Dear Stakeholders,
We take absolute pleasure in reaching out to you through this annual report and also
feel proud to announce a successful conclusion to 2021-22. KMEW maintained a track record
of being India's young and leading marine time industry service provider, through its
fleet of vessels well supported by professionals who work round the long to make the
Company reach new heights.
Being in an industry historically dominated by large PSU corporations on one hand and
small unorganised players on the other, we have won the trust of our customers with
valuable engineering inputs and through sustainable operations to help the marine trade
function without any adverse implications, and we are proud of this achievement.
Successful Initial Public Offering
We are grateful for the overwhelmingly positive response to our initial public offering
(IPO), which was oversubscribed 2.97 times and today is a family of 596 shareholders. As a
company, we are honoured by your trust, and this response reinstates our faith in the
business strategy and a promising future. This is a big moment for all of us at KMEW,
heralding a new beginning in our 7 years of services since inception. The support we
receive from you continues to inspire us to work harder.
Global overview
To say the world is in uncharted waters would be an understatement. The adverse impact
of a mix of the pandemic, armed conflict and climate change has exposed the fragility of
the global system that we had largely considered as having competently learned how to
manage itself. It has now dawned on governments across the world that the implications of
this multidimensional crisis are hard to predict, may complicate further and that signs of
its damaging effects uncontrolled inflation, disrupted food supplies, increased
human displacement, exposed healthcare machinery, stalled education levels and faltering
job creation ecosystems are evident and testing the resilience of every nation.
The overarching takeaway is that despite global instability, India has fared better
than almost any other major nation. While there were situations over the past 24 months
when it appeared that events were getting out of control, we must give credit where credit
is due India was able to bounce back each time, a testimony to our nation's
resilience.
Future demand outlook and our diversification strategy
As far as the future prospects, we are confident that the Indian port infrastructure is
expected to grow in the long-term. This will provide an accelerating growth opportunity to
ancillary support industries such as dredging companies. The government is also focusing
on expanding the sea infrastructure to allow direct trade lines to its ports. This will
avoid transit ports thereby reducing the lead times for critical supplies and improve the
financial viability of the local ports and also further the growth of geographies.
Government is intending to reduce the project timelines of these infra projects by
incentivising the ancillary industries for speedy execution and delivery. Few of the
estimated market sizes are:
(a) Port Ancillary Craft Market Size (500 Plus crafts, Rs. 2,000 Crores Annual Basis)
(b) Dredging Market (Govt and Private Port, Defence, Shipyard and Oil PSU Business Rs.
5,000 Crores annual basis, and
(c) River Dredging Potential Business (Rs. 5,000 Cr annual basis).
KMEW is proud of its portfolio of its legacy services which have gained huge national
importance for the reasons of national security, trade and service opportunities. Our
portfolio of services includes dredging and other key port related ancillary services,
shipbuilding, conducting hydrographic surveys, pilotage services, patrolling services,
ship mooring services, repair, refit services of naval and merchant ships, and providing
technical solutions for maintenance and operations of vessels, etc. In the years to come,
these services will strongly emerge as opportunities of great potential for the company's
growth story for our industry.
Considering the bright future outlook, we have strategised to diversify into new
business segments like developing Fishing Harbours, river dredging, rock dredging,
entering into Cutter Suction Dredger (CSD) Market, ship building etc. They all are in our
consideration for our medium to long term growth story. KMEW has been able to exhibit its
operational and managerial expertise in managing various services with firm commitment.
Our critical focus on having a judicious capital management has helped us in undertaking
prudent investment decisions on acquisition of new vessels and technology. We have
demonstrated our competency through various projects undertaken across geographies and
fierce global competition
Operation front at KMEW
We are delighted to report that the Company has shown an immense resilience in its
financial performance, even under market distress. Our operational revenue was up by 84%
and EBIDTA up by 53% on Y-o-Y FY22 basis. Our capital management strategy to reduce debt
overhang by repaying the debts before the contract tenure has helped us to reduce the cost
of debt to 7.5% vis-a-vis over 15% earlier. All thanks to our competent and professional
team of all disciplines and their dedication to performance excellence.
