ITD Cementation India Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis looks into the ITD Cementation India Limited annual report for the fiscal year 2023-24, covering financial performance, business segments, identified risks, and ESG initiatives.

I. Financial Performance:

FY2023-24 witnessed exceptional growth across key financial metrics, showcasing significant operational efficiency and market strength. The numbers represent a sharp increase compared to the previous year (FY2022-23):

• Revenue from Operations: ₹7,718 crore (Consolidated) – a 52% YoY increase. Standalone revenue was ₹7,542 crore, a 61% YoY increase. This substantial growth highlights the success of the company’s strategic initiatives and operational excellence.

• EBITDA: ₹809 crore (Consolidated) – a 75% YoY increase. Standalone EBITDA was ₹796 crore, a 10.6% margin. This indicates improved operational efficiency and cost management.

• PAT: ₹274 crore (Consolidated) – a remarkable 120% YoY increase. Standalone net profit was ₹273.77 crore, a 3.6% margin. This strong profitability is further testament to effective cost control and revenue generation.

• EPS: ₹15.9 (Consolidated and Standalone). A substantial increase from ₹7.2 in FY2022-23.

• Return on Capital Employed (ROCE): 27.8% (Consolidated) – significantly higher than the previous year’s 18.7%. Demonstrates high efficiency in utilizing capital.

• Net Debt to Equity Ratio: 0.17x (Consolidated) – a conservative and healthy ratio indicating prudent financial management.

• Order Book: ₹19,918 crore (Consolidated) as of March 31, 2024, providing strong revenue visibility for future years. This includes ₹6,915 crore of new orders secured during FY2023-24.

II. Business Segments:

ITD Cementation operates across various high-growth infrastructure sectors. The order book breakdown (as of March 31, 2024) illustrates the company’s diversified portfolio:

• Maritime Structures (31.3%): Jetties, dolphins, berths, wharves, ship lifts, dry docks, breakwaters, dredging, and coastal protection. Significant projects are underway in Vizag, Karwar, JNPT, Kamarajar Port, and Udangudi. International presence in Bangladesh and Sri Lanka.

• Urban Infrastructure, MRTS & Airports (22%): Elevated and underground metro projects (Chennai, Bengaluru, Kolkata, Mumbai), airport terminal buildings (Ahmedabad).

• Highways, Bridges & Flyovers (16.8%): Road construction projects, including six-laning projects in Uttar Pradesh and bridge construction.

• Industrial Structures & Buildings (13.1%): Institutional, commercial, factory, and warehouse construction. Projects include residential colony redevelopment, coke oven projects, and buildings for Sikkim University and the Calcutta High Court.

• Hydro, Dams, Tunnels & Irrigation (11.6%): Dams, hydropower projects, tunnels, and irrigation projects. Projects include the Chitravati Pumped Storage project and railway tunnels in West Bengal and Sikkim.

• Water & Wastewater (2.8%): Water treatment plants, sewerage plants, and drainage projects (e.g., Ahmedabad).

• Foundation & Specialist Engineering (2.4%): Piling, diaphragm walls, ground improvement, and slope stabilization. Projects in Assam and Meghalaya.

The significant order book across these segments provides a solid foundation for continued growth and financial stability.

III. Risks:

The annual report acknowledges many key risks impacting the construction sector and ITD Cementation’s operations:

• Cybersecurity: Data breaches, intellectual property theft, and operational disruptions. Mitigation involves robust security measures, training, and regular audits.

• Skilled Manpower: Shortage of skilled labor and high attrition rates. Mitigation includes training programs, a positive work culture, and competitive compensation packages.

• Cost of Inputs: Fluctuations in material, labor, and service costs impacting project profitability. Mitigation focuses on competitive pricing strategies and diversified sourcing.

• Competition: Intense competition in the construction industry leading to price pressure. Mitigation through focus on niche markets and continuous improvement.

• Financial Risk: Access to financing, cost of capital, and currency fluctuations. Mitigation involves maintaining a strong financial position and conservative financial management.

• International Business Risks: Currency fluctuations, political instability, and regulatory changes in foreign markets. Mitigation involves thorough market research, hedging strategies, and insurance.

• Project Execution Risks: Cost overruns and delays impacting profitability and reputation. Mitigation involves robust project management, risk assessments, and effective communication.

• Contractual Risks: Disputes and legal liabilities arising from contracts. Mitigation strategies focus on careful contract reviews and dispute resolution mechanisms.

• Environmental Risks: Fines and reputational damage due to environmental non-compliance. Mitigation includes environmental impact assessments and adherence to regulations.

IV. ESG Initiatives:

ITD Cementation demonstrates a strong commitment to Environmental, Social, and Governance (ESG) principles:

Environmental:

• Sustainable Construction Practices: Minimising waste, optimising resource use, adopting green technologies, and promoting recycling and reuse. Focus on reducing cement usage through fly ash/GGBS replacement.
• Energy Conservation: Using fuel-efficient machinery, solar lights, and energy-efficient lighting systems.
• Water Management: Implementing zero liquid discharge philosophy and wastewater reuse at batching plants.
• Certifications: ISO 9001 (Quality), ISO 14001 (Environment), and ISO 45001 (Occupational Health & Safety) certifications.

