Today I am more confident and optimistic about the future because it is
being backed by strong factors and figures!
Dear Shareholders,
It is always a pleasure addressing the privileged shareholders, and it
is more so while placing the 23rd Annual Report because I am jubilant for the
fact that the Company has emerged successfully from a spell of challenges. Thankfully I am
so happy that my employees and associates are able to work and move fearlessly, post-
Covid period! A good coincidence!
"This too shall pass", thus goes a famous old saying!
Just two years before, I could not have envisaged that the difficult
phase which arose out of the pandemic would pass and the world would emerge free of the
virus and the market would boom! The world economy has been oscillating like a pendulum
during the past few years and many entities have been subjected to real hardships. However
our management and the Company stood robustly strong, faced the tides and stood anchored.
The experience was unique and challenging but we endured thanks to all my employees,
shareholders and well-wishers!
Today I am more confident and optimistic about the future because it is
being backed by strong factors and figures! I could feel the winds of change and sense the
great future for the Company and the stakeholders.
However we reached this stage with lots of planning and forethought. A
large space of post-Covid period is reserved for Power Mech and the Company has already
started advancing itself. I would like to discuss some of the relevant elements that are
going to give a push to the Company in the next five years.
Self-preparation: When the process of recess was engulfing the world
economy the Company was engaging itself in building up infrastructure, resources and the
organizational structure. The exercise was set in motion even when the slowdown was
casting a shadow on our working model and style.
We have been consistently strengthening the power of human resources in
the organization with multiple and parallel attempts; the management started new
initiatives for improving the capability and leadership quality of young executives
through well implemented training sessions and updating senior executives through special
sessions of orientation.
Both senior and young leadership programs helped in aligning the
already talented engineers and executives to that of the Company's vision and mission. I
am proud that we have highly dedicated employees numbering more than 14,000, majority of
whom are talented engineers. Raising the talents of employees is a continuous process and
I am hopeful that the management shall continue with these programs or even enlarge them
to other levels too!
I am expressing my wishes out of hope and confident that the Company is
definitely poised for greater reach and growth in the next five years time.
The year 2021-22 is perhaps one of the bests in its journey of 23 years
as it has found a new zenith in order book, revenue and performance. It has established
itself as a trusted Company through performance, achievement, completion and delivery with
time line. Therefore it is not surprising that the execution bandwidth stands between Rs.
700 Cr to Rs 1,200 Cr per quarter and expected to improve further. It was possible because
of the strong in-built capabilities in execution and engineering.
Strong order book and revenue segments: The strong order book which
stands at Rs Rs 18,149 Cr explicit clear visibility for the future and raises our
confidence in bettering our performance.
The Company has reported an all-time high total income of Rs. 2,728 Cr
during the FY 21-22, whereas the total revenue was Rs. 1,900 Cr. for the FY 20-21. The
revenue from O&M business has gone up to Rs. 805 Cr from Rs. 661 Cr an increase by
22%. The revenue from Erection, Testing and Commissioning has increased from Rs.446 Cr to
Rs. 521 Cr a swelling by 17% & Electrical business has gone up to Rs. 93 Cr from Rs.
86 Cr an increase by 8%. Pleasingly the revenue from Civil & others segments including
railways and water projects has gone up to Rs. 1,290 Cr from Rs. 687 Cr a whopping
increase by 88%.
The contribution of different segments to the overall revenue is
impressive; Operation & Maintenance segment has contributed 30% of the overall
revenue, Erection, Testing and Commissioning 19%, Electrical Business 3% and Civil &
others including railways & water projects 48% of the total contract revenue. The
change of order book mix has pushed the total income from Rs. 1,900 Cr to Rs. 2,728 Cr, an
increase by 43.54%.
Envisaging bright future: I am pleased that very recently the Company
bagged a record number of 5 Flue Gas Desulphurization [FGD] projects from Adani
Group aggregating to Rs. 6,163 Cr for 15 FGD retrofits in coal based
units. Central Electricity Authority has identified 1,69,000 MW of existing coal based
plants with 448 units out of 2,09,100 MW of installed base with 593 units needing FGD
retrofitting. The Company is aggressively pursuing for opportunities in the FGD segment
for direct participation.
It is pleasing to note that during the last 10 years the Company has
built strong expertise in the field of Railways, Water Projects,
Overseas Operations, Road Projects, Material Handling, Cross Country
Pipelines, Steel, Oil & Gas, etc., increasing the prequalifications.
