The following discussion is intended to convey management‘s perspective on our financial condition and results of operations for the period ended on September 30, 2023 and for the year ended on March 31, 2023, March 31, 2022 and March 31, 2021. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled "Risk Factors" beginning on page 20 of this Draft Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year (?Fiscal Year ) are to the twelve-month period ended March 31 of that year.
In this section, unless the context otherwise requires, any reference to ?we , ?us or ?our refers to Teerth Gopicon Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements for period ended on September 30, 2023 and for the Financial Years 2022-23, 2021-22, and 2020-21 included in this Draft Prospectus beginning on page 122 of this Draft Prospectus.
BUSINESS OVERVIEW
We are an engineering construction and development company engaged primarily in the construction of roads, sewerage work and water distribution work in the Madhya Pradesh. We have also worked as sub-contractor and constructed residential tower in the city of Indore. We as corporate have the track record of not more than 5 years. However the promoter of the Company Maheshbhai Khumbhani has started the Proprietorship in the name of Gopi Construction in the year 2009.
Our company has taken up various work as a registered Civil contractor of various Central/State Government like ISCDL, IMC, USCL, UMC, MPJNM etc. and also executed building works for private sector.
Our company has executed wide range of civil engineering projects like building construction work, water supply, pipeline, sewerage network, sewerage treatment plant, nalla tapping work, Re-use network, Over Head Tanks, GSR, , Road work, Rejuvenation of Lake etc.
As an EPC contractor, the scope of our services includes detailed engineering of the project, procurement of construction materials, plant and machinery, construction and execution of the project and its operation and maintenance in accordance with the contractual provisions. Our manpower, resources and fleet of machinery and equipment, together with our engineering capabilities, enables us to execute a large number of projects simultaneously. We believe that our resource, quality of work and project execution skills have enabled us to enhance our relationships with existing clients and helps us to further secure projects from new clients.
The Company is an ISO 9001:2015 certified company and also registered as ?A class civil and Electrical
Contractor and has taken up various Projects of Government Department. The Company has been certified as ISO 14001:2015 and ISO 45001 :2018 for environmental Management System respectively for occupation health and Safety Management system for project management, Engineering and design, procurement, Construction and maintenance of commercial, residential and infrastructure. The business of the company is concentrated in the State of Madhya Pradesh and mainly in city of Indore, Chhattarpur, Sagar, Dindori, Jabalpur and Ujjain. The various clients of the Company are Indore Smart City development Limited, Indore Municipal Corporation, Ujjain Smart City Limited, Ujjain Municipal Corporation and Madhya Pradesh Jal Nigam Maryadit.
For more details, please refer chapter titled ?Business Overview on page 86 of this Draft Prospectus.
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:
After the date of last financial period i.e. September 30, 2023, there is no any significant development occurred in the Company except mentioned below.
1. The Board of the Company has approved bonus issue of equity shares in the ratio 6:10 in the board meeting held on November 01, 2023. The members of the Company approved proposal of Board of Directors for bonus issue of equity shares in the ratio 6:10 in the EGM held on November 01, 2023.
2. We have received Orders after September 30, 2023 are as follow: a) Redevelopment of Land Projects at MOG Lines Barracks near Mhow Naka Square Mixed use Commercial residential & PSP (Block 11) from Indore Smart City Development Ltd order dated 08-
10-2023 b) Engineering, Procurement, Construction, Testing, Commissioning, Trial Run and Operation & Maintenance for 10 Years of Karanjiya Shahpura-Mehandwani, Multi-Village Drinking Water
Supply Schemes District Jabalpur Mandla and Dindori in Single Package on Turn-Key Job Basis‘ from Madhya Pradesh Jal Nigam, Bhopal order dated 05-10-2023
3. We have taken Unsecured loan of Rs. 57.00 Lakhs sanctioned from Canara Bank on 05 December, 2023 for the purpose of purchase of Plant and machinery New Air Break
KEY FACTORS AFFECTING THE RESULTS OF OPERATION:
Our Company‘s future results of operations could be affected potentially by the following factors:
1. Changes in Laws and Regulations that apply to our Industry.
2. Changes in Fiscal, Economic or Political conditions in India
3. Company‘s inability to retain the experienced staff
4. Failure to adapt the changing technology in our industry of operation may adversely affect our business
5. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate
6. Competition with existing and new entrants
OUR SIGNIFICANT ACCOUNTING POLICIES
For Significant accounting policies please refer Significant Accounting Policies, ?Annexure IV beginning under Chapter titled ?Restated Financial Information beginning on page 122 of the Draft Prospectus.
