Salasar Techno Engineering Ltd Management Discussions

Management Discussion and Analysis Report

GLOBAL ECONOMIC OVERVIEW AND OUTLOOK

The global economy expanded by 3.2% in the year 2023, demonstrating remarkable resilience in the face of several economic adversities, like geopolitical challenges and fluctuations in commodity prices. This has led to inflationary pressures across both advanced and emerging markets. To fight these headwinds, central banks of several economies employed strategies. They implemented interest rate increases, suppressing the escalation. Despite persistent geopolitical tensions, disrupting global supply chains and trade, inflation rates declined more swiftly than anticipated from their peak in 2022, resulting in gradual economic recovery and job creation in the US, Europe and other emerging markets. The Chinese economy continued to experience strain throughout 2023, a trend expected to persist even in 2024, given its significant manufacturing capabilities and supply chain influence, posing a potential risk to global economic stability. Owing to the rising foreign institution investor interest, several emerging economies like

India, Vietnam and Mexico are expected to a show positive growth trajectory.

Against a background of multiple geo-political disruptions, global growth is expected to maintain a pace of slow but steady recovery. The global economy is projected to grow at 3.2% maintaining the same rate as in 2024 and 2025. Growth in advanced economies is expected to rise marginally from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025, while emerging and developing economies are projected to grow at 4.2% in 2024 and 2025. There are of course considerable variations in growth across countries around these global and group averages. In the United States, growth is projected to rise to 2.7% in 2024 before moderating to 1.9% in 2025. Growth in the Euro area is expected to pick up from 0.4% in 2023 to 0.8% in 2024 and 1.5% in 2025. Growth in China is expected to slow down to 4.6% in 2024 and 4.1% in 2025, mainly due to the protracted crisis in the property sector.

INDIAN ECONOMIC OVERVIEW AND OUTLOOK

Real GDP growth India was a robust 7.6% in FY 2023-24 (Second Advanced Estimate, Central Statistical Organisation), up from 7% in FY 2022-23. The growth spurt in FY 202324 was driven by double digit growth of 10% in capital formation (Capex) which, in turn, was led by high public sector capex. At the sectoral level, high non-agricultural growth was broad based with 9% growth in industry and 7.5% growth in services. However, agriculture performed poorly, recording a growth of only 0.7%. This is mainly due to uneven rainfall, volatile weather conditions, and reduction in wheat acreage in response to softening of wheat prices with the easing of Black Sea supply disruption.

Inflation remained at 5.4% in FY 2023-24, within the 6% upper limit of RBIs tolerance band. It had exceeded the upper limit in July and August, 2023-24 due to high inflation in prices of vegetables, pulses, and milk & milk products. Food price inflation remained elevated at 7.5% in FY 2023-24, while energy declined from September 2023. Core inflation was declining in FY 2023-24 but rebounded in the last two months, mainly on account of services.

For FY 2024-25 annual inflation rate is expected to be around 5%, still above the 4% RBI target, but within the tolerance band. However, the forecast is subject to upside risks on account of persisting high food price inflation and the rebound of global crude oil prices.

Indias merchandise exports for FY 2023-24 were USD 437.06 Billion as against USD 450.5 Billion during FY 2022-23 (April- March), a decline of 3%. Merchandise exports fell for the first time in four years (since 2020-21) owing to geo-political tensions and export curbs on food items such as rice, wheat and sugar. However, merchandise imports declined by a steeper 5.5%. This helped narrow the merchandise trade deficit to USD 238.4 billion as compared to USD 265 billion in FY 2022-23. However, the overall trade deficit improved by 35% to USD 78 billion due to the buoyant services export. The services trade surplus at USD 162 billion in FY 2023-24 was more than USD 143 billion recorded in 2022-23.

As an outcome of the higher services exports, Indias current account deficit narrowed to USD 10.5 billion or 1.2% of the GDP in the October-December quarter 2023-24 from USD 11.4 billion in the previous three months. For the first nine months of 2023-24 as well, the current account deficit narrowed to USD 31 billion as against USD 65.6 billion recorded in the corresponding period of 2022-23.

