DearShareholder,
It is great to be communicating with you through my annual letter. I hope you and your
loved ones are safe. Safety for us has assumed critical priority, considering the more
aggressive second wave that was considerably fatal. My thoughts and good wishes are with
all those who have endured the brunt of this invisible enemy.
It's hard to believe that another year has passed so quickly and what a year it has
been! We were in the midst of some exceptional and unprecedented times.
The coronavirus pandemic has been a wakeup call exposing shortcomings in business
strategies, fragility of interconnectedness and global supply chains. All business plans
drawn up before the pandemic hit the world were almost abruptly turned to naught. Survival
took precedence over success. So it was with us.
India commenced unshackling itself from the lockdown in a phased manner from the end of
the first quarter. While other businesses restarted and rebounded in the second quarter of
FY21, our hands remained tied, owing to the nature of our work. The painful part was that
we had to foreclose a mineral exploration contract owing to the pandemic-related travel
restrictions.
With only about five months of field operations, we remained in the black; we reported
a Net Profit of about B7 crore. This, for me, was immensely satisfying. I believe the team
did a commendable job in sailing through troubled waters in FY21.
FY22 holds reasonable promise
The start to the current fiscal mirrored that of the previous fiscal. But this time
around, two things worked in our favour. We were more prepared with our fall back plan in
the event of a possible second wave. Also, managing the health crisis became a state
subject (previously it was on the national agenda). As such, there were windows of
opportunity for undertaking field work. We capitalised on them effectively to post a
topline of B80 crore in the first quarter of FY22 – our highest in the preceding five
quarters. Also, we reported a Net Profit in excess of B14 crore during the same period.
This, I consider, as a healthy start to the fiscal.
As the old adage goes ‘well begun is half done', I remain optimistic about our
performance in FY22. We have an order pipeline in excess of B360 crore. In the second half
of the year, we will focus on completing a major part of these projects. Moreover, we are
hopeful of securing some projects towards the close of the financial year, which will
further bolster our order book as we enter FY23.
Over the horizon
The prospects over the horizon appears considerably promising. My optimism stems from a
number of realities.
Pent-up demand: The pandemic forced private and government companies to postpone
their aspiration to find oil and gas for more than 12 months. These are expected to
re-surface in the next 12-24 months.
Consider this: In the recently completed fifth round of the Open Acreage Licensing
Policy (OALP), the government offered 11 blocks to ONGC (7 blocks) and Oil India Ltd. (4
blocks). These companies signed contracts with the Government for the allotted blocks only
in November 2020. This should open interesting opportunities over the coming years.
Gas gaining ground: The
Government has set a vision to make India a gas-based economy. The goal is to increase
the share of gas in the energy mix from the current 6% to 15% in 2030. Towards this goal,
the Government has planned a US$60 billion investment for creating gas infrastructure in
the country till 2024. The increased focus on gas could lead to a larger hunt for gas
resources.
Mineral exploration: India has a lot of potential for discovery of minerals as the
continental landmass and its offshore consists of several crustal elements going back
ages. India is blessed with ample resources of a number of minerals and has the geological
environment for many others. But currently mining only accounts for less than 2% of
India's GDP.
My sense tells me that this number should increase appreciably over the coming years.
This thought is based on Government aspirations of an Atmanirbhar Bharat which necessarily
mandates a sharper focus on increasing the production of minerals.
The recent Production-Linked Incentive (PLI) Schemes (for 13 key sectors), for which
the Government has announced an outlay of B1.97 lakh crore are considered cornerstones of
the Government's push for achieving an Atmanirbhar Bharat. For these schemes have been
contoured to create national manufacturing champions. If these schemes are to see the
light of day, India will definitely need to multiply its mineral production going forward.
According to a FICCI report, every 1% increase in the growth rate of mining and
quarrying leads to an increase of 1.2-1.4% in the growth rate of industrial production.
The aggressive push towards electric vehicles is expected to magnify the demand for
minerals considerably, for a number of them India is completely import-dependent.
As such, I believe that mineral exploration space is expected to generate significant
opportunities over the medium-term.
Going forward, our focus will be on actions that will strengthen our ability to capture
opportunities and reinforce our future sustainability.
In closing, I take this opportunity to thank our esteemed shareholders, partners and
other stakeholders for reposing confidence in our capability and extending your invaluable
support in our journey.
| Warm regards, |
| Dinesh Alla |
| Chairman & Managing Director |