Vruddhi Engineering Works Ltd Management Discussions

BUSINESS OVERVIEW

Our Company was incorporated in Mumbai, Maharashtra as “Vruddhi Steel Private Limited”, a private limited company under the Companies Act, 2013, vide certificate of incorporation dated October 27, 2020 issued by the Assistant Registrar of Companies, Central Registration Centre. Subsequently, our Company was converted from a private limited company to a public limited company, pursuant to a resolution passed in the extraordinary general meeting of our Shareholders held on December 26, 2022, and consequently, the name of our Company was changed to “Vruddhi Steel Limited”, and a fresh certificate of incorporation consequent upon conversion from private company to public company dated January 05, 2023, was issued by the RoC to our Company. Later on, January 31, 2023, the running business of the proprietorship concern of our Promoter namely “M/s. Kosmo Ventures” was taken-over by the Company, along with the assets and liabilities of the proprietorship concern as going concern. Further, the name of our Company was changed to “Vruddhi Engineering Works Limited” pursuant to a special resolution passed in the extraordinary general meeting of our Shareholders held on April 29, 2023 and a fresh certificate of incorporation dated June 20, 2023 was issued by the Registrar of Companies, Mumbai.

Our Company is mainly engaged in offering mechanical splicing solutions to the real estate, construction and infrastructure industry by designing, engineering and supplying of rebar couplers. Our Companys offering under this vertical includes (a) supply of rebar couplers as per our customer needs; (b) on-site threading services of the couplers; and (c) trading in threading machines and spares. Our Company believes that it offers an end-to-end mechanical splicing solutions ranging from design, manufacturing, testing, logistics and rebar threading. We believe that the rebar couplers offered by our Company is an alternative to the conventional splicing methods followed in the construction industry.

As our Company primarily caters to the construction industry, our Company with an objective to expand its product offerings acquired the running business of the proprietorship concern of our Promoter namely, “M/s. Kosmo Ventures”, along with the assets and liabilities of the proprietorship concern as going concern. Kosmo Ventures was engaged in the business of trading of reinforcement bars (TMT bars) and machinery. The acquisition was completed on January 31, 2023 and since then, our Company has expanded into the business of trading of reinforcement bars (TMT bars) and machinery as a trader and service provider. Our Company design and engineer the rebar couplers as per the customers requirement and is manufactured by a third-party manufacturer.

Our Promoter is engaged with the construction industry for over 5 years. In a short span of time, we believe that our Promoter has established herself as a trusted and reliable source for supply of Steel Products amongst our suppliers. We believe that our approach of timely supply of materials, quality control, logistics, inventory management, credit and delivery at cost effective prices to the customers has helped our Company to build strong relationship with our customers.

Our Company offers on-site threading service to our customers of the couplers. Our skilled and experienced workforce shall take care of all the hassles associated with on-site machine installation and rebar threading.

INDUSTRY OVERVIEW

The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

EXECUTIVE SUMMARY

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. The Indian real estate market is projected to experience a substantial increase, potentially reaching a value of US$ 5-7 trillion by the year 2047, with the possibility of surpassing US$ 10 trillion. In 2023, luxury home sales in India priced at Rs. 4 crore (US$ 481,927) and above surged by 75%, doubling their share in total housing sales. Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to the countrys GDP. Rapid urbanisation bodes well for the sector. The number of Indians living in urban areas is expected to reach 542.7 million by 2025 and 675.5 million by 2035. Construction is one of the largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at Rs. 3,83,229.78 crore (US$ 44.46 billion) from April 2000-September 2024. Government of Indias ‘Housing for All initiative is expected to bring US$ 1.3 trillion investment in the housing sector by 2025. Global Real Estate Market Experts JLLs 2024 Real Estate Transparency Index shows that India has moved into the transparent zone for the first time, ranking 31st out of 89 countries. Indias Global Real Estate Transparency Index ranking improved by three notches from 39 to 36 since the past eight years from 2014 until 2022 on the back of regulatory reforms, better market data and green initiatives, according to property consultant JLL. Indias physical retail landscape is poised for a substantial boost, with nearly 41 million sq. ft of retail developments set to be operational between 2024 and 2028 across the top 7 cities, encompassing projects in various stages from construction to planning.

