You should read the following discussion of our financial position and results of operations together with our Restated Standalone Financial Information, which have been included in this Draft Red Herring Prospectus. You should also read the section entitled "RISK FACTORS" beginning on page 17 and "FORWARD LOOKING STATEMENTS" beginning on page 12, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.
The following discussion and analysis of our financial position and results of operations is based on our Restated Standalone Financial Information for the period ended 31st January, 2023 and for financial years ended March 31st, 2022, 2021 and 2020 including the related notes and reports, included in this Draft Red Herring Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Standalone Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Indian GAAP, Companies Act, SEBI Regulations and other relevant accounting practices in India.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward looking statements as a result of certain factors such as those described under "RISK FACTORS" and "FORWARD LOOKING STATEMENTS" on pages 17 and 12, respectively, and elsewhere in this Draft Red Herring Prospectus. Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.
BUSINESS OVERVIEW
Our Company, Service Care Limited, is into Integrated Business Services of providing Workspace Administration Services & Workforce Administration Services across all the business domains. With the experience and Market presence of more than 23 years, we have establish our creditability with our customers and partners across the country. Primarily Workspace Administration services covers all the Integrated Facility Management and Business Services, on the other hand Workforce Administration services covers all kind staffing solutions, outsourced recruitment processes and payroll management.
Incorporated in 2011, we have currently 5,800+ associate team (including contractual employees). We currently service clients from the Manufacturing, Engineering, Infrastructure, Information Technology, Government & Banking, healthcare, Staffing & Recruitment, Food, Education, FMCG verticals.
Service Care Limited bifurcate its services into 2 categories;
- Workspace Administration Services;
- Workforce Administration Services
Workspace Administration Services
Workspace Administration Services vertical focus on delivering professional services towards facility management. Be it Hard Services, Soft services, Guest House management or any Business administrative Services, day-to-day up keep and maintenance services, we have effective combination of trained team, environmentally friendly & best in class cleaning materials, latest machinery with professionally defined process controls. In the workspace Administration services contain the following services:
- Hard Services;
- Soft Services;
- Business Services.
Workforce Administration Services
We are a popular workforce management services provider, we offer end-to-end HRMS & HRO S services that is designed solving complex HR challenges. Build to consume staffing services, Contract Staffing, talent acquisition, search and recruitment, payroll management & compliance, training and skill development, to manpower management, we provide all the support to ensure our clients business workflow is exponential. Our workforce services contain the following services:
- Manpower & Payroll Services
- Contract Staffing
- Recruitment Services
For more details kindly refer our chapter titled "BUSINESS OVERVIEW" begins from page no. 78 of this Draft Red Herring Prospectus.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
For details in respect of Statement of Significant Accounting Policies, please refer Restated Financial Statements under chapter titled "RESTATED FINANCIAL STATEMENT" beginning on page 122 of this Draft Red Herring Prospectus.
Factors Affecting our Results of Operations
Our business is subjected to various risks and uncertainties, including those discussed in the section titled "RISK FACTORS" beginning on page 17 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:
1. COVID-19 pandemic:
2. Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;
3. Any failure to comply with the financial and restrictive covenants under our financing arrangements;
4. Our ability to retain and hire key employees or maintain good relations with our workforce;
5. Impact of any reduction in sales of our services/products;
6. Rapid Technological advancement and inability to keep pace with the change;
7. Increased competition in industries/sector in which we operate;
8. General economic and business conditions in India and in the markets in which we operate and in the local, regional and national economies;
9. Changes in laws and regulations relating to the Sectors in which we operate;
10. Political instability or changes in the Government in India or in the government of the states where we operate could cause us significant adverse effects; 11. Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;
12. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition; and 13. Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impact our profitability.