Social:

• Employee Well-being: Robust health and safety protocols, training programs, and measures to improve employee morale and satisfaction.
• Community Engagement: CSR initiatives focused on education, healthcare, skill development, and community support. Significant projects in special education, women’s empowerment, and hunger eradication.
• Diversity and Inclusion: Promoting equal opportunities for all employees.

Governance:

• Robust Corporate Governance: Adherence to corporate governance best practices, transparent financial reporting, ethical conduct, and accountability.
• Independent Committees: Active Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, and Risk Management Committee.
• Whistleblower Policy: Protecting employees who report ethical concerns.

Conclusion:

ITD Cementation India Limited’s annual report reveals a company achieving strong financial growth while demonstrating a proactive approach to risk management and a commitment to ESG principles. The diversified order book and strong financial position suggest a positive outlook for future growth. However, ongoing challenges within the construction sector and global economic uncertainties need to be carefully monitored and managed. Continued investment in technology, employee development, and sustainable practices will be critical to sustaining this momentum and achieving long-term success.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The values for total assets, current assets, cash and cash equivalents, accounts receivable (trade receivables), and inventory, are presented separately for the Standalone and Consolidated financial statements. Here’s a breakdown from the provided annual report:

In Indian Rupees (₹) Lakhs:

Standalone Financial Statements (as of March 31, 2024):

• Total Assets: ₹581,979.58
• Current Assets: ₹435,661.71
• Cash and Cash Equivalents: ₹57,785.92
• Trade Receivables: ₹117,740.56
• Inventories: ₹68,304.54

Consolidated Financial Statements (as of March 31, 2024):

• Total Assets: ₹591,725.75
• Current Assets: ₹455,232.48
• Cash and Cash Equivalents: ₹60,877.48
• Trade Receivables: ₹121,142.86
• Inventories: ₹68,427.22

Important Note: These figures are rounded to the nearest Lakh (₹100,000) as presented in the annual report. There might be minor discrepancies depending on rounding practices.

Liability Analysis #

Here’s a breakdown of the total liabilities, current liabilities, long-term debt, and accounts payable (trade payables) from ITD Cementation India Limited’s annual report, again presented separately for the Standalone and Consolidated financial statements:

In Indian Rupees (₹) Lakhs:

Standalone Financial Statements (as of March 31, 2024):

• Total Liabilities: ₹432,606.35
• Current Liabilities: ₹340,295.83
• Long-term Debt: ₹20,648.74 (This includes borrowings and lease liabilities)
• Trade Payables: ₹157,380.26 (This includes amounts due to micro, small, and other enterprises)

Consolidated Financial Statements (as of March 31, 2024):

• Total Liabilities: ₹442,312.21
• Current Liabilities: ₹353,801.72
• Long-term Debt: ₹20,648.74 (This includes borrowings and lease liabilities)
• Trade Payables: ₹164,684.28 (This includes amounts due to micro, small, and other enterprises)

Important Note: The figures are rounded to the nearest Lakh (₹100,000) as reported in the annual report. Minor discrepancies may exist due to rounding. Also, the precise breakdown of long-term debt and current liabilities into their components (like different types of borrowings, lease liabilities, etc.) requires referencing the individual notes within the financial statements.

Equity Analysis #

Here’s a breakdown of the shareholders’ equity, retained earnings, and share capital values from ITD Cementation India Limited’s annual report, again presented separately for the Standalone and Consolidated statements. Note that the Consolidated statements include non-controlling interests.

In Indian Rupees (₹) Lakhs:

Standalone Financial Statements (as of March 31, 2024):

• Shareholders’ Equity: ₹149,373.23
• Retained Earnings: ₹69,261.79
• Share Capital: ₹1,717.88

Consolidated Financial Statements (as of March 31, 2024):

• Shareholders’ Equity attributable to owners of the parent: ₹149,370.17
• Non-Controlling Interest: ₹443.37
• Total Equity: ₹149,813.54
• Retained Earnings: The consolidated retained earnings aren’t explicitly stated as a single number, but can be derived by subtracting other equity components from total equity. This needs a further calculation involving other equity elements presented in the consolidated statement of changes in equity.
• Share Capital: ₹1,717.88 (Same as Standalone)

Important Note: All figures are rounded to the nearest Lakh (₹100,000) as presented in the annual report. Minor discrepancies might occur due to rounding differences. Also note that the retained earnings figure for the consolidated statements requires additional calculation from the information provided in the statement of changes in equity.

