I am writing to you all shareholders amid the Covid-19 pandemic which has createdunprecedented disruption not only in India but also in the entire world. After thelockdown the economic activities are being restored slowly in a phased manner. Hopefullythe economy shall be back to normal before the year ends.
We are confident that the present government shall leave no stone unturned to fight thecrisis and resolve all issues whether it is Covid-19 pandemic or border issues withneighbouring countries. The push for being self-reliant or "Atma Nirbhar"brought in by the honourable Prime Minister Shri Narendra Modi and medium-term strategyof structural reforms along with rehabilitation of MSMEs announced by the Finance Ministermay ensure the early revival of the economy with least dependence on other countries.
During these trying times we are taking sufficient care of all employees and workersassociated with the company by maintaining social distancing and following otherprecautions at project sites to ensure the safety of our people. Most of the office staffare working from home who are physically not required at office/sites. Following lockdownrules and regulations all meetings are being conducted via video conferences and/orteleconferences to avoid physical contacts.
The overall economic scenario before Covid-19 was driven by the slowdown in privateinvestment and low consumption spending by the public at large leading to a decelerationof the overall GDP growth to 4.2% in FY 20. In FY 21 IndiaRs.s GDP is likely to witnessthe severest contraction since independence due to Covid-19 related disruption. As bothlife and livelihood are important the Government has endeavoured to strike a balancebetween control of the pandemic and opening up of the economy. The Central Government hasannounced Rs. 21 trillion package so far including massive liquidity injection by theRBI. The Atma Nirbhar package has mainly three elements - relief to the downtrodden;rehabilitation of industries particularly the MSMEs; and structural reforms in multiplesectors to kick-start the economy after the pandemic is brought under control. Deep cutsin the Repo rate by the RBI and large liquidity injection has reduced lending rate for thecorporates to a reasonable level. The MSMEs are the biggest beneficiary of the AtmaNirbhar package as they get the credit guarantee form the government besidescollateral-free loans and moratorium on the repayment of the loan for six months. Despitethe increase in the government market borrowings the fiscal position is tight due tolikely shortfall in revenue collection and non-materialisation of disinvestment in FY21.
The global scenario is also disappointing. There is a wait and watch situation all overthe world which is presently struggling to maintain economic and physical health whilefighting the Covid-19 pandemic. Most of the countries like ours have come out withstimulus packages to boost their economies. The geopolitical risks remain alive as theUS-China trade issues have further worsened in the last year.
A growing economy such as India requires substantial and focused investments ininfrastructure that will enable businesses and attract further capital to sustain itseconomic momentum. India has been counted as the fastest-growing major economies of theworld for some time but the recent slowdown and this year contraction has cast a shadowon our GDP target of US$ 5 trillion by 2024. The Finance Ministry Economic Survey of 2019the government indicated that India needs to spend 7%-8% of its GDP or US$ 200 billionannually on infrastructure to meet its growth targets. The Government plan to invest Rs.102 trillion in infrastructure projects under the National Infrastructure Pipeline overthe next 5 years is the first step towards the above goal. The broad breakup of the sameis - Power & Energy Rs. 24.54 trillion; Roads Rs. 19.64 trillion; Urban InfrastructureRs. 16.29 trillion; Railways Rs. 13.68 trillion; Irrigation Rs. 7.73 trillion; RuralInfrastructure Rs. 7.73 trillion; and balance in social industrial infrastructure portsetc. This shall be collectively funded by the Central Government and State Governments tothe extent of 79%. The remaining 21% is envisaged to come from the private sector.
The Company is confident that it will obtain sufficient orders over the coming yearsand increase its activities based on the above-proposed investments. These investmentsshall improve the economic recovery of the country as well as generate employment. Duringthe year FY 20 the Company received a good number of fresh orders including the Letterof Allotment (LoA) for civil works of Kiru HE Project for Rs. 22410 Million which is alarge hydro project in Jammu & Kashmir. The total order book size of the company wasRs. 131846.50 million as on March 31 2020 which would generate sustained revenues overthe next few years.
Covid-19 Impact: Our Company is into the EPC / Constructionsector wherein the Company has to execute work at project sites to generate revenue. Allthe project sites of the company across the country were shut immediately as perdirectives of the Central Government from March 25 2020 to fight against the Covid-19pandemic. Operations in all projects pan-India were impacted in the latter part of Q4 FY20 and also in FY 21 till complete lockdown was relaxed. Since June 2020 almost all thesites started operations though at less than full capacity due to a shortage of manpowerand disruption in the supply of construction materials. We have made necessaryarrangements for the labour force at sites to work with new restrictions like socialdistancing besides providing additional facilities like food lodging etc. The company ispresently in the process of getting the migrated labourers back at the site as normalcy isbegin restored.
Even in such difficult time when the country witnessed a lower GDP growth in FY 20 theperformance of the company continued to be stable coupled with a slow but steady growthnotwithstanding the Supreme Court reversal of an arbitration award given by the DistrictCourt earlier in favour of the company relating to one of Award.
The performance of FY 20 is as follows:
On a consolidated basis
- Revenue from operations increased by 10.8% to
Rs. 26172.14 million in FY 20 from Rs. 23622.05 million in FY 19 reflecting steadygrowth in the operations of the company.
- Net Profit has decreased from Rs. 1487.25 million in FY 19 to Rs. 44.46 million inFY20.
On a standalone basis
- Revenue from operations increased by 12.7% to
Rs. 23330.59 million in FY 20 from Rs. 20698.90 million in FY 19 reflecting steadygrowth in the operations of the company.
- Net Profit has declined from Rs. 830.30 million in FY 19 to Rs. 363.40 million inFY20.
The Company has continued to focus on monetization of non-core assets to reduce debtand further increase liquidity. The Company also successfully completed a Rights Issue forRs. 2009.97 million during FY 20. As a result the debt of the company on a standalonebasis has declined from Rs. 22152.70 million in FY 2019 to Rs. 19037.50 million in FY20.
Due to the Covid-19 pandemic the Company is going through one of its toughest years inFY 21. However various measures undertaken by the government including that of moratoriumgranted by the RBI in payment of interest and principal dues have enabled the Company tosurvive during the pandemic. We feel that this time shall also pass and the country shallbe back to normal by the year-end with sentiments improving in the send half of the year.
I assure all shareholders that we shall together be able to overcome even this hurdleas we have done in the past.