Valecha Engineering Ltd Management Discussions.


Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.

Government Initiatives and Opportunities

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport.

The Government of India is taking every possible initiative to boost the infrastructure sector. Announcements in Union Budget 2019-20:

• The Government of India has given a massive push to the infrastructure sector by allocating Rs 4.56 lakh crore for the sector.

• The Indian Railways received allocation under Union Budget 2019-20 at Rs 66.77 billion. Out of this allocation, Rs 64.587 billion (US$ 8.95 billion) is capital expenditure.

• Rs 83,015.97 crore allocated towards road transport and highway.


Following are the achievements of the government in the past four years:

• The total national highways length increased to 122,434 kms in FY18 from 92,851 kms in FY14.

• Indias rank jumped to 24 in 2018 from 137 in 2014 on World Banks Ease of doing business - "Getting Electricity" ranking.

• Energy deficit reduced to 0.7 per cent in FY18 from 4.2 per cent in FY14.

• Number of airports has increased to 102 in 2018.

Efficiency-Improving Technology

The biggest differentiator for builders and developers this year is likely to be technology in construction — specifically, the innovations that can enhance efficiency.


The Company has been going through a challenging time over the past few years. Debt commitments in terms of interest expenses kept on mounting leading to tightening of liquidity position and profitability erosion of the business. However, in a bid to revive the business and restore its financials the Company has undertaken a series of measures directed towards improving its operational efficiencies, cutting down on expenses and negotiating with the bankers for securing better terms on existing debt. The Companys strategic initiatives are also ably supported by improving macro environment on the back of supportive policies of the government. The Company is optimistic that the above factors will help it emerge as a stronger and more focused EPC player. The future looks even more bullish for various reasons. The increasing demands on infrastructure will see the implementation of mega and complex projects. The Company is tying up with JV partners to bid for new projects. Financial and Operational Performance

The Company has achieved a turnover of Rs.184.30 crores as at 31st March, 2019 against Rs 207.80 crores resulting into a decrease by 11.31%.

Internal Control System

The Company has an adequate system of internal controls to safeguard and protect from loss, unauthorized use or disposition of its assets. All transactions are properly authorized, recorded and reported to the management. The Company is following all the Accounting Standards for properly maintaining the books of accounts and reporting of financial statements. The Company has appointed external Internal Auditors to review various areas of the operations of the Company. The audit reports are reviewed by the management and the Audit Committee of the Board periodically.

Consequent to implementation of Companies Act, 2013 (Act), the Company has complied with the specific requirements in terms of Section 134(5) (e) of the Act calling for establishment and implementation of an Internal Financial Control framework that supports compliance with requirements of the Act in relation to the Directors responsibility statement.

Human resources

The companys mission has always been in creating an exciting workplace where opportunities are made available for employees to perform, deliver results to their fullest potential and add value to the organizational growth. Effective and judicious redeployment of manpower played a significant role in ensuring timely mobilization of key personnel required at new project sites.

Improved communication channels, periodic brain-storming sessions, sharing best practices and use of technology to our advantage, augmented the seamless working between sites and various departments and brought in the required coordination for achieving our companys goals & objectives. Periodic reviews and visits were undertaken to ensure costs are kept under control amidst stringent monitoring.

The Top Managements active involvement in Operations provided the thrust & impetus for smooth & effective execution of ongoing projects. Senior leadership team continued to guide, mentor and instill the sense of pride, ownership & commitment amongst the employees so as to strive to excel in this highly competitive Infrastructure industry


Sr. No. Particulars 2018-19 Change %
1 Current Ratio 1.05 3%
2 Debt Equity Ratio 19.91 -4%
3 Operating Profit Margin (%) -5.21% 58%
4 Net Profit Margin (%) 0.63% 104%

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the infrastructure sector, significant changes in political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labour relations and interest costs.