /year: As a result of the factors outlined above, our profit for the year was Rs.2,332.05 million in Financial Year ended March 31, 2024 as compared to the profit for the year of Rs.1,075.68 million in Financial Year ended March 31, 2023.
Total other comprehensive income for the period /year: Our total other comprehensive loss for the year was Rs.64.92 million in Financial Year ended March 31, 2024, as compared to total other comprehensive loss for the year of Rs.0.07 million in Financial Year ended March 31, 2023. This was primarily due to increase in loss on exchange difference on translation of financial statement of our foreign operations.
Total comprehensive income for the period /year: As a result of the factors outlined above, our total comprehensive income for the year in Financial Year ended March 31, 2024, was Rs.2,267.13 million as compared to a total comprehensive income for the year of Rs.1,075.61 million in Financial Year ended March 31, 2023.
Financial Year ended March 31, 2023 compared to Financial Year ended March 31, 2022
Total revenue: Our total revenue increased by 34.57 % from t 23,571.99 million in Financial Year ended March 31, 2022, to t 31,720.34 million in Financial Year ended March 31, 2023. This increase was primarily due to an increase in revenue from operations. This increase was mainly due to the following:
• Revenue from sale of products: Our revenue from sale of products decreased by 2.90% from t 2,067.76 million in Financial Year ended March 31, 2022, to t 2,007.77 million in Financial Year ended March 31, 2023. This marginal reduction was primarily due to reduction in the volume of products sold as our facilities were deployed in the completion of ongoing large scale Domestic and International T&D projects which required higher volumes of towers and conductors.
• Revenue from sale of services: Our revenue from sale of services decreased by 50.50% from t215.18 million in Financial Year ended March 31, 2022, to t106.52 million in Financial Year ended March 31, 2023. This was primarily due to decrease in undertaking of new service orders by our Company and focusing on completion of the ongoing EPC projects.
• Income from EPC contracts: Our revenue from income from EPC contracts increased by 39.83 % from t20,558.48 million in Financial Year ended March 31, 2022, to t28,747.08 million in Financial Year ended March 31, 2023. This was primarily due to an increase in the in the completion of the EPC for international and domestic T&D business.
• Revenue from other operating revenue: Our revenue from other operating revenue increased by 0.22 % from t658.73 million in Financial Year ended March 31, 2022, to t660.19 million in Financial Year ended March 31, 2023. This was primarily due to increase in scrap sale and export incentives.
• Other income: Our other income increased by 176.69 % from t71.84 million in Financial Year ended March 31, 2022, to t198.78 million in Financial Year ended March 31, 2023. This increase was primarily due to increase in interest income due to the increase in deposit made by our Company from t48.87 million in Financial Year ended March 31, 2022 to t81.63 million in Financial Year ended March 31, 2023, increase in miscellaneous income which mainly includes Vat refund and credit notes from vendors, from t21.01million in Financial Year ended March 31, 2022 to t80.87 million in Financial Year ended March 31, 2023 and due to increase in reversal of provision by t35.48 million.
• Total expenses: Our total expenses increased by 33.45 % from t 22,665.32 million in Financial Year ended March 31, 2022, to t30,247.14 million in Financial Year ended March 31, 2023. This increase was mainly due to the following factors:
• Cost of materials consumed: Our cost of materials consumed increased by 51.03 % from t12,059.66 million in Financial Year ended March 31, 2022, to t18,214.11 million in Financial Year ended March 31, 2023. The increase was mainly due to an increase in volume of material utilized for undertaking EPC projects, coupled with increase in the price of materials. Further, due to increase in outlay of supply of manufactured items, proportion of the material consumed to the total revenue was higher.
• Changes in inventories of finished goods, work-in-progress and stock-in trade: Changes in inventories of finished goods, work-in-progress was t(82.08) million in Financial Year ended March 31, 2023, as compared to t(178.14) million in Financial Year ended March 31, 2022. This increase in inventories was due to increase in the sales of supply and erection of the finished goods.