INDUSTRY STRUCTURE AND DEVELOPMENTS

TELECOM INDUSTRY Overview

The Telecom industry in India is the second largest in the world with a subscriber base of 1.17 bn as of September 2022 (wireless + wireline subscribers). India has an overall tele-density of 84.86%, of which, the tele-density of the rural market, which is largely untapped, stands at 58.01% while the tele-density of the urban market is 134.62%. According to the count of mobile towers provided on the Department of Telecommunications Dashboard, the four operators running the telecom network utilised 7.37 lakh towers and 23.7 lakh base stations as of November 2022. Since 2017, the country has seen approximately 45,000-55,000 year-on-year addition on the telecom tower side and 50,000-65,000 net adds on the BTS side.

The Government of India, under the Union Budget 2023, has allocated 975.79 billion for the Department of Telecommunications. As per the Budget, Bharat Sanchar Nigam Limited (BSNL), which is expected to roll out 4G and 5G services during the current year, is expected to get 529.37 billion capital infusion from the government in 2023

24. The Government plans to set up one hundred labs for developing applications using 5G services in engineering institutions to realize a new range of opportunities, business models, and employment potential. The DoT is targeting a combination of 100% broadband connectivity in the villages, 55% fiberisation of mobile towers, average broadband speeds of 25 mbps and 30 lakh kms of optic fibre rollouts by December 2022. Broadband connections rose to 816 million in September 2022. By December 2024, DoT is looking at 70% fiberisation of towers, average broadband speeds of 50 Mbps and 50 lakh kms of optic fibre rollouts at a pan-India level. In the current budget, the government has also allocated 21.58 billion for optical fibre cable-based network for defence services and 7.16 billion for telecom projects in the northeastern states.

The industrys exponential growth over the last few years is primarily driven by affordable tariffs, wider availability, rollout of Mobile Number Portability (MNP), expanding 4G and 5G coverage, evolving consumption patterns of subscribers, Governments initiatives towards bolstering Indias domestic telecom manufacturing capacity, and a conducive regulatory environment.

Challenges

With providing infrastructural support and being the backbone of the communications sector, the telecom tower industry faces challenges such as restricting the installation of towers in the residential or nearby residential areas due to distrusts regarding its effects on health, this sometimes leads to authorities taking disruptive actions by halting the operational sites, frequent fiber cuts, etc. the situation gets challenging with the reduction in the trained and skilled workforce which requires the technicians to climb the tower for maintenance purposes. Also, the prolonged weakness in the credit profile of some telecom service providers has resulted in the working capital cycle of tower companies stretching, impacting the liquidity profile of the downstream tower manufacturers and EPC players in the industry.

Outlook

Today, with data growth and the launch of next gen 5G technology taking center stage, plenty of new opportunities are arising for tower companies due to shift of attention by leading telcos and towercos from a macro tower focused business, towards new business models hinged on fiber, small cells, data centers, Wi-Fi, smart cities and beyond. Also the Bharat 6G vision document aims to facilitate R&D, design and development of 6G technologies by Indian start-ups and enable India to become a leading global supplier of IP, products and solutions for affordable 6G telecom solutions. Thus on back of these domestic prospects, the next decade holds exciting new prospects for tower manufacturing and EPC players.

Company overview

The Company is operating in the telecommunications towers sector for over a decade, providing exceptional telecommunication towers designed to international standards. Alongside this, the Company also provide monopoles, smart city tech solutions, portable towers, and various other accessories. The Companys technical collaboration with Danish design giant Ramboll along with its prowess in EPC, guarantees state-of-the-art Monopoles capable of enduring all types of soil and wind conditions.