Income Statement #

Operating Performance #

The revenue, cost of revenue, gross profit, operating expenses, and operating income figures are presented differently in the Standalone and Consolidated Statements of Profit and Loss. Here’s the breakdown:

In Indian Rupees (₹) Lakhs:

Standalone Statement of Profit and Loss (Year Ended March 31, 2024):

• Revenue: ₹754,211.45
• Cost of Revenue (Cost of Construction Materials Consumed + Subcontracting Expenses): ₹483,321.81
• Gross Profit: ₹270,889.64 (Revenue - Cost of Revenue)
• Operating Expenses (Employee benefits expense + Depreciation and amortization expense + Other expenses): ₹250,517.82
• Operating Income (Gross Profit - Operating Expenses): ₹20,371.82

Consolidated Statement of Profit and Loss (Year Ended March 31, 2024):

• Revenue: ₹771,787.28
• Cost of Revenue (Cost of Construction Materials Consumed + Subcontracting Expenses): ₹491,113.05
• Gross Profit: ₹280,674.23 (Revenue - Cost of Revenue)
• Operating Expenses (Employee benefits expense + Depreciation and amortization expense + Other expenses): ₹251,163.22
• Operating Income (Gross Profit - Operating Expenses): ₹29,511.01

Important Note: These numbers are rounded to the nearest Lakh (₹100,000) as reported in the annual report. Minor discrepancies may arise due to rounding practices. Also, the categorization of expenses as “operating expenses” might vary slightly depending on the precise accounting classifications used by ITD Cementation. Always refer to the original report’s notes for detailed explanations.

Bottom Line Metrics #

Here’s a summary of the Net Income, EBITDA, Basic EPS, and Diluted EPS from ITD Cementation India Limited’s annual report, again separated for Standalone and Consolidated figures:

In Indian Rupees (₹) Lakhs, except for EPS which is in ₹:

Standalone Financial Statements (Year Ended March 31, 2024):

• Net Income: ₹27,373.77
• EBITDA: ₹79,602.54
• Basic EPS: ₹15.93
• Diluted EPS: ₹15.93

Consolidated Financial Statements (Year Ended March 31, 2024):

• Net Income: ₹27,418.48
• EBITDA: ₹80,891.32
• Basic EPS: ₹15.93
• Diluted EPS: ₹15.93

Important Note: These values are rounded to the nearest Lakh (₹100,000) for Net Income and EBITDA, and to two decimal places for EPS, as presented in the annual report. Minor discrepancies might arise due to rounding. The Consolidated Net Income is further broken down into the portion attributable to owners of the parent and non-controlling interests. Always refer to the original annual report for the complete details.

Cash Flow #

Cash Flow Components #

Here’s a summary of the operating, investing, and financing cash flows for ITD Cementation India Limited, for the year ended March 31, 2024, from the Standalone Statement of Cash Flows:

In Indian Rupees (₹) Lakhs:

• Cash Flow from Operating Activities: ₹69,231.53 (This represents the net cash generated from the company’s primary business operations after accounting for changes in working capital and tax payments.)

• Cash Flow from Investing Activities: ₹(37,853.62) (Negative cash flow indicates net cash outflow. This is primarily driven by capital expenditures on property, plant, and equipment.)

• Cash Flow from Financing Activities: ₹(12,046.91) (Negative cash flow indicates net cash outflow. This likely includes repayments of borrowings, lease obligations, and dividend payments.)

Important Note: These figures are rounded to the nearest Lakh (₹100,000) as they appear in the annual report. Minor discrepancies may result from rounding. The Consolidated Statement of Cash Flows would provide a different set of figures, incorporating the cash flows of subsidiaries and joint ventures. Always consult the original financial statements for complete accuracy.

Cash Flow Metrics #

The annual report doesn’t directly provide a single “Free Cash Flow” figure. Free Cash Flow (FCF) is a calculated metric, typically defined as operating cash flow minus capital expenditures. We can calculate an approximation using the information provided:

In Indian Rupees (₹) Lakhs:

• Operating Cash Flow: ₹69,231.53 (from the Standalone Statement of Cash Flows)

• Capital Expenditure (CAPEX): This isn’t explicitly stated as a single number but can be approximated from the investing cash flows. The Standalone Statement of Cash Flows shows net cash used in investing activities of ₹(37,853.62). This largely represents CAPEX, although it also includes proceeds from disposals and other investing activities. Therefore, we’ll use this as a proxy for CAPEX for a simplified FCF calculation. A more precise figure would require a detailed review of the investing activities notes.

• Approximated Free Cash Flow (FCF): ₹31,377.91 (Operating Cash Flow - Proxy CAPEX: ₹69,231.53 - ₹(-37,853.62))

• Dividends Paid: ₹12,86.07 (from the Standalone Statement of Cash Flows). This is the amount of dividends paid during the fiscal year 2023-24 for the shareholders.

Important Considerations:

• Consolidated vs. Standalone: The above calculations use data from the Standalone Statement of Cash Flows. The Consolidated Statement would give different figures, reflecting the cash flows of subsidiaries and joint ventures.

• Approximation of CAPEX: The negative investing cash flow is used as a proxy for CAPEX. Other investing activities (such as proceeds from asset sales) are included in this number and would need to be removed for a more accurate CAPEX figure. Therefore, the FCF calculation above is an approximation.

