You are here » Home » Companies ยป Company Overview » MEP Infrastructure Developers Ltd

MEP Infrastructure Developers Ltd.

BSE: 539126 Sector: Infrastructure
NSE: MEP ISIN Code: INE776I01010
BSE 15:40 | 03 Feb 14.85 0.50
(3.48%)
OPEN

14.35

HIGH

15.05

LOW

13.70

NSE 15:31 | 03 Feb 14.75 0.45
(3.15%)
OPEN

14.00

HIGH

15.00

LOW

13.65

OPEN 14.35
PREVIOUS CLOSE 14.35
VOLUME 223106
52-Week high 30.95
52-Week low 10.60
P/E
Mkt Cap.(Rs cr) 272
Buy Price 0.00
Buy Qty 0.00
Sell Price 14.80
Sell Qty 5000.00
OPEN 14.35
CLOSE 14.35
VOLUME 223106
52-Week high 30.95
52-Week low 10.60
P/E
Mkt Cap.(Rs cr) 272
Buy Price 0.00
Buy Qty 0.00
Sell Price 14.80
Sell Qty 5000.00

MEP Infrastructure Developers Ltd. (MEP) - Chairman Speech

Company chairman speech

Dear shareholders

The FY20-21 marked the completion of 19 years of MEP Infrastructure Developers Limited.Firstly my sincere gratitude to all our shareholders for your continued trust in ourcapability which enables us to reach new heights. We believe that the infrastructuresector is more than building roads and creating corridors of transit. It is about makingthe wheels of the economy move continuously shrinking distances and making tomorrowbetter.

Strategic review and outlook.

Overview

The principal message that one needs to communicate is that the worst appears to beover for India's road building and allied sectors which could benefit focused long-termplayers like MEP Infrastructure Developers Limited. Our optimism is derived from ourdecision to resize our Balance Sheet to enhance long-term competitiveness. The speed withwhich the Company responded has helped the Company protect its Balance Sheet fromextensive impairment on the one hand and capitalise on widening prospects on the other ina challenging FY20-21.

Initiatives

The year under review was marked by the extensive impact of the Covid-19 pandemic. Thepandemic affected virtually every segment of India's industry; the road building sectorwas not an exception. In the road building and tolling sector there was a decline inlabour availability as most preferred to return to their rural home towns and villages;there was a decline in road and highway traffic that affected toll collection.

The twin impact resulted in a mismatch between what had been projected and reality. Ina business where project deliveries are strictly mapped leading to capital managementdiscipline this mismatch disrupted our cash flows. The Company was faced with twooptions: wait for the improvement to transpire and thereafter drive the business as usualor realign the business model with speed to remain relevant and viable. The

Company opted for the second option; this responsiveness was driven by the convictionthat to be able to finish first the Company would first need to finish prompting acorresponding urgency and sensitivity.

The result is that the Company completed the harmonious substitution of four hybridannuity model (HAM) projects to the new concessionaire during the year under review; theseprojects were marked by factors largely outside the Company's control and the managementtook a considered view that in view of the extensive uncertainty a smaller order bookwould be safer.

Following this harmonious substitution the Company finished the year under review withsix ongoing projects strengthening the Company's capacity to address them with timelycompetence.

Strengthening the business

At MEP Infra we recognised that harmonious substitution during the last financial yearwould help protect the business; the Company was faced with the need to grow the businessto respond to the widening prospects within India's road building sector.

The Company proposed to create a wider room for sizable net worth infusion for whichshareholders' approval was taken. The proposed net worth infusion is expected to achievethe following objectives: resize the Balance Sheet towards a higher role of net worth overdebt; strengthen the Company's pre-qualifications to address larger road buildingprojects; strengthen the credit-rating that could potentially moderate the cost of debt.In view of this we see the proposed net worth infusion as a potential game-changer thatis expected to enhance the Company's preparedness to bidding opportunities in the BOTHAM EPC and tolling spaces.

Sectoral upside

At MEP Infra we see the emerging road building agenda for the next decade as thesingle largest infrastructure opportunity for the country.

The Indian government has made fresh road building its principal national growthagenda reconciling a number of national priorities: inclusive growth Make in Indiabridging the urban-rural divide and strengthening national logistical efficiency. There isa growing conviction that road building represents an investment offering the largestreturns to the biggest number of beneficiaries for the longest time. During the firstphase of the present Central government the focus was on strengthening the existing roadnetwork through lane-widening (from four to six) facilitating a quicker throughput. Inthe second phase the government is focusing on new road construction coupled with roadwidening. This second phase (comprising road building across national and state highwaysexpressways and district roads) has been secured through large institutionalisedprogrammes with multi-year potential. In view of this I am convinced that road buildingrepresents a growth sector through the coming decade strengthening prospects forlong-term players. Besides the Indian government is also responding with speed toevolving ground realities. The Finance Minister recently announced the NationalMonetisation Pipeline comprising of four-year pipeline of the government's brownfieldinfrastructure assets. Maximum monetisation by FY25 is expected from the road sector whereH1.6 lakh crore worth national highways of NHAI are identified. At MEP Infra we areoptimistic that despite a relaxation in the bidding norms that could lead to a largernumber of players there is enough scope for all the players to succeed in. This is onaccount of a large number of projects being announced by the government that is wideningthe sectoral opportunity; a focus on Make in India is enhancing the role of Indian playersin joint venture alliances; a focus on governance is serving as an effective filter forintending entrants. We are confident that the government's initiatives will only widen thesectorial eco-system by enhancing the availability of talent capital technology andequipment providers. Also the emergence of models within the country are inspiring anumber of States to replicate proven approaches and prompt project launches across thecountry widening the industry opportunity.

MEP Infra's preparedness

At MEP Infra we are attractively placed to capitalise on the sectorial inflectionpoint. One the Company addresses the widest value chain in its business – from roadbuilding (EPC) to road building cum ownership (HAM) to toll management. Two the Companyenjoys a leadership in the toll management business.

Three the Company resized its business with speed during the last financial yearenhancing sustainability.

Four the proposed infusion of net worth will strengthen the Company's credit-ratinginitiating a virtuous cycle.

Outlook

We see an upside for good reasons. Going ahead we see accelerated road buildingwithout comprising safety and protection standards. This should translate into a higherthroughput and timely completion (after getting the necessary road extension permissionsfrom the concessionaire for reasons related to the pandemic) that revives cash flowsenhancing value for all those related to the sector and our Company.

Mr. Jayant D. Mhaiskar

 

Chairman and Managing Director

.