TRANSMISSION POWER INDUSTRY

Overview

Indias power transmission market is a crucial component of the countrys energy sector, which is growing rapidly to meet the rising electricity demand. The countrys transmission system plays an important role in supply of power to the consumers through the vital link between the generating stations and the distribution system. The energy resources like coal, hydro and renewable have a skewed distribution in the country This skewed distribution of resources necessitated development of robust transmission system including establishment of inter-regional corridors for seamless transfer of power from surplus to deficit regions/areas. In this process, it enables access to power generation from anywhere in the country to various consumer spread throughout the country. The progressive integration of regional grids started in 1992, and on 31st December 2013, our country achieved ONE NATION-ONE GRID-ONE FREQUENCY with synchronous interconnection of Southern Region Grid with rest of the Indian Grid with the commissioning of 765kV Raichur-Solapur Transmission line. The Central Government has given emphasis to have congestion free transmission network, so that there is no constraint in flow of power from surplus region to deficit region. Accordingly, transmission system in the country has been continuously strengthened with addition of transmission lines and inter-regional capacity. During FY 22-23 the country added 14,625 ckm of transmission lines and added 75,902 MVA in its transformation capacity. With this the country has become one of the largest synchronous interconnected electricity grids in the world with 4,71,817 ckm of transmission line and 11,85,058 MVA of transformation capacity (as on Apr23). Besides, the countrys inter-regional capacity also increased by whopping 212% to 1,12,250 MW since 2014.The above transmission capacity addition has benefitted in development of power sector in the country.

With the greater focus on the transmission sector, the importance of critical infrastr-uc-ture in this space has become even mo-re significant, particularly with regard to lines/cables and towers. In-dia has emerged as the second lar-g-e-st transmission market after China. India ac-c-ounts for 15% of the global transmission tower market. Further, In-dia will be consuming 1.8 trillion units by 2025. The Central Governments vision of a $5 trillion economy will require an estimated investment of 5 trillion in the transmission sector over the next few years. As per the National Infra-structure Pipeline, a capital expenditure of 3,040 billion is expected in the transmission segment from 2020 to 2025. The transmission tower market exceeded $17 billion in 2021 and is expected to grow over a compound annual growth rate (CAGR) of 4% from 2022 to 2028 (Source: Global Market Insights). Furthermore, the market size valuation is expected to reach $24 billion by 2028. There have been significant improvements in transmission tower designs and these developments have reduced the RoW requirement, minimised the visual impact, enabled faster execution and provided ease of installation. With new de-si-gns it has become easier to expand the transmission network to remote areas. There have been significant improvements in transmission tower designs and these developments have reduced the RoW requirement, minimised the visual impact, enabled faster execution and provided ease of installation. With new de-si-gns it has become easier to expand the transmission network to remote areas.

Challenges

Critical transmission projects are not simple to commission. I n I nd ia, it is hard to acquire lan d and to secure rig hts-of- way (ROW) for a transmission projects. It is getting equally difficult to negotiate new corridors in metropolitan areas and densely populated cities. Thus, most of the transmission tower projects and EHV sub-stations projects in India are grossly delayed.

The industry ascribes the cause of these delays to the necessity of extensive co-ordination and co-operation between various stakeholders like state owned companies, individual landowners and contractors. This leads to standoffs on critical issues like ROW (right of way), design, land acquisition, environmental approvals etc. and consequently to unpredictable time overruns.

Outlook

The expansion potential in the transmission sector is chiefly fueled by an increased focus on grid reliability and the development of new urban and rural power grids resulting from urbanization and rural electrification. In addition, the renewable energy sector will create new opportunities for the transmission sector, contributing to rising demand for transmission towers in upcoming years. Given the large distances between energy generation sites and consumers, especially in remote areas, there will be substantial requirements for transmission lines and substations infrastructure. Growth in the transmission tower market correlates directly with the expansion of transmission lines nationally. Therefore, factors such as growing energy demand, the need to replace worn-out infrastructure, and the establishment of new transmission and distribution infrastructure, are anticipated to propel the transmission tower markets growth. However, varying raw material prices, especially steel, and export and import restrictions may hinder the future potential of this market.