• Sub-contracting expenses: Our sub-contracting expenses marginally decreased by 1.94% from t3,540.40 million in Financial Year ended March 31, 2022, to t3,471.57 million in Financial Year ended March 31, 2023 due to lower execution in erection and construction jobs.
• Employee benefits expense: Our employee benefits expense increased by 12.28 % over t 1,594.58 million in Financial Year ended March 31, 2022, to t1,790.37 million in Financial Year ended March 31, 2023. This increase was primarily due to a 12.31 % increase in salaries, bonus, perquisites etc. from t1,521.09 million in Financial Year ended March 31, 2022, to t1,708.35 million in Financial Year ended March 31, 2023. This increase was due to an increase i n the number of employees employed by us and annual compensation increments.
• Finance costs: Our finance cost increased by 41.08 % from t848.43 million in Financial Year ended March 31, 2022, to t1,196.94 million in Financial Year ended March 31, 2023. This increase was primarily due to an increase in the lending interest rates because of increase in MCLR during the period and due to increase in the borrowings and interest based bills of acceptances against letter of credit given by our Company.
• Depreciation and amortisation expense: Our depreciation and amortisation expense increased by 21.11 % from t378.39 million in Financial Year ended March 31, 2022, to t458.26 million in Financial Year ended March 31, 2023. This was primarily due to capitalization of certain assets acquired during the year in the ordinary course of business.
• Other expenses: Our other expenses increased by 17.55 % from t4,422.00 million in Financial Year ended March 31,
2022, to Rs.5,197.97 million in Financial Year ended March 31, 2023. This was primarily due to an increase in (i) stores and spares consumed from Rs.528.30 million in Financial Year ended March 31, 2022 to Rs.629.33 million in Financial Year ended March 31, 2023; (ii) bank charges and bank guarantee charges from Rs.537.20 million in Financial Year ended March 31, 2022 to Rs.690.34 million in Financial Year ended March 31, 2023; (iii) power and fuel consumed from Rs.78.89 million in Financial Year ended March 31, 2022 to Rs.97.36 million in Financial Year ended March 31, 2023; (iv) freight and other expenses from Rs.1,136.39 million in Financial Year ended March 31, 2022 to Rs.1,727.76 million in Financial Year ended March 31, 2023; (v) rates and taxes from ^75.13 million in Financial Year ended March 31, 2022 to Rs.223.28 million in Financial Year ended March 31, 2023; (vi) decrease in Sundry Debit balances written off from Rs.80.12 million in Financial Year ended March 31, 2022 to Rs.27.65 million in Financial Year ended March 31, 2023; (vii) Bad Debts written off decreased from Rs.83.53 million in Financial Year ended March 31, 2022 to Rs.14.86 million in Financial Year ended March 31, 2023; and (viii) insurance expenses increased from Rs.171.56 million in Financial Year ended March 31, 2022 to Rs.204.23 million in Financial Year ended March 31, 2023. The increase in other expenses was in line with the increase in revenues from operations.
Share ofprofit of Joint venture amounted to Rs.9.74 million for Financial Year ended March 31, 2023. This was mainly due to the profits made by Transrail Lighting Limited - First Capital Energy & Power Industries Limited JV (Nigeria) in Financial Year ended March 31, 2023, as against the loss in Financial Year ended March 31, 2022.
Profit before tax: As a result of the factors outlined above, our profit before tax was Rs.1,482.94 million in Financial Year ended March 31, 2023, as compared to the profit before tax of Rs.901.70 million in Financial Year ended March 31, 2022.
Tax expense
• Current tax: We recorded a current tax expense of Rs.389.96 million in Financial Year ended March 31, 2023, as compared to a current tax expense of Rs.237.03 million in Financial Year ended March 31, 2022. This increase was primarily due to increase in profit before tax.
