Even while wading through uncertainties we exhibit the spirit of resilience and overcome the hurdles to continue on our journey for sustainable growth
My dear fellow stakeholders
Undoubtedly this has been one of the most challenging years in recent times for the global and Indian economy. The case of the infrastructure sector in the country is no different and the sector faced issues such as slow awarding delays in land acquisition di culties in debt nancing prolonged monsoon etc. In spite of these challenges I am happy to report that our differentiated strategy of asset-light business model with focus on prudent capital structure and cash management has helped us build a strong balance sheet with a healthy cash balance allowing us not only to complete our ongoing projects but also to pursue growth opportunities in these times where global economy is grappling with multiple challenges of credit and liquidity constraints on one hand and demand squeeze on the other. Thanks to an exceptional team and to the support of all our stakeholders I believe we have been able to build an institution focused on operational excellence capable of withstanding challenges and creating long-term sustainable value for our stake holders.
Year under Review
During the first half of the year the activity in the road sector was sluggish. We saw very few new orders especially in HAM being awarded in the initial part of the year due to general election and elections in certain large states. NHAI's policy of tendering projects only after acquiring 80% of the land has also resulted in fewer projects reaching the tendering stage. Execution was also slow as the country witnessed unexpected extended heavy monsoons which impacted construction of projects across the country. While both awards and executions picked up in the second half of the year some fundamental challenges continued to impact the sector. Issues in land acquisition led to delays in appointed date for many projects. Stress in the banking sector led to di culties in raising debt funding for the projects delaying financial closure and appointed dates.
Despite all these challenges Welspun Enterprise has been able to maintain its revenue and EBITDA margin. We have progressed well on our under-construction projects. Two HAM projects - Gagalheri-Saharanpur-Yamunanagar as well as Chutmalpur-Ganeshpur-Roorkee-Gagalheri are at advanced stages of completion with around 90% of the physical progress. We are con dent of achieving PCOD for both these projects by Q1 FY21. The other two HAM projects Amravati-2 and Chikhali Tarsod is also progressing well and we plan to complete both in FY21 ahead of schedule. In the water segment we completed the Dewas Water Project during the early part of the year and the project is now supplying water to many industries in and around Dewas.
We have always been focused on unlocking value from our completed projects. During the year we successfully re nanced the Delhi-Meerut project possibly the first re financing of a completed HAM highway project in the country. The re financing at a competitive rate helped us strengthen our balance sheet. This re financing is also significant from the perspective that we could earn the trust of new lending partners in this environment of severe credit squeeze. I am grateful to our lenders for the faith they have reposed in us. I believe this has been possible only due to our excellent track record on execution strong balance sheet and robust credit rating.
Covid-19 and our Response
As you know the world is currently going through a major crisis; a crisis unlike any other over the past 100 years. COVID 19 is not only threatening lives but is also causing immense disruption to healthcare systems macro and micro economic environments and financial systems at global scale. At Welspun Group we stand united with global community in contributing in every possible way to help humanity deal with this unprecedented challenge in the spirit of our Hon'ble Prime Minister's resolve to undertake the journey from `Jan Hai To Jahan Hai' to `Jan Bhi aur Jahan Bhi'
At Welspun it is our utmost priority to ensure safety & well-being of our customers partners employees and community at large. We are not only ensuring compliance to guidelines issued by relevant public authorities but also continuously communicating with our clients suppliers and service providers and our employees across our o ces and sites globally to raise awareness about the safeguards against COVID19 to provide access to healthcare and information infrastructure and to help our clients suppliers/service providers and employees adopt global best practices. We believe that continuity of our services is critical component of global community's ght against the pandemic.
We have issued SOPs and strengthened our IT Infrastructure to enable remote working and collaboration among our clients partners and employees to continue our operations across our o ces construction sites and operating sites.
In spite of the bleak macroeconomic scenario in the near term I am optimistic about our Company's future. We remain prepared to cater to India's future infrastructural needs. To thrust development infrastructure development across sectors is recognized as an important lever to generate growth and social prosperity. With the government clearly signaling that infrastructure especially roads and water will be a priority we expect sustained order in flows over the next few years. The National Infrastructure Pipeline is an e ort in the right direction to augment India's infrastructure through an investment of Rs. 111 trillion between FY 2020-25. The government has emphasized the role of private investment for funding this developmental infrastructure program. This investment-led development can possibly take economic welfare into the deeper corners of the general public.
Apart from primary bidding we also believe that the current environment will throw up many opportunities to acquire projects at attractive valuations. We have already taken a significant step in this direction. We recently announced the acquisition of a Build-Operate-Transfer (BOT) Toll project Mukarba Chowk Panipat from Essel Group through the harmonious substitution route. This project adds more than Rs. 21 billion to our project portfolio and more than Rs. 11 billion to our order book. We would be able to immediately start execution on this project as the appointed date has been achieved and some initial work has already been completed. We believe that this addition to our existing road portfolio will create sustainable value for our shareholders and improve the overall returns for the Company.
Focus for FY21
We start the year with a project portfolio of more than Rs. 106 billion and a robust order book of around Rs. 50 Billion. Our focus will be to continue on our journey of operational excellence and complete these projects on time or ahead of schedule. We have already resumed construction at all our project sites following all government guidelines. We believe that we will be able to make up for the lost time during the remaining part of the year and would be able to achieve COD on four under-construction projects during FY21. We are also expecting significant progress on the execution of our other projects including the recently acquired project.
In the current environment preservation of cash remains key. Therefore we will have a sharp focus on optimization of our operating and financing costs leveraging operational excellence healthy balance sheet and robust credit rating.
In line with our asset-light strategy we will look at unlocking value from our projects once they are complete. With ve operational projects expected before the end of the year (including the already operational Delhi-Meerut Expressway project) we will have more options to explore in terms of our asset monetization. We will also look at unlocking value from our Oil & Gas investments.
My Sincere Gratitude
We are going through an unprecedented situation and I thank all our stakeholders who are standing by us through this di cult time. I express my sincere gratitude to our shareholders bankers customers Board of Directors and our committed employees. These are challenging and uncertain times but we feel con dent that as a company and community we can get through this together. I hope that you your family and colleagues are well and are taking the necessary safety measures.
Stay safe stay happy.
My best wishes to you and all your loved ones
B. K. Goenka