BRIEF FINANCIALS OF OUR COMPANY
| For the period ended 31st January | For the year ended March 31, | |||||||
| Particulars | 2023 | 2022 | 2021 | 2020 | ||||
| Amount | % of Total Income | Amount | % of Total Income | Amount | % of Total Income | Amount | % of Total Income | |
| Revenue from operations | 13208.05 | 99.93% | 11495.16 | 99.94% | 8926.23 | 99.92% | 10807.27 | 99.95% |
| Other Income | 9.24 | 0.07% | 6.49 | 0.06% | 7.15 | 0.08% | 5.07 | 0.05% |
| Total Income | 13217.29 | 100.00% | 11501.64 | 100.00% | 8933.38 | 100.00% | 10812.34 | 100.00% |
| EXPENDITURE | ||||||||
| Cost of Material Consumed | 113.60 | 0.86% | 127.45 | 1.11% | 73.14 | 0.82% | 82.08 | 0.76% |
| Employee Benefits Expenses | 12576.34 | 95.15% | 10995.82 | 95.60% | 8715.96 | 97.57% | 10347.41 | 95.70% |
| Finance Cost | 15.26 | 0.12% | 10.70 | 0.09% | 15.72 | 0.18% | 42.06 | 0.39% |
| Depreciation and amortization Expenses | 3.73 | 0.03% | 4.43 | 0.04% | 6.97 | 0.08% | 9.61 | 0.09% |
| Other Expenses | 105.91 | 0.80% | 130.25 | 1.13% | 75.51 | 0.85% | 108.28 | 1.00% |
| TOTAL EXPENSES | 12814.85 | 96.96% | 11268.64 | 97.97% | 8887.28 | 99.48% | 10589.44 | 97.94% |
| Profit Before Tax | 402.45 | 3.04% | 233.00 | 2.03% | 46.10 | 0.52% | 222.90 | 2.06% |
| Tax Expenses | ||||||||
| Current Tax | 102.15 | 0.77% | 68.08 | 0.59% | 12.69 | 0.14% | 90.59 | 0.84% |
| Deffered Tax (Liabilities) | / (2.04) | (0.02%) | (9.56) | (0.08%) | 9.94 | 0.11% | (3.97) | (0.04)% |
| Assets | ||||||||
| Prior Year Tax (Liabilities) / - | - | - | - | - | - | - | - | |
| Assets | ||||||||
| Profit After Tax | 302.34 | 2.29% | 174.48 | 1.52% | 23.46 | 0.26% | 136.28 | 1.26% |
Financial Performance Highlights for the period ended 31st January, 2023:
The following descriptions set forth information with respect to the key components of our profit and loss statement.
1. INCOME:
Revenue from Operation: Our Companys total revenue during the period (April 01, 2022 to January 31, 2023) was 13,217.29 Lakhs. The revenue from operation was 13,208.05 Lakhs which is almost 99.93% of Total Revenue which consist of Manpower Supply/Recruitment Services, Manpower Sourcing/Staffing Service.
Other Income: Other Income during the period (April 01, 2022 to January 31, 2023) was 9.24 Lakhs which is 0.07% of the Total Revenue.
2. EXPENSES:
Total Expenses: Our Companys total expenses during the said period (April 01, 2022 to January 31, 2023) were 12,814.85 Lakhs. The Total Expenditure is almost 96.96% of Total Revenue. The main constituent of Total Expenditure is Employee Benefit Expenses which was 12,576.34 Lakhs, almost 95.15% of Total Revenue.
Employee Benefits Expense: The Employee Benefit Expenses for the said period (April 01, 2022 to January 31, 2023) was 12,576.34 Lakhs, almost 95.15% of Total Revenue.
Finance Cost: The Finance Cost for the said period (April 01, 2022 to January 31, 2023) was 15.26 Lakhs, almost 0.12% of Total Revenue.
Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a straight line method as prescribed under schedule II of the Companies Act, 2013.
Other Expenses: Other expenses includes cleaning expenses, service contract payments, professional fees, rent expenses, travelling expenses and other miscellaneous expenses. Total other expenses for the said period (April 01,
2022 to January 31, 2023) was 105.91 Lakhs, almost 0.80% of Total Revenue.
3. PROFIT:
Profit/ (Loss) Before Tax: The Restated Profit Before Tax for the said period (April 01, 2022 to January 31, 2023) was
402.45 Lakhs, almost 3.04% of Total Revenue.
Profit/ (Loss) after Tax: The Restated Profit After Tax for the said period (April 01, 2022 to January 31, 2023) was
302.34 Lakhs, almost 2.29% of Total Revenue.
Comparison of Financial Performance of Fiscal 2022 with Fiscal 2021
The following descriptions set forth information with respect to the key components of our profit and loss statement.
1. INCOME:
Total Revenue: During FY 2021-22 the revenue from operation and other income of the company has been increased to 1,1501.64 Lakhs as against 8,933.38 Lakhs in FY 2020-21. This increase was mainly due to our association with new clients with increased revenue from existing clients.
2. EXPENSES:
Total Expenses: The total expenditure for FY 2021-22 has been increased to 11,268.64 Lakhs as against 8,887.28
Lakhs in FY 2020-21. This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above.
