Page 64 - Kolte Patil AR 2019-20
P. 64

Risk management

             Economy risk             The Company’s           Mitigation              India’s economy slowed
                                      performance could be                            down to 4.2% in FY20, yet
                                      adversely affected in                           the Company reported an
                                      the event of economic                           increase in Revenue, PAT
                                      slowdown.                                       and collections.

             Labour risk              Any decline in the      Mitigation              Over the years, the
                                      availability or shortage                        Company has promised
                                      of construction labourers                       career growth, attractive
                                      could affect project progress                   remuneration and a healthy
                                      and cash flows.                                 work environment..
             Geographic risk          Concentration in a few   Mitigation             The Company selected to
                                      regions could impact the                        focus on the development
                                      Company’s growth.                               of residential real estate
                                                                                      properties in Pune, Mumbai
                                                                                      and Bengaluru. In Pune,
                                                                                      the Company enjoyed
                                                                                      a dominant position; in
                                                                                      Mumbai, the Company
                                                                                      reported the fastest
                                                                                      growth in the society
                                                                                      redevelopment niche.
             Raw material risk        Raw materials such as   Mitigation              The Company has agreed
                                      cement, bricks, sand,                           upon a standard price with
                                      among others, constitutes                       its vendors for all major
                                      a major chunk of the cost in                    materials. The Company’s
                                      the construction industry                       contracts are non-
                                      and fluctuations in prices                      speculative in terms of raw
                                      of these may lead to                            material.
                                      substantial losses, which
                                      in turn may impact the
             Funding risk             The Company may not     Mitigation              The Company optimised
                                      be able to fund its capex                       its debt-equity ratio to
                                      requirements in a cost-                         0.35 during FY20 from 0.47
                                      effective manner.                               during FY19. The Company
                                                                                      was accredited with A+/
                                                                                      Stable rating by CRISIL, one
                                                                                      of the highest among Indian
                                                                                      residential real estate
             Competition risk         Intense competition from   Mitigation           The Company’s core
                                      peers could affect the                          strength lies in robust
                                      Company’s market share.                         project planning and
                                                                                      execution, enhanced by
                                                                                      strong procurement and
                                                                                      people management,
                                                                                      making it a preferred choice
                                                                                      of every customer.

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