It is my privilege to share this message as KEI celebrates five decades of a powerful journey. Over these past 50 years, your Company has invested in the right capabilities at the right time and at scale, comprehensively expanded its offerings through innovations on a continuous basis, and reached out to new geographies while continually strengthening its presence in India. We have responded to the promise of new technologies, emerging opportunities and intense competitive pressures. It is a matter of immense pride that today KEI is counted among India’s top three wires and cables manufacturers, a trusted EPC partner for nation building and has an impressive global footprint. The credit for our eventful journey belongs to all our stakeholders - thank you for your support on this journey.
During FY 2017-18, the Indian economy was characterized by resilience with several transformative policy changes seeing the light of day. Most important among them was the implementation of the Goods and Services Tax, bringing 29 states under one tax regime. While the country saw short-term pains due to the disruptive nature of the tax, with Gross Domestic Product (GDP) growth remaining subdued at 6.6% as compared to 7.1% clocked in FY 2016-17, the long-term gains, I believe, will outweigh temporary shortfall. India continues to be a strong, stable economy, with several international institutions maintaining a positive growth outlook taking into consideration the Government’s reformatory agenda. Infrastructure continues to be amongst the top priority for the Government, and this should have a cascading effect on other sectors of the economy.
Financial and Operational Performance
I am extremely delighted to report another year of stellar performance by your Company. We reported 29% overall growth in turnover, with Net Sales increasing from Rs.2,666 Crores in FY 2016-17 to Rs.3,446 Crores in FY 2017-18. What makes our performance even more compelling is the fact that we have been able to achieve strong growth in each of our business verticals: Retail, Institutional and Exports. Our business is now well-diversified by products, segments and markets, underscoring the success of our strategy in capturing growth opportunities across verticals and building a stronger, de-risked entity. Further, robust growth in every vertical has enabled better utilization of our capacities, leading to better margins.
PAT for the full year grew by 54% on an annual basis, while EBITDA stood at Rs.348 Crores as against Rs.279 Crores in the previous year.
Our world-class infrastructure has been pivotal to our dynamic growth. Further building on our manufacturing strengths, we have completed the first phase of expansion of our new facility for LT cables at Pathredi, Rajasthan. The second phase of expansion of the facility is in progress. After the completion of the second phase of expansion of our facility, your Company will be able to drive output amounting to Rs.500-550 Crores annually. We have also commenced expansion of our HT capacities at the same unit, expected to be commissioned by early next year. Our intense focus on augmenting scale, we are confident, will enable us to generate significant value from the market.
Strengthening Retail Growth
The adoption of impact branding measures, such as television and digital media advertisements and third successive year of sponsorship of the Indian Premier League (IPL) Cricket tournament, have enabled us to drive strong brand visibility.
In equal measure, we continued the thrust on strengthening our distribution network. We are doing this through a twopronged approach: addition of new channel partners and expansion of business from existing partners through several schemes. Our focused efforts have rewarded us well. Today, Retail is an important contributor to our overall sales. An added advantage with this vertical is that it ensures positive cash flows in the organization.
The Retail segment offers significant prospects propelled by increasing urbanization and a growing economy. We will continue aggressively with our branding and marketing strategy to capture a greater share of the market. Also, GST has narrowed the price differential between the organized and unorganized segment and also enabled us to reduce transit time and logistic costs for goods delivery. This should enable us to enhance our retail penetration.
We are pleased to share that as part of our 50-year celebrations, several programs were held during the year, which helped deepen connect and relationship with our channel partners. It is also an opportune time to acknowledge the contributions of our channel partners towards helping KEI emerge as a market leader. We see great future for this collaborative partnership. Going forward, we will continue to demonstrate the same level of commitment and transparency to ensure our mutual success.
Continued Institutional Success
Our ability to provide customized power cable solutions has enabled us to win contracts and respect from leading institutional customers across sectors. Additionally, forward integration of our cable business has led us to offer EPC services in the field of power transmission and distribution.
We have recently commissioned our production line for 400 kV EHV cables - a manufacturing capability powered by only select Indian companies. During the year, leveraging these competitive differentiators, we continued to build on our institutional performance, with both EPC segment and EHV sales recording robust growth.
Going forward, our focus is to maximize the opportunities given the Government’s intense focus on infrastructure development. Power, railways, roads and petrochemicals sectors in particular offer considerable opportunities. The Government is encouraging investments at the transmission and distribution level to boost access to reliable and continuous power supply through schemes such as Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS). Additionally, in line with the Supreme Court directive to reduce emissions as per BS-VI norms, petrochemical companies are going for plant modernization, along with plant expansion, increasing the demand for cables. The real estate sector is also beginning to show green shoots of revival. With our proven capabilities in executing large and complex turnkey projects, all the above sectors offer attractive opportunities to boost our EHV Cable and EPC business.
KEI’s strong growth in the global arena over the last five decades in a dynamic industry is indeed a worthy achievement. What has helped us to sustain our performance is our ability to meet stringent pre-qualification parameters and key approvals from major testing houses based abroad. Careful selection of geographies and projects has enabled us to replicate our success on scale. Along with this, we have always kept our customers at the centre of our product development strategy. Product customization has enabled us to meet niche demands of clientele across industries. During the year, exports maintained its positive growth momentum, exemplifying the global acceptance for our products. In the current year, we will continue to fortify customer relationships and enhance export revenues through setting of new offices and product innovation.
We have followed our vision and built on our strengths at each step of our journey. Our industry-leading capabilities have enabled us to respond effectively to the demands of customers across industries. We have scaled global growth and brought in greater recognition for Indian products and manufacturing long before ‘Make in India’ was made a national goal. Our business is now well-diversified and de-risked, thus reinforcing our abilities towards achieving new milestones.
Along with technical competence, financial stability has always remained our topmost priority. We have ensured that our growth does not come at the cost of stretching our debts.
Also, we have always believed that longevity is a function of our determination to be a respected corporate and do what is right. Being a professionally-run Company that maintains a personal connect with its customers through its offerings as well as principles has always been important to us. We will continue to grow while ensuring that transparency and ethics remain engrained in our value system, and our approach goes beyond compliance.
Powered by Our People
Celebrating 50 years, it is befitting that we appreciate the efforts of our employees and colleagues over the years for helping build KEI into what it is today. Our people have been the true engines of our growth and we intend to build on this strength further. We will continue to empower our people through training across various disciplines to ensure that we have the pipeline of talent and leadership for driving tomorrow’s success.
Through our five-decades journey, we have had the privilege of growing along with our nation India. Today, as India moves resolutely ahead to script the most powerful growth globally, we remain steadfast to participate in full measure towards the national agenda of infrastructure development. We remain committed to drive increased sales and profitability through extending the reach of our offerings. All our verticals offer exciting growth opportunities and we are well-positioned to capitalize on them. Our financial health is sound, providing us ample scope to expand our capacities, as and when required, through internally generated funds.
I want to thank all the people that help to make KEI successful, from our Board of Directors and investors, to our customers, bankers, financial institutions, Central and State government bodies, channel partners, business associates, suppliers and employees, and last but not the least, our community. KEI could not have evolved and grown into the Company it is today without your confidence and support. As we embark on the next era of our journey, with your continued trust, we will take your Company to new heights.