Indiabulls Enterprises Ltd Management Discussions

OVERVIEW

We are engaged in the services of providing business of equipment renting, management & maintenance, leasing of a comprehensive range of construction, infrastructure, manufacturing, and mineral handling equipment(s), including machineries, excavators, furniture, fixtures, dumpers, trucks, vehicles, turnkey solutions to Engineering Procurement & Construction (EPC) Companies.

The primary equipment in our rental fleet includes tower cranes, passenger hoists, piling rigs, excavators, dozers, motor graders, wheel loaders, mobile boom placers, transit mixers, dumpers, steel stir-up machines, concrete batching plants and many more. The equipment offered by our Company is of reputed global brands with unmatched productivity and efficiency.

We have our offices in Mumbai, Gurgaon, Kolkata, Hyderabad, Bangalore, Pune and Chennai. We have rental yards at key locations to serve on a pan India basis and ensure higher productivity. We are providing seamless services to our customers through a focused and professional team managing the business.

The equipment rental industry is highly fragmented and diverse. We have extensive resources and competitive advantages. This results in our customers increasing their reliance on our execution and management abilities. We have a sustainable business model in place as our fleet has breadth and depth to serve sectors with different trade cycles.

We continue to pursue excellence in the following areas:

• Customized leasing and rental solutions

• Ability to swiftly mobilize and execute projects across the country

• Design and execution capabilities to handle complex projects

• Professional team to manage O&M activities at project sites

• Highest safety standards

• Higher availability and reliability of rental machines, which helps customers to execute projects faster

Our company is fully poised to grow its equipment rental business in FY22-23, by taking advantage of the governments investment in the infrastructure sector and the revival seen in the real estate segment.

The pandemic proved to be a watershed moment in equipment renting demand since the government will be compelled to work on a very strict monitoring mechanism of infrastructure projects implementation to restore the impressive GDP growth, in the near future.

MANAGEMENT AND MAINTENANCE SERVICES:

The Company has developed expertise in all avenues of management and maintenance of properties.

The management commends the commitment of the maintenance team which continued to provide all services by staying in the residential campuses for long duration.

BUSINESS OUTLOOK-

General Review of business environment

The business environment continues to be not so positive due to various factors such as stock market volatility, high interest rates, certain bank failures, tightness in money market and funding winter for the startup ecosystem, Russia Ukraine war, isolation of Chinese economy over several months due to COVID 19 and other factors.

Economic outlook

The world economic outlook dated January 2023, projects that global growth will fall to 2.9% in 2023 but expect to rise to 3.1% in 2024. The 2023 forecast is 0.2% higher than predicted in the October 2022 world economic outlook but below the historical average of 3.8%. Rising interest rate and the war in Ukraine continue to weigh on economic activity. Chinas recent reopening has paved the way for faster than expected recovery. Global inflation is expected to fall to 6.6% in 2022 and 4.3% in 2023 which is still above the pre-pandemic levels.

Global Financial Conditions

As per the global financial stability report of International Monetary Fund (IMF) in October 2022, financial risk have increased amid the highest inflation in decades and the ongoing spillovers from Russia war in Ukraine to European and global energy markets. Amid poor market liquidity, there is a risk that a sudden, disorderly tightening in financial conditions may interact with pre-existing vulnerabilities. In emerging markets, rising rates, weak fundamentals and large outlows have pushed up borrowing costs, particularly for frontier economies with heightened risk of additional defaults. In China, the property downturn on developers, pose heightened risks to the financial sector.

Source: htps://www.imf.org/en/publications/gfsr

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE (STANDALONE)

Segment revenue

(Rs.in Crores)

Particulars	31 March 2023	31 March 2022
Management and maintenance services	20.68	36.88
Equipment renting services	54.23	57.52
Revenue from continuing operations	74.91	94.40
Revenue from discontinued operations	8.48	55.12
Total revenue from continuing and discontinued operations	83.39	149.52
Segment results		(Rs.in Crores)
Particulars	31 March 2023	31 March 2022
Management and maintenance services	6.06	(1.04)
Equipment renting services	(8.47)	5.99
Less: Interest	0.07	9.89
Less: Other unallocable expenditure net off unallocable income	(366.08)	7.79
Profit/ (Loss) before tax from continuing operations	(368.56)	2.85
Profit/ (Loss) before tax from discontinued operations	(14.54)	(16.69)
Profit/ (Loss) before tax from continuing and discontinued operations	(383.10)	(13.84)

INDUSTRY OUTLOOK

The Governments push for growth through larger infrastructure spends continues in FY 2023-24. The private capex continues to provide tailwinds to the growth momentum. Buoyancy in tax collections during the current fiscal year supports the capex- led growth aspirations. A healthy balance sheet of private players, improving consumer confidence and investment activity, as well as growing demand conditions, will provide support to economic growth in the near term. It is expected that the prolonged geopolitical conflict in Europe could continue to impact supply chain dynamics and keep commodity prices volatile for a longer period. Rising interest rates across the world could also influence capital flows into the country. Finally, India, due to the structural reforms and the infrastructure-strengthening efforts of the Government and the monetary support from the RBI, is in a better position to counter the challenges and sustain its growth agenda.