Company overview

Being a leader in Transmission Line Towers, the Company manufactures various categories of such towers approved by PGCIL and other power utilities and corporations, with long durability, aesthetic design, and excellent functionality. The Company also manufactures and source components as required for the installation of sub-stations and are also experienced at planning, and carrying out turnkey projects in any terrain and geographical condition. Additionally, the Company also manufactures Monopoles for overhead DC/ AC transmission lines.

RAILWAY ELECTRIFICATION INDUSTRY Overview

The Indian Railways has committed itself to achieving 100% electrification, as a part of its goal of becoming a net zero carbon emitter before 2030. This is in tandem with the Indian governments stated mission of achieving Net Zero carbon emissions by 2070 as pledged to at the COP26 in Glasgow. On successfully completing this journey, the Indian Railways will achieve the remarkable feat of becoming the worlds largest green railway system. This large-scale effort is also in line with the United Nations Sustainable Development Goals which is an urgent and collaborative call for action by all countries. By modernizing its infrastructure and electrifying its lines, the railways are covering SDG 9 - which is a push towards building resilient infrastructure and fostering innovation. Further, this will help the Railways in substantially reducing their carbon emissions, tying it to SDG 13 which emphasizes the need to take urgent action to battle climate change and its adverse impacts. On average, the Indian Railways with track length spanning 126,366 km contains 7,335 stations operate 11,2831 trains daily and had transported 1512 MT of freight during 2022-23. Given that the operations are this widespread, the energy needs of the railways are also equally massive. As opposed to the high- emitting diesel engines, country-wide electrification would then introduce a more efficient and centralized power system. Indian Railways has planned to electrify a total of 28,810 km of broad-gauge route by December 2023. As of March 2023, 100% electrification has been completed in 14 states & UTs including Haryana, Uttrakhand, Meghalaya, and Uttar Pradesh. In line with the Centres seven priorities or Saptarshi, as called out during the Union Budget - a significant milestone was the completion of railway track electrification in the Union Territory of Jammu and Kashmir.

Challenges

Completely electrifying involves high capital costs that may be uneconomic on lightly trafficked routes, a relative lack of flexibility (since electric trains need third rails or overhead wires), and a vulnerability to power interruptions. As said earlier, electrification of the Indian Railways is a massive undertaking that requires significant financial resources. The cost of electrification is estimated to be around 12 Lakh Crores (approximately $162 billion). Securing funding for such a large-scale project is a significant challenge. Electrification of the Indian Railways requires the acquisition of land for laying down the electrical infrastructure, including overhead electrification lines and substations. The acquisition of land is a complex and time-consuming process in India.

Outlook

First and foremost, being able to achieve 100% Railway electrification in India would mean eliminating emissions of 7.5 million tonnes of CO2 equivalent each year, about the same as two coal power plants, according to the United Nations Environment Programme (UNEP). Further, electrification on such a large scale is bound to bring forth various cross-sectoral opportunities. Rolling stock companies, particularly electric locomotives will also benefit from this wide-scale transformation. With railway electrification, electric locomotives can draw power directly from the electric grid, resulting in lower operating costs. In 2024, the annual requirement for electricity to enable electrification will be approximately 30 billion units. This presents excellent opportunities for renewable power generation. Agreements for direct power purchases are also likely to go up with wind and solar power installations. With a strategic and coordinated approach, the electrification of the Indian Railways can transform the railway network into a world-class system that meets the demands of the 21st century.

Company Overview

The Company provide end-to-end solutions from designing the engineering plan to supply, erection, testing and commissioning of railway electrification projects including Overhead Equipment ("OHE") and Traction Sub Station ("TSS") installations. The Companys Railway Overhead Electrification structures are manufactured under expert guidance and strict quality control for top notch functionality and endurance and are approved by Central Organization for Railway Electrification (CORE).