KMEW also considers FY22 as a watershed year. We have secured the largest dredging
project in our history - the award of our first International contract in assistance with
the Government of India to build the strategic port at Sittwe, Myanmar. The project is a
collaboration between India and Myanmar and is valued at Rs. 118 Crores with a project
tenure of 2.5 years and further extendable by an additional 2 years. The project is
financed by the Ministry of External Affairs as part of its Kaladan MultiModal Transit
Transport Project, located near the mouth of the Kaladan River.
Currently, we have a strong order book of more than Rs. 210 crores with an average
tenure of 2.5 years. On the operations side, FY22 saw us successfully executing 4 dredging
contracts and completed more than 6 million cubic meters of dredging.
We have invested in expanding our fleet assets with new additions to the current fleet
strength of 9. Two more fleets are in pipeline to be ready by December 2022.
We have been able to manage and maintain healthy financial and operational
jurisprudence. All our contracts have a project duration between 36 Months to 84 Months.
On a cautious note, our investments in assets are committed only after award of secured
long term government contract. Our strong receivable cycle ensure that all liabilities are
accounted in less than 45 days as evidenced for last 7 years with GOI.
We have sufficient financial, operational and managerial muscle to compete and bid for
single Contract worth Rs.200 Cr thus assuring us of little to no competition. Our
long-term debts are
Vision 2025
Strategic tie ups with strategic Partners to create Special Purpose Vehicles
(SPVs) with the objective to enter sand mining and Cutter Suction Dredger (CSD) Market
Venture into Costal /Inland Dredging,
Optimize Capacity Utilization.
Expansion of our geographical presence to nearby countries.
Enhancement of the Fleet.
Reducing Capital & Operational Costs.
Enhancement of market share in maintenance dredging and more participation in
capital dredging in India aligned with contract duration so that it is ensure that the
entire debt is repaid within 60-70% of contract completion.
Outlook
The Indian dredging and marine time industry is likely to experience significant
expansion in the coming years. The government's plans to create new waterways and ports,
as well as upgrade and expand the current ports, will account for the majority of this
expansion. The demand for dredging is estimated to reach about 170 million cubic me-tres
in the coming years at existing major ports. In addition, at least eight dredging projects
are being considered at existing non-major ports, with an estimated 18 million cubic
metres of material to be dredged as part of these projects. Furthermore, the six new ports
planned under Sagarmala will create opportunities in the dredging market.
The identification of 106 additional national waterways has created significant
potential. Over 200 million cubic metres of dredging volu-me has been assessed for the
next decade for the existing five waterways as well as the 32 new waterways that have been
identified as viable for development. Given this increase in dredging re-quirements, the
sector presents ample opportunities.
Employees and Society Welfare
We recognise and appreciate our human resources and their constant value-additions.
They are our strategic business partners and play a prominent role in supporting and
driving our business strategies. Although our major challenge will be to find the right
mix of people with domain expertise and skill- sets appropriate for projects requiring
high degree of technical skills. We aim to develop competencies of our people by training
them in the latest developments in their respective domain.
We have always ensured on boarding the right talent across all the levels of the
organisation. We have also provided right work environment for the growth of our
employees, ensuring complete job satisfaction. Our employees adapted the 'new covid
normal' situation in a very quick time and continued to display same levels of commitment
even during the lockdowns and the subsequent waves of pandemic.
Thanking note
We are all passing through a crisis of unprecedented magnitude, and we would like to
thank Team "KMEW"as well as our customers, vendors and other stakeholders for
the confidence and trust they have reposed in us. We also thank our fellow Board Members
for their invaluable support in guiding the Company and enabling another year of growth.
Mr. Saurabh Daswani
Managing Director