• Deferred tax: We recorded a Nil deferred tax expense for Financial Year ended March 31, 2023, and Financial Year ended March 31, 2022. Our Company has accounted for deferred tax asset on tax disallowances on a prudent basis only to the extent of deferred tax liability as there is reasonable probability of future taxable income to the extent of reversal of temporary tax differences.
• Excess/short provision of earlier years: We recorded short of tax provisions for earlier years by Rs.17.30 million in Financial Year ended March 31, 2023, as compared to Rs.17.60 million in Financial Year ended March 31, 2022. This was due to differential in provision for tax as against actual tax payment for the assessment year 2022- 2023.
Profit for the period /year: As a result of the factors outlined above, our profit for the year was Rs.1,075.68 million in Financial Year ended March 31, 2023, as compared to the profit for the year of Rs.647.07 million in Financial Year ended March 31, 2022.
Total other comprehensive income for the period / year: Our total other comprehensive loss for the year was Rs.(0.07) million in Financial Year ended March 31, 2023 as compared to total other comprehensive income for the year of Rs.1.81 million in Financial Year ended March 31, 2022. This was primarily due to loss on exchange difference on translation of financial statement of our foreign operations.
Total comprehensive income for the period /year: As a result of the factors outlined above, our total comprehensive income for the year in Financial Year ended March 31, 2023, was Rs.1,075.61 million as compared to a total comprehensive income for the year of Rs.648.88 million in Financial Year ended March 31, 2022.
Other operating revenue
The following table sets forth a breakdown of our other operating revenue for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023, and March 31, 2022:
| Particulars | Three months period ended June 30, 2024 |
Financial Year ended March 31, 2024 |
Financial Year ended March 31, 2023 |
Financial Year ended March 31, 2022 |
| Sale of scrap | 123.53 |
438.93 |
392.82 |
370.50 |
| Job work | 21.97 |
101.15 |
74.95 |
75.67 |
| Export incentives | 43.25 |
105.12 |
99.94 |
64.55 |
| Sundry credit balances written back | 0.00 |
20.43 |
83.08 |
124.43 |
| Others | - |
7.31 |
9.40 |
23.58 |
| Total | 188.75 |
672.94 |
660.19 |
658.73 |
Liquidity and Capital Resources Capital Requirements
For the three months period ended June 30, 2024 and the Financial Year ended March 31, 2024, Financial Year ended March 31, 2023, and Financial Year ended March 31, 2022, we met our funding requirements, including capital expenditure, satisfaction of debt obligations, investments, taxes, working capital requirements and other cash outlays, principally with funds generated from operations and optimization of operating working capital, with the balance principally met using external borrowings and additional equity.
The following table sets forth information on liquidity and capital resources as at the dates indicated:
| Particulars | As at June 30 2024 |
As at March 31 |
||
2024 |
2023 |
2022 |
||
| Cash and cash equivalents at the end of the period / year | 883.34 |
1,098.46 |
1,247.14 |
575.04 |
| Non-Current borrowings | 694.89 |
806.65 |
1,203.40 |
1,179.76 |
| Current Borrowings | 5,339.39 |
5,625.22 |
4,845.82 |
3,511.41 |
| Lease Liabilities | 221.87 |
241.55 |
163.51 |
74.02 |
| Bank balances other than cash and cash equivalent | 1,564.29 |
1,140.52 |
734.05 |
532.75 |
The following table sets forth certain information concerning our cash flows for the three months period ended June 30, 2024 and the Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022 indicated:
| Particulars | Three months period ended June 30, 2024 |
For Financial Year ended March 31, 2024 |
For Financial Year ended March 31, 2023 |
For Financial Year ended March 31, 2022 |
| Net cash flow from operating activities | 1,318.72 |
354.85 |
1,426.79 |
501.62 |
| Net cash flow used in investing activities | (752.81) |
(782.99) |
(1,045.30) |
(813.91) |
| Net cash flow from / (used in) financing activities | (781.03) |
279.46 |
290.61 |
(3.72) |
Net cashflow from operating activities
For three months period ended June 30, 2024, our net cash flow from operating activities was Rs. 1,318.72 million which primarily comprised of (i) net profit before tax and extraordinary items for the period of Rs.770.58 million which was adjusted primarily for, among other things, depreciation and amortisation expense of Rs.126.68 million and finance cost of Rs.379.55 million; (ii) working capital changes; and (iii) income taxes paid (net of refund). Working capital changes primarily included, inter-alia, increase in trade receivables and contract assets of Rs.470.45 million, increase in inventories of Rs.871.95 million, increase in trade payable and contract liabilities of Rs. 1,803.40 million, increase in other financials, non- financial liabilities and provisions of Rs.125.89 million and increase in other financial and non- financial assets of Rs.225.60 million. Net cash flow from operating activities also included income taxes paid (net of refund) of Rs. 163.47 million.