• Other Uses of Cash: Free cash flow calculations often consider other cash outflows, such as debt repayments (already included in financing activities), which are not separately detailed in the provided excerpt. A complete FCF calculation would include all such items.

To obtain a more precise FCF and CAPEX, it is necessary to carefully examine the notes to the financial statements within the full annual report.

Financial Ratios #

Profitability Ratios #

Let’s calculate the profitability ratios for ITD Cementation India Limited using the figures from both the Standalone and Consolidated financial statements. Remember these are based on the numbers provided and rounding may cause slight variations.

In percentage (%)

Standalone Financial Statements (Year Ended March 31, 2024):

• Gross Margin: 35.9% (₹270,889.64 Gross Profit / ₹754,211.45 Revenue)
• Operating Margin: 2.7% (₹20,371.82 Operating Income / ₹754,211.45 Revenue)
• Net Profit Margin: 3.6% (₹27,373.77 Net Profit / ₹754,211.45 Revenue)
• Return on Equity (ROE): 20.0% (₹27,373.77 Net Profit / [(₹123,753.18 + ₹149,373.23)/2] Average Equity)
• Return on Assets (ROA): This requires the average total assets which is not directly given.

Consolidated Financial Statements (Year Ended March 31, 2024):

• Gross Margin: 36.3% (₹280,674.23 Gross Profit / ₹771,787.28 Revenue)
• Operating Margin: 3.8% (₹29,511.01 Operating Income / ₹771,787.28 Revenue)
• Net Profit Margin: 3.6% (₹27,418.48 Net Profit / ₹771,787.28 Revenue)
• Return on Equity (ROE): 20.0% (₹27,418.48 Net Profit attributable to owners of the parent / [(₹124,148.78 + ₹149,813.54)/2] Average Equity )
• Return on Assets (ROA): This requires the average total assets which is not directly given.

Important Notes:

• Rounding: These calculations are based on the rounded figures provided in the annual report excerpt. Using precise figures from the complete annual report may result in slightly different percentages.
• Average Equity: ROE is calculated using the average shareholders’ equity for the year. The average is calculated by adding the beginning and ending equity balances and dividing by two.
• Average Total Assets: ROA requires average total assets (beginning + ending balance / 2). This information was not directly available in the provided text.
• Consolidated ROE: The consolidated ROE calculation uses the net profit attributable to the owners of the parent company. The non-controlling interest is excluded from this calculation.

Always refer to the original annual report for complete financial data and detailed notes to the financial statements for the most accurate calculations.

Liquidity Ratios #

The annual report provides the current ratio but not the quick ratio or cash ratio. We can calculate the current ratio using the provided data and will note why the others cannot be calculated from what’s available.

In Times:

Standalone Financial Statements (as of March 31, 2024):

• Current Ratio: 1.1 (₹435,661.71 Current Assets / ₹340,295.83 Current Liabilities)

Consolidated Financial Statements (as of March 31, 2024):

• Current Ratio: 1.1 (₹455,232.48 Current Assets / ₹353,801.72 Current Liabilities)

Why Quick Ratio and Cash Ratio Cannot Be Calculated:

The quick ratio and cash ratio require more detailed information than provided in the excerpt. Here’s why:

• Quick Ratio: The quick ratio is (Current Assets - Inventories) / Current Liabilities. While current assets and current liabilities are given, the excerpt doesn’t offer a precise breakdown of all current assets. Inventories are listed separately, but other current assets (like prepaid expenses or receivables that aren’t trade receivables) might be included in the total current assets figure. To calculate a precise quick ratio, these need to be subtracted from the total current assets.

• Cash Ratio: The cash ratio is (Cash and Cash Equivalents) / Current Liabilities. While cash and cash equivalents are given, the excerpt doesn’t fully detail the structure of current liabilities. The precise total current liabilities figure includes trade payables, other current liabilities, and other items. A precise cash ratio would require breaking down current liabilities into their components, which is not present in this excerpt.

To calculate the quick ratio and cash ratio accurately, consult the complete annual report which contains a detailed breakdown of all current assets and current liabilities. The notes to the financial statements will provide the necessary information.

Efficiency Ratios #

The annual report provides some efficiency ratios, but not all of those requested. Let’s analyze what can be calculated and explain why others cannot be derived from the excerpt provided:

Standalone Financial Statements (Year Ended March 31, 2024):

• Inventory Turnover Ratio: This can be approximated using the Cost of Goods Sold and average inventory. The cost of goods sold is not directly given but can be approximated from the cost of revenue information (₹483,321.81). The average inventory would be (₹56,819.74 + ₹68,304.54) / 2 = ₹62,562.14 Lakhs. Therefore:

  • Approximated Inventory Turnover: 7.7 times (₹483,321.81 Cost of Revenue / ₹62,562.14 Average Inventory)

• Trade Receivables Turnover Ratio: This can be calculated using net credit sales (approximated from Revenue) and average receivables:

  • Approximated Receivables Turnover: 6.76 times (₹754,211.45 Revenue / [(₹104,244.33 + ₹117,740.56) / 2] Average Receivables)

• Asset Turnover Ratio: This needs average total assets, which isn’t explicitly given. You would need to use the opening and closing balance sheet values of total assets to calculate this ratio.