Financial performance of the stub period for the period ended on September 30, 2023
| Income from continuing operations | Amount | % |
| Revenue from operations | ||
| Revenue from operations | 3737.02 | 99.87 |
| Other Income | 4.76 | 0.13 |
| Total Revenue | 3,741.78 | |
| Expenses | ||
| Cost of Material Consumed | 2675.08 | 71.49 |
| Change in Inventory | -30.23 | |
| Employee benefits expense | 152.16 | 4.07 |
| Finance Costs | 27.65 | 0.74 |
| Other expenses | 409.94 | 10.96 |
| Depreciation and amortisation expenses | 36.80 | 0.98 |
| Total Expenses | 3,271.40 | 88.24 |
| Restated profit before tax from continuing operations | 470.38 | 12.57 |
| Share of profit from Associate Company | ||
| Total tax expense | 130.85 | |
| Restated profit after tax from continuing operations (A) | 339.53 | 9.07 |
| EBDITA | 534.83 |
Standalone Financial Performance
Total Income from Operations
The Total income from the operation for the stub period ended on September 30, 2023, was Rs 3741.78 Lacs which includes revenue from operation of Rs 3737.02 lacs and other income of Rs 4.76 lacs.
Total Expenditure
The total expenditure for stub period ended on September 30, 2023 was Rs 3271.40 lacs which is 88.24 % of the total revenue for the stub period. The major expenditure which is part of the total expenditure is Cost of Material Consumed of Rs 2675.08 lacs (71.49%), Employee Benefit Expenses of Rs152.16 lacs (4.07%) and other Expenses of Rs409.94 lacs (10.96%).
EBDTA
The EBDITA for the stub period was Rs534.83 lacs representing 14.29% of total Revenue.
Profit after Tax
The profit after Tax for the stub period was Rs339.53 lacs representing to 9.07% of the total revenue.
RESULTS OF KEY OPERATIONS (Rs in lakhs)
COMPARISON OF F.Y. 2022-23 WITH F.Y. 2021-22:
Income from Operations
We are an engineering construction and development company engaged primarily in the construction of roads, sewerage work and water distribution work in the Madhya Pradesh. In the F.Y. 2022-23, the Company‘s total revenue was Rs3907.66 Lakhs, which is increased by 25.37 % in compare to total Income from operations of 3116.84 Lakhs in F.Y. 2021-22.The Company has established in the MP market and getting good orders from the Government and Local Authorities.
Expenditure:
Cost of Material Consumed
The Cost of Material Consumed for F.Y. 2022-23 was Rs3139.78 Lakhs against the cost of Material Consumed of Rs2503.75 Lakhs in F.Y. 2021-22. The cost of material consumed was 80.35 % of the total revenue from operations in F.Y 2022-23 as against 80.33 % of total revenue from Operations in F.Y 2021-22.
Employee Benefits Expenses:
The Employee expenses for F.Y. 2022-23 was Rs240.36 Lakhs against the expenses of Rs172.14 Lakhs in F.Y. 2021-22 showing increase by 39.63%.The increase in the employee cost is increase of the staff to cope up with the increase in business volume. The managerial remuneration is also increased in FY 2022-23 by 27.50 lac in FY 2022-23 as compared to FY 2021-22.
Finance Cost:
The Finance Cost for the F.Y. 2022-23 was Rs22.92 Lakhs against the cost of Rs2.59 Lakhs in the F.Y. 2021-22 showing increase of 784.94%. The company had borrowed from NBFC and banks in the FY 2022-23 for the growth of the business, for purchase of machinery and vehicles. Apart from that the company has utilized the working capital limit in FY 2022-23 which was not significant in FY 2021-22.
Other Expenses
Other Expenses decreased to Rs227.18 Lakhs for F.Y. 2022-23 against Rs367.09 Lakhs in F.Y. 2021-22 showing decrease of 38.11 %. The other expenditure Depends upon the contract taken by the Company. In FY 2021-22 the company had spent Rs73.99 lacs for pole shifting work which was not in FY 2022-23. Apart from that the Company donated 31.78 lacs in the FY 2021-22 which was nil in the FY 2022-23.