BUSINESS RESTRUCTURING

In line with the long term business objectives of the Company to further accelerate the scaling up of the operations and to provide synergy of consolidated business operations and management and to streamline the operations of the Company and /or its identified subsidiaries to have a simplified and streamlined holding structure with pooled resources, the Board of Directors of the Company, subject to all applicable statutory and regulatory approvals, including approval from the stock exchanges, SEBI, shareholders and creditors of the company and the jurisdictional bench of the NCLT, has approved a composite Scheme of Arrangement inter-alia involving Amalgamation of the Company along with its wholly owned subsidiary .i.e. Indiabulls Pharmacare Limited, with and into the Company ("Amalgamated Company" / "Resulting Company "Yaari Ditigal Integrated Services Limited ") (the "Scheme").

Upon the Scheme coming into effect, the fully paid-up equity shares of the Yaari will be issued to the shareholders of the Company , basis the swap ratio as mentioned in the scheme.

"110 equity shares of Yaari of INR 2/- each fully paid-up for every 100 equity shares of IEL of INR 2/- each fully paid-up."

Further under the Scheme the Real Estate Undertaking (as more elaborately defined thereunder ) of India Land Hotels Mumbai Private Limited (ILHMPL) will stand demerged and vest into Indiabulls Pharmacare Limited (IPL), presently a wholly owned subsidiary of the Company, will become wholly owned subsidiary of YAARI. In consideration of merger of Real Estate undertaking of ILHMPL into IPL whereof "322 equity shares of Yaari, INR 2/- each fully paid-up, will be allotted to the Shareholders of ILHMPL, for every 1 equity share held by them in Company.i.e. ILHMPL".

Considering the current economic and business landscape, and with the intention of enabling the Company to fully concentrate on its other profitable ventures, the Company has discontinued its unprofitable business segments involving the sale of LED Lighting and Pharmaceutical products.

OUR STRATEGY

Our strategy focuses on ensuring that our customer is at the core of everything we do. We believe in building a sustainable organization that remains relevant to the agenda of our stakeholders, and providing value to our clients, and aim to create growth opportunities to our employees and profitable returns to our investors.

THE CUSTOMER EXPERIENCE IS AT THE CENTRE OF THE INDUSTRY

Customers now demand a transparent and seamless experience enabled by technology that provides quick information/ feedback. Customers are now setting new standards of ease, convenience and value, expecting 24-hour access, at competitive prices & better options. Customer journeys and an increasing focus on customer experiences is now emerging as a key imperative for the growth of Industry.

OUR STRENGTHS

Presence of dynamic leadership and professional management team

The Company and the group companies are headed by professional industry leaders and are overseen by Boards comprising of eminent industry veterans. The Group benefits immensely from the diverse and collective experience of these individuals and the social commerce business will also draw from their inputs and experience.

TECHNOLOGICAL EXPERTISE

The Company has effectively deployed technology to further expand its reach into the hinterlands. The technology thrust of the Group is customer focused and aims at offering utmost customer convenience and maximum cost effectiveness.

ROBUST SYSTEMS AND PROCESS

The Company believes that the systems and processes are its major strength. Considering the nature of the business, the Company will put in place robust processes and systems for the orderly growth of the Company. We shall develop appropriate systems and processes to ensure that the investments of the Company are in line with the regulatory requirements and asset- liability norms.

OPPORTUNITIES

Equipment Renting ,Management & Maintenance Services Opportunity drivers:

• Infrastructure demand of the young demographic in India and impetus to develop new areas.

• Continuously adopting new technologies to achieve better productivity in project execution space.

• Companys presence in all regions and opening branches in major cities of the country.

• Service differentiation by keeping simple performance matrices.

Although the equipment rental , management & maintenance service industry is highly fragmented and diverse, the Company believes that it is well-positioned to take advantage of this environment. As a large company, it has extensive resources and compelling advantages. The Companys size gives it greater purchasing power and the resources to provide customers with a broader range of equipment and services. The Company is also able to transfer equipment across various regions and sites to satisfy customer needs.

RISKS AND THREATS

Uncertainty

Uncertainty is the inability to predict the future with confidence. Because of the presence of uncertainty, we need to consider the effects of possible deviations from the projected figures. Due to overall uncertainty in the environment, the market volatility and consumer confidence we could experience a drop in demand as consumer confidence in the stock market is shaky.

