Power Sector in India
The Government of India has released its roadmap to achieve 175 GW
Capacity in Renewable Energy by 2022, which includes 100 GW of Solar Power and 60 GW of
Wind Power.
Coal-based power generation capacity in India, which has currently
reached a level of 192 GW is expected to expand to
330-441 GW by the year 2040.
The immediate goal of the Government is to generate two trillion units
(kilowatt hours) of energy by the year 2019. This will propel the current production
capacity to almost double to provide 24x7 electricity for residential, industrial,
commercial and agricultural use.
Power transmission sector in India plays a pivotal role in supplying
electricity to the end consumers. It is imperative to note that the growth of the power
sector is dependent on the development of a robust transmission infrastructure.
Developing dedicated green energy corridors and further enhancement of
transformation capacity of existing substations, along with setting up of new sub-stations
will primarily drive the opportunity in the power sector in near future.
However, margin pressure due to build-up of overcapacity will continue
to drag down profitability.
Further, the Government plans to invest USD 2.15 Billion till December
2018 for supplying electricity to approximately 4
Crore of the rural households under "Saubhagya Scheme".
This might demand more inter-regional power transmission transactions and capacity
enhancement of intra-regional power evacuation infrastructure. Indias peak load demand of
power is only 164 GW of the achieved installed capacity and aggravating this situation
further, some of Indias power surplus regions do not have adequate power evacuation
infrastructure which could alleviate the recurring supply shortages in other parts of the
nation. The Government of India has an ambitious plan of 100% electrification of the rail
network by 2020. Currently, only 42% of the total rail-track network is electrified. The
pace of electrification has been increased from the present average of 1700 route
kilometer per annum to 4000 route kilometers in 2017-18.
Transformer Business
The Transformer business in India are continue to witness huge margin
pressure due to low demand and excess capacity in the Industry which remains under
utilised. A low rate of industrial growth, a poor financial status of the utilities along
with general economic slowdown has contributed to the transformer demand remaining subdued
in the country. Your company has proactively aligned its strategy according to the
prevailing market conditions and it will continue to focus on exports, few large central
utilities and selective state utilities, which have access to capital. Your company has
successfully commissioned 15 numbers of 500 MVA, 400 kV class transformers for PGCIL. All
the transformers are functioning smoothly at installed locations in the Northern and
Southern part of India. Your company has also contributed positively and helped to add
power generation capacity of
1320 MW to our Nation by supplying 260 MVA, 420 kV, Single
Phase Generator Transformers to NTPC for its Solapur & Mouda power
generation projects.
Your company has a Healthy Order Book position and visibility of
revenue improvement for the FY 2018-19. Even the Export Orders with better margins and
cash flow are almost 40% of the current Order Book position. Your companys plants &
facilities are regularly audited & approved by internationally renowned technical
consultants/customers and their regular feedback that we are at par with the best
manufacturers in the world gives us a lot of pride and it motivates us to keep working
harder to create more satisfied customers.
Project Business
Your company has successfully commissioned a section of
765KV Double Circuit Orai - Aligarh Transmission Line, in
addition to successfully commissioning a section of 765 KV
Double Circuit Hyderabad - Wardha Transmission Line for
PGCIL. Your company is currently executing a prestigious order received
from PGCIL for 800KVHVDC Raigarh-Pugalur Transmission Line.
Your company has also successfully undertaken a number of 400 kV
sub-station up-gradation work as a part of strengthening the Northern and the Southern
Regional Grid System. The company management is also pleased to inform that your company
has commenced execution of first open-air GIS substation at Phusauli (Bihar) for Indian
Railways under a PGCIL contract.
Construction of three Greenfield sub-stations in Africa, which have
been funded by the World Bank is under full-fledge implementation and these sub-stations
are expected to be commissioned shortly. The Safety and Environment Conservation practices
followed at a site by the company have been very well recognised and acknowledged by the
World Bank.
International Business
International Business offers single point access to all its customers
worldwide supplying Products and Solutions that meet various International Standards like
IEC and ANSI.