Depreciation and Amortisation Expenses:
The Depreciation for F.Y. 2022-23 was Rs33.08 Lakhs as compared to Rs42.34 Lakhs for F.Y. 2021-22. The depreciation decreased by 21.87 % in F.Y. 2022-23 as compared to F.Y. 2021-22. The depreciation in FY 2022-23 was decreased on account of reduction of the written down value of assets.
EBDITA
The EBDITA for F.Y. 2022-23 was Rs307.55 Lakhs as compared to Rs77.80 Lakhs for F.Y. 2021-22, because of an increase in the business of the company by 25.37% in FY 2022-23 as compared to FY 2021-22. The company has done the construction work of the projects awarded s on which the margin of profit is high and reduction of other expenses like pole shifting work amounting to Rs73.99 lacs and donation of Rs 31.78 lacs which were nil in FY 2022-23. The EBDITA was 7.86 % of total Revenue as compared to 2.49 % in F.Y. 2021-22.
Profit after Tax (PAT)
PAT is Rs179.21 Lakhs for the F.Y. 2022-23 in compared to Rs15.27 Lakhs in F.Y. 2021-22. The PAT was 4.58 % of total revenue in F.Y. 2022-23 compared to 0.49 % of total revenue in F.Y. 2021-22. The company has done the construction work of the projects awarded s on which the margin of profit is high and reduction of other expenses like pole shifting work amounting to Rs73.99 lacs and donation of Rs 31.78 lacs which were nil in FY 2022-23 . The EBDITA was 7.86 % of total Revenue as compared to 2.49 % in F.Y. 2021-22.
COMPARISON OF F.Y. 2021-22 WITH F.Y. 2020-21:
Income from Operations
We are an engineering construction and development company engaged primarily in the construction of roads, sewerage work and water distribution work in the Madhya Pradesh. In F.Y. 2021-22, the Company‘s total revenue was Rs3116.84 Lakhs, which is decreased by 32.53% in comparison of total Income of Rs4619.33 Lakhs in to F.Y. 2020-21.
Expenditure:
Cost of Material Consumed
The Cost of Material Consumed for F.Y. 2021-22 was Rs2503.75 Lakhs against the cost of Material Consumed of Rs3630.16 Lakhs in F.Y. 2020-21. The cost of material consumed was 80.33 % of the total revenue from operations in F.Y 2021-22 as against 78.59 % of total revenue from Operations in F.Y 2020-21. The increase in cost of raw material consumed is on account of increase in prices of major raw materials
Employee Benefits Expenses:
The Employee expenses for F.Y. 2021-22 was Rs172.14 Lakhs against the expenses of Rs154.91 Lakhs in F.Y. 2020-21 showing increase by 11.12% The increase in the employee expenses was on account of increment in the salary of the employees.
Finance Cost:
The Finance Cost for F.Y. 2021-22 was Rs2.59 Lakhs against the cost of Rs0.36 Lakhs in the F.Y. 2020-21 showing an increase of 619.44 %. The Company was enjoying the interest free loan from the directors and relatives of the directors. In both the financial years the interest cost was negligible compared to total contract receipt. In the FY 2020-21 the company had outstanding unsecured loan from the directors and relatives of the Directors were Rs933.82 lakh on which no interest was paid by the Company.
Other Expenses
Other Expenses decreased to Rs367.09 lakhs for F.Y. 2021-22 against Rs725.89 Lakhs in F.Y. 2020-21 showing decrease of 49.43%. The other expenditure depends upon the contract taken by the Company. In the FY 2020-21 the company had done Nala Tapping work of Rs50.02 lacs, Hiring of excavator cost of Rs102.77 lacs, Repairs & Maintenance expenses of Rs 48.62 Lakhs Building Material of Rs 40.51 Lakhs which were no in the FY 2021-22 on account of nature of work carried out by the Company.