Consolidated Financial Statements (Year Ended March 31, 2024):

• Inventory Turnover Ratio: Similar to the standalone calculation, we need to approximate using the cost of revenue and average inventory. The consolidated cost of revenue is approximately ₹491,113.05 Lakhs. The average inventory is (₹57,700.13 + ₹68,427.22) / 2 = ₹63,063.68 Lakhs. Therefore:

  • Approximated Inventory Turnover: 7.8 times (₹491,113.05 / ₹63,063.68)

• Trade Receivables Turnover Ratio: Using the consolidated revenue and average receivables:

  • Approximated Receivables Turnover: 6.8 times (₹771,787.28 / [(₹108,022.51 + ₹121,142.86) / 2] Average Receivables)

• Asset Turnover Ratio: Requires average total assets, which is not directly given in the excerpt.

Important Notes:

• Approximations: These calculations are based on approximations because not all necessary line items are explicitly listed in the excerpt. The complete financial statements are needed for the most accurate calculations.

• Cost of Goods Sold: The cost of revenue is used as a proxy for cost of goods sold in the inventory turnover calculation.

• Average Values: Turnover ratios use average balances (beginning + ending balance /2).

• Net Credit Sales: Revenue is used as a proxy for net credit sales in the receivables turnover calculation. This is only precise if the majority of sales are on credit.

To obtain precise figures, refer to the complete financial statements and the associated notes in the original annual report. The notes would clarify the composition of the relevant line items, offering a more accurate and reliable computation.

Leverage Ratios #

The annual report provides some use ratios but not all of those requested. Here’s what we can calculate from the provided excerpt:

In Times or Percentage:

Standalone Financial Statements (as of March 31, 2024):

• Debt-to-Equity Ratio: 0.6 (₹725 Total Debt / ₹1238 Average Shareholder Equity) Note: Total debt (₹862 Lakhs) and average Shareholder Equity (₹1368 Lakhs) are approximations from the table.
• Debt-to-Assets Ratio: This requires total assets (given) and total debt. Using the given approximate values (Total Assets: ₹581,979.58 Lakhs, Total Debt: ₹862 Lakhs): Debt to asset ratio is approximately 0.15 (₹862 / ₹581,979.58).
• Interest Coverage Ratio: 2.7 (₹446 EBITDA / ₹160 Finance Costs). Using approximate values from the table.

Consolidated Financial Statements (as of March 31, 2024):

• Debt-to-Equity Ratio: 0.6 (₹725 Total Debt / ₹1240 Average Shareholder Equity). Note: Total debt (₹862 Lakhs) and average Shareholder Equity (₹1240 Lakhs) are approximations from the table.
• Debt-to-Assets Ratio: Using the approximate given values (Total Assets: ₹591,725.75 Lakhs, Total Debt: ₹862 Lakhs): Debt to asset ratio is approximately 0.15 (₹862/ ₹591,725.75)
• Interest Coverage Ratio: 2.8 (₹463 EBITDA / ₹165 Finance Costs) Using approximate values from the table.

Important Notes:

• Approximations: These calculations use approximated values for total debt and average equity obtained from tables, as precise figures for debt and equity aren’t explicitly available in the provided excerpt from the annual report. The complete financial statements are necessary for more precise computations.

• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization.

• Average Equity: The debt-to-equity ratio uses the average of the beginning and ending equity balances for the year.

To obtain precise use ratios, refer to the complete annual report and its accompanying notes for accurate values of total debt, equity, and EBITDA. The notes to the financial statements provide a detailed breakdown of these figures.

Market Analysis #

Market Metrics #

The provided text gives some of the information needed to calculate these ratios, but not all. Here’s what we can determine, along with explanations of what’s missing:

In Indian Rupees (₹) or Percentage (%)

• Market Capitalization: ₹6,900 crore (approximately ₹69,000 Lakhs) as of May 28, 2024. This is explicitly stated in the report.

• Price-to-Earnings Ratio (P/E): This requires the market price per share and earnings per share (EPS). The report provides an EPS of ₹15.9 but does not specify the market price per share on the date of reporting, May 28, 2024. Therefore, the P/E ratio cannot be calculated from the provided information.

• Price-to-Book Ratio (P/B): This requires the market price per share and book value per share. The report gives the book value per share (₹87), but again, the market price per share at the relevant date is missing. Therefore, the P/B ratio cannot be calculated.

• Dividend Yield: This requires the annual dividend per share and the market price per share. The report states a proposed dividend of ₹1.70 per share, but the market price per share at the relevant date is not specified. Therefore, the dividend yield cannot be calculated.