Your Company has exported its products and solutions to more
than 50 countries in the Middle East, Africa, Latin America and the Asia Pacific region
due to consistently achieving International Quality Standards. Among impressive
international clientele are Power Utilities, Oil and Gas companies, Mining companies and
EPC companies. This has enabled your company to underline truly global presence.
Maintaining a healthy order book position and cashing on excellent
references across the globe, your company is confident of increasing the share of
international business to about 40% from the current level in the next few years. This
itself will drive the growth substantially. A healthy mix of regions and developing
customers across all product segments without excessive dependence on any specific product
or market will generate balanced growth of companys business.
Coal Mine-Indonesia
During the year under review, your companys Coal Mine in Indonesia
sold close to 2.30 Million tons of coal and now the company is taking steps for targeting
a sale of 3 million tons of coal in the next financial year. Market intelligence reports
reveal that there is a good demand for your companys coal. Our Indonesian counterpart has
already initiated steps for enhancement of the coal mine output further in the next few
years.
Renewable Energy
The performance of power generation from 5 MW Solar PV
Plant was satisfactory during the current year and the trend of
improvement is expected to continue during the next financial year also. This initiative
of your company in a small way reduces carbon emissions thereby contributing to the
‘Green Cause.
Opportunities and Threats
Your company foresees a market full of opportunity for its businesses
in the forthcoming years. Your company has strategically poised to take advantage of the
opportunity of growth anticipated in the Indian Railways business. With supplies to more
than 50 countries, your company is also exploring opportunities to escalate its projects
business internationally.
Open and Transparent process of selecting/empaneling the Contractors
for carrying out EPC works related to Tariff Based Competitive Bidding by Central Utility
(PGCIL) in the Transmission Line business within India and opening doors for Indian
companies to do work under the line of Credits provided by the Exim Bank to foreign
countries are the major factors which are helping your company to increase its presence in
the domestic and overseas market.
Internal Control System
Yourcompanyhasinplaceeffectivesystemsforinternalcontrol, compliance
procedures and guidelines for ensuring accurate, reliable and speedy compilation of
financial information, safeguarding the assets and interests of the company and ensuring
compliance with laws and regulations, an exhaustive budgetary control system and
management reviews for actual performance along with well-defined organizational
structure, clear authority levels and detailed internal guidelines for the business
transactions.
The CEO/CFO Certification is provided in the report to discuss the
adequacy of our Internal Control Systems and Procedures. In accordance with provisions of
Companies Act, 2013 and
Securities Exchanges and Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (‘Listing Regulations, 2015) the Audit
Committee has evaluated the
Internal Financial Controls of the Company. The Management of your
Company has determined that the Companys internal financial control as of 31st March,
2018 were efficient and effective.
The Company has successfully implemented a novel mechanism to inform
Members of Board of Directors of the
Company, about identification, assessment, control and mitigation of
risk in the businesses of the Company at periodic intervals. The Company has an
independent Internal Auditor for auditing the transactions of the Company to ensure that
recording and reporting is meeting statutory compliance. The Internal Auditors evaluates
the adequacy of internal control to ensure that internal controls, check and balances in
the system are adequate, proper and up-to date as per prevailing standards. Remedial
measures are suggested by them to mitigate the risks identified during the auditing
procedures and rectification plans ensure implementation of strategy to mitigate such
risks.
Risk and Concerns
The Company is thoughtfully concerned about overcapacity in the
transformer industry and liquidity issues caused due to cash flow getting affected by
overdue receivables. The other risks your company faces is increase in project cost due to
delay in customers getting Right of Way (ROW) permission while executing transmission line
projects. Other risks such as safety of Emcoites and contractors working at heights during
construction work of transmission lines, risk of commodity prices fluctuation, foreign
currency fluctuation etc.
The Risk Management Committee reviews various risks faced by your
company periodically and it has put in place robust check and balance mechanism to
mitigate these risks.
Outlook
Considering the campaign of ‘Make in India and other initiatives
of the Government of India like focusing on generating power from renewable energy, which
might boost up growth in power sector and industrial activity in general, the prospects
for your companys products and services look very positive. In addition to the domestic
market, your Company has taken a number of steps to increase its global reach which will
further bring in more business opportunities for your company. While we remain very
optimistic about the overall business environment, we are also internally adjusting our
costs to a new world of continuous pricing pressure.