For Financial Year ended March 31, 2024, our net cash flow from operating activities was Rs.354.85 million which primarily comprised of (i) net profit before tax and extraordinary items for the period of ^3158.13 million which was adjusted primarily for, among other things, depreciation and amortisation expense of Rs.503.08 million and finance cost of Rs.1436.79 million; (ii) working capital changes; and (iii) income taxes paid (net of refund). Working capital changes primarily included, inter-alia, increase in trade receivables and contract assets of Rs.8,726.33 million, increase in inventories of Rs.672.68 million, increase in trade payable and contract liabilities of Rs.7543.46 million, increase in other financials, non- financial liabilities and provisions of Rs.100.59 million and increase in other financial and non- financial assets of Rs.1656.82 million. Net cash flow from operating activities also included income taxes paid (net of refund) of Rs.1,101.61 million.
For Financial Year ended March 31, 2023, our net cash flow from operating activities was Rs.1,426.79 million which primarily comprised of (i) net profit before tax and extraordinary items for the period of Rs. 1,473.20 million which was adjusted primarily for, among other things, depreciation and amortisation expense of Rs.458.26 million and finance cost of Rs.1,057.95 million; (ii) working capital changes; and (iii) income taxes paid (net of refund). Working capital changes primarily included, inter-alia, increase in trade receivables and contract assets of Rs.3,861.12 million, increase in inventories of Rs.325.11 million, increase in other financials, non- financial liabilities and provisions of Rs.3,311.70 million and decrease in other financial and non- financial assets of Rs.381.36 million. Net cash flow from operating activities also included income taxes paid (net of refund) of Rs. 137.63 million.
For Financial Year ended March 31, 2022, our net cash flow from operating activities was Rs.501.62 million which primarily comprised of (i) net profit before tax and extraordinary items for the period of Rs.906.67 million which was adjusted primarily for, among other things, depreciation and amortisation expense of Rs.378.39 million and finance cost of Rs.679.46 million; (ii) working capital changes; and (iii) income taxes paid (net of refund). Working capital changes primarily included, inter-alia, increase in trade receivables and contract assets of Rs.5,992.20 million, increase in inventories of Rs.4,60.27 million, increase in
other financials, non- financial liabilities and provisions of Rs.5,233.76 million and increase in other financial and non- financial assets of Rs.103.69 million. Net cash flow from operating activities also included income taxes paid (net of refund) of Rs.353.60 million.
Net cashflow used in investing activities
For the three months period ended June 30, 2024, our net cash flow used in investing activities was Rs.752.81 million which was towards purchase of property, plant and equipment of Rs.231.77 million, purchase of equity shares in associate company being , purchase of other investments of Rs. NIL million, loans and advances given to related parties of Rs.NIL million and movement in other bank balances of Rs.542.52 million which was partially offset by proceeds from sale of property, plants and equipment’s of Rs.0.73 million, sale of other investment of Rs.NIL million and interest received of Rs.20.75 million.