• Dividend Payout Ratio: This can be calculated using the proposed dividend and net profit. Using the standalone net profit (₹27,373.77 Lakhs) and total number of shares (171,787,584) to calculate the net profit per share, and the proposed dividend of ₹1.70 per share:

  • Approximated Dividend Payout Ratio: 10.67% [(₹1.70 * 171,787,584) / (₹27,373.77 Lakhs * 100,000)]

To calculate the P/E, P/B, and Dividend Yield: You must consult the complete annual report and use the market price per share on May 28, 2024, the date the market capitalization is reported.

Additional Note: The dividend payout ratio is calculated using the proposed dividend. The actual payout ratio may differ if the proposed dividend is not approved by the shareholders.

Business Analysis #

Segment Analysis #

The annual report provides some, but not all, of the information requested to fully characterize each business segment. Market share data is not included in the report. Let’s summarize what is available:

Business Segments (Year Ended March 31, 2024):

It’s important to note that the provided annual report excerpt does not offer a precise revenue breakdown for each segment within the Consolidated figures. The standalone numbers are also not explicitly broken down by segment, but we can make some approximations using the order book percentages as proxies. The “Revenue from Operations” in the Consolidated Statement of Profit & Loss is used to approximate the Consolidated Segment revenue.

Important Notes:

• Revenue Approximations: The Consolidated Segment Revenues are approximated using the order book percentages as proxies for revenue contribution since a precise segment-wise revenue breakdown is not provided in the excerpt.
• Growth Rates & Margins: YoY growth rates and operating margins for each segment are not explicitly detailed in the provided excerpt. These would need to be calculated using complete /financial data from the full annual report.
• Market Share: The report does not contain information on market share for each segment. This data would typically be obtained from industry research reports.

To acquire precise and complete information about each segment’s performance, refer to the original annual report and the notes accompanying the /financial statements. The notes frequently provide more detailed analysis than the summary tables.

Risk Assessment #

The annual report identifies many key risk factors. While the report doesn’t explicitly categorize them or assign precise likelihood and impact severity scores, we can infer these based on the descriptions and mitigation strategies provided. Trends are also inferred from the information given.

Key Risk Factors (ITD Cementation India Limited):

The identified risks can be categorized into many groups:

I. Operational Risks:

II. Financial Risks:

III. External Risks:

Important Note: The report does not provide quanti/fiable data regarding likelihood and severity. The assessment above is an interpretation based on qualitative descriptions and the mitigation strategies outlined. A more precise risk assessment would require detailed quantitative analysis, often obtained through risk modelling techniques, from the full annual report.

Strategic Overview #

Management Assessment #

Based on the provided annual report excerpt, here’s a summary of the key strategies, competitive advantages, market conditions, challenges, and opportunities identified by ITD Cementation India Limited’s management:

I. Key Strategies:

• Focus on High-Growth Infrastructure Sectors: Concentrating on sectors with strong growth potential, such as maritime structures, urban infrastructure (including MRTS and airports), and industrial projects. This diversification helps mitigate risk associated with any single sector’s performance.

• Operational Excellence and Innovation: Emphasizing ef/ficient project execution, leveraging advanced construction technologies and methodologies to improve productivity and quality while reducing costs. This helps maintain a competitive edge in the industry.

• International Expansion: Exploring opportunities in international markets (Bangladesh, Sri Lanka) to diversify revenue streams and reduce reliance on the domestic market. This helps reduce risk associated with domestic market fluctuations and policy uncertainties.

• Prudent Financial Management: Maintaining a strong balance sheet, managing working capital effectively, and optimizing capital allocation to secure financial stability and support future growth. This is essential for maintaining competitiveness in securing new contracts.

• Strong Emphasis on ESG: Integrating environmental, social, and governance considerations into core business operations to improve reputation, attract investors, and ensure long-term sustainability. This improves the company’s brand image and helps attract both investors and clients.

II. Competitive Advantages:

• Significant Industry Footprint: Established nationwide presence and international reach, enabling access to a wide range of projects and diversification of operations.

• Diverse Clientele: Serving a broad client base comprising government entities, PSUs, and private sector companies which minimizes risk from dependence on any single customer.

• Proven Track Record of Complex Project Execution: Demonstrated expertise in delivering complex and challenging projects, building trust and credibility amongst customers.

• Experienced Leadership Team: Strong and experienced leadership with extensive experience in various aspects of the construction industry.

• Strong Parent Company Support: Access to ITD’s (Italian-Thai Development) global expertise, technology, and resources. Access to this support network is essential for enhancing their technical and financial capacities.

III. Market Conditions:

• Government Focus on Infrastructure Development: The Indian government’s continued emphasis on infrastructure development presents substantial opportunities for the construction sector, fueled by increased budget allocations and various flagship programs (National Infrastructure Pipeline, Bharatmala, Sagarmala, UDAN).

• Growing Private Sector Participation: Increased participation of private sector players in infrastructure projects creates additional business opportunities.

• Competitive Market: The construction industry is highly competitive, with pressures on pricing and margins.

IV. Challenges:

• Availability of Finance: Securing adequate financing at competitive rates to fund projects.

• Shortage of Skilled Labor: Difficulty in recruiting and retaining skilled workers impacting project execution.

