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SPML Infra Ltd.

BSE: 500402 Sector: Infrastructure
NSE: SPMLINFRA ISIN Code: INE937A01023
BSE 13:17 | 21 Jan 56.10 2.65
(4.96%)
OPEN

56.10

HIGH

56.10

LOW

54.50

NSE 13:09 | 21 Jan 55.70 2.65
(5.00%)
OPEN

55.70

HIGH

55.70

LOW

54.85

OPEN 56.10
PREVIOUS CLOSE 53.45
VOLUME 132455
52-Week high 56.10
52-Week low 8.20
P/E
Mkt Cap.(Rs cr) 206
Buy Price 56.10
Buy Qty 58215.00
Sell Price 0.00
Sell Qty 0.00
OPEN 56.10
CLOSE 53.45
VOLUME 132455
52-Week high 56.10
52-Week low 8.20
P/E
Mkt Cap.(Rs cr) 206
Buy Price 56.10
Buy Qty 58215.00
Sell Price 0.00
Sell Qty 0.00

SPML Infra Ltd. (SPMLINFRA) - Chairman Speech

Company chairman speech

"We have realized that the projects we execute have greater impact on people'slives by providing basic necessities like water and electricity. So we have moved intobeing a very impact oriented company with deeper social conscience."

Before I discuss the economy business and company affairs let us remember the peoplewe lost during the coronavirus pandemic. It is a big humanitarian loss globally on such alarge scale severity and geographical spread that has never been seen before in acentury.

Some of our valued employees have suffered and we lost them during the second wave ofpandemic. I and my colleagues on the Board and Company Management offers our heartfeltcondolences to all those in our SPML Family who have lost their loved ones. Prayers andfond memories are what we have to remember our dearly departed.

For us the financial year 2020-21 was marked not only by its challenges due toCOVID-19 but also by how people in your company came together to fight it. After theinitial lockdowns your company continued to operate its project sites and offices inaccordance with the guidelines issued by the Central State and local Governments whilestrictly adhering to the prescribed safety protocols.

Even amidst the 2nd wave of COVID-19 infections and thereafter the employees of yourcompany constantly worked closely with the clients associates and suppliers to ensurecontinuing project executions and uninterrupted supply of water and power to the people ofour country through many water supply and electricity distribution projects. Thecommitment and courage shown by the employees during these testing times has beenexemplary. My sincere gratitude and appreciation to all of them.

I would also like to convey our deepest gratitude to all the doctors healthcareprofessionals police and administration officials across the country for theextraordinary fortitude displayed in serving the people during these trying times.Unprecedented efforts were witnessed as the country rallied together to provide crucialsupport in augmenting oxygen supplies ramping up healthcare infrastructure and extendingrelief to the people in need.

Government of India's endeavors to accelerate vaccination program brings optimism forthe future. The determined efforts to vaccinate all citizens are undoubtedly the mostcrucial to restore normalcy at the earliest possible. The crisis however is far from over.The distress caused by the pandemic continues to be a concern for lives and livelihoods aswell as for our economic growth. Despite uncertainties the Indian economy holds immensepromise.

Indian Economy

Indian economy that was witnessing a sharp drop in GDP following the impact of Covid-19induced disruptions and lockdowns has started showing signs of improvement during thesecond half of FY 21. The GST collections got robust from November 2020 onwards. Howeverthe second wave that started in March 2021 has come in the way of further recoverynecessitating deployment of resources to protect lives safety and basic needs of largenumber of people besides augmenting healthcare infrastructure that was needed to fight themost deadly second wave. There have been restrictions and lockdowns again by all thestates across the country causing shutdown and constraints for movements and activities.

Apart from the huge spends on covid relief measures the Government is focusing oneconomic recovery with planned investment in various infrastructure projects and schemes.This can create employment as well as income sources that can boost economic activities inthe coming months. With the vaccination program and focused approach of the government

I am hopeful that the Indian economy will bounce back at a higher rate leading toglobal supremacy towards achieving $5 trillion GDP.

Construction Sector

According to a latest report ‘Global Construction Outlook to 2025' signifyingthat global construction sector will continue on a recovery path following the historiccollapse in activity in 2020 amid the severe disruptions caused by the pandemic. From 2022to 2025 global output growth is predicted to average 3.7% a year.

In India the construction sector which suffered colossal losses is expected to bounceback from the perils. The Union Budget laid huge emphasis on the infrastructure sectorhighlighting the commitment of the Government to the growth of the sector which wouldhave a multiplier effect on the overall economy.

