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Sadbhav Engineering Ltd.

BSE: 532710 Sector: Infrastructure
NSE: SADBHAV ISIN Code: INE226H01026
BSE 00:00 | 24 Sep 48.75 -0.80
(-1.61%)
OPEN

49.80

HIGH

50.60

LOW

47.90

NSE 00:00 | 24 Sep 48.75 -0.70
(-1.42%)
OPEN

49.50

HIGH

50.70

LOW

47.85

OPEN 49.80
PREVIOUS CLOSE 49.55
VOLUME 122740
52-Week high 96.30
52-Week low 37.00
P/E 11.89
Mkt Cap.(Rs cr) 837
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 49.80
CLOSE 49.55
VOLUME 122740
52-Week high 96.30
52-Week low 37.00
P/E 11.89
Mkt Cap.(Rs cr) 837
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sadbhav Engineering Ltd. (SADBHAV) - Chairman Speech

Company chairman speech

Dear Stakeholders

While it is challenging to predict the uncertainties of the future the success lies inbuilding new paths leading towards growth that have not yet been imagined. By expandingthe perceptions of the strategic options available we can create the vision to own thefuture. It is better to create our own paths to a destination we want to triumph thantraversing on rather easy paths to the destinations not known to us.

Sadbhav has a vision to build tomorrow's constructions today by virtue of 4 Dsintrinsic to its philosophy namely Dream Design Dedication and Dynamism. Sadbhav isrelentlessly working to build the future infrascape for the nation through its variousEngineering Procurement and Construction (EPC) projects in Transport Mining &Irrigation sectors across 12 states in the country.

The global economy witnessed some setbacks during the year with major outbreak ofCOVID-19 pandemic that completely changed the lifestyle of the people changing the modesof interactions and transactions. Lockdown travel restrictions and social distancingnorms completely changed the rules introducing new normal. While Indian Governmentproactively worked on averting the major threat of community transmissions it also gavemoral support to the infrastructure sector to continue work on major projects. It was achallenging task for the infrastructure sector to retain the workforce and manage theirhealth & safety at the sites. However your Company anticipates no significant longterm impact on its business performance due to COVID-19.

Even though the economy had witnessed twists and turns the performance of Sadbhav hasbeen encouraging upholding that the vision and corporate strategies we have adopted arein line with the larger picture we have visualised for the future of the Company. As onMarch 31 2020 your Company has a balanced order book of

Rs. 8371.90 crores with order book to sales ratio stands at 3.73 x FY20. Income fromoperations for the full year stood at Rs. 2252 crores. EBITDA for the full year stood atRs. 279 crores. PBT for the full year stood at Rs. 110 crores and PAT for the full yearstood at Rs. 85 crores. EBITDA margin for the full year remains at 12.41%.

Your Company has been performing steadily by virtue of synergy created between thecontemporary knowledge energetic workforce and rich insightful experience of 32 years.Your Company has steadily posted CAGR of ~16% and ~15% in net revenue and net profitsrespectively over last 13 years. Your Company has market cap of Rs. 464.96 crores and networth of Rs. 2103.98 crores as on March 31 2020.

The Government has allocated Rs. 91823 crore to the Ministry of Road Transport andHighways under the Union Budget 2020-21. The Government plans to invest Rs. 15 lakh croresin the next five years. Highway construction in India increased at 21.44 per cent CAGRbetween FY16-FY19. In FY19 10855 km of highways were constructed and the Government hasset a target for constructing 12000 km of national highways in FY20. In March 2020 NHAI(National Highways Authority of India) accomplished the highest ever highway constructionof 3979 kms. Pradhan Mantri Gram Sadak Yojana (PMGSY) has brought many socio-economicgains in the rural areas. In Union Budget 2020-21 the Government has allocated Rs. 19500crores under Pradhan Mantri Gram Sadak Yojana (PMGSY). As per the Union Budget for FY2030000 km of PMGSY roads were to be built using green technology waste plastic and coldmix technology thereby reducing carbon footprint. The Government has approved the launchof phase-III of PMGSY at an estimated cost of Rs. 80250 crore to widen and revamp125000 kms of road over the next five years. Your Company is resolute to contribute amajor share in achieving the national vision of building infrastructure to propel growth.

