Today I am more confident and optimistic about the future because it isbeing backed by strong factors and figures!
Dear Shareholders
It is always a pleasure addressing the privileged shareholders and itis more so while placing the 23rd Annual Report because I am jubilant for thefact that the Company has emerged successfully from a spell of challenges. Thankfully I amso happy that my employees and associates are able to work and move fearlessly post-Covid period! A good coincidence!
"This too shall pass" thus goes a famous old saying!
Just two years before I could not have envisaged that the difficultphase which arose out of the pandemic would pass and the world would emerge free of thevirus and the market would boom! The world economy has been oscillating like a pendulumduring the past few years and many entities have been subjected to real hardships. Howeverour management and the Company stood robustly strong faced the tides and stood anchored.The experience was unique and challenging but we endured thanks to all my employeesshareholders and well-wishers!
Today I am more confident and optimistic about the future because it isbeing backed by strong factors and figures! I could feel the winds of change and sense thegreat future for the Company and the stakeholders.
However we reached this stage with lots of planning and forethought. Alarge space of post-Covid period is reserved for Power Mech and the Company has alreadystarted advancing itself. I would like to discuss some of the relevant elements that aregoing to give a push to the Company in the next five years.
Self-preparation: When the process of recess was engulfing the worldeconomy the Company was engaging itself in building up infrastructure resources and theorganizational structure. The exercise was set in motion even when the slowdown wascasting a shadow on our working model and style.
We have been consistently strengthening the power of human resources inthe organization with multiple and parallel attempts; the management started newinitiatives for improving the capability and leadership quality of young executivesthrough well implemented training sessions and updating senior executives through specialsessions of orientation.
Both senior and young leadership programs helped in aligning thealready talented engineers and executives to that of the Company's vision and mission. Iam proud that we have highly dedicated employees numbering more than 14000 majority ofwhom are talented engineers. Raising the talents of employees is a continuous process andI am hopeful that the management shall continue with these programs or even enlarge themto other levels too!
I am expressing my wishes out of hope and confident that the Company isdefinitely poised for greater reach and growth in the next five years time.
The year 2021-22 is perhaps one of the bests in its journey of 23 yearsas it has found a new zenith in order book revenue and performance. It has establisheditself as a trusted Company through performance achievement completion and delivery withtime line. Therefore it is not surprising that the execution bandwidth stands between Rs.700 Cr to Rs 1200 Cr per quarter and expected to improve further. It was possible becauseof the strong in-built capabilities in execution and engineering.
Strong order book and revenue segments: The strong order book whichstands at Rs Rs 18149 Cr explicit clear visibility for the future and raises ourconfidence in bettering our performance.
The Company has reported an all-time high total income of Rs. 2728 Crduring the FY 21-22 whereas the total revenue was Rs. 1900 Cr. for the FY 20-21. Therevenue from O&M business has gone up to Rs. 805 Cr from Rs. 661 Cr an increase by22%. The revenue from Erection Testing and Commissioning has increased from Rs.446 Cr toRs. 521 Cr a swelling by 17% & Electrical business has gone up to Rs. 93 Cr from Rs.86 Cr an increase by 8%. Pleasingly the revenue from Civil & others segments includingrailways and water projects has gone up to Rs. 1290 Cr from Rs. 687 Cr a whoppingincrease by 88%.
The contribution of different segments to the overall revenue isimpressive; Operation & Maintenance segment has contributed 30% of the overallrevenue Erection Testing and Commissioning 19% Electrical Business 3% and Civil &others including railways & water projects 48% of the total contract revenue. Thechange of order book mix has pushed the total income from Rs. 1900 Cr to Rs. 2728 Cr anincrease by 43.54%.
Envisaging bright future: I am pleased that very recently the Companybagged a record number of 5 Flue Gas Desulphurization [FGD] projects from Adani
Group aggregating to Rs. 6163 Cr for 15 FGD retrofits in coal basedunits. Central Electricity Authority has identified 169000 MW of existing coal basedplants with 448 units out of 209100 MW of installed base with 593 units needing FGDretrofitting. The Company is aggressively pursuing for opportunities in the FGD segmentfor direct participation.
It is pleasing to note that during the last 10 years the Company hasbuilt strong expertise in the field of Railways Water Projects
Overseas Operations Road Projects Material Handling Cross CountryPipelines Steel Oil & Gas etc. increasing the prequalifications.