Employee Benefits Expense: The Employee Benefit Expenses for FY 2021-22 has been increased to 10,995.82 Lakhs as against 8,715.96 Lakhs in FY 2020-21. This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above leading to hiring of new employees.
Other Expenses: The Other Expenses for the FY 2021-2022 has been increased to 130.25 Lakhs as against 75.51
Lakhs in the FY 2020-21. This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above.
3. PROFIT:
Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2021-22 has been increased to 233.00 Lakhs as against 46.10 Lakhs in the FY 2020-21. This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above and improved profit margins.
Profit/ (Loss) After Tax: The restated Profit After Tax for FY 2021-22 has been increased to 174.48 Lakhs as against 23.46 Lakhs in the FY 2020-21. This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above and improved profit margins.
Comparison of Financial Performance of Fiscal 2021 with Fiscal 2020
The following descriptions set forth information with respect to the key components of our profit and loss statement.
1. INCOME:
Total Revenue: During FY 2020-21 the revenue from operation and other income of the company decreased to 8933.38 Lacs as against 10812.34 Lacs in FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic. Since majority of the business started working from home, the requirement for manpower and staffing services at client location reduced.
2. EXPENSES:
Total Expenses: The total expenditure for FY 2020-21 decreased to 8,887.28 Lakhs as against 10,589.44 Lakhs in
FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic during the FY as mentioned in revenue from operation above.
Employee Benefits Expense: The Employee Benefit Expenses for FY 2020-21 decreased to 8,715.96 Lakhs as against 10,347.41 Lakhs in FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic during the FY as mentioned in revenue from operation above.
Other Expenses: The Other Expenses for the FY 2020-2021 decreased to 75.51 Lakhs as against 108.28 Lakhs in the FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic during the FY as mentioned in revenue from operation above.
3. PROFIT:
Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2020-21 decreased to 46.10 Lakhs as against 222.90 Lakhs in the FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic during the FY as mentioned in revenue from operation above.
Profit/ (Loss) after Tax: The Restated Profit After Tax for FY 2020-21 decreased to 23.46 Lakhs as against 136.28 Lakhs in the FY 2019-20. This decrease was mainly due to the impact of COVID-19 Pandemic during the FY as mentioned in revenue from operation above.
CASH FLOWS:
| Particulars | For the period ended January 31, 2023 | For the Year ended March 31st | ||
| 2022 | 2021 | 2020 | ||
| Net Cash from Operating Activities | 22.38 | 9.41 | 287.18 | 34.98 |
| Net Cash from Investing Activities | 2.76 | (18.59) | (0.37) | 5.54 |
| Net Cash from Financing Activities | (156.50) | 17.08 | (6.30) | (116.89) |
Cash Flows from Operating Activities
Net cash from operating activities for period ended 31st January, 2023 was at 22.38 Lakhs as compared to the Profit Before Tax at 402.45 Lakhs. This was primarily due to adjustments against, changes in trade receivables, loans and advances and other current liabilities.
Net cash from operating activities for year ended 31st March, 2022 was at 9.41 Lakhs as compared to the Profit Before Tax at 233.00 Lakhs. This was primarily due to adjustments against, changes in trade receivables, provisions and other current liabilities.
Net cash from operating activities for year ended 31st March, 2021 was at 287.18 Lakhs as compared to the Profit Before Tax at 46.10 Lakhs. This was primarily due to adjustments against change in trade receivables, loans and advances and other current liabilities.
Net cash from operating activities for year ended 31st March, 2020 was at 34.98 Lakhs as compared to the Profit Before Tax at 222.90 Lakhs. This was primarily due to adjustments against change in trade payables, other current liabilities, trade receivables, provisions and other current liabilities.
Cash Flows from Investment Activities
For the period ended 31st January, 2023, net cash outflows from Investing Activities were 2.76 Lakhs. This was mainly on account of Purchase and sale of Fixed Assets.
For the year ended 31st March, 2022, net cash outflows from Investing Activities were (18.59) Lakhs. This was mainly on account of Purchase of Fixed Assets.
For the year ended 31st March, 2021, net cash outflows from Investing Activities were (0.37) Lakhs. This was mainly on account of Purchases of Fixed Assets.
For the year ended 31st March, 2020, net cash outflows from Investing Activities were 5.54 Lakhs. This was mainly on account of Sale of Fixed Assets.