The investments under National Infrastructure Pipeline (NIP) of Rs 111
Lakh Cr with allocation to Energy 24%, Roads. 18%, Railways 12% and Urban development at
17% constituting 71% of NIP allocations should play a major role in all round development.
The third decade is emphasising on growth with aggressive expansion into areas mentioned
earlier.
Operation & Maintenance (O&M):
O&M segment has been playing a very vital role in power sector and
in the growth of the Company in the last 10 years. It is presently being modelled mostly
on long term service contracts. This methodology is being adopted into other non-power
sectors like process plants, steel plants, minerals, refineries, petrochemicals, drinking
water, material handling etc.
Efforts are on to increase the long term O&M contracts including
control room operation and this is a quantum jump in our operational capabilities. The
company has strongly established its presence in Middle East, Africa and Bangladesh for
ETC business and presently pursuing for O&M business in these regions. The recent
O&M order from Dangote, Nigeria will be a breakthrough for large global contracts.
Minerals, Coal and Material
handling: India is a leading producer of Iron Ore, Coal, Bauxite etc
and has 3rd largest reserves in coal deposits and is also the 2nd
largest producer of steel. With the huge opportunities in the market in handling of coal,
iron ore and other minerals, the scope for market penetration is quite substantial.
Railway and Metro Projects: The massive investments taking place in the
railways can be a game changer for the transportation sector. Every segment of the
railways are offering huge opportunities with investments exceeding Rs 1 Lakh Cr per year.
At present, the Company is implementing about six projects and with the
experience gained during the last five years can offer multiple opportunities to scale up
the presence in the railway works.
The future is also in high speed ravel and bullet trains. The huge
investments in Metro Rail will throw up cascading opportunities. The Company has already
taken steps to enter the metro projects and the initial effort is for undertaking
maintenance of workshops for Bangalore Metro work estimated at Rs 500 Cr.
Water & Waste Water Treatment Projects Government of India has
restructured and subsumed the ongoing National Rural Drinking Water Programme to provide
Functional Household Tap Connection (FHTC) by 2024, for an estimated cost of Rs. 3.60 Lakh
Cr. Sensing the huge opportunity in this segment, the Company rightly made efforts to
enter this area of business in a big way. This business will pay a major role in overall
business growth going forward. The present focus is on the opportunities in the states of
Uttar Pradesh, Madhya Pradesh, Rajasthan, Karnataka and Odisha.
Roads & High ways: It is heartening that the Company has made entry
into the road sector after a lot of deliberations over the huge opportunities being made
available. As part of the NIP plan the total investment planned is around Rs 20.33 Lakh Cr
forming 18% of NIP plan with largest allocation for road connectivity. Presently, the
Company is executing three large projects under EPC mode. This diversification measure
will positively supplement the growth of the Company, and also contribute to the synergy
of the entire range of civil work spread across various segments.
Mine Development & Operation:
Coal will continue to play a major role as the main input for thermal
power generation, steel production and also for the cement industry. Power Mech will
continue to seek mining opportunities on MDO basis in future to secure a long-term revenue
contract. As a strategy, Power Mech would specifically target for coking coal blocks under
MDO route, as there will be assured demand for the coking coal mainly from the steel
plants. The Company has established good expertise in the installation of material
handling and O&M operations of such material handling plants which are needed for the
mechanised working of the mines. The aim of the Company is to enhance the capacity of MDO
operations to about 15 MTPA to enable the Company to create a long term base over 25 to 30
years for sustained revenue generation of Rs 1,500 Cr to Rs 2,000 Cr p.a.
Conclusion: As I have mentioned in my opening statement, we have passed
the gloomy period of Covid and recess. The future seems bright and shining. I have tried
to describe the various factors and expectations that should come forth before us as
opportunities for consolidation and growth. A well thought out base has been established
by the Company during the preceding decade which would help as inertia and stimuli for
sustained growth!
I am indebted to all my employees who stood like a rock behind me and
the Company during thick and thin. My heart goes out with gratitude and appreciation for
the contribution from my employees, a factor which gives me strength for further search
and findings. I also thank all my colleagues in the Board who stood by me and helped
shaping the Company to what it is!
I express my due respect and thanks to all the Financial Institutions,
Central and State Governments officials, Auditors, our associates and dependents for their
cooperation, and support! I thank all the shareholders for their trust, confidence and
wishes!
S. Kishore Babu
Chairman and Managing Director