For Financial Year ended March 31, 2024, our net cash flow used in investing activities was Rs.782.99 million which was towards purchase of property, plant and equipment of Rs.289.64 million, purchase of other investments of Rs.44.94 million, loans and advances given to related parties of Rs.470.00 million and movement in other bank balances of Rs.367.51 million which was partially offset by proceeds from sale of property, plants and equipment’s of Rs.17.03 million, sale of investment in Associate s of ^31.95 million, sale of other investment Rs.33.00 million, interest received of Rs.132.38 million and loans and advances repaid by related parties of Rs.174.74 million.
For Financial Year ended March 31, 2023, our net cash flow used in investing activities was Rs.1,045.30 million which was towards purchase of property, plant and equipment of Rs.539.50 million, loans and advances given to related parties of Rs.125.00 million and movement in other bank balances of Rs.486.57 million which was partially offset by proceeds from sale of property, plants and equipment’s of 21.33 million, interest received of Rs.62.51 million and loans and advances repaid by related parties of Rs.21.93 million.
For Financial Year ended March 31, 2022, our net cash flow used in investing activities was Rs.813.91 million which was towards purchase of property, plant and equipment of Rs.805.80 million, purchase of equity shares in associate company of Rs.0.05 million, loans and advances given to related parties of Rs.199.37 million and movement in other bank balances of Rs.65.42 milli on which was partially offset by proceeds from sale of property, plants and equipment’s of Rs.47.60 million, interest received of Rs.26.88 million and loans and advances repaid by related parties of Rs.182.25 million.
Net cashflow from / (used) in financing activities
For the three months period ended June 30, 2024, our net cash flow used in financing activities was Rs.781.03 million which primarily comprised of interest payment and repayment of borrowings. Repayment of current borrowings of Rs.294.64 million and long term borrowing of Rs.102.95 and interest payment of Rs. 357.44 million respectively.
For Financial Year ended March 31, 2024, our net cash flow from financing activities was Rs.279.46 million which primarily comprised of repayment of long term borrowings of Rs.602.00 million, principal repayment of lease liabilities Rs.75.49 million and interest paid Rs.1,399.50 million which was partially offset by proceeds from long term borrowings Rs.84.95 million and Net proceeds from short term borrowings of Rs.899.83 million.
For Financial Year ended March 31, 2023, our net cash flow from financing activities was Rs.290.61 million which primarily comprised of repayment of long term borrowings of Rs. 1,191.15 million, principal repayment of lease liabilities Rs.62.13 million and interest paid Rs.998.32 million which was partially offset by proceeds from long term borrowings Rs.1,004.50 million and net proceeds from short term borrowings(net) of Rs.1,544.72 million.
For Financial Year ended March 31, 2022, our net cash flow used in financing activities was Rs.(3.72) million which primarily comprised of repayment of long term borrowings of Rs.499.12 million, repayment of short term borrowings of Rs.132.76 million, principal repayment of lease liabilities Rs.55.81 million and interest paid Rs.639.99 million which was partially offset by proceeds from issue of equity shares/ preference shares of Rs.302.78 million and proceeds from long term borrowings (net) Rs.1,031.90 million.
Capital Expenditure
The table below provides details of our net cash outflow on capital expenditure for the three months period ended June 30, 2024 and the Financial Year ended March 31, 2024, Financial Year ended March 31, 2023 and Financial Year ended March 31, 2022, respectively:
| Particulars | For the three months period ended June 30, 2024 |
For the Financial Year ended March 31, 2024 |
For the Financial Year ended March 31, 2023 |
For the Financial Year ended March 31, 2022 |
| Net cash outflow on capital expenditure | 231.05 |
272.61 |
518.17 |
758.20 |
Planned Capital Expenditure
Our planned capital expenditure for Financial Year 2024-2025 shall be primarily used for plant, tools and equipment for construction projects and some additions to the factories.