RENEWABLE INDUSTRY Overview

India stands 4th globally in Renewable Energy Installed Capacity (including Large Hydro), 4th in Wind Power capacity & 4th in Solar Power capacity (as per REN21 Renewables 2022 Global Status Report).The country has set an enhanced target at the COP26 of 500 GW of non-fossil fuel-based energy by 2030. This has been a key pledge under the Panchamrit. This

is the worlds largest expansion plan in renewable energy. The countrys installed non-fossil fuel capacity has increased 396% in the last 8.5 years and stands at more than 179.322 Giga Watts (including large Hydro and nuclear), about 43% of the countrys total capacity. The Country saw highest year-on-year growth in renewable energy additions of 9.83% in 2022.The installed solar energy capacity has increased by

24.4 times in the last 9 years and currently stands at 67.07 GW. The installed Renewable energy capacity (including large hydro) has increased by around 128 % since 2014. India has set a target to reduce the carbon intensity of the nations economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. India aims for 500 GW of renewable energy installed capacity by 2030 and aims to produce five million tonnes of green hydrogen by 2030. This will be supported by 125 GW of renewable energy capacity. 57 solar parks with an aggregate capacity of 39.28 GW have been approved domestically. The Government has also set an off-shore target of 30 GW by 2030 through Wind Energy.

Challenges

Fluctuations in sunlight levels and wind mean that supplies are less consistent than those derived from fossil fuel plants. Owners, therefore, require batteries to store energy for later. And to even out discrepancies in the energy supply. Another big challenge faced by the renewable energy sector is economics. Specifically, the financial issues involved in bringing renewable technologies and renewable energy to the masses. Over the last few years, investment in renewables has resulted in a surge of innovation and emerging technologies. But economic pressures do still stifle innovation. With these challenges for renewable energy in mind, it may seem difficult to foresee a future with clean energy. However, it is possible if the governments and organisations all take a collaborative approach then a pathway can be achieved through a transition to the clean energy.

Outlook

For the GDP growth to be sustainable and robust, there, clearly, is a need to install power plants to meet a heavy power requirement that ensues. And to balance GDP growth with environment, the need is to install renewable power plants. Therefore, to enhance energy security becomes renewable power plants. Therefore, to enhance energy security becomes a vital requirement for India. Given this, solar and wind come in as promising agents.

Company overview

The Company is passionately working towards creating a sustainable and environmentally-friendly future through the development of innovative green solutions. With over a decade of experience in the industry and a diverse client base, the Company now provides comprehensive solutions for wind and solar energy projects. Due to our commitment to delivering high-quality products and services, we have cultivated strong relationships with our clients and are contributing to creating a more sustainable future.

HEAVY STEEL STRUCTURE INDUSTRY

Overview

Structural steel is one of the major raw materials used in the construction of pre-engineered buildings and other infrastructure projects. Structural Steel Fabrication Market was valued at $ 6.111 Billion in 2020 and is projected to reach $ 9.78 Billion in 2028, growing at a CAGR of 5.36% from 2021 to 2028. The Indian structural steel market is expected witness significant growth during the forecast period, owing to factors, such as the increasing demand from manufacturing sector, the rising preference toward pre-engineered buildings and components, and government initiatives for infrastructure development activities. Additionally, the booming commercial building sector, along with Indian governments initiatives, such as increasing the construction of green buildings, smart cities, and make in India scheme, is expected to boost the structural steel fabrication market in India. Currently global manufacturing companies are focusing to diversify their production by setting-up low- cost plants in countries other than China, is expected to drive the Indias manufacturing sector to grow more than six times by 2025, to USD 1 trillion. Thus, this is driving the demand in the structural steel fabrication market in the country. Government initiatives, such as the construction of metro stations, new no frill airports, international terminals, industry corridors, power plants, and ports, require heavy steel structures. Also, in renewable energy generation like Wind and Nuclear Energy, structural steel finds its use. This is further increasing the demand of the market.

Challenges

Any expected increase in steel prices due to the increase in the price of coking coal (primary raw material used to manufacture steel) or any other raw material and the governmental regulations and restrictions on the manufacturing of steels to reduce adverse effects on the environment have been identified to be few of the major challenges faced by the structural steel fabrication market in India.