Corporate strategies and standard operating procedures (SOPs) at Sadbhav EngineeringLimited have been designed and aligned keeping in view the compliance with the lawsmandating the corporates to follow the policies to protect good environment fair andethical labour practices and governance structure. Sadbhav continuously engages with allits major stakeholders and strives to understand their expectations.

Your Company is a front-runner in the construction industry with its major focus areasof transport mining and irrigation sectors. India as a country is facing large gapbetween the infrastructure required for development and existing infrastructure. YourCompany is determined to reduce this gap and establish the nation in the club of developednations. The Company is steadfast in its commitment to materialise the Government's visionand mission like Atmanirbhar Bharat Make in India Per Drop More Crop (PradhanmantriKrishi Sinchai Yojana) connecting the remotest areas of country with all its bordersunder Bharatmala Project mining prosperity in terms of minerals and making country energyefficient through clean energy.

As on date the Company has completed total 46 projects in the transportation sector inwhich 43 of Highway projects (out of which 11 are EPC projects 11 BOT projects 20 Itemrate projects and 1 Annuity project) and 3 are Metro projects. Your Company hasconstructed roads and highways of over 9621 lane kms as on date and it has contributed89% of the total revenue for the year. Sadbhav has mined 562 cubic mt till now which hasgenerated 7% of the total revenue for the year. Irrigation division of your Company hascompleted canal work over 812 kms which has generated 4% of total revenue for the year.

I am glad to share that SEL's subsidiary SIPL has entered into a share purchaseagreement dated July 1 2019 with inter alia IDBI Trusteeship Services Limited and LTIDPLINDVIT Services Limited. Under this agreement SIPL has transferred its holding in 8 SPVsnamely Bijapur Hungund Tollway Private Limited Aurangabad Jalna Tollway LimitedHyderabad Yadgiri Tollway Private Limited Dhule Palesner Tollway Limited Nagpur SeoniExpressway Limited Shreenathji Udaipur Tollway Private Limited Bhilwara RajsamandTollway Private Limited and Mysore Bellary Highway Private Limited (MBHPL) a subsidiaryof the Sadbhav Engineering Limited to IndInfravit Trust during the year and the Trust nowholds 100% (hundred percent) of the total issued subscribed and paid-up share capital ofthe above 8 SPVs on a fully diluted basis as on date of this report. For

Ahmedabad Ring Road Infrastructure Project Limited ( ARRIL) regulatory approvals havebeen applied for and will be closed when the change in ownership approval is received.

Furthermore your Company has decided a merger of its subsidiary SadbhavInfrastructure Private Limited (SIPL) into Sadbhav Engineering Limited (SEL). Thestatutory processes are in advance stage and the complete merger process is expected to beaccomplished by March 2021. This amalgamation will enable consolidation of the businessesinto one combined entity which would lead to simplified corporate structure productiveutilisation of combined resources economies of scale reduction in overheads & otherexpenses reduced inter-company transactions and reduction in the multiplicity of legaland regulatory compliances. Further the company expects with this deal that its net worthwill increase allowing it to bid for larger projects.

Achieving holistic and sustainable growth is at the helm of the core ethos of SadbhavGroup and your Company strives for equitable growth and fair distribution of wealth amongstakeholders. Your Company has been giving employment opportunities to 3423 employees.Company's progressive plans for new projects would further generate more direct as well asindirect employment and business opportunities. Your Company believes to give back what ittakes from the communities and surrounding. Hence Company is proactively working forupliftment of the surrounding communities and provides amenities like community healthcare community infrastructure building and need based interventions around project siteson periodic intervals.

Your Company has introduced “Technovation” under which Company has augmentedits technologies across all the verticals to benchmark the Company with the best in theworld. Your Company implements the best practices and systems like SAP S/4HANA along withinnovative and engaging HR practices to motivate and retain talent. Our HR policies aredriven by 3 Es Empowerment Engagement and Excellence to infuse performance among the teammembers.

I appreciate and thank all our passionate employees for their contributions which hasmade Sadbhav a revered name in the construction sector. I am also thankful to all theshareholders investors clients community members suppliers and government authoritiesfor their support and motivation to us in surpassing our own benchmarks and enabling us toforge ahead to achieve our vision of building tomorrow's infrastructure today.

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