Page 64 - Kolte Patil AR 2019-20

Risk management
Economy risk
The Company’s performance could be adversely affected in the event of economic slowdown.
Mitigation
India’s economy slowed down to 4.2% in FY20, yet the Company reported an increase in Revenue, PAT and collections.
Labour risk
Any decline in the availability or shortage
of construction labourers could affect project progress and cash flows.
Mitigation
Over the years, the Company has promised career growth, attractive remuneration and a healthy work environment..
Geographic risk
Concentration in a few regions could impact the Company’s growth.
Mitigation
The Company selected to focus on the development 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 cement, bricks, sand, among others, constitutes a major chunk of the cost in the construction industry and fluctuations in prices of these may lead to substantial losses, which
in turn may impact the topline.
Mitigation
The Company has agreed upon a standard price with its vendors for all major materials. The Company’s contracts are non- speculative in terms of raw material.
Funding risk
The Company may not be able to fund its capex requirements in a cost- effective manner.
Mitigation
The Company optimised
its debt-equity ratio to
0.35 during FY20 from 0.47 during FY19. The Company was accredited with A+/ Stable rating by CRISIL, one of the highest among Indian residential real estate players.
Competition risk
Intense competition from peers could affect the Company’s market share.
Mitigation
The Company’s core strength lies in robust project planning and execution, enhanced by strong procurement and people management, making it a preferred choice of every customer.
62 | Kolte-Patil Developers Limited