| Particulars | For the three months period ended June 30, 2024 |
For the Financial Year ended March 31, 2024 |
For the Financial Year ended March 31, 2023 |
For the Financial Year ended March 31, 2022 |
| Property plant and machinery | 3,547.38 |
3,474.01 |
3,604.27 |
3,254.35 |
| Capital work in progress | 70.11 |
57.85 |
41.24 |
172.13 |
| Intangible assets | 0.88 |
0.90 |
1.95 |
2.38 |
In the Financial Year ended March 31, 2022, our capital expenditure towards additions to tangible assets, capital work in progress, intangible assets (on gross block basis) amounted to Rs.573.79 million, Rs.133.62 million and Rs.0.13 million, respective ly. In the Financial Year ended March 31, 2023, our capital expenditure towards additions to tangible assets, capital work in progress and intangible assets (on gross block basis) amounted to Rs. 790.33 million, Rs (130.89) million, and Rs.0.12 million, respectively. In the Financial Year ended March 31, 2024, our capital expenditure towards additions to tangible assets, Capital work in progress and intangible assets (on gross block basis) amounted to Rs.306.01 million, Rs.16.61 million and Rs.0.10 million, respectively. In the three months period ended June 30, 2024, our capital expenditure towards additions to tangible assets, capital work in progress and intangible assets (on gross block basis) amounted to Rs.180.30 million, Rs.12.26 million, and Rs. Nil million, respectively.
Indebtedness
As of September 30, 2024, we had total outstanding indebtedness amounting to Rs.57,689.30 million (fund-based amounting to Rs.6,845.83 million and non-fund based amounting to Rs.50,843.47 million), which consisted of secured working capital loans from banks, and unsecured loans from certain non-banking financial institutions. For further details related to our indebtedness,
see "Financial Indebtedness’" on page 337.
Aging Schedule of Trade Payables
The table below provides details regarding the aging of significant trade payables as of June 30, 2024:
| Particulars | As of June 30, 2024 |
|||||
Payables not due |
Less than 1 year |
1 -2 years |
2-3 years |
More than 3 years |
Total |
|
| (i) MSME | 200.50 |
229.47 |
26.54 |
15.05 |
15.77 |
487.33 |
| (ii) Others | 13,449.91 |
1812.83 |
149.48 |
150.91 |
757.36 |
16320.48 |
| (iii) Disputed Dues - MSME | - |
- |
- |
- |
- |
- |
| (iv) Disputed Dues - Others | - |
- |
- |
- |
- |
- |
| (v) Unbilled dues | - |
- |
- |
- |
- |
- |
Contingent Liabilities and Commitments
As of June 30, 2024, our contingent liabilities as per Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets were as follows:
| Particulars | As at June 30, 2024 |
| (a) Contingent Liabilities | |
| Bank Guarantees issued by bankers | 661.11 |
| Direct Tax matters for which company has preferred appeal | 761.68 |
| Indirect Tax matters for which company has preferred appeal | 930.65 |
| Others | 177.62 |
| (b) Commitments | |
| Estimated amount of contracts remaining to be executed on Capital Account and not provided for in accounts | 696.25 |
| Other Commitments | 11.37 |
Auditor Observations
There are no qualifications, reservations and adverse remarks by our Statutory Auditors in our Restated Consolidated Financial Statement.
Related Party Transactions
We have entered into related party transactions with, amongst others, promoter group entities, our key managerial personnel and with our Subsidiaries.
For further information on our related party transactions, see "Summary of the Offer Document - Summary of Related Party Transactions’" on page 17. Also, see "Risk Factors - We have in the past entered into related party transactions and may continue to do so in the future and there can be no assurance that we could not have achieved more favorable terms if such transactions had not been entered into with related parties"" on page 45.
Off-Balance Sheet Transactions
We have not entered into any off-balance sheet transactions.
