vsf projects ltd Management discussions

Industry accounts for 31% of Indias GDP and employs over 12.1 crore people. In 2022-23, the industrial sector is estimated to grow by 6.7%. In the current financial year, the sector faced high input costs for imports due to the Russia-Ukraine conflict. The increase in the capital expenditure of the central government in the post-pandemic period has crowded in investment from the private sector, which has provided a stimulus to industrial growth. The sector has been helped by pent-up demand, export stimulus, and strengthening of corporate balance sheets.

The importance of electronics manufacturing has been increasing. India aims to achieve USD 300 billion in electronics manufacturing with USD 120 billion in exports by 2025-26. High growth on both fronts indicate that India is on track to achieve these targets. Production-linked incentive schemes will help attain economies of scale in domestic production of electronics goods.

INFRASTRUCTURE AND CONSTRUCTION - THE LONG TERM OPPORTUNITY

Increase in infrastructure investment provides a critical push to the potential growth of the economy. The central government has given increased impetus to infrastructure development and investment in recent years when capital expenditure by the private sector has been subdued. Capital expenditure in 2022-23 is targeted at 7.5 lakh crore,35.4% higher than2021-22.

To sustain the investment drive, the National Infrastructure Pipeline (NIP) has provided a forwardlooking roadmap of investible projects of around Rs 111 lakh crore between 2019-20 and 2024-2025. Currently, the NIP has 8,964 projects with a total investment of more than Rs 108 lakh crore under different stages of implementation. The transport sector constitutes more than half of these projects.

FINANCIAL PERFORMANCE

VSF Projects (VSFPROJ.) is one of Indias leading companies with a history of 29 years. Over this span, the company built strong capabilities and established widespread credentials for success of project delivery across wide spectrum of sectors within the infrastructure industry. It is this pedigree that has helped the Company re-invents itself to meet the challenges of different times and deliver value to all stake-holders.

The Companys core business is providing Engineering & Construction services for large projects across sectors like Power (Thermal, Solar), Transportation (Roads, Bridges etc.) Water (Irrigation and water supply) and Industrial Projects.

The Financial Year 2022-23 has been a very good year for the Company as the company has got a Final Confirmation letter from Government of India, Ministry of Commerce & Industry Department of Commerce (SEZ Section), for Setting up of a Multi-Product Free Trade Warehosuing Zone at Ankulpaturu Village, Tirupathi District, Andhra Pradesh notifying pursuant to rule 8 of the Special Economic Zones Rules, 2006 an area of 53.81.Ha (132.96 Acres) as Special Economic Zone w.e.f 22.09.2022.

OPPORTUNITIES & THREATS

Infrastructure Industry: The continued thrust on infrastructure projects including highways / express ways and Power will bring lot of opportunities for India and your Company.

Power Generation: The necessity for addition of power generation capacity of the country and the various incentives provided by the Government of India for private sector participation in development of power will be key to the development of Power projects.

General: According to Survey, Indias economic growth in FY23 has been principally led by private consumption and capital formation and they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. Still, private capex soon needs to take up the leadership role to put job creation on a fast track.

It also points out that the upside to Indias growth outlook arises from (i) limited health and economic fallout for the rest of the world from the current surge in Covid-19 infections in China and, therefore, continued normalization of supply chains; (ii) inflationary impulses from the reopening of Chinas economy turning out to be neither significant nor persistent; (iii) recessionary tendencies in major Advanced Economies (AEs) triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 6 per cent; and (iv) this leading to an improvement in animal spirits and providing further impetus to private sector investment.

The Survey says, the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6 per cent, on average during Jan-Nov 2022, supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government. It adds that the recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme (ECGLS) is easing their debt servicing concerns.

RISKS & CONCERNS

1. Infrastructure sector is dependent on political stability.

2. Contract Payment Risk

3. un organized Sector

4. Shortage of Labor and Employees.

5. Coal Shortages

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The philosophy we have with regard to internal control systems and their adequacy has been formulation of effective systems and their strict implementation to ensure that assets and interests of the Company are safeguarded; checks and balances are in place to determine the accuracy and reliability of accounting data. The Company has a well-defined organization structure with clear functional authority, limits for approval of all transactions. The Company has a strong reporting system, which evaluates and forewarns the management on issues related to compliance. Company updates its internal control system from time to time, enabling it to monitor employee adherence to internal procedures and external regulatory guidelines.

HUMAN RESOURCES

Human wealth is the ultimate wealth in for any industry. The Company recognizes this fact and understands that employees are one of the most important sources for sustained growth of any business. Quality personnel delivering their optimum potential for the organization is the key differentiator. The Company maintained good relations with its employees and there was no unrest in the Company at any point of time.

Industrial relations in the organization continued to be cordial and progressive.

HEALTH AND SAFETY

The Company places considerable emphasis on health and safety throughout its operation and displays commitment to ensure the high standards being maintained in compliance with applicable laws and regulations.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

PARTICULARS	2022-23	2021-22
Total Income (Including other income)	163.23	164.76
Total Expenses	156.83	165.85
Profit Before Tax	6.41	(1.01)
Profit After Tax	1.44	(8.05)
Earnings per share	0.02	(0.14)

KEY RATIOS:

S.No PARTICULARS	2022-23	2021-22	Percentage of variation	Reason for variance
1 Debtors turnover Ratio	NA	NA	NA	-
2 Inventory Turnover ratio	NA	NA	NA	-
3 Debt Equity Ratio	18.36	239.98	92.35	The Change is due to shares issued in the Current year
4 Interest Coverage Ratio	NA	NA	NA	-
5 Current Ratio	0.09	0.81	-13.90	-
6 Operating Profit Margin	NA	NA	NA	-
7 Net Profit Margin	0.008	-0.048	118.07	The Change is due to expenses
8 Return on Net worth	0.01	0.12	93.36	The Change is due to shares issued in the Current year.

FORWARD LOOKING / CAUTIONARY STATEMENT:

Certain statements in the Management Discussion & Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future event, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting domestic demand supply conditions, finish goods prices, changes in Government Regulations and Tax regime etc. The Company assumes no responsibility to publically amend, modify or revise any forward looking statements on the basis of subsequent developments, information or events.

	BY THE ORDER OF THE BOARD
	For VSF Projects Limited
	Sd/-
	Bobba Narayana Murthy
	Chairman and Managing Director
Place: Hyderabad	(DIN:00073068)
Date :14.08.2023