DELIVERING ON PROMISES
It gives me immense pleasure to present you the 13th Annual Report of yourCompany. The financial year 201819 was very exciting for all of us. At your company theyear remained full of new opportunities and significant accomplishments for Dilip BuildconLimited (DBL). We continue to march forward with confidence hope and humility on ourexciting journey of business growth and value creation for our shareholders. Every NewYear brings new optimism new hopes and renewal of unwavering commitment towards endeavorfor excellence. Once again this is the time to rededicate ourselves for creation of worldclass infrastructure in India and make contribution in nation's progress.
Being optimistic doesn't mean remaining oblivious to reality and the year gone by wasnot a smooth ride by any means. There were several macroeconomic uncertainties andchallenges which plagued the global economy and a full-scale trade war between two globaleconomic superpowers USA and China was the major worry. The more aggressive and uncertainstance from UK on the modalities of Brexit localized geopolitical conflict escalation inmany regions and economic slowdown in several countries was other challenges.
The world economy certainly looked in a worse shape in March 2019 as compared to April2018. This was also reflected in the consistent downgrades in growth rate for globaleconomy by global agencies from time to time and through out the year.
There were other local and India specific headwinds including political uncertaintiesregarding the General Elections and assembly elections in several states including MadhyaPradesh Rajasthan and Chhattisgarh negative impact of volatile crude oil prices andunexpected sharp and unpredictable movements
in currency markets. The economic slowdown was also contributed by funding pressuresfor NBFCs due to certain debt defaults poor performance in mining and agriculturalsector high profile bankruptcies in sectors such as aviation and the increase in fiscaland current account deficits for India as a whole. The economy has also not fullyrecovered from disruptive impact of Goods and Service Tax (GST) yet.
The global economic outlook for 2019 vs. 2018 which had turned out to be a good yearfor growth is really worrisome. International Monetary Fund (IMF) assessed the growth rateat 3.6% for 2018 and IMF has moderated the economic growth expectation to 3.3% for 2019.Some of the other forecasts are even gloomier. For example the World Bank expects globaleconomic growth to moderate to 2.6% in 2019. While the estimates will have variance andthat is natural there is virtually a consensus that global economic growth willexperience a considerable slowdown in 2019.
In FY19 India had recorded 6.8 % growth in its GDP. It remains to be seen how Indianeconomy will perform in FY20 but some of the latest data points are ominous. In the mostrecent statement from Reserve Bank of India (RBI) released in August 2019 India's centralbank has cut the FY20 growth rate estimate from 7.0% to 6.9%. While this performance issatisfactory considering the vulnerabilities surrounding the global economy and numerousmacroeconomic factors proving to be a hindrance we as a country can surely do better. Inthis context there is no doubt that some of the recent developments have also negativelyimpacted the investor sentiment on India and this is an important area to focus on forcapital hungry growing economy.
We strongly believe that challenges also offer opportunities and our country's economywill successfully withstand these pressures to emerge even stronger. We are not onlyoptimistic about next twelve months; we are confident that there will be solid supportfrom the fact that a stable and dynamic Government is in place. We understand andappreciate that the long-term impact of reforms such as Goods and Service Tax (GST) ispositive and policy intervention has been proactive to address industry concerns. Thereform measures were undertaken keeping the larger picture in mind and the nation isgradually realizing their benefits.
The re-election of a stable and decisive Central Government will play a crucial role inproviding the right macroeconomic direction to the country. From the perspective ofInfrastructure sector the continuity at the very top in the Ministry of Road Transportand Highways is extremely vital.
The dynamic leadership of concerned ministers will be important in providing furtherimpetus to project award and construction activity.
The BJP's 2019 elections manifesto and Finance Minister's Budget speech in July 2019talks extensively about continued focus on infrastructure increased allocation for roadsand full-scale support for removing the bottlenecks in infrastructure space. The electionmanifesto promises:
a) construction of 60000 kilometers of National Highways in the next five years
b) doubling the length of National Highways by 2022
c) conversion of all viable rail tracks to broad gauge by 2022 and efforts to ensureelectrification of all railway tracks by 2022
d) from a total of 101 functional airports doubling the number of functional airportsin the next five years
e) 50 cities to be covered with a strong metro network in next five years.
In the first Union Budget presented in July 2019 by the Central Government after itsre-election the infrastructure remains a key priority area. There is also an increasedrealization that an effective private participation will be required to fulfil therequirement of ? 100 trillion investment needed for infrastructure development over thenext five years. There are announcements on augmenting 125000 kilometers of rural roadsunder the Pradhan Mantri Gram Sadak Yojana at a cost of ? 800 billion and creating anational highways grid. In light of this we strongly believe that as a country we arevery close to the beginning of a bigger push on roads and highways from the CentralGovernment and respective state administrations.
All of this presents an unparalleled opportunity to companies in infrastructure andconstruction sectors. The Government's increased efforts to create and improve theinfrastructure in the country is attracting the interests of both domestic andinternational companies and investors.
In this segment the private sector is a major contributor in the growth initiative asit is involved in a large number of projects across sectors from roads and Highways tometro systems for urban transports seaports and airports.
From requiring some tweaks from time to time the Public- Private Partnership (PPP)model is already proving to be a successful in a sector which is hungry for capital. Withthe aim of boosting the construction and development activity the Government has formed asingle window clearance facility for allowing speedy approval of the projects in manysectors. The Foreign Direct Investment (FDI) has surged significantly in this sector. Thisalso reflects in announcements of big-ticket investments by foreign investors on a regularbasis.
This sector offers continuous opportunity for decades to come as the task of nationbuilding is being pursued relentlessly by the policy makers administration andentrepreneurs. The differentiating factor for companies to benefit from this largeopportunity is their prudence in project bidding adherence to highest executionstandards judicious capital allocation tight control on costs and their ability todeliver consistent quality across sectors.
To speak about your company DBL has been at the forefront to utilize them and deliverfast significantly above industry average profitable and most importantly sustainablegrowth the business and financial performance of DBL is testimony of our commitment todeliver best quality in the shortest possible time at the most competitive cost to ourclients and our strict adherence to solid work ethics. DBL has been doing this for yearsin the past and will continue to do so in future.
Our journey over the last four decades has been a story of consistent hard workadaptability to continuously evolving business environment and never compromisingstandards on corporate governance. By staying true to our core values DBL has remainedone of the most coveted brands among leaders in roads and highway construction andEngineering Procurement & Construction (EPC) business in India. Delivering onPromises to all the stakeholders is the philosophy we live by and that is what we strivefor in all our efforts.
To conclude I would like to thank the Board Members and the stakeholders for theirconfidence and trust in the Company. I also extend my sincere gratitude to our employeescustomers and vendors for their hard work and continuous support. With your patronage wewill keep delivering on our promises without compromising on the business ideals we holdso dear to ourselves. With deep regards and great appreciation to all our stakeholders Iam confident that we will reach even greater heights in future.
Chairman and MD