Cash Flows from Financing Activities
For the period ended 31st January, 2023, net cash from financing activities was (156.50) Lakhs. This was on account of payment of Short Term Borrowings and proceeds from issue of equity shares.
For the year ended 31st March, 2022, net cash from financing activities was 17.08 Lakhs. This was on account of movement in Short Term Borrowings.
For the year ended 31st March, 2021, net cash from financing activities was (6.30) Lakhs. This was on account of payment of Interest on Borrowings.
For the year ended 31st March, 2020, net cash from financing activities was (116.89) Lakhs. This was on account of payment on Borrowings and its Interest.
Information required as per Item (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:
An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:
1. Unusual or infrequent events or transactions.
There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.
2. Significant economic changes that materially affected or are likely to affect income from continuing operations.
Except for any change in economic policy affecting service industry in India, there are no other significant economic changes that may materially affect or likely to affect income from continuing operations.
3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.
Apart from the risks as disclosed under Section "RISK FACTORS" beginning on page 17 in the Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.
4. Future changes in relationship between costs and revenues.
Our Companys future costs and revenues will be determined by growth of industry in which we operate.
5. Increases in net sales or revenue and Introduction of new products or services or increased sales prices.
Increases in revenues are by and large linked to increases in volume of our business.
6. Status of any publicly announced New Services or Business Segment.
Our Company has not announced any new Services.
7. Seasonality of business.
Our Companys business is not seasonal in nature as it is in service industry.
8. Dependence on few Customer.
The percentage of contribution of our Companys Top Customers/Clients is as follows:
| S. No. Name of the | As at 31st January, | As at 31st March, | ||||||
| 2023 | 2022 | 2021 | 2020 | |||||
| Customer | % | Amount | % | Amount | % | Amount | % | Amount |
| 1. Larsen & Toubro Limited | 74.89 | 9,891.32 | 73.88 | 8,492.46 | 73.29 | 6,541.90 | 80.43 | 8,691.94 |
| 2. L & T Geostructure Private Limited | 7.10 | 938.25 | 4.71 | 540.91 | 2.14 | 190.90 | - | - |
| 3. State Bank of India | 4.53 | 598.92 | 5.86 | 673.62 | 7.29 | 650.97 | 4.03 | 435.14 |
| 4. Prosol IT | 2.30 | 303.69 | 2.33 | 267.81 | 3.08 | 274.78 | 2.49 | 269.56 |
| 5. Omega Healthcare Management Service Private Limited | 1.06 | 139.62 | 0.72 | 83.14 | 1.11 | 99.10 | 1.93 | 208.43 |
| 6. Andritz Separation & Pump Technologies India Private Limited | 0.94 | 124.27 | 1.26 | 144.86 | 1.42 | 126.34 | 1.27 | 136.80 |
| 7. Think & Learn Private Limited | 0.80 | 106.00 | - | - | - | - | 0.65 | 70.56 |
| 8. Ashok Leyland Limited | 0.79 | 104.51 | 0.97 | 112.07 | 1.30 | 116.02 | 1.60 | 173.44 |
| 9. Birla Carbon India Private Limited | 0.70 | 91.88 | 0.84 | 96.25 | 0.91 | 80.93 | 0.76 | 82.46 |
| 10. Laurus Bio Private Limited | 0.65 | 85.97 | 0.99 | 113.31 | - | - | - | - |
| 11. J.K. Fenner (India) Limited | - | - | 0.74 | 85.22 | - | - | 0.81 | 87.93 |
| 12. L & T Geostructure LLP | - | - | - | - | 1.85 | 165.11 | - | - |
| 13. Mahindra Aerostructur es Private Limited | - | - | - | - | 0.93 | 82.93 | 0.58 | 62.91 |
| 14. Other | 6.24 | 823.61 | 7.70 | 885.50 | 6.69 | 597.26 | 5.44 | 588.10 |
| Total | 100 | 13,208.05 | 100 | 11,495.16 | 100 | 8,926.23 | 100 | 10,807.27 |
9. Competitive conditions.
Competitive conditions are as described under the Chapters "INDUSTRY OVERVIEW" and "BUSINESS OVERVIEW" beginning on pages 73 and 78, respectively of the Draft Red Herring Prospectus.
10. Details of material developments after the date of last balance sheet i.e. January 31st, 2023.
Except as mentioned in this Draft Red Herring Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing the Draft Red Herring Prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months.
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