On behalf of the Board of Directors and the Management of the Company it is indeed aprivilege to present before you the maiden Annual Report of HPL Electric & PowerLimited after our successful listing. We thank you for the support you have reposed in ourCompany and assure you that growth is at the core of our strategic goals. We have immenseclarity in how this growth can be achieved and are confident of realising our overarchingvision and objectives details of which we shall share later in our letter.
Under the leadership of our Honourable Prime Minister Shri Narendra Modi and thevarious initiatives undertaken by the government India is poised for rapid growth anddevelopment. India today is not only determined to occupy its rightful place in the globalarena but is also expected to be a key engine of global growth. It is against thisbackdrop of an energised India that we see exciting opportunities and responsibilities inthe coming years for HPL towards electrifying the nation and against which we are proudto share the Company's performance for the year gone by.
Year in Review
While the underlying fundamentals for the electrical equipment industry remain robustdemand remained sluggish in FY 2016-17 delay in finalisation of orders by utilitieslowered the demand for metering solutions. In the lighting business we made a voluntarydecision of not bidding for projects awarded under the government's EESL scheme due tofall in prices and very low margins. Also the transitory impact of demonetisationaffected our B2C business. As a result of these headwinds largely beyond our controltotal revenue stood at Rs. 926.48 crore on a standalone basis in FY 2016-17 as compared toRs. 1115.26 crore in the previous year. We however believe that this is a smallaberration in our strong track record of sustained growth over the past three decades.
A key highlight of the year was that we recorded good volume growth in the LED lightingsolutions space. In another landmark development your Company secured its first SmartCity Lighting project for the city of Bhopal. With very few companies having thetechnology required for such projects we remain upbeat that we shall we able to securefurther orders under the Smart Cities Mission as and when more projects get underway.
Strengthening our manufacturing capabilities a new plant set-up at Guwahati commencedoperations towards the end of the year. This facility will enable us to avail various taxbenefits as well as gain easier access to the North Eastern Indian market.
Initial Public Offering of Rs. 361 Crore
Our Initial Public Offering (IPO) in September 2016 was oversubscribed by nearly ninetimes and we got listed on the BSE and NSE.
Our Business Strategy
At the start of this letter we mentioned that HPL has a clear growth strategy and astrong commitment to realising those ambitions. With the electricity equipment industryestimated for buoyant growth at a CAGR of 8-12% between 2016 and 2020 themacro-conditions are highly conducive for realising our ambitious revenue target.Expanding our product range with value-added products growing our distribution networkand enhancing our brand visibility we aim to garner a significant pie of the demand forelectrical equipment. Leveraging our backward integrated facilities we will continue todrive product and process innovation to provide customers with the best-in-classtechnology at cost-effective prices and at the same time retain our margins.
Cognisant that the B2B business is capital intensive and more cyclical vis--vis B2Cbusiness we are also focussing on the trade segment. Aligned to this plans are on theanvil to step up our branding efforts by foraying into mass media advertising. With a viewto reducing receivables from our trade debtors we have already begun the process offacilitating channel financing.
Government thrust on the infrastructure creation through various initiatives such asSmart City Mission Affordable Housing DDUGJY IPDS and UDAY has set the ball rolling foraccelerated demand for electrical equipment. Revival in the real estate sector thrust onrenewable energy recovery in the private capex cycle are other developments that open upexciting prospects for your Company. We remain confident that driven by our strengths weshall be able to capitalise on these burgeoning opportunities and deliver greater value.
We are pleased to share that tenders issued by power utilities have gained traction inthe second half of FY2016-17. On the back of our strong prequalification credentials weremain optimistic of garnering key institutional contracts. As on March 31 2017 ourorder book stood at Rs. 285.4 crore providing robust revenue visibility.
The implementation of the GST is also likely to benefit HPL. Apart from endingcost-arbitrage available to unorganised players the smoother inter-state goods transportunder GST will enable us to lower working capital cycle.
As we move ahead on our growth trajectory we remain grateful for the support of ourstakeholders including Central and State government bodies customers bankersinvestors creditors and dealers. We aim to earn your continued trust every day. We wouldalso like to take this opportunity to thank our employees whose skills and commitmentenable our achievements. We look forward to sharing our success with you as we realise thegoals we have set for ourselves.