I am delighted to share with you the events developments and achievements of yourCompany during course of financial year 2016-17. The overall performance of your Companyhas witnessed a growth in work orders resulting in overall revenues increasing by 20% incomparison with previous year. We have continued to do well in our core businesses andhave alongside paved path for new ventures. The year has witnessed the sustained healthygrowth and High Ground Enterprise continues to create value for all its stakeholders.
The Indian economy across the last year has demonstrated a high order of resilienceand remains an island of stability amidst global volatility. Meanwhile setting its sightson the future the Government has initiated several structural reforms whose positiveoutcomes should be tangible in long term growth.
The global scenario is being colored by protectionist policies in various hues adoptedby a few developed countries. While such populist measures tend to impede trade anddiscourage revival of the investment cycle it is up to international industry to addressthese challenges by reconfiguring its offerings and recasting its operations. In theMiddle East relatively low oil prices and consequent fiscal pressure has led tocontraction of developmental spends.
Last year witnessed interesting developments across the global economy. After a longspell of stagnation and de-growth green shoots of economic upswing are appearing for theworld economy. According to the International Monetary Fund global economic activity ledby emerging markets and developing economies should pick up pace in FY 2017 and FY 2018.Asian economies led by India are picking up speed as policy and consumption led tailwindshave given businesses a positive fillip. Indeed India with a 7.1% growth rate in FY2016-17 along with China's growth rate of 6.7% for 2016 and promising to continue thetrend into FY
2017-18 will remain the epicenter of action. In India a fundamental premise ofoptimism stemmed from its strong socio-economic reforms that were peppered with eventsthat will reset our country's economic direction in a transformational manner. This milieuenabled us to deliver yet another year of sustainable yet profitable growth.
The Government's increased emphasis on infrastructure development through many flagshipprograms has been widely welcomed. Infrastructure spends have a multiplier effectenabling pan-industry growth while contributing to an enhanced quality of life. YourCompany is uniquely positioned to respond to these initiatives of the Government. So farour capabilities in turnkey execution of small to medium scale infrastructure projects arevirtually unmatched but now with our enhanced positioning we even look forward to thespeedy transition of these publicly announced large proposals into implementation mode.
In the year gone by we have taken significant steps to strengthen our businesses andare committed to continue investing in them for the future. The reforms in the Governmentpolicies have fashioned a transparent environment for doing business in India resulting inbetter governance. Your Company believes in following the best governance and transparencyin its business operations.
The recent changes in the government reforms have opened several opportunities forEngineering Procurement and Construction Management (EPCM) entities like your Companyacross various sectors viz Oil and Gas Water Resources Road development Solar PowerTelecom PMC and Man power consultancy Outdoor Play - Installation of Multiactivitysystem open gyms & outdoor activites for Various Muncipal Gardens Solid wastemanagement and Consultancy. The Company has been currently working on expanding anddiversifying its offerings to capitalize on opportunities thrown open by such governmentinitiatives.
Your company is engaged in consulting project management and EPC (EngineeringProcurement & Construction) in the infrastructure space and has built a strongportfolio of projects in a very short span of time. Your company has grown at over 100percent in the last three years. The Company has executed an order book of more than Rs.10000 lakhs in its first quarter and is in process of implementing an order book of overRs. 32500 lakhs.
From last four years your company is involved in Third Party Certification (TPC) auditsand have completed TPC audit for over 40000 retail outlets (Petrol Pumps) of IOCL inover 1000 cities and towns in past three years located on all National Highways StateHighways and Major District Roads. This seems to have created a new benchmark in theindustry. During the year under review not only has your company bagged another contractfrom IOCL to carry out inspection of its 7294 petrol pumps but also bagged a contractfrom Hindustan Petroleum Corporation Limited (HPCL) for carrying out audits of SOP plusClub HP (or Club HP Star) integrated petrol pumps. These audits will be carried outinitially only for SOP & Non Club HP retail outlets of HPCL. This audit process willbe carried out in a span of 2 (two) years covering about 43000 petrol pumps across thenation which forms the core of the Company's EPCM division. During the year the Companyhas also successfully executed EPCM contracts for other clients like Axis Rail India SunPower Arihant Industries Corporation Gateway Distriparks Shapoorji Palanji Larsen& Toubro Neev Infrastructure Inox Wind Infrastructure Services Limited. Further inpipeline are projects with ShapoorjiPalanji Ltd. Vadinar Oil Terminal Limited Essar BulkTerminal Prakash Constrowell Limited Incor Central Park Projects Ltd J. Kumar andothers.
The revenue from EPCM business segment of the Company increased from Rs. 19339.52 lacsin the financial year 2015-16 to Rs. 25865.02 lacs in for the financial year 2016-17registering an year-on-year (YoY) growth of over 33.74%. With new opportunities opening inthis sector and the expansion activities undertaken by your Company the EPCM division ofthe Company will continue to be a major growth driver for the company going ahead.
