valecha engineering ltd Management discussions

Introduction

Indias high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress.

Infrastructure is a key enabler in helping India become a US $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Mr. Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors.

Market Size

In Budget 2023-24, capital investment outlay for infrastructure is being increased by 33% to Rs.10 lakh crore (US$ 122 billion), which would be 3.3 per cent of GDP.

As per the Union Budget 2023-24, a capital outlay of Rs. 2.40 lakh crore (US$ 29 billion) has been provided for the Railways, which is the highest ever outlay and about 9 times the outlay made in 2013-14.

Started with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors, as per news reports. Under the initiative, 2476 projects are under development phase with an estimated investment of US$ 1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 in the roads and bridges sub-sector.

India plans to spend US$ 1.4 trillion on infrastructure through ‘National Infrastructure Pipeline in the next five years. In FY21, infrastructure activities accounted for 13% share of the total FDI inflows of US$ 81.72 billion.

Government Initiative and investment

Some of the recent government initiatives and investments in the Infrastructure sector are as follows:

• Budget 2023 provides INR10 lakh crore allocation for development of the infrastructure sector which will enhance growth potential, job creation, pool private investments and provide a cushion against global headwinds.

- Highest capital outlay of INR2.40 lakh crores allocated to Railways

- 100 critical transport infrastructure projects with capital expenditure of INR75,000 crores identified for last and first mile connectivity

including INR15,000 crores from private sector.

- 50 additional airports, heliports, water aerodromes and advance landing grounds to be revived for improving regional air connectivity • Policy announcement proposed to support Green Growth:

- Viability Gap Funding for Battery Energy Storage Systems with capacity of 4,000MWH.

- Investment of INR20,700 crores including central support of INR8,300 crores proposed for Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy to be constructed from Ladakh.

- Green Credit Programme to be notified under the Environment (Protection) Act to incentivize environmentally sustainable and responsive actions.

• Coastal shipping will be promoted as the energy efficient and lower cost of transport, both for passengers and freight, through PPP mode with viability gap funding.

• Urban Infrastructure Development Fund will be established through use of priority sector lending shortfall for creating urban infrastructure in Tier 2 and Tier 3 cities.

• Harmonized Master List of Infrastructure will be reviewed by an expert committee for recommending classification and financing framework.

• Newly established Infrastructure Finance Secretariat will assist for more private investment in infrastructure sector.

• States and cities will be encouraged to undertake reforms and actions to transform cities into ‘sustainable cities of tomorrow.

• 50-year interest free loan to State Governments extended for one more year to spur investment in infrastructure and incentivize State Governments for complementary policy actions

Road Ahead

Over the last seven to eight years, we have witnessed a great impetus on infrastructural development in the country. The government has implemented stringent monitoring systems across project life cycles, countering frequent project delays and yielding results within the stipulated timeline.

The roadmap to Indias infrastructure is exciting and the new decade seems to be promising. More and more green and clean initiatives are happening across government bodies in major countries, especially, the Indian government has given the much-needed push to the infrastructure sector in the recent 2021 budget. India is looking at a US$ 5 trillion economy dream.

Today, our country also has all the resources to create state-of-the-art infrastructure - a young population, a substantial skilled workforce and availability of the latest technology and new-age materials.

Financial and Operational Performance

The Company has achieved a turnover of Rs. 90.07 crores for the year ended 31st March, 2023 against Rs. 230.81 crores in the previous year.

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.

SIGNIFIACANT CHANGES IN KEY FINANCIAL RATIOS COMPARED TO PREVIOUS YEAR

Sr. Particulars No.	2022-23	Change %
1 Debtors Turnover	NA	NA
2 Current Ratio	0.95	-11%
3 Debt Equity Ratio	28.14	81%
4 Operating Profit Margin (%)	-22.79%	948%
5 Net Profit Margin (%)	-19.60%	-2041%

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.