The investments under National Infrastructure Pipeline (NIP) of Rs 111Lakh Cr with allocation to Energy 24% Roads. 18% Railways 12% and Urban development at17% constituting 71% of NIP allocations should play a major role in all round development.The third decade is emphasising on growth with aggressive expansion into areas mentionedearlier.
Operation & Maintenance (O&M):
O&M segment has been playing a very vital role in power sector andin the growth of the Company in the last 10 years. It is presently being modelled mostlyon long term service contracts. This methodology is being adopted into other non-powersectors like process plants steel plants minerals refineries petrochemicals drinkingwater material handling etc.
Efforts are on to increase the long term O&M contracts includingcontrol room operation and this is a quantum jump in our operational capabilities. Thecompany has strongly established its presence in Middle East Africa and Bangladesh forETC business and presently pursuing for O&M business in these regions. The recentO&M order from Dangote Nigeria will be a breakthrough for large global contracts.
Minerals Coal and Material
handling: India is a leading producer of Iron Ore Coal Bauxite etcand has 3rd largest reserves in coal deposits and is also the 2ndlargest producer of steel. With the huge opportunities in the market in handling of coaliron ore and other minerals the scope for market penetration is quite substantial.
Railway and Metro Projects: The massive investments taking place in therailways can be a game changer for the transportation sector. Every segment of therailways are offering huge opportunities with investments exceeding Rs 1 Lakh Cr per year.
At present the Company is implementing about six projects and with theexperience gained during the last five years can offer multiple opportunities to scale upthe presence in the railway works.
The future is also in high speed ravel and bullet trains. The hugeinvestments in Metro Rail will throw up cascading opportunities. The Company has alreadytaken steps to enter the metro projects and the initial effort is for undertakingmaintenance of workshops for Bangalore Metro work estimated at Rs 500 Cr.
Water & Waste Water Treatment Projects Government of India hasrestructured and subsumed the ongoing National Rural Drinking Water Programme to provideFunctional Household Tap Connection (FHTC) by 2024 for an estimated cost of Rs. 3.60 LakhCr. Sensing the huge opportunity in this segment the Company rightly made efforts toenter this area of business in a big way. This business will pay a major role in overallbusiness growth going forward. The present focus is on the opportunities in the states ofUttar Pradesh Madhya Pradesh Rajasthan Karnataka and Odisha.
Roads & High ways: It is heartening that the Company has made entryinto the road sector after a lot of deliberations over the huge opportunities being madeavailable. As part of the NIP plan the total investment planned is around Rs 20.33 Lakh Crforming 18% of NIP plan with largest allocation for road connectivity. Presently theCompany is executing three large projects under EPC mode. This diversification measurewill positively supplement the growth of the Company and also contribute to the synergyof the entire range of civil work spread across various segments.
Mine Development & Operation:
Coal will continue to play a major role as the main input for thermalpower generation steel production and also for the cement industry. Power Mech willcontinue to seek mining opportunities on MDO basis in future to secure a long-term revenuecontract. As a strategy Power Mech would specifically target for coking coal blocks underMDO route as there will be assured demand for the coking coal mainly from the steelplants. The Company has established good expertise in the installation of materialhandling and O&M operations of such material handling plants which are needed for themechanised working of the mines. The aim of the Company is to enhance the capacity of MDOoperations to about 15 MTPA to enable the Company to create a long term base over 25 to 30years for sustained revenue generation of Rs 1500 Cr to Rs 2000 Cr p.a.
Conclusion: As I have mentioned in my opening statement we have passedthe gloomy period of Covid and recess. The future seems bright and shining. I have triedto describe the various factors and expectations that should come forth before us asopportunities for consolidation and growth. A well thought out base has been establishedby the Company during the preceding decade which would help as inertia and stimuli forsustained growth!
I am indebted to all my employees who stood like a rock behind me andthe Company during thick and thin. My heart goes out with gratitude and appreciation forthe contribution from my employees a factor which gives me strength for further searchand findings. I also thank all my colleagues in the Board who stood by me and helpedshaping the Company to what it is!
I express my due respect and thanks to all the Financial InstitutionsCentral and State Governments officials Auditors our associates and dependents for theircooperation and support! I thank all the shareholders for their trust confidence andwishes!
S. Kishore Babu
Chairman and Managing Director