GOVERNMENT INITIATIVES

Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives:

In the Union Budget 2024-25, under PM Awas Yojana Urban 2.0, housing needs for one crore urban poor and middle-class families will be met with a Rs. 10 lakh crore (US$ 120.16 billion) investment, including Rs. 2.2 lakh crore (US$ 26.44 billion) in central assistance over the next 5 years. In the 2024-25 Interim Budget, Union Minister of Finance, Ms. Nirmala Sitharaman announced a boost for Indias affordable housing sector by adding two crores more houses to the flagship scheme PMAY-U. In the Union Budget 2023-24, the Finance Ministry announced a commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Yojana, which represents a 66% increase compared to last year. In October 2021, the RBI announced to keep benchmark interest rate unchanged at 4%, giving a major boost to the real estate sector in the country. The low home loan interest rates regime was expected to drive the housing demand and increase sales by 35-40% in the festive season in 2021. Under the Union Budget 2021-22, tax deduction up to Rs. 1.5 lakh (US$ 2,069.89) on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22. The Atmanirbhar Bharat 3.0 package announced by Finance Minister Ms. Nirmala Sitharaman in November 2020 included income tax relief measures for real estate developers and homebuyers for primary purchase/sale of residential units of value up to Rs. 2 crore (US$ 271,450.60) from November 12, 2020, to June 30, 2021). In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet approved the setting up of Rs. 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF). Government created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs. As of December 31, 2022, India had formally approved 425 SEZs, and as of January 2023, 270 SEZs are operational. Most special economic zones (SEZs) are in the IT/ BPM sector.

OPPORTUNITIES, THREATS, CONCERN AND OUTLOOK

OUR COMPETITIVE STRENGTHS Diversified customer base

We have a well-diversified domestic customer base, wherein we supply standard as well as custom based products. This reduces the intensity of any significant single customers contribution in our revenues. We have relationships with some of our customer since inception.

Our continuous focus on providing quality products and services consistently to our customers has helped us nurture long-term relationships with them. Our track record of delivering timely services and demonstrated industry expertise has helped in forging strong relationships with them. We have a history of high customer retention and derive a significant proportion of our revenue from repeated business.

Diversified and Established Product

Our Company design, engineer and supply rebar couplers that finds its application in real estate, construction and infrastructure industry and is used in the construction of residential and commercial buildings, steel structures, roads, etc. With a wide variety of product categories, our product finds in application across real estate, construction and infrastructure industry as one of the key products.

Quality Assurance

We believe that we manufacture our product using the best raw material, i.e. carbon steel meeting the strict technical specification and governing standards of an ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certified Company issued by Quality Control Certification accredited by “UASL, England, UK”. We conduct quality tests at every stage of manufacturing process of our third party manufacturer and the desired chemical compositions are maintained right through the process. After manufacturing, the products are also carefully inspected and evaluated on various parameters. For every batch of raw materials (unique Heat number), testing is conducted in third party NABL accredited Lab and one sample is tested for physical properties (UTS and Elongation) and one sample is tested for chemical composition in each batch. In case of finished products, once the Unique Identification number (UIN) has been marked on the coupler, one sample from each UIN lot is tested for chemical composition.

OUR BUSINESS STRATEGIES Increase our market share

In the domestic market we presently have presence in Pune, Dhule, Surat, Mangalore, Hyderabad, Kolkata, Bangalore market with majority of our business coming from Mumbai. We intend to increase our market share in domestic by focusing on cross selling of products and by introducing new products and introduce our products in the international markets. We believe that focus on export sales will enable us to improve our margins. We further believe that there exist significant opportunities to cross-sell our products and offer the same product to additional locations of our existing customers with the help of our established capabilities and manufacturing, sales and distribution infrastructure. We have multiple such customers wherein we service their different projects, across locations.

We have identified overseas markets where we would like sell our products and we would be starting our marketing activities in such select market. Considering that our products, rebar couplers are critical inputs in construction process we would be subject to stringent quality requirements and our products will be tested on various parameters.