Outlook

After demolition, pre-engineered buildings and components, which are 90% recyclable, do not have a significant impact on the environment to that of wastages, like asphalt, concrete, brick, and dust. Thus, these factors are expected to drive the growth of the structural steel fabrication market in India and create a sustainable future.

Company overview

Structural steel is widely used in large-scale construction projects. The Company has set up a dedicated facility to contribute towards the development of national infrastructure powered by technology. The Company is also approved by the Research Designs and Standards Organisation (RDSO) and always relentlessly strives towards accelerating the pace of infrastructure development in

India with its reliable and meticulously crafted heavy steel structures. Additionally, the Company incorporates new technologies to provide smart solutions for customized steel fabrication and infrastructural development in India. One of USP of the Companys Heavy Steel Structure comes through its manufacturing facility which complies to rigorous industry standards, and thus infrastructure built with its steel structures can are also poised to withstand adverse weather conditions; it requires low maintenance, and these structures also supports reuse and recycling.

COMPANY OVERVIEW

Salasar Techno Engineering Limited, established in 2001, is a prominent leader in Indias market for advanced steel fabrication and infrastructural solutions. The company specializes in several key areas, including the design and deployment of Telecommunication Towers, Transmission Towers, Substation Structures, and Solar Module Mounting Structures.

Salasar Techno provides a comprehensive range of services that cover the entire spectrum of project needs—from engineering and designing to fabrication, galvanizing, and deployment of products. Their product portfolio is diverse and includes:

• Telecommunication Towers: Essential for modern communication networks.

• Railway Overhead Electrification (OHE) Towers:

Essential for Overhead Electrification of Railways.

• Power Transmission Line Towers: Critical for the distribution of electrical power.

• Smart Lighting Poles and Monopoles: Used in urban and infrastructure projects.

• Guard Rails: Safety structures for roads and highways.

• Substation Structures: Integral components in power distribution networks.

• Solar Module Mounting Structures: Used in solar power installations.

In addition to these products, Salasar Techno offers customized solutions, including galvanized and non- galvanized steel structures, catering to specific client needs. The company is also deeply involved in providing Engineering, Procurement, and Construction (EPC) services, which are crucial for various projects in rural electrification, power transmission lines, and solar power plants. These services make Salasar Techno a versatile and vital player in multiple sectors of infrastructure development in India.

Salasar Techno Engineering Limited operates three state-of- the-art manufacturing facilities with a combined production capacity of 2,11,000 MTPA (Metric Tons Per Annum). These facilities are equipped with cutting-edge technology and inhouse designs that have been certified by the prestigious Indian Institute ofTechnology (IIT). Additionally, the company employs proven designs and tools from Ramboll, a global engineering, design, and consultancy company, further enhancing the quality and efficiency of their offerings.

Salasar Technos commitment to excellence is reflected in its impressive client base of over 600 customers, both within India and across 25 countries worldwide. The company is recognized for its highly skilled team of professionals who are dedicated to delivering projects within specified timelines and budgets. This relentless pursuit of perfection has enabled Salasar Techno to achieve a remarkable zero- defect production record, coupled with some of the fastest delivery times in the industry.

FINANCIAL OVERVIEW

The Companys financial statements were prepared as per the Indian Accounting Standards ("Ind AS") as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.

During the year, Informerics Valuation and Rating Private Limited (IVR) has reaffirmed Salasar Techno Engineering Limiteds a long-term rating of IVR A with a Positive outlook and short-term rating of IVR A1 for its bank loan facilities. This rating reflects confidence in the Companys consistent operational performance and experienced management, its diverse product range and geographical reach, a robust order book, a reputable client base with minimal counterparty risk, and a sound financial risk profile.

Brief financial analysis:

Total Income increased by 20.25% from Rs.1,00,489.50 Lakhs to Rs.1,20,842.59 Lakhs, owing to new projects accretion and expansion into new geographies.

Networth decreased by 20.67% from Rs.36,934.00 Lakhs to Rs.29,286.00 Lakhs.