On his Independence Day speech Hon'ble Prime Minister of India has put the Covidshocks behind and places the economy on the fast-track promising several initiatives.Rs.100 trillion announcements for Pradhan Mantri Gatishakti Bharat Master Plan forintegrated infrastructure growth will certainly see robust growth in the sector in comingyears. He also set a target of making India energy independent by 2047 by replacingpetroleum with other forms of energy produced indigenously and announced a NationalHydrogen Mission noting the country spends Rs.12 trillion on energy imports every year.The National Infrastructure Pipeline Project announced earlier and re-emphasized againalso aimed at easier interconnectivity between road rail air and waterways to reducetravel time and improve industrial productivity.

India is facing a vital challenge of fresh water. Already 20% of the population lacksclean drinking water and 40% lacks basic sanitation. Over 43% population is suffering fromacute water stress and more than 20 large cities in the country are facing extreme watershortage and possibility of ‘day zero' water supply. Sustainable infrastructuredevelopment with awareness and behavioral change around water usage and management iscritical in addressing this challenge.

The government is well aware about the emerging situation and has initiated a number ofdedicated water supply schemes. The flagship Jal Jeevan Mission will see huge spendingworth Rs.6.47 trillion under rural and urban water supply infrastructure development inthe next 3 years' time. As on mid-August'21; 7.98 crore (41.57%) out of 19.19 crore totalhouseholds in the country has been connected with functional tap water supply. Every ruralhousehold in over 1.08 lakh villages and 78 districts is getting assured tap water supplyin their home.

Apart from the much publicized Jal Jeevan Mission program there are other schemes inwater sector like Pradhan Mantri Krishi Sinchayee Yojana- Har Khet ko Pani with anallocation of Rs.9050 Crore; Dam Rehabilitation and Improvement Project (DRIP) Phase 2& 3 with Rs.10200 Crore for the period of 2020 - 2031; National River Linking Project- Rs.22495 Crore; Atal Mission for Rejuvenation and Urban Transformation (AMRUT) withRs.7300 Crore for 2021-22; and National Hydrology Programme with Rs.3680 Crore upto year2024. Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) - Accelerated Irrigation BenefitProject (AIBP) scheme with exclusive budget allocation of Rs.11588 Crore for the periodof 2021-22; National Watershed Project with Rs.2611 Crore upto 2022; Atal Bhujal Yojanawith Rs.6000 Crore upto year 2025 are the important government schemes that promises abetter prospect for water infrastructure development in next few years' time.

On the capex side the National Infrastructure Pipeline Plan has already taken up 8158projects and another 1858 projects are under development stage. 217 projects worth INR1.10 lakh crore are already completed. Another 678 projects worth Rs.6 lakh crore havebeen in the stage of formulation and implementation.

Power irrigation roads and highways urban infrastructure railways aviation metrorail bullet train smart cities development Swachh Bharat program digital and telecominfrastructure and other sub-sectors together constitute the infrastructure developmentgrid in India. The Centre and State Governments are the major funding sources withmoderate participation from the private sector.

Water and electricity infrastructure is in focus of attention through implementation ofthe Jal Jeevan Mission and the new power distribution scheme. On road connectivitysignificant work is being done under the Bharatmala Pariyojana and Pradhan Mantri GramSadak Yojana which are expected to deliver gains in trunk and rural connectivity.Efficiency of transport services requires attention. Use of technology proposed under theNational Logistics Policy is expected to deliver good results. With several keyinitiatives in the relevant sectors it hold promises of good business prospects for yourCompany.

Technology Intervention

World over business enterprises are navigating their way to a better future byconnecting their businesses with digital and cellular technologies and automation devices.The global information technology market is expected to grow from $7.85 trillion in 2020to $8.37 trillion in 2021 at a compound annual growth rate (CAGR) of 6.6%. Almost everyobject around us is going to be connected; from streetlights water & electricitymeters water pumps supply network household utility connections cars elevatorshousehold appliances and all utility gadgets we can think about. The transformativepotential technology holds for business and society is boundless allowing us to solveproblems like never before. The pandemic has further accelerated extensive digitalizationand this transformation is happening faster than ever.

In order to execute successful projects at scale we must organize our business withthe perspective of long-term transformation that includes setting up operationalfundamentals in a smart way. We need to think digitalization and embed appropriateinnovative technologies into the core of our business with clear and smooth path tobusiness growth. With end-to-end implementation in mind we will need to ensure that wehave or can source the right skill sets and capabilities.

Company Highlights

Since its inception in 1981 your Company has come a long way to stand tall as one thelargest water management company in the country. Many years of dedication and sweat havecontributed to this fruitful yet exhilarating journey. Over the years we have createdsustainable water infrastructures across the country to provide drinking water facilitiesto more than 50 million people and have been a valuable partner to the government andwater utilities.

