I am happy to present our numbers for 2015-16.
OUR REVENUES GREW 11 PER CENT WHILE OUR PROFIT AFTER TAX STRENGTHENED 30 PER CENT OURFOURTH STRAIGHT YEAR OF PROFITABLE GROWTH.
This profitable growth validated what we wanted our company to be one that wouldbe driven by a growing presence in rapidly growing but relatively under-crowded verticalsfavourable trade terms and attractive profitability.
The numbers of the last financial a 78 bps improvement in EBIDTA margin to 10.36 percent and a 130 bps improvement in Return on Equity to 11.61 per cent indicate that we areindeed headed in the right direction.
To contribute extensively to the development of the Infrastructure Sectors by providingquality services matching the best in the Industry thus consistently meeting thebenchmarks set by customers in terms of quality price and schedules.
The alchemy of culture
There is a simple way in which I wish to describe the re-invented Sunil Hitech.
One company. One vision. One information system. One monitoring system.
In a world where businesses and markets are becoming increasingly complex what isrequired is a simplified management approach.
Through progressively investments in technology we are enunciating a common agendathat aligns every single individual in the company around a common goal; we are building asystem of review meetings that connects people across geographies to accelerate informeddecision making; we are investing in information sharing systems that make it possible forexecutives to tap into a common knowledge pool; we are investing in information design andimplementation that makes all relevant information easily accessible.
For long we have heard that extensively empowered companies are the most successful.In todays rapidly changing environment information lies at the cutting-edge ofempowerment. The most successful companies are also the best informed. So when everyoneknows what is to be achieved the company works as a team; when information is adequatelyavailable in an easily accessible manner enhanced morale and success inevitably follow.
It might sound simplistic but the reality is that in the reinvented Sunil Hitechmemos have been replaced by whatsapp groups periodic cross-functional meetings have beenreplaced by multi-locational video-conferencing office diaries have been replaced bysmartphones a monthly newsletter from the MDs office has been replaced by abroadcast group right down to day-long hired cars now being replaced by Uber andOla. We may be in old businesses; we possess a rejuvenated mindset.
The result is that at the Sunil Hitech of today the focus is to work smarter and notmindlessly harder. The focus is to go consciously slower if only to move consistentlyfaster. There is a growing conviction that God lies not as much in the financials as muchin the culture. The bottom line: if a project has been allocated to Sunil Hitech then thecustomer should be assured that the project will be successfully completed.
5 challenges that we faced in our business
The BoP business was marked by project delays. Receivables were generally extendedstretching working capital. Clients encountered funding challenges affecting vendors. Theincreased cost of working capital affected viability. Overheads affected competitiveness
This cultural transformation could not have come a day too soon.
There is adequate traction building up: the countrys road building sector hasturned around and sits at the cusp of an unprecedented opportunity; the building sector isreporting a bigger quantum of larger contracts; the power sector is likely to deliverattractive growth translating into attractive Balance of Plant assignments.
At Sunil Hitech we believe that our complement of operating culture core competenceand a right-sized Balance Sheet will address the emerging infrastructure opportunity at atime when most construction companies in the country are addressing legacy low-marginorders and nurse stretched Balance Sheets.
5 decisive initiatives through which we countered challenges
Reduced the proportion of BOP business over the years. Moderated receivablesproportionate to turnover. Worked completely on government projects funded by globalagencies; eliminated bad debts. Moderated working capital cost from banks by nearly 50bps. Restructured the business; reduced BoP business manning by 400 people
We had grown our order book to Rs 3429.57cr by the close of 2015-16 which provides 30months of revenue visibility; these projects correspond to attractive margins that shouldincrease our EBIDTA margin yet again in 2016-17. At Sunil Hitech we have laid thefoundation for scalable growth which should make it possible for each of our threeoffices to contribute at least Rs 1000 cr in revenues to the company five years from nowwhich should translating into sustained revenue growth improved margins profitablegrowth and enhanced value in the hands of those who hold shares in our company.
Ratnakar Gutte Chairman