Focus on Advanced Products

We intend to leverage our design and engineering capabilities to increase our focus on advanced products. We believe that high value added and technology driven components will provide us with early-mover advantages and higher profit margins, thus giving us the opportunity to consolidate our position with our customers. We believe that the construction industry is evolving rapidly both in terms of products and also in terms of quality. We would keep upgrading our product portfolio to meet this every changing dynamic, to further improve the quality of our products and our introducing technology-oriented products and to add new products to our portfolio. For instance, we are testing Grouting couplers a product used in precast concrete structure for mechanical splicing of joints Saves cost and time in construction. Further, these grouting couplers can be customised to meet our customer specifications. We believe that an expanded product portfolio will assist us in developing long-term relationships with our customers. Focus on consistently meeting quality standards Our Company intends to focus on adhering to the quality standards of the products and services. This is necessary so as to make sure that we get repeat orders from our customers. Quality of the product and services is very important for the company from both customer and regulatory point of view. Providing the desired and quality products help us in enhancing our reputation and maintaining long term relationships with customers. We conduct quality testing from IIT, Kanpur as well as we have started with international testing of our products.

COMPETITION

We face competition from domestic manufacturers. Competition emerges from small as well as big players in the mechanical splicing industry and from traders and dealers in the Steel Products industry. Further, we also face competition from manufacturers of steel products who have direct access to our customers. We believe that our experience in this business and quality assurance will be key to overcome competition posed by organized and unorganized players. We believe that we are able to compete effectively in the market with our quality of services and our reputation. We believe that the principal factors affecting competition in our business include client relationships, reputation, the relative quality, credit terms and price of the products Our continued success depends on our ability to compete effectively against our existing and future competitors.

INTERNAL CONTROL FRAMEWORK

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern its business. Your Company has a established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including self-assessment exercises. The Company time to time seek evaluating the adequacy of all internal controls and ensuring that operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements.

PEOPLE AND PRACTICES:

The Board of Directors continues to challenge the management and push for higher targets. The Boards well-rounded experience in industry. The Board continues to provide long term direction to the Company and engages actively towards initiatives inputs on the Companys long-term vision.

The Company recognizes the importance and contribution of its human resources for its growth and development and values their talent, integrity and dedication. With the focus to develop leadership talent from within, the Company conduct various programmes. Employee motivation is key to organization success. On these lines, the Company conducts its various social programs and motivate them. As on March 31, 2025, the Company has 69 employees.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company is engaged in the business of trading of couplers, threading services and crimping services for couplers, trading, importing and exporting of engineered construction products, MS products and construction machinery and spares. Your Company has achieved a total income of Rs. 3183.41/- Lakhs during the year under review as against Rs. 2217.41/- Lakhs in the previous financial year. The net profit after tax of the Company for the year under review is Rs. 149.15/- Lakhs as compared to profit of Rs. 57.29/- Lakhs for the previous year. The net profit before tax for the year under review is Rs. 203.95/- Lakhs as compared to profit of Rs. 80.36/- Lakhs for the previous year.

FINANCIAL RATIOS

Particulars	As at 31-3- 2025	As at 31-3- 2024	% Variance	Reason for variance of more than 25%
Current ratio (in times)	1.83	1.15	59.07	Due to Increase in current Assets and Liabilities
Debt equity ratio (in times)	0.54	1.08	(49.98)	Due to Increase in share capital
Debt service coverage ratio (in times)	5.79	3.24	78.97	Due to Increase in profit after tax
Return on equity ratio (%) (ROE)	0.27	0.24	12.38	-
Inventory turnover ratio	58.88	37.59	56.63	Due to increase in revenue from operations
Trade receivables turnover				-
	4.54	3.87	17.29
ratio (in number of days)
Trade payables turnover ratio	9.82	6.19	58.62	Due to increase in purchases
Net capital turnover ratio (in times)	8.88	16.64	(46.66)	-
Net profit ratio	0.05	0.03	78.63	Due to Increase in revenue from operation
Return on capital employed (%) (ROCE)	0.16	0.14	8.98	-

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report containing the objectives, expectations or predictions of the company may be forward-looking within the meaning of securities laws and regulations. Actual results may differ materially from those expressed in the statement. The operations of the Company could be influenced by various factors such as domestic and global demand and supply conditions affecting sales volumes a selling prices of finished goods, input availability and cost, tax laws, economic developments within the country and other factors such as litigation and industrial relations.