Market Risks
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
Commodity Price Risk
The Group is affected by the price volatility of the major commodities. The Group’s operating activities require the ongoing purchase and manufacture of tower, conductors and poles and therefore require a continuous supply of Steel, Aluminium and Zinc. It may be observed that all the three metals have significant volatility in the prices during the year. However in case of steel which is the major item, there is no marketplace to manage the price risk. The Group holds derivative financial instruments such as commodity future contract to mitigate the risk of changes in Aluminium prices.
Further substantial part of our revenues during the year were covered by escalation clauses which addresses the price volatility to a large extent. Due to the significantly increased volatility of the price of the Steel, Aluminium and Zinc, during the year the Group entered into various purchase contracts for Steel, Aluminium and Zinc at specific rates to manage the risk of the costs. The prices in these purchase contracts are linked to market rates. Our Company’s Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The group exposure to the risk of changes in market interest rates relates primarily to the Company’s longterm and short-term debt obligations with floating interest rates.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Our Company’s exposure to the risk of changes in foreign exchange rates relates primarily to our Company’s operating activities (when revenue or expense and monetary assets and liabilities is denominated in a foreign currency). Our company undertakes selective hedging based on the risk perception of the management. We use forward contracts, derivatives, foreign currency loans to hedge its foreign currency exposures relating to the firm commitments, receivables, payables and highly probable future transactions.
Liquidity risk
Our Company monitors its risk of a shortage of funds using a liquidity planning tool. Our Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, debentures and other instruments. As of June 30, 2024, no term loan has matured based on the repayment schedule specified in the financing agreements with the lenders.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments. Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on the ability of the customer to honor his commitments.
The credit quality is also assessed on factors like state/central sponsored undertaking, financial strength of the customer, assurance of payments like LC or Guarantees etc. Outstanding customer receivables are regularly monitored and any shipments
to major customers are generally covered by letters of credit or other forms of credit insurance. Retention is considered as part of receivable which is payable on completion of the project and achieving the completion milestones. In certain contracts the retention would be realised on submission of a Bank guarantee, which is submitted as per the terms of the contract with customer.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are consolidated into a homogenous class and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in "Restated Consolidated Financial Information - Note 45: Fair value hierarchy" on page 317. The Company does not hold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. In addition, the Group is exposed to credit risk in relation to financial guarantees given by the company on behalf of joint operation (net of group share). These financial guarantees have been issued to the banks on behalf of the joint operations. Based on the expectations at the end of reporting period, Company considers the likelihood of the any claim under such guarantee is remote.
Inflation Risk
In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact on our business and results of operations, inflation generally impacts the overall economy and business environment and hence could affect us.
Unusual or Infrequent Events or Transactions
Except as described in this Red Herring Prospectus, there have been no events or transactions to our knowledge that have in the past or may in the future affect our business operations or financial performance which may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Other than as described in "Risk Factors" and this "Management’s Discussion and Analysis ofFinancial Condition and Results of Operations" on pages 31 and 340, respectively, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on our revenue or income from continuing operations.
Future Relationships Between Expenditure and Income
Other than as described in "Risk Factors" on page 31 and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" on page 340, to our knowledge there are no known factors which we expect will have a material adverse impact on our operations or finances.
New Product or Business Segments
Other than as described in "Our Business" on page 196 there are no new products or business segments in which we operate. Competitive Conditions
We expect competitive conditions in our industry to further intensify as new entrants emerge and as existing competitors seek to emulate our business model and offer similar products. For further details, please refer to "Risk Factors" and "Our Business" beginning on pages 31 and 196, respectively.
Significant Developments after June 30, 2024
There is no subsequent development after the date of our financial statements contained in this Red Herring Prospectus which materially and adversely affects, or is likely to affect, trading or revenue or profitability or operations of value of the assets and the ability to pay its liabilities within the next 12 months.
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