Media and Allied Activities (M&A):
The media sector business is very close to my heart as after graduating from Delhiuniversity my father's textile business didn't excited me and my first entrepreneurialmove was in this sector only starting from a small production company engaged incorporate films advertising & editorial shoots TV programming & contentdevelopment etc. in India to gradually working overseas with some prestigious clientsand projects in UK and US. In 2005/06 The business flourished on a large scale as the UKgovernment encouraged investment in media and entertainment. In a span of 3-4 years by2008/09 we had established a reasonably big set-up in the media hub of Central London.
The Indian Media and Entertainment (M&E) industry which saw a temporary slash downafter 2010 not only in India but globally has witnessed major corrections in the recentyears and is now a shining sector for the economy making high growth strides. Proving itsresilience to the world the Indian M&E industry is on the cusp of a strong phase ofgrowth backed by rising consumer demand and improving advertising revenues. The dynamicsof the sector has majorly changed with changing technology and consumption mediums.Lifestyles have evolved Audiences are consuming content very differently. Tabs phabs andtouch screens have shrunk the silver screen. And the attention span is dropping fast. Inthe middle of such odds and ends we are not far away to see internet becoming the leadingmainstream media for entertainment for the people.
Your Company has a full-fledged digital post-production/technical media facility studioin India to cater to its domestic and export market. This facility is located in Mumbaiand is flourishing now with some award winning projects under its belt like ABillion colour story' Ralang Road commercial campaigns for Chings (Ranveer Singh)Raffles (Singapore) Charlie kay Chakkar MeinThe Head Hunter Beti Padhao BetiBachao' campaign. With this newly established facility your Company has consolidated itsofferings for the Domestic and International Markets. Alongside this your Companycontinues its operations in this sector by providing services to overseas/export clientsvia sublet mechanism through strategic partners.
Your Company is spearheading well in the media sector not only integrating media spacefor prints and Outdoors; but also integrating content and executing events lineproduction and post production work for our advertising clients and corporates likeReliance Nippon Life Asset Ltd Bajaj Allianz Life Insurance Co Ltd Bharti Axa LifeInsurance Co. Ltd Indofill Industries Ltd PNB Housing and EROS along others.
Our Media division has reported a 3 year CAGR of ~39% despite witnessing aconsolidation phase in FY15. The media division contributes ~15% to our overall turnoverdown from +50% a couple of years back primarily because the fast pace at which our EPCMdivision has grown at. That said we have taken a lot of steps in the last 12-15 months toinvigorate the growth in this division which should start paying dividends from this yearonwards. We have progressed aheadwith our recent but synergistic Tie-ups and take-oversin the previous years - Sunflower Advertising a 20 year old INS accredited full servicead agency and 361 Degree Entertainment (into the business of media management ResearchFilm marketing IPR and Content syndication) will help strengthen our bargaining power inthe media buying and enable the company to enjoy better credit periods and incentivesimpacting us positively. Likewise setting up our own post production studio in ColourbarPvt Ltd (wholly owned subsidiary) and taking substantial stake in the talent management& event company (MAGNIFIQUE - Chitra Talent management Pvt Ltd) has helped usimmensely. Further we are taking a substantial stake now in Picture Thoughts ProductionPvt Ltd. Picture Thoughts is a niche content production company focused on developing anddelivering specific commissioned content in various formats like features shorts webseries advertisements advertorials news/infotainment capsules musicals educationalcorporate etc. for its niche clientele and valued audience. These strategic tie-ups andtakeovers not only have given us a bargaining edge by complimenting the services of eachother but also cumulatively makes a larger bouquet with larger scope for growth.
The revenue from the media and allied business segment of the Company stands at Rs.4887.86 lakhs for the financial year 2016-17 as compared to Rs. 5463.27 lakhs for thefinancial year 2015-16.
The operating profits earned by the Company from this business segment stands at Rs.417.40 lakhs for the financial year 2016-17 as compared to Rs. 315.61 lacs for thefinancial year 2015-16.
In view of the profits earned by the Company in both these segments it gives me greatpleasure to inform you that the Board of Directors of the Company has recommended a finaldividend of Re. 0.10 per equity share on a face value of Re. 1 per share for the year.(i.e. 10% on the face value of shares)
In the years ahead I hope that the steps taken by the Management of the Company willfructify in making the Company a leading player in the EPCM as well as the Allied mediasector.
"Crafting Opportunities Delivering Growth" our inspirational taglinecontinues to define the company's motto.
To conclude we have had a reasonably good year. The Company has received listing andtrading approval for its entire securities from the esteemed National Stock Exchange ofIndia Limited (NSEIL) on November 24 2016. We remain encouraged and confident ofachieving our long-term objectives of inclusive sustainable and profitable growth. I amconfident that our disciplined strategy prudentapproachfocusonagileexecutionandourcommitted team will enable us to improve performancefurther and create greater shareholder value.
I would like to take this opportunity to thank all our employees for their contributionin the continued success of High Ground Enterprise. I would also like to extend mygratitude towards our business partners associates vendors and the Central Stategovernments and government agencies for their sustained support. I would also like toexpress my sincere appreciation to all our shareholders for your continued faith trustencouragement and support.
Your support is the foundation on which this Company will scale new heights.
Sandeep R Arora
Chairman and Managing Director