Simplex Infrastructures

B.D. Mundhra
 Chairman and Managing Director
 
 Rising to the Challenge
 
 The financial year 2008-09 will be remembered as the year in which the
 world faced its gravest economic challenge since the Great Depression
 of 1930 over 75 years ago. What began as a sub-prime crisis in 2008,
 snowballed into a major financial paralysis leading to the collapse of
 several famous institutions in USA and other developed countries.
 Trillions of dollars simply vanished from the system leading to a
 squeeze on credit, loss of jobs, closure of businesses and desperate
 government bailouts across the world.
 
 As India cannot remain isolated with the conditions of global
 economics, almost all sections of Indian industry were adversely
 affected by the 2008-09 recession and the construction and real estate
 sector was no exception. Projects were postponed or slowed. As compared
 to 2006 and 2007 when the sector grew by 20% and 14% respectively,
 growth in 2008- 09 fell to single digits, plummeting to 4.2% in the
 third quarter.
 
 Fortunately, at Simplex we have been largely immune to the upheaval. As
 this Annual Report demonstrates, both topline and bottomline grew
 satisfactorily, with turnover rising phenomenally by 65.72% from Rs.
 
 28081.20 mn to Rs. 46536.88 mn. Profit before tax increased by 32.65%
 from Rs.  1270.50 mn to Rs. 1685.35 mn. Profit after tax increased by
 34.11% to Rs. 1208.03 mn compared to Rs. 900.79 mn in 2007-2008.  The
 Consolidated Turnover stood at Rs.  46960.66 mn. The Consolidated
 Profit befor Tax was Rs. 1731.82 mn and Consolidated Profit after Tax
 and minority interest was Rs.  1234.24 mn. This can be ascribed to many
 factors including the companys enviable reputation in infrastructure
 engineering, its diversity and the nature of our projects and client
 mix, the ability to manage the environment and fiscal prudence. As a
 recognition for achievements in quality and excellence representing
 success for India in the business world we have recently received the
 prestigious International Quality Summit Award, New York 2009,
 organised by Business Initiative Directions (BID) at New York in Gold
 category. The Award is given to Companies in recognition of Commitment
 to Quality, Leadership, Technology and Innovation. During the year
 under review, your Company has also received a prestigious award from
 Construction Industry Development Council (CIDC).
 
 The current economic scenario coupled with sustained government
 initiatives in the infrastructure sector such as the proposed public
 private partnerships augur well for future growth of the construction
 business.
 
 The execution and order book values both showed a healthy growth. We
 have reason to believe that this growth can be sustained in the future.
 
 Several factors contribute to this belief.  Investment in
 infrastructure is considered the surest way of countering economic
 recession which the world is well aware. It is heartening to note that
 both global and Indian governments have made large commitments to
 stimulate the economy. For example, India was recently granted a new
 US$ 3 bn loan from the World Bank for infrastructure spending. The
 policy support protects our industry from the worst downside risks even
 in a global recession.
 
 It is also worth mentioning that the Indian economy continues to enjoy
 vigorous internal fundamentals that can insulate it at least partially
 from a long term recessionary global economy. A youthful billion plus
 population, political stability, tested financial systems, solid
 production and consumption base and low cost talent all contribute to
 make it the cynosure of the world. The financial system in India has so
 far faced the challenges of recession without any major damage to the
 economic condition of the country.
 
 A stable political establishment with progressive economic views is
 another cause for optimism.
 
 Looking forward, one can say with some confidence that for the economy
 and industry, the outlook today is far more positive than it was a few
 months ago. The consensus today is that in 2009 - 10 India will achieve
 6.5-7% growth, which remains healthy by any standards although the
 target of the Central Government is even higher. The economy may have
 slowed in its headlong rush but it remains very much on track. For
 Simplex, this growth will be supplemented by growth in the Middle East
 markets - where we are still a small player in a region with huge
 infrastructure plans. The current upward trend in oil prices bodes well
 for the region.
 
 With the demand drivers coming back in place, we at Simplex are
 focusing on continuous improvements of our technical skills and
 management efficiency to take advantage of Indias long term growth
 story as well as to expand as a global player. An integrated
 construction project management software, EConstruct, was made ‘live
 during the last year. Several business intelligence systems have also
 been developed during the year to help our management in taking the
 right decision at the right time.
 
 Another contributor to our confidence is the strength of human
 resources at our command. With over 7000 employees, nearly 80% of whom
 are technical, we command an enviable array of skills to meet any
 challenge.  Regular training and motivation programmes, backed by a
 conducive work atmosphere, add a cutting edge to the skills. The people
 strength and the skill sets they possess is the bedrock on which we
 stand.
 
 I wish to place on record my appreciation for the outstanding
 commitment and hard work of all our employees, whose constant value
 creation endeavours have yielded excellent results. I am also grateful
 for the continuing support of my colleagues, our customers, business
 associates, shareholders and members of the Board. It is my belief that
 the faith and trust reposed in us would power and propel all future
 initiatives of Team Simplex.
 
                                                    B. D. Mundhra
                                    Chairman and Managing Director