It gives me immense pleasure to present before you the Annual Report of your companyfor the financial year 2017-18. This has been an year of transition for RITES during whichwe not only maintained business growth profitability but also successfully completedexercise for listing of the company through part disinvestment of holding by Government ofIndia. Your Company has maintained its distinct brand name over the last 44 years in Indiaand abroad while serving different infrastructure sectors and diversified geographicallocations.
Listing with Stock Exchanges
The initial public offer in June 2018 to disinvest 12.6% stake of Government of Indiareceived very encouraging response from the investors. The issue received over 13 lakhapplications and was over-subscribed about 67 times as per the bid book of BSE and NSE.This indicates deep trust and confidence of investors your company enjoys. The Company'sequity shares were listed on BSE Limited and National Stock Exchange of India Limited on 2ndJuly 2018. The confidence posed in the company by the investors will be a greatsource of motivation for all of us to excel further in times to come.
I am pleased to inform that during FY 2017-18 your Company achieved its highest everstandalone Turnover and Profit After Tax of Rs. 1603 crore and Rs. 337 crore respectivelyas compared to previous year's standalone Turnover of Rs. 1507 crore and Profit After Taxof Rs. 331 crore respectively showing an increase of 6.4% in total revenue and 1.8% inPAT.
On Consolidated Accounts basis the total revenue was Rs. 1667 crore in FY 2017-18 ascompared to Rs. 1561 crore in FY 2016-17 recording an increase of 6.8%. The consolidatedPAT in FY 2017-18 was Rs. 363 crore as compared to Rs. 337 crore in FY 2016-17 showing anincrease of 7.8%. In the FY 2017-18 growth was predominantly driven by consultancy incomewhich was Rs. 1015 crore as compared to Rs. 833 crore in FY 2016-17 registering a growthof 22%. Revenue from turnkey construction projects has increased by Rs. 116 crore to Rs.147 crore in FY 2017-18 as compared to Rs. 31 crore in FY 2016-17. Your company achievedthese results despite severe competition from domestic and foreign consultancy companies.
REMCL Subsidiary of RITES
RITES subsidiary company REMCL has also reported excellent performance in FY 2017-18.Its turnover increased to Rs. 69 crore in FY 2017-18 as compared to Rs. 58 crore in FY2016-17. PAT of REMCL has increased to Rs. 30 crore in FY 2017-18 from Rs. 18 crore in FY2016-17 registering a growth of 72%. The company has successfully facilitated procurementof power for Indian Railways for 1160 MW. The company successfully awarded 120 MW of solarroof top projects for zonal railways. Mandate has been received from Indian Railways for323 MW of solar roof projects and 450 MW of solar ground mounted projects.
The growth in the business & excellent financial results have prompted yourDirectors to recommend a final dividend of Rs. 40 crore for FY 2017-18. This is inaddition to interim dividend of Rs. 70 crore which was paid in January 2018 to theesteemed shareholders.
Your Company has ended FY 2017-18 with its highest ever order book of Rs. 4818 crore.In view of the healthy order book and huge investments taking place in infrastructureprojects in India I am confident company will continue in years to come. This increasewas due to orders flowing in from various infrastructure projects in railways metrosairports exports and loco leasing segments. The focus of the management would be toensure timely execution of these orders with quality standards and complete clientsatisfaction.
New Tax Regime
The FY 2017-18 also marked the introduction of Goods and Service Tax (GST) growth inits quality which is considered as the biggest tax reform so far. Your company was able toensure a smooth transition into the new tax regime and also coordinated proactively withits business partners and clients on these matters.
Your company has been able to consistently achieve Excellent rating in itsperformance evaluation under Memorandum of Understanding (MOU) by Department of Publicenterprises. With the performance in FY 2017-18 your company has become eligible to berated as Excellent for the FY 2017-18 also.
Keeping in view the sectoral investment scenario and the orders in hand your companyhas signed MOU with the Government of India for setting performance target for excellentrating showing 22% growth in FY 2017-18 over FY 2016-17. I am confident that my team atRITES would scale up the efforts and ensure that we achieve such enhanced performancetargets.
The audited accounts of the Company for the FY 2017-18 along with the Directors'Report Report of Auditors and Comments of Comptroller and Auditor General of India havealready been circulated to you and with your permission I take them as read.
Transport Infrastructure and RITES
The key infrastructure sectors where your company is actively working in India andabroad are seeing increasing investments from Government and private sector.
In India the capital expenditure in projects in railways highways metros airportsports have been getting 20-30% increase in budget allocation for investments on year onyear basis since last 3-4 years. In addition Govt. of India has identified specificgoals/targets for 75th year of independence to set up a modern and efficienttransport system through its New India 2022 development agenda with key emphasis onrailways roads urban transportation and airports.
Also in several countries where we pursue business interests there is increasedattention to expand rail network establish Light Rail System (metro rail) that theaccelerated growth of your to enhance suburbs connectivity with cities and acquire newrolling stock. We are participating in such business opportunities wherever possible. Suchinvestment scenario opens up possibilities of higher growth in the years to come.
Your company has further strengthened its leading position in providing comprehensiveconsultancy to railway sector in India. Apart from feasibility studies integrated designservices institutional management and technical support services your company has shownsignificant assurance business.