Financial performance with respect to operational performance
The financial performance of your company vis a vis previous financial
year has been poor on account of shortage of working capital, leading to lower capacity
utilization in the transformer business thus, resulting in lower sales and contribution.
Further financial performance of your companys project business was
also affected due to a shortage of working capital and delayed tendering of some large
transmission line tenders from key customers which resulted in lower sales.
Human Resource
To live your companys vision of being a Great Place to Work, your
companys management aspires to steadily develop, implement and support programs and
processes that add value to your companys business and Emcoites at all levels of
operations. The focus of HRM is not only to improve Emcoites welfare, empowerment,
growth,and retention, while they stay committed to growing your company, but also
improvement in productivity, skill sets and knowledge up-gradation. The management of your
company promotes a work environment that is characterized by fair and equal treatment for
all Emcoites; encourages open communications; understanding personal accountability;
Inculcating trust and mutual respect.
Environment and Safety:
Your companys management is continuously ensuring to provide a safe
place to work for Emcoites and it is also environmentally conscious to move towards taking
Green Initiatives. It has taken a number of such initiates in the current year as well.
The company has received ISO 9001: 2015 / ISO 14001: 2015 and OHSAS
18001: 2007 Standard for a Quality, Safety, and Environment for its Project Business.
Your company celebrated 47th National Safety Week
across all its location, which included Electrical safety awareness programmes, practical
demos on fall arresters for work at height, safety competitions for motivating employees
etc. Your company also organised health camps, PPE exhibitions;conducted mock-drills for
making EMCOites aware about safety and also for promoting a safe environment at work.
Your company celebrated World Environment day at its various
location on 5th June. The objective of this celebration is to educate and encourage
Emcoites to participate in the initiative Go Green - planting trees/saplings. An
environment awareness session, and an exhibition for the eco-friendly product for creating
green strategy approach across the organisation was organised to demonstrate the companys
commitment to protect the environment and to encourage the involvement of employees in
such drives. Training on eco-friendly products entitled "Saffron Thinking and Green
Living - A Way to sustainable development is also imparted to the workers and employees.
A training programme for Emcoites was conducted to explain their roles
and responsibilities under various provisions of the Factories Act, 1948. Health camps
have been regularly conducted by your company to educate Emcoites and contractors on
health and safety issuesat all project sites.
CSR – Initiatives towards Corporate Social Responsibility:
Your Company has taken various initiatives towards the
Corporate Social Responsibility through its extended arm
EMCO Foundation. EMCO Foundation (EF) has been established to promote
sustainability and welfare of humanity with a vision "To transform lives through
sustainable development involving stakeholders." Since inception EF has transformed
more than 88,723 human lives through resourceful initiatives in Education (Akshar),
Environment (Ankur and Roshni) and Healthcare (Jeevan).
Best Corporate Foundation Award has been conferred upon your company
for outstanding contribution to Social Causes and CSR Efforts at theWorld CSR Day 2017.
The joy of Giving (DaanUtsav):
Like every year this year too, your company organised a collection
drive, where Emcoites donated Clothes, Books, Toys etc. Total donated items collected this
year occupied 14 large bags and till now the generosity of Emcoites has reached to more
than 22,000 needy people.
Forward-Looking Statements
Certain statements in the Discussion and Analysis Report of
Management describing the companys objectives, projections, estimates, expectations
or predictions may be forward-looking statements within the meaning of applicable
Securities Laws and Regulations. Forward-looking statements in this report are based on
certain assumptions and expectations about future events.
The company cannot guarantee that those assumptions and expectations
will turn out to be accurate or will be realized practically. It is likely that actual
results could deviate from those expressed or implied according to expectations of the
management of your company. The company assumes no responsibility to publicly amend,
modify or revise any forward-looking statements, on the basis of any subsequent
developments, information or events.
| On behalf of the Board of Directors |
| For EMCO Limited |
| Sd/- |
| Rajesh S. Jain |
| Chairman |
| (DIN:00005829) |
+91-9892691696
