Dear Fellow Stakeholders
On behalf of the Board of ARSS it is my pleasure to present the 21st Annual Report andAudited Financial Statements for the year ended 31st March 2021. I am addressing you allat a time when the nation has been impacted by the second wave of the Corona virusleading to widespread distress and tragic loss of life. The unexpected scale and intensityof this year's surge threatened to overwhelm India's healthcare systems and undermine theprevailing macro-economic narrative. Undoubtedly this is the most severe test ever facedby all of us households corporates civil society and the Government.
At this critical juncture as important as observing health and safety measures is toremain psychologically strong guard against cynical despair and stay united in our sharedsense of purpose. As they say the darkest hour is before dawn and we are alreadybeginning to glimpse early signs that give rise to cautious optimism. The declining trendin cases across the states as well as the prospects of the vaccine rollout gaining paceshould help us look forward to happier times.
This year I intend to commence my communication with how we intend to protect ourbusiness. This statement has acquired a deeper connotation following the sweepingresurgence of the second pandemic wave in India. Any discussion about our business musttherefore begin with what needs to be done to protect our people. These are challengingtimes for a knowledge intensive business like ours; there is a premium on the ability toprotect talent from the effects of the pandemic.
At ARSS we believe that there has never been a moment when our business model has beenmore relevant than it is now. The Indian government is investing more than ever ininfrastructure creation; there is a need to build the India of tomorrow with more roadsmore bridges and more rail networks in addition to the rejuvenation of existinginfrastructure. There are a number of realities that make the scenario attractive andcompelling. India is building infrastructure larger and faster. The standards ofinfrastructure building are rising. The government has recognized the need for vendors andservice providers to be remunerated with speed. The Indian government has introducedvarious liquidity measures for the businesses and especially for construction companieslike ours wherein proportionate bank guarantees have been released for partly completedcontracts.
This has also been supported by the accommodative stance of the Reserve Bank of Indiaby maintaining interest rates at around the historically lowest levels seen in thiscountry. At ARSS we applaud the Government's initiative to retrieve the Indian economyout of the shock induced by the pandemic through liquidity measures and feel that thiscoupled with low tax rates as introduced in the last Union Budget will incentivizebusinesses to invest and grow in a sustainable manner. These realities are attractingserious long-term players. The scenario has evolved from a singular focus on profits toliquidity. The industry's needs are no longer about profitability as much as they areabout sustainability.
For this year ARSS faced some difficulties in growth due to stressed economicenvironment and accrued a loss of Rs. (-) 52.65 cr. during the year. Your Company'sstandalone performance for the financial year 2020-21 are as follows:
- Turnover of Rs 248.45 crores.
- EBITDA is Rs (-) 37.52 crores.
- PAT (loss) is Rs (-) 52.65 crores.
- EPS (basic) is Rs (-) 23.16
The outlook for FY2021-22 is one of cautious optimism with the country's GDP regainingpositive territory thanks to the base effect in the first half followed by robust growthin the second. While the current resurgence of COVID-19 may dent prospects in the initialpart of the year vigorous vaccination efforts and improved adherence to safety protocolsshould spark a revival in the latter half. We therefore believe the recovery isdelayed' and not derailed'.
One unintended but welcome consequence of the pandemic has been the rapid adoption ofdigital technologies. This was a lifeline which ensured that economies do not getparalysed due to lockdowns and other constraints. Another positive fall-out has been anincreased awareness of sustainability and a more stringent emphasis on EnvironmentProtection Social Responsibility and Governance frameworks. The Covid-19 pandemic and itsfallout makes it difficult to forecast the future with any degree of certainty. While weare hopeful that the 2nd half of FY 2021-22 will herald better economic and businessactivity in terms of tendering good liquidity and revival of labour and supply chains itwould be premature to predict the Company's business outcomes for FY 2021-22. The companyis putting in enormous efforts to mitigate the impact of the pandemic and registerenhanced performance in FY 2021-22 and coming years.
At this point in time we see prospects in the areas of Government buildings datacentres healthcare infra airports metro railways water projects including wastewatertreatment and irrigation hydel projects expressways as well as onshore and offshorehydrocarbon projects. We are uncertain however of the timelines when these projects willtake off.
Despite the challenges the Government's thrust areas continued to provide a businessopportunity basket for the Company which was in the pole position to capitalize on thebusiness prospects that came to fruition during the year. The continuing weakness in theRealty sector was countered with a Government focused boost to the affordable mass housingand health segments. With the Government's focus on improving air-connectivityopportunities in the airport segment continue to arise at periodic intervals.
Budgetary provisions 2021-22: Railways
The Finance Minister Nirmala Sitharaman allocated Rs. 1.1 Lakh Crore for IndianRailways to improve infrastructure out of which INR 1.07 Lakh Crore will be allocated forcapital expenditure. Indian Railways announced National Rail Plan for 2030 with theobjective of creating capacity before demand.
Roads and bridges:
The other growing opportunity in India is related to roads and bridges. There is agrowing conviction that new roads and bridges are possibly the quickest infrastructuredrivers of economic growth. They encourage new settlements to emerge along the roadnetwork while bridges make is possible to shorten conventionally long commutes. In2020-21 the allocation towards road and bridge construction by the government was INR48777 Crore 6% higher than the revised estimates of 2019-20 (INR 45897 Crore).Expenditure under roads and bridges includes development of national highways projectsrelated to expressways increasing the number of lanes under various projects anddevelopment of road connectivity in left-wing extremism-affected areas.
ARSS Infrastructure to gradate to a virtuous cycle of sustainable profitabilityenhancing value in the hands of all those who hold shares in our company. Let me end witha word on the second wave of the pandemic. In view of the uncertain nature of the next fewmonths one will not venture to provide a financial guidance. At ARSS we have assured theemployees that they and their immediate family members will be vaccinated by the Companyfree of cost and therefore they need not worry about the economic impact on theirhouseholds. In addition ARSS has pledged to support local communities where it operatesby offering to run free vaccination camps free distribution of Immunity Booster medicinesfor the underprivileged. We hope to reach the marginalized who need to be vaccinated atthe earliest helping eradicating the pandemic. At ARSS we donated ventilators and ECMOMachine to the Hospitals for helping the needy peoples to survive their lives. The onlyresolution that one will make is that we will invest our every resource in ensuring thatall our employees and their family members remain safe until they are vaccinated Intoday's uncertain environment there can be no higher priority.
Before I conclude I would like to extend my thanks to Customers vendors andsuppliers Central and State Governments Regulatory Authorities investors bankers andfinancial institutions for their continued faith and trust without whom our continuedgrowth momentum would not have been possible. I would also like to thank my fellow Boardmembers for their unstinted support and encouragement and helping me in creating goodgovernance culture across the organization and fulfilling the responsibilities of Board. Iwould like to place on record the sincerity hard work commitment and dedication of theentire Team of ARSS. I seek your continued support in making the Company more sustainableand resilient to external challenges.
|With warm and very best regards |
|Subash Agarwal |