Supply chain management

The manifold disruptions due to Covid-19 related lockdowns, challenges in production, managing supply, volatile global environment due to Russia Ukraine war and distribution networks pose multi-dimensional risks that are rapidly evolving. These can disrupt supply chain and manufacturing processes and adversely impact business.

Cyber Security Risks

Our operations are increasingly dependent on IT systems, digital interactions and management of information. The cyberattack threat of unauthorised access and misuse of sensitive information or disruption to operations can inhibit business operations in several ways.

Competition Risks

The risk is that the Company may face stiffer competition for the growth of its businesses. With the expanding capacities of existing players and also the emergence of new entrants, competition is a sustained risk.

Strategic initiatives to enhance brand equity through enhanced marketing activities and continuous efforts in enhancing the product portfolio and value-adding services have been the thrust areas of the Company.

Financial Risks

The risk of exposure to interest rates, foreign exchange rates, and the requirements of cash for operations.

The Company has elaborate financial risk management policies which are followed for every transaction undertaken. The Companys policies to counter such risks are reviewed periodically and keep a track of the operations to ensure a consistent cash conversion cycle.

Internal Control Systems

The company has adequate internal control systems, based on policies and guidelines, which ensure timely and accurate execution of responsibilities. Internal Control Systems evaluate operations, financial reporting, strategic investments and regulatory compliances to protect interests of the investors. The effectiveness and reliability of Internal Control Systems is reviewed periodically by the Audit Committee and the Board of Directors which gives its recommendations regarding improvements over existing control systems.

Discussion on financial performance with respect to operational performance.

For management purposes, the Company is organised into business units based on the nature of the products and services and their differing risks and returns. The organisation structure and internal reporting system has two reportable segments, as follows:

1. Equipment renting services

2. Management and maintenance services

During the year ended 31 March 2023, the Company earned net revenue from operations of Management and maintenance

services of INR 20.68 crores vis-a-vis INR 36.88 crores during the year ended 31 March 2022; and the profit from the Management and maintenance services during the year ended 31 March 2023 was INR 6.06 crores vis-a-vis loss of INR 1.04 crores during the year ended 31 March 2022.

Furthermore, during the year ended 31 March 2023, the Company earned net revenue from operations of Equipment renting services of INR 54.23 crores vis-a-vis INR 57.52 crores during the year ended 31 March 2022; and the loss from the Equipment renting services during the year ended 31 March 2023 was INR 8.47 crores vis-a-vis profit of INR 5.99 crores during the year ended 31 March 2022.

Further, during the financial year ended 31 March 2023, the Company has discontinued its business operation of LED Lighting. Consequently, LED Lightings operations have been recognised as discontinued operations and related comparatives have been restated in accordance with the requirement of Ind AS-105. The revenue and net loss from discontinued segment for the year ended 31 March 2023 was INR 8.48 crores and 14.54 crores respectively; while the same for the year ended 31 March 2022 was INR 55.12 crores and 16.69 crores respectively.

HUMAN RESOURCES

The Company firmly believes that its employees are the key to driving performance and developing competitive advantage. The emphasis has been on proper recruitment of talent and empowerment while devoting resources for their continuous development. The structured recruitment process, which the Company employs, focuses on recruiting people who have the right mindset for working, supported by structured training programs and internal growth opportunities. As on March 31, 2023, the Company had a strong team of 64 employees, who are aligned and dedicated towards the Companys goals.

Significant Changes in Key Financial Ratios

In compliance with the requirements of Schedule V of the SEBI LODR Amendment Regulations, 2018, significant changes (change of 25% or more from FY 2021-22 to FY 2022-23) in the key financial ratios applicable to the Company, are as under:

Particulars	31 March 2023 (%)	31 March 2022 (%)	Variance	Reason
Debt Equity Ratio	0.20	0.14	47.54%	During the financial year 2022-23, the Company has made a provision for diminution in the value of its investment and fixed assets. Due to which net-worth of the Company got reduced and as a result debt-equity ratio got increased.
Net Capital Turnover Ratio	0.58	0.20	196.51%	The increase in the ratio is due to closure of non-profitable segment "Led operations".

Change in Return on Networth:-

During the FY 2022-23 and FY 2021-22, the Company has incurred losses and hence return on networth is negative.

CAUTIONARY STATEMENT

Statements in this Report on Management Discussion and Analysis describing the Companys objectives, estimates and expectations may be forward looking based on certain assumptions and expectations of future events. Actual results might differ substantially or materially from those expressed or implied. The Company here means the consolidated entity consisting of its subsidiary(ies).