PAT increased by 31.49% from Rs.4,025.44 Lakhs to Rs.5,293.33 Lakhs, owing to improved operational efficiency, higher revenue growth and favourable market conditions.

Total expenses increased by 19.66% from Rs.95,259.37 Lakhs to Rs.1,13,987.95 Lakhs, owing to factors such as increased cost of raw materials, higher employee expenses, expansion of operations, increased finance costs, and other operational factors.

Employee expenses increased by 13.41% from Rs.4,646.34 Lakhs to Rs.5,255.78 Lakhs, owing to factors such as salary increments, additional employee benefits, recruitment of new staff

Its brief financial performance on consolidated Basis for FY 2023-24 is given below:

Particulars	Year ended March 31, 2024	Year ended March 31, 20243
March 31,2023
Revenue from Operations	1,208.43	1,004.89
PBT	72.02	54.06
Interest and Financial Charges	43.66	31.56
Depreciation and amortization	10.21	7.95
Tax expenses	19.09	13.80
PAT	52.93	40.25

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILS EXPLANATION THEREFOF:

Ratios	2023-24	2022-23
Current Ratio (Times)	1.35	1.52
Debt Equity Ratio (Times)	0.77	0.68
Operating Profit Margin (%)	10.13	9.14
Net Profit Margin (%)	4.38	4.01

RISKS AND CONCERNS

Salasar Techno Engineering Limited primarily operates in three key areas: Steel Fabrication, EPC (Engineering, Procurement, and Construction) services, and Infrastructure Construction. Given its extensive operations both within India and internationally, the company faces a range of risks that could impact its long-term success. To address these challenges, Salasar Techno has developed a robust risk management framework that plays a crucial role in identifying, assessing, and mitigating potential risks across its business.

The companys risk management processes are integrated at various levels ofits operations, ensuring that risks are managed effectively throughout the organization. These processes are periodically reviewed and updated to stay aligned with the evolving internal and external environments. This proactive approach allows Salasar Techno to adapt to changes in the market, regulatory landscape, and other external factors, thereby maintaining its resilience and continued success in the industry.

Salasar Techno Engineering Limited, like any large-scale operation, faces various risks across its business functions. Below are some of the key risks and the mitigation measures the company employs:

A	Risk: The company operates in sectors that are influenced by economic cycles, market demand, and competition. Fluctuations in these areas can impact profitability and business continuity.
Market Risk	Mitigation: Salasar Techno diversifies its product portfolio and client base, both domestically and internationally, to reduce dependency on any single market or sector. The company also focuses on continuous innovation and adopting new technologies to maintain its competitive edge.
	Risk: Delays in project execution, inefficiencies in manufacturing, or issues with supply chain management could adversely affect the companys operations.
Operational Risk	Mitigation: The company employs advanced manufacturing technologies and robust project management systems to ensure efficiency and timely delivery. Regular audits and reviews of operational processes help in identifying and resolving potential bottlenecks.
	Risk: Volatility in foreign exchange rates, interest rates, and credit risks can impact the financial stability of the company, especially given its international operations.
Financial Risk	Mitigation: Salasar Techno utilises hedging strategies to manage foreign exchange risks and maintains a strong balance sheet to mitigate credit risks. The company also conducts regular financial reviews to ensure prudent fiscal management. The company typically completes projects within 18 to 36 months, with payment terms that include an initial mobilization advance, followed by monthly progress payments that have a credit period of 45 to 90 days, and retention money released upon project completion. To ensure timely payment collection, the company has a thorough review process for overdue receivables at multiple levels within the organization.
	Risk: The company must comply with various national and international regulations. Noncompliance can result in legal penalties, fines, and reputational damage.
Regulatory and Compliance Risk	Mitigation: Salasar Techno has a dedicated compliance team that stays updated with regulatory changes and ensures that all operations are in line with the latest legal requirements. The company also conducts regular training for its employees to ensure compliance across all levels.
	Risk: The companys operations, particularly in steel fabrication and infrastructure construction, can have environmental impacts and pose safety risks to workers.
Environmental and Safety Risks	Mitigation: Salasar Techno implements strict environmental and safety protocols, adheres to international standards, and invests in eco-friendly technologies. The company conducts regular safety drills and audits to ensure a safe working environment.
	Risk: Disruptions in the supply chain, such as delays from suppliers or shortages of raw materials, can impact production timelines and costs.
Supply Chain Risks	Mitigation: The company maintains strong relationships with multiple suppliers and holds strategic reserves of critical materials to mitigate supply chain disruptions. Salasar Techno also regularly evaluates and optimizes its supply chain processes.
	Risk: Rapid technological changes could render the companys existing technologies and processes obsolete, affecting competitiveness.
Technological Risks	Mitigation: Salasar Techno invests in research and development to stay ahead of technological trends. The company continuously upgrades its manufacturing processes and adopts new technologies to enhance efficiency and product quality. To ensure top-quality products and services for its clients, the company has partnered with the global consulting leader Ramboll for the technical design and quality control of its telecommunication towers, monopoles, poles, and smart poles.
	Risk: The companys success depends on its ability to attract and retain skilled professionals. A shortage of skilled labour or high employee turnover could impact operations.
Human Resource Risks	Mitigation: Salasar Techno offers competitive compensation packages, invests in employee training, and fosters a positive work environment to attract and retain top talent. The company also has succession planning and talent management programs in place.
Geopolitical risk	Risk: Unexpected political unrest, trade barriers, increasing conflict between other nations are some of the risks which can disrupt supply chain & impact the execution/progress of its projects.
	Mitigation: The company proactively monitors potential risks and develops effective countermeasures, including evaluating the feasibility of operating in different countries, exploring strategic procurement options, and assessing the impact of warfare. Furthermore, the company formulates strategies to mitigate these uncertainties.

By employing these mitigation measures, Salasar Techno Engineering Limited ensures that it is well-prepared to handle the various risks associated with its operations, thereby safeguarding its long-term success.

INTERNAL CONTROL AND THEIR ADEQUACY

Salasar Techno Engineering Ltd. has implemented robust internal control systems to ensure efficient operations, accurate financial reporting, and compliance with regulations. These systems are designed to provide reasonable assurance that the companys assets are safeguarded, transactions are executed properly, and the financial information is reliable. The company regularly reviews and updates its internal controls to ensure they remain adequate and effective in addressing emerging risks and changes in the business environment. This ongoing evaluation helps Salasar Techno maintain high standards of operational efficiency and integrity.

M/s. VAPS & Company, the statutory auditors of the Company have audited the financial statements included in this annual report and have issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013).

INFORMATION TECHNOLOGY

The Company recognizes technology as a crucial strategic asset and aims to harness digital solutions to achieve exceptional service. To foster value creation throughout the organization, the Company has implemented "FOCUS" ERP Software. Currently, the Company is focused on fully digitizing its plants, processes, and work sites, and is actively developing the capabilities needed to provide transformative solutions. The goal is to enhance agility, intelligence, and efficiency across all business processes, improve stakeholder experiences, and drive meaningful, sustainable long-term progress.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The level of employee satisfaction affects an organisations success. The Company constantly emphasises how important it is to hire a diverse workforce and how much it values each employees contributions. We believe our intellectual capital to be the business most valuable asset, and losing it would have a significant negative impact on our performance. The Companys overarching goal is to attract and retain competent employees while also providing a fulfilling workplace that is safe, welcoming, and supportive of career progress. During the year under review, the Company expanded on a variety of projects to improve current HR systems and procedures, as well as to create new tools to improve the employee experience in terms of leadership and succession, performance and recognition, development, engagement, and employer branding. The Companys Human Capital headcount, stands at 1,312 (including temporary and permanent) as on 31st March, 2024.

CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and domestic demand supply conditions, finished goods prices, raw material cost and availability, changes in Government regulations, tax regimes, economic developments within India and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.