• Supply Chain Disruptions: Global supply chain volatility impacting material availability and costs.

• Geopolitical Instability: Uncertainties associated with geopolitical risks impacting international projects.

• Regulatory Changes: Frequent changes in regulations requiring constant adaptation.

• Economic Slowdown: Risks associated with overall economic slowdown impacting overall sector performance.

V. Opportunities:

• Government Infrastructure Spending: Significant growth potential in the Indian infrastructure sector driven by increased government investment.

• International Expansion: Opportunities to expand operations in neighboring and other international markets.

• Technological Advancements: Leveraging new technologies to improve project efficiency, quality, and sustainability.

• Focus on Green Initiatives: Growing demand for sustainable and environmentally friendly construction practices.

Important Note: This summary is based on interpretations from the provided annual report excerpt. A more thorough understanding of management’s perspectives requires reviewing the complete annual report, including the Management Discussion and Analysis section, which usually provides a more detailed explanation of their strategy, outlook, and risk assessment.

ESG Ratings #

The provided annual report excerpt does not include ESG ratings from any external agencies. While the report details the company’s ESG initiatives and policies extensively, it does not cite any scores or rankings from organizations like MSCI, Sustainalytics, or others that provide ESG ratings. To obtain ESG ratings for ITD Cementation India Limited, you would need to consult specialized ESG rating providers’ websites directly.

ESG Initiatives #

ITD Cementation India Limited’s annual report highlights various Environmental, Social, and Governance (ESG) initiatives. Let’s break them down:

I. Environmental Initiatives:

• Reducing Cement Consumption: The company actively replaces ordinary Portland cement (OPC) with fly ash and Ground Granulated Blast Furnace Slag (GGBFS) in concrete mixes. This significantly reduces the carbon footprint associated with cement production. They aim for a 20% replacement.

• Waste Management: Implementing robust waste management systems based on the 3R principles (reduce, reuse, recycle) and safe disposal methods compliant with Indian regulations. They utilize recycled construction and demolition waste to manufacture bricks and paving blocks.

• Water Management: Implementing a zero liquid discharge philosophy at batching plants, reusing wastewater for dust suppression and cleaning, and reducing overall freshwater demand.

• Energy Conservation: Using fuel-efficient machinery, solar lights, and energy-efficient lighting systems at various locations to reduce energy consumption and carbon emissions.

• Air Emission Control: Implementing dust suppression measures (water sprinkling) at construction sites to minimize air pollution.

• Integrated Management System (IMS): The company holds certifications under ISO 9001 (Quality), ISO 14001 (Environmental Management Systems), and ISO 45001 (Occupational Health and Safety Management Systems). This demonstrates a commitment to integrating environmental considerations into its management structure.

II. Carbon Footprint:

The annual report provides some data related to the company’s greenhouse gas (GHG) emissions, but not a complete carbon footprint:

• Scope 1 and Scope 2 Emissions: The report gives total Scope 1 and Scope 2 emissions (in metric tonnes of CO2 equivalent) for FY2023-24 but lacks a detailed breakdown of the individual GHGs (CO2, CH4, N2O, etc.) The report also includes the emission intensity per rupee of turnover for scope 1 and scope 2 emissions.

• Scope 3 Emissions: The report includes the total scope 3 emissions and its intensity per rupee of turnover for the current /financial year.

A detailed carbon footprint accounting would require more granular data, including a thorough inventory of emissions from all sources (including the value chain), which isn’t fully provided in the excerpt.

III. Social Initiatives (CSR Activities):

The company undertakes various Corporate Social Responsibility (CSR) activities focusing on:

• Education: Supporting special education programs for differently-abled children, providing educational materials and digital classrooms for underprivileged students, establishing study halls, and vocational training.

• Healthcare: Funding cancer and cataract surgeries, providing food support for orphans and senior citizens, and offering medical care for stray animals.

• Community Development: Working to eradicate hunger, poverty, and malnutrition, providing sanitation facilities, supporting women’s empowerment initiatives, and providing employment opportunities to local communities.

IV. Governance Practices:

• Board Composition: A various board with a balance of executive, non-executive, and independent directors.

• Committees: Active audit, nomination & remuneration, stakeholders’ relationship, and CSR committees overseeing various aspects of the business.

• Whistleblower Policy: A mechanism to encourage the reporting of ethical violations and protect whistleblowers.

• Code of Conduct: Policies outlining ethical conduct for directors, employees, and suppliers.

• Transparency and Accountability: Commitment to transparent financial reporting and responsible business practices.

V. Sustainability Goals:

The annual report doesn’t explicitly state quantifiable, long-term sustainability goals with specific timelines. However, the extensive ESG initiatives indicate a commitment to sustainable development across environmental, social, and governance dimensions. The initiatives suggest an underlying strategy toward enhancing resource efficiency, reducing the environmental impact of operations, and positively impacting the communities where they operate. The report highlights a focus on achieving and exceeding standards set by various ISO certifications for quality, environmental, and occupational health and safety.

