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LANCO INFRATECH LIMITED
ANNUAL REPORT 2007-2008
CHAIRMAN'S REPORT
Dear Shareholders,
The Company's performance in the previous year has been encouraging. We
doubled our turn over from Rs. 16,473 million in the previous year to
Rs.33,365 million. We registered a 67% growth in our Operating Profits
which stood at Rs.6,993 million. All our business verticals recorded growth
with the Construction and EPC business registering the highest growth rate
on account of the healthy order book. The year also marked our successful
foray into the Sea Port segment. Going forward, believe that power sector
will be our mainstay while we gradually grow our presence in the
infrastructure segment. The allocation of a coal mine block in Orissa has
enhanced our fuel security for the expansions in power segment.
Presently, economies across the globe are going through a turbulent phase
and Indian Economy is no exception. The shockwaves sent by the sub prime
problems in the United States of America and elsewhere have been felt in
all the financial markets in the world. That coupled with the surge in the
commodity prices lead by Crude, Steel and Coal have resulted in
inflationary pressures in most of the economies. India, an economy at the
forefront of developing nations is also bearing the brunt of inflation and
the Government and the Central Bank of the country have initiated policy
measures aimed at taming inflation which have an impact on growth.
The sectors in which your Company has interests viz. Infrastructure
development, Construction and property development - have al I been
affected by these developments. However, there is an acute awareness
amongst policy makers that infrastructure development cannot be made to
suffer because of these pressures and therefore the government is trying
its best to moderate policy measures in a manner which would continue to
allow infrastructure development to grow. There is therefore no slowdown on
the initiatives being taken by the government to encourage Public Private
Partnership (PPP) models for infrastructure development and it is indeed
felt that fiscal pressures on government's finances would encourage the
government to adopt PPP models more aggressively.
On the other hand, the increased commodity and borrowing costs is
challenging companies such as ours to look at innovative methods to reduce
costs and maintain margins. I believe that the synergies provided by the
integrated business model which we have gives us an excellent opportunity
to test our skills in improving efficiencies across our value chain so that
we can still be generating returns better than industry benchmarks. I am
quite confident that a strong focus on value engineering in our EPC
business can throw up good potential in terms of cost savings and also a
large dose of technology in the construction activities can improve
execution time cycles and thereby costs. Innovations in the way we finance
our projects can enable us to reduce financing costs. Also, the pressure on
energy prices is making countries across the globe look for alternative
energy sources such as wind and solar power production in a much more
serious manner than earlier, thereby providing new areas for future growth.
Besides strengthening our existing business verticals we have identified
opportunities presented in construction and infrastructure development of
Transmission, Distribution Lines, Pipelines, Gas Distribution, Railway
Transportation, Modernization of Railway and Bus Terminals to name a few.
Entering in to joint ventures and strategic alliances to enhance our
credibility in terms of financial, technical and execution abilities
remains a core strategy in new areas. On the basis of the technology tie-
ups we have also created subsidiaries to develop and execute business
models for manufacturing and providing complete services for wind power
generation and also solar photovoltaic cell manufacturing.
I strongly believe that the synergetic growth model which we have would
enable us to continue to grow strongly and rapidly for more years to come.
The growth potentialities which we are targeting necessarily require an
enhancement of human resources capabilities at all levels. We have put in
place a human resources strategy which would focus on positioning
managerial skills in each business vertical supported by resources to
execute the plans. I believe that the ability to attract and retain best of
the talent is of critical importance for achieving growth.
A profitable growth model with foundations securely linked to a sustainable
development model is what I believe is required from every Corporate and we
are committed to discharge our responsibilities and duties as a good
corporate citizen. We are taking a number of initiatives including putting
in place a CSR policy document which would create a framework and a roadmap
for achieving this objective.
I take this opportunity to acknowledge and appreciate the support and
inspiration that our stakeholders including customers, shareholders,
associates and employees have provided us through this growth journey
enabling us to excel. I thank each one of you for the same and look forward
to your continued support as we continue to move forward on this successful
journey.
L. Madhusudhan Rao
Executive Chairman
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