Depreciation and Amortisation Expenses:
The Depreciation for F.Y. 2021-22 was Rs 42.34 Lakhs as compared to Rs41.31 Lakhs for F.Y. 2020-21. The depreciation was increased by 2.49 % in F.Y. 2021-22 as compared to F.Y. 2020-21. The depreciation in FY 2021-22 was high on account of the addition of fixed assets of Rs 16.35 lacs in F.Y. 2021-22 which was Rs67.67 lacs FY 2020-21. The depreciation provided on the addition in the Fixed Assets in F.Y 2020-21 was not for the full year and in the year 2021-22 depreciation on the addition of the assets in F.Y 2020-21 was for full year.
EBDITA
The EBDTA for F.Y. 2021-22 was Rs77.80 Lakhs as compared to Rs109.79 Lakhs for F.Y. 2020-21. The EBDITA was 2.49 % in FY 2021-22 of total Revenue as compared to 2.38% in FY 2020-21. The EBDITA is increased on account of reduction of other expenses in F.Y. 2021-22 as compared to F.Y 2020-21.
Profit after Tax (PAT)
PAT isRs15.27 Lakhs for F.Y. 2021-22 as compared to Rs46.45 Lakhs in F.Y. 2020-21. The PAT was 0.49 % of total revenue in F.Y. 2021-22 compared to 1.01% of total revenue in F.Y. 2020-21.The PAT margin was decreased on account of reduction of business by 32.53 % in FY 2021-22 as compared to FY 2020-21.The profit is also reduced on account of unrelated business expense of donation amounting to Rs31.78 lacs in FY 2021-22 which wasRs9.68 lacs in FY 2020-21.
CASH FLOW (Rs in lakhs)
| Particulars | September 30, 2023 | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| Net cash from Operating Activities | 106.76 | 1360.74 | (405.18) | 41.73 |
| Net cash flow from Investing Activities | (469.68) | (16.88) | (71.34) | (186.27) |
| Net Cash Flow Financing Activities | 45.72 | (1027.52) | 431.68 | 390.25 |
Cash flow March 31, 2023
The Company has positive cash flow from operating on account of receipt of advance from one of the clients for execution of the project. The positive cash operating flow was used to reduce the long-term borrowings and investment in fixed assets. The company had repaid the interest free borrowing of the directors and relative of directors from the positive operating cash flow. The positive cash operating flow has not resulted in any benefit to the Company except reducing the long-term liability.
Cash flow March 31, 2022
The negative cash flow from operating activities and investment activities were financed through long term borrowings. The short term requirement of working capital was financed by the long term borrowings. Generally short term requirement should be met with short term borrowings and not long term borrowings As far as Cash flow from operating activities were concerned, the company‘s funds blocked in change in working capital is more than the Profit earned by the Company hence the cash flow from Operating activity was negative.
Cash flow March 31, 2021
The Company had positive cash flow from operating activities as well as from financing activity and the same has been used for purchase of fixed assets which result in to negative cash flow from Investing activities
Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:
1. Unusual or infrequent events or transactions
To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years
2. Significant economic changes that materially affected or are likely to affect income from continuing operations.
Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in Factors Affecting our Results of Operations‘ and the uncertainties described in the section entitled ?Risk Factors" beginning on page 20 of this Draft Prospectus. To our knowledge, except as we have described in this Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.
3. Income and Sales on account of major product/main activities
Income and sales of our Company on account of major activities derives from EPC Contract work.
4. Whether the company has followed any unorthodox procedure for recording sales and revenues
Our Company has not followed any unorthodox procedure for recording sales and revenues.
5. 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 titled ?Risk Factors beginning on page 20 in this Draft 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.
6. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.
Increases in revenues are by and large linked to increases in volume of business.
7. Total turnover of each major industry segment in which the issuer company operated.
The Company is in the business of Infrastructure Industry , the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no 79 of this Draft Prospectus.
8. Status of any publicly announced new products or business segment.
Our Company has not announced any new services or business segment.
9. The extent to which business is seasonal.
Our business is not seasonal.
10. Any significant dependence on a single or few suppliers or customers.
Our Company is dependent on few customers for the business of the Company. The top 5 customers contribute 100 % of the total contract receipt for the period ended on September 30, 2023 and for the FY 2023, 2022 and 2021 respectively. The Company is not dependent on few suppliers for its requirement.
11. Competitive conditions.
Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 79 and 86, respectively of this Draft Prospectus.
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