Your company continues to maintain its growth in the highway metro rail and airportsectors despite stiff competition. Several new projects for airports Project ManagementConsultancy have been received during the year. With 44 locomotives business of offeringshunting locomotives on wet lease including operation & maintenance continued to bewell received by domestic Non- Railway clients.
Select Domestic Projects
Your Company continues to follow a path of systematic and professional operationsresulting in preserving its position as a premier transport consultancy organization inIndia and abroad. During the year the company was engaged in a number of prestigiousdomestic projects which included High Speed Passenger Corridor between Ahmedabad Mumbai; and Dedicated Freight Corridor between Dadri-JNPT Mumbai railway constructionprojects of doubling 3rd line electrification and upgradation of workshops onEPC/turnkey basis General Consultancy work for Metro rail projects for Ahmedabad NagpurPune and DPR for Kochi Patna Gauhati Kanpur Varanasi Agra Lucknow and Chennai etc;design of 4940 metres long rail-cum-road bridge a fully welded composite structure overRiver Brahmputra in Bogibeel near Dibrugarh Assam; upgradation of 1132 km nationalhighway under Bharatmala project in 4 states; Integrated Check Post (ICP) at Jogbani onNepal Border and at Moreh on Myanmar Border and airport at Khushinagar (UP).
Select Foreign Projects
Your company was also engaged in technical services for Metro project in Mauritiussupply of coaches to Bangladesh supply of Diesel-Electric Multiple Units (DMU) train setsand Broad Gauge locomotives to Sri Lanka Metre Gauge locomotives to Myanmar engineeringconsultancy for new standard gauge railway line in Gabon Integrated Check Posts atBiratnagar Nepal Road project at Botswana and Guyana etc.
Your company consistently endeavors to adopt and maintain the highest standards ofethics in all spheres of business activities. Your company is implementing the percepts ofCorporate Governance in letter and spirit. Your company accords highest importance totransparency accountability and equity in all facets of its operations.
With emphasis on transparency several initiatives were implemented during the year.All details related to vacancies recruitments e-procurements & tenders policies& procedures for use by employees employees' service portals inspection callsregistration and status etc. have been made accessible online. Online Grievanceregistration has been made effective.
Contribution to Govt. of India Initiatives
RITES has always been proactively supporting the Government of India initiatives byformulating its business or governance objectives in line with the Govt. of India plans.
Make in India
In line with Make in India' initiative our joint venture company with SAILSRBWIPL (SAIL RITES Bengal Wagon India Pvt Ltd.) has been established and the company hasstarted manufacturing and rehabilitation of wagons at its works at Kulti West Bengal.
Skill India Mission
In line with Skill India Mission initiative to create convergence acrosssectors and states in terms of skill training your company has provided training to 135apprentices in the non-technical and non-engineering categories during FY 2017-18 in allthe sectors of operation of RITES viz. Railway Equipment Services Highways & PortsBridges & Airports Electrical and S&T projects.
In line with the Digital India initiative and to enhance transparency improveefficiency of our operations several key initiatives have been implemented which includecompanywide SAP based Enterprise Resource Planning (ERP); e-procurement for works goodsand services; mobile app for third party inspection services Employee Self Service (ESS)portals and online grievance handling and monitoring etc.
Corporate Social Responsibility
Your company understands its responsibility towards society and adopted aCorporate Social responsibility and Sustainability policy to show itscommitment towards operating in economically socially and environmentally sustainablemanner. As a responsible corporate citizen your Company has spent Rs. 9.9 crore onvarious CSR activities during the year 2017-18.
I express my gratitude to our esteemed Shareholders my colleagues on the Board ofDirectors and to the Chairman Members and Officers of the Railway Board for theirvaluable support advice and co-operation. We are particularly grateful to the Ministriesof Railways Road Transport and Highways Commerce Finance External Affairs and UrbanDevelopment Health and other Ministries and to the Indian Embassies and Missions abroadto the Foreign Mission and Embassies in India and Exim Bank and other Bankers of thecompany for their valuable support and guidance to the Company.
Your continued support and unstinted confidence inspires us in all our endeavors forexcellence.
I would like to express my sincere and heartiest thanks to Department of Investment andPublic Asset Management (DIPAM) Security and Exchange Board of India (SEBI) StockExchanges i.e. National Stock Exchange of India Ltd. and BSE Ltd. and Registrar ofCompanies (ROC) for their guidance and support throughout the IPO process.
Special mention is warranted for the tireless efforts of RITES team of officers andstaff for their performance and enduring contribution in bringing the Company to such aheight. Powered by the talent of our people and vesting reaffirmed faith in the resilienceof our business model we look forward to overcoming any challenges that may lie ahead.
We are indebted to our loyal set of clients who have been a constant source ofinspiration for us to provide them value added services. Their continued support hassustained our excellent performance through the years.
I am confident that with its sustainable track record and global reputation yourcompany will achieve new heights of success by effectively harnessing the host ofopportunities and business that can be expected in the coming times.
|Best regards || |
| ||(Rajeev Mehrotra) |
|Dated: 16th August 2018 ||Chairman & Managing Director and Chief Executive Officer |