Dear distinguished shareholders,
''The comeback is always stronger than the setback''
Greetings to all the shareholders while presenting the Annual Report at the 19th Annual General Meeting for the Financial Year 2017-18. As you are aware, the investment profile has undergone drastic change particularly in the coal-based power plants, and this has stunted the growth for past three years. However, your Company has strived to maintain the profitability and margins against the adverse conditions, and with renewed efforts, the Company is again on a growth path in exploiting the new investments coming up in multiple sectors in related field. The momentum of recent order booking has shown a very positive trend.
The three years period of flat growth was well utilized for making new strategy, consolidating our energy & resources, venturing into new areas for diversification, structural reorganization, letting in new talents, pruning the human resources, testing fresh waters in overseas projects etc., to name a few.
Therefore I have reason to believe that your Company is undergoing a process of reformation and innovation! We are poised to deliver a bright future, given the fact that we have a strong base and glorious past. Our efforts have started yielding results as we have taken some potentially rewarding steps in strengthening O&M and International Operation It has largely helped in complimenting to the growth by over 15.5% of our Annual Turnover of Rs 15546 Mn for the FY 2017-18 against Rs 13459 Mn for the FY 2016-17. The profit margin (EBITDA) has also gone up significantly by 20.4%, and the PAT has gone up by 22.1%.
In a nutshell, I can describe our efforts for the past three years as we have become ''War-ready''. We have made restructuring the top management and created Strategic Business Units (SBU), each headed by a highly competent, experienced and professional. Each SBU is more independently being led with a commitment for delivery. This has given me much-needed space and offloads my circumferential responsibilities so that I am able to focus on the core issue of future strategic business development and strengthening the synergy.
Our professional and engineering experience in construction and O&M for the past two decades has helped handy in undertaking projects in diversified fields in related sectors and executing on a highly successful note. In the case of railway projects, we have completed over 54% of the contractual volume much ahead of schedule. In International Operations we have met the demanding requirements of our overseas clients keeping standards of quality, safety and timeline. It has been widely appreciated and recognized through multiple projects being offered to us for execution in succession. This experience lays the foundation for expanding the business and profile in the fast-growing railways where the government is planning huge investment.
All our efforts have started showing results, and it is likely to get demonstrated in terms of many projects, growth, turnover etc., and the visibility for revenue for the next three years strong enough. Presently we are occupying significant space in half a dozen fields including Power, Railways, Cross Country Piping, Petro-chemicals & Refineries, Electricals, Civil, O&M, International Operation, Hydro Power and Manufacturing. The order book as on date stands at Rs 42,677 Mn, and we are working on achieving a strong order book target for the FY 2018-19. We are marching towards increasing the current profit margin with a mix of different business portfolios, making the balance sheet lighter, up-warding the ROE and bringing down the Debt level as much as possible.
We are all aware that many investments are happening in Railways (both in track and OHE), Infrastructure development, Petrochemicals, and Electricals. Our operation is expected to help increasing the volume of these portfolios where the turnover is high with better margins and working capital management. There is growing opportunity for mechanical project works in sectors other than power including steel, cement, process industries, petrochemicals etc. The cross-country pipeline work is yet another area where the turnover is fast and with a good margin. The Company is planning to exploit in these segments.
O&M consolidation and further growth is possible in no npower, international operations and captive power base which is not yet penetrated.
Opportunities for Civil projects are available in the market in abundance. However, the Company desires to be selective depending on a better scope for profit, workability, timeline, location, payment terms etc. This principle applies to all other businesses because our focus hereafter will be on turnover, margins and cash flow.
Increasing the turnover in O&M segment by 20% year on year and drawing support from the manufacturing unit, Noida for backward integration. Stabilizing our presence in the international market and expanding to occupy greater space in Gulf, Asian and African regions. Exploring avenues for O&M in sectors other than power like petrochemicals, fertilizers, steel, cement, process industry by improving system and procedures. The experience gained in power sector comes handy in our exploration. Even though we are entering multiple fields, our modus operandi shall remain the same. Your Company should be successful and recognized as a truly comprehensive service provider with low capital deployment.
I can assure you that we are in the making of your Company becoming a truly ''Versatile Engineering and Constructing Company.''
I am pleased that we are relentlessly pursuing our Corporate Social Responsibility and we are sustaining in standing by the side of those socially underprivileged while assisting in the fields of Education, Health Care, Social Welfare and Environment.
In all our endeavours we have received unblemished support from our shareholders, Financial Institutions, Investors, Associates, Government departments etc. We profusely thank one and all, and I am confident of receiving the same cooperation in coming years.
I remain thankful to all my colleagues on the Board for their guidance and encouragement and all my employees who stand by me during thick and thin.
S. Kishore Babu
Chairman & Managing Director