Notwithstanding the positives outlined above there exists a fair probability ofconditions remaining uncertain over a longer duration as the pandemic is yet to abateboth globally and locally with the emergence of newer strains. Large scale disruptionshave affected the growth pattern and continue to trigger aftershocks that weigh on therecovery. Your company had to deal with the following major challenges during FY 20-21.

• Lockdown that started in the second fortnight of March 2020 and continued duringa major part of Q1 of FY 21 have adversely impacted the operations. Company's projectsites remained closed with significant losses reported in revenues and profitability.

• The Company has gone through a difficult phase of liquidity crunch to meet itsworking capital requirements with mismatch cash flow due to payment delayed from theclients.

• Absorption of idle costs of machineries and employees incurred during Q1 as yourcompany did not resort employment cuts or kneejerk cost saving measures.

• Continuous increasing of key raw-material prices from the second quarter onwardsand absorbing price increases without disturbing the projects execution had a significantimpact on profitability.

• Making alternate indigenous supply arrangements for some key equipment andmaterial that were being imported from other countries. This also caused project delaysand loss of sizable execution opportunities during FY 21.

• In the financials like many other construction companies your Company alsosuffered a major loss in sales and profit. The turnover during the year reduceddrastically to Rs.658.58 Crore as against Rs.925.42 Crore in the previous year. TheCompany's profit also suffered a major loss of Rs.107.17 Crore during the FY 21.

With the above background I shall proceed to briefly cover the other significanthighlights of FY 21 and the steps being taken by your Company to stay stronger as itcontinued to maintain its leadership in the core water sector opportunities.

• Your Company featured again in the World's Top 50 Private Water Companies asper bi-annual survey by Global Water Intelligence London. Your Company continuously beingfeatured in World's Top 50 since 2015.

• During the year your Company also received substantial new project orders injoint ventures with different friendly companies worth Rs.5770 Crore from the esteemedclients in the state of Odisha Manipur and Uttar Pradesh including several projectsunder the Jal Jeevan Mission.

• Your Company continue to bid for water projects aggressively and the businessdevelopment team has already submitted or in the process of submitting project tendersworth about Rs.20000 Crore with our JV partners.

• Your Company has completed a drinking water supply project in Manipur in arecord time of 18 months as against the project duration of 24 months despite being achallenging task to provide tap water facilities to around 300000 populations in 73014households. The project was inaugurated by Hon'ble Chief Minister of Manipur Shri N. BirenSingh.

• The Hon'ble Prime Minister of India has laid the foundation stone for Manipurwater supply projects under the Jal Jeevan Mission which your Company will be executing.

• Your Company has secured an arbitration award of Rs.236.43 Crore against theNational Thermal Power Corporation (NTPC) for Bongaigaon Thermal Power Plant in the Stateof Assam which has been challenged by the NTPC and final outcome is awaited.

• Your Company also featured among the BS1000 Top Indian Companies reportpublished by leading business daily Business Standard.

Every business has to discover its own ways to adapt to the new normal find innovativeapproaches to meet the challenges and remain afloat in every aspect. The one who movesswiftly and take proactive measures is bound to sail through these turbulent times andemerge stronger. Your company took the disruptions caused by the pandemic as anopportunity and initiated several proactive steps in digitalizing business operationsproject monitoring HR management technological intervention in systems and processes andmost importantly augmenting supply chain to ensure that it is prepared to meet therequirement of every project adequately on time.

Your company is committed to the welfare of its employees at all levels and has kepttheir morale high through various support measures to tide over these difficult times.Almost every employee and work force is fully vaccinated and comprehensively follows allcovid and safety guidelines.

Your Company is committed to conduct business with a strong environment conscience toensure sustainable development safe work places and enrichment of the quality of life ofits employees clients and the community. It respects human rights values supportingorganizations and invests in innovative technologies and solutions for the economic growthof the country. We stay committed to our core values for development of a better India inthe making.

Acknowledgements

Before concluding I once again wish to convey my sincere thanks to the dedicatedemployees of the Company. Without their efforts and commitment the Company could not haveperformed and sustained during these challenging conditions. I would also like to thankthe leadership team and management for their continued strong and unequivocal support.

I extend my gratitude to the various government and regulatory authorities Company'svalued clients suppliers vendors investors bankers and shareholders for theirconsistent and resolute co-operation and trust. The supports we continue to receive fromour banks enable us to obtain and execute projects and plan for the future.

I take this opportunity to thank the Board Members and particularly the distinguishedIndependent Directors for their continued leadership and unwavering support to theCompany. They are always there for invaluable guidance and I truly value their partnershipwhich holds the company to the highest governance and compliance standards.

I wish and pray that this world emerges victorious from the crisis created by thepandemic. I urge each and every one of you to stay safe and take care of your loved ones.

Thank you!

Subhash Chand Sethi.

Chairman.

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