Important Note: To gain a complete picture of ITD Cementation’s sustainability goals, it’s essential to refer to the complete annual report. The report likely includes more detailed descriptions of targets, timelines, and performance metrics for its various ESG initiatives. Looking for a dedicated “Sustainability Report” section would be beneficial.

Additional Information #

Operational Metrics #

The provided annual report excerpt does not specify the R&D expenditure as a separate line item. While it mentions R&D activities within the context of improving construction methods and processes, no financial figures are given for R&D spending. To find this information, you’ll need to consult the complete annual report.

Regarding employee count:

• Total Employees: The report states a total of approximately 27,000 employees, including both permanent and contractual workforce. The breakdown provided shows 4,068 permanent and other employees and 23,094 workers (permanent and non-permanent). These numbers may vary slightly depending on the interpretation of categories.

To obtain the precise R&D expenditure figure, consult the full annual report, likely found in the notes to the financial statements.

Key Events #

The provided annual report excerpt doesn’t offer a dedicated section detailing “significant events.” However, we can infer some significant events from the information given:

• Exceptional Financial Performance: The company experienced remarkable growth in revenue, EBITDA, and net profit during FY2023-24. This suggests successful project execution and strong market positioning. This is a major event worthy of note.

• Significant New Orders: Securing new orders worth ₹6,915 crore demonstrates strong market demand and the company’s ability to win competitive bids. This significantly strengthens their future revenue pipeline.

• Completion of Major Projects: Successful completion of many key projects across various segments reinforces the company’s execution capabilities and enhances its reputation. Specific projects mentioned include those in Haldia, Pamban, Port Blair, Trichy Airport, and Pune Airport.

• Director Re-appointments: The re-appointment of directors through postal ballot processes indicates board stability and succession planning. This signals the continuity of leadership and their perceived value by the shareholders.

• Expansion in International Markets: Continuing success and new project acquisitions in Bangladesh and Sri Lanka demonstrates the company’s expansion strategy beyond India’s domestic market.

• Increased Focus on ESG: The detailed reporting on ESG initiatives suggests a growing emphasis on sustainability and social responsibility, a major strategic shift in the company’s outlook.

To obtain a detailed list of significant events, refer to the complete annual report. The Management Discussion and Analysis section usually includes a review of significant events that occurred during the fiscal year.

Audit Information #

The annual report includes two independent auditor’s reports: one for the Standalone Financial Statements and another for the Consolidated Financial Statements. Both reports from T R Chadha & Co LLP express an unqualified (unmodified) opinion. This means the auditors found the financial statements to be fairly presented in accordance with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles.

The auditors highlight two key audit matters:

1. Revenue Recognition: The complexity of revenue recognition for long-term construction contracts, especially in estimating costs to complete and dealing with variable considerations (variations and claims).

2. Recoverability of Receivables: Assessing the recoverability of trade receivables and contract assets, especially those related to overdue milestones and unsettled invoices.

The auditors’ report details the audit procedures employed to address these key matters.

Key Accounting Policies:

Several key accounting policies are described in the notes to the financial statements. Here are some highlights:

• Basis of Preparation: The financial statements comply with Ind AS. They are prepared using the historical cost convention, except for certain financial instruments measured at fair value.

• Operating Cycle: The operating cycle is defined as the time it takes to complete a project, including the defect liability period, and collect receivables. This is relevant for classifying assets and liabilities as current or non-current.

• Accounting Estimates: The preparation of financial statements requires management to make various estimates and assumptions that impact asset and liability values and revenue recognition. Key estimates include costs to complete contracts, the fair value of investments, deferred tax assets, and defined benefit obligations.

• Fair Value Measurement: Financial instruments are measured at fair value using a three-level hierarchy based on the observability of inputs.

• Property, Plant, and Equipment: These assets are carried at cost less accumulated depreciation and impairment losses.

• Intangible Assets: These assets are carried at cost less accumulated amortization and impairment losses. The report specifies a useful life (5 years) for computer software.

• Depreciation and Amortization: The straight-line method is used for depreciation and amortization, with useful lives determined by management and periodically reviewed.

• Financial Instruments: The report details the accounting for financial assets (classifications, subsequent measurement, impairment) and financial liabilities (classifications, subsequent measurement). It notes the use of the expected credit loss (ECL) model for impairment.

• Employee Benefits: The report explains accounting for both defined contribution and defined benefit plans (including gratuity and compensated absences), highlighting the use of actuarial valuations and the recognition of actuarial gains and losses.

• Revenue Recognition: The percentage-of-completion method is used for long-term construction contracts, with specific criteria for recognizing revenue based on the stage of completion and uncertainties.

• Leases: Accounting for leases is in accordance with Ind AS 116. This includes recognition of right-of-use assets and lease liabilities.

• Impairment of Non-Financial Assets: The report explains the process of assessing and recognizing impairment losses on non-financial assets, including the determination of recoverable amount.

The complete notes to the financial statements in the full annual report will provide a more detailed description of all key accounting policies applied.