Era Infra Engineering Ltd Management Discussions.

"Some sectors will pick up while others will take time. Road and railways are the quick fixes. The damage has been very severe in some other cases where projects were delayed. But there is sufficient amount in the kitty to see that new infrastructure takes off. We are very bullish; more corporates will be willing to take the risk of investing. We could see the infrastructure boom in one or two years".

- Forbes India CEO Dialogues Infrastructure plays a very significant role in economic development. The government has outlined various infrastructure development initiatives in the country, which include smart cities, nationwide connectivity networks of roads, power, gas and water grids. We are also witnessing India’s potential to grow as a manufacturing hub. There is demand for good quality construction and we will investto cater to that demand. Also, the governments focus on the implementation of an ambitious infrastructure development programme will also increase scope for ease of doing business for various companies which will lead to enhancing the supply chain management resulting in a faster economic growth. We are reforming business to ensure that we promote the production and consumption of products and solutions in India.

However, over the past few years, need has been felt to kick-start stalled infrastructure projects by stepping up infrastructure investment, improving the productivity and quality of infrastructure spending, removing procedural bottlenecks, and improving governance. In the current perspective, the real challenge is not only to identify a core set of projects that are crucial for accelerating overall economic growth but also to ensure channelization of investment for such viable infrastructure projects and expedite their implementation by addressing issues like delays in regulatory approvals, land acquisition and rehabilitation in fast-track mode.


The industrial sector has continued to perform well in the wake of various reforms measures undertaken by the government recently.

Despite global headwinds and a truant monsoon, India registered robust growth of 7.2 per cent in 2014-15 and 7.6 per cent in 2015-16, thus becoming the fastest growing major economy in the world.

The global macroeconomic landscape is currently chartering a rough and uncertainterrain characterized by weak growth of world output. These conditions reflect extreme risk-aversion behavior of global investors, thus putting many, and in particular, commodities exporting economies under considerable stress. Even in these trying and uncertain circumstances, India’s growth story has largely remained positive on the strength of domestic absorption, and the country has registered a robust and steady pace of economic growth in 2015-16 as it did in 2014-15.

Its macroeconomic parameters like inflation, fiscal deficit and current account balance have exhibited distinct signs of improvement. Wholesale price inflation has been in negative territory for more than a year and the all-important consumer prices inflation has declined to nearly half of what it was a few years ago.

The new government tends to put its primary focus on infrastructure development and may continue with the estimated $1 trillion spent on infrastructure till 2017 as per Twelfth Five Year Plan. India’s rate of urbanisation is high and the ambitious 100 smart cities project is about to take off that will require a number of infrastructure planning and development efforts.

However, the new government has chosen the path of infrastructure development to achieve long term sustainable economic growth and has provided a lot of measurement to fuel infrastructure development which will help infra and construction companies to bag new orders. Further with the new government, the country is expected to see increased economic growth and the removal of barriers to foreign investment that will increase demand for construction.

However, now with politically stable government at the Centre, it is widely believed that the entire economy will turn around in the days to come.


With increasing urbanization, opportunities as well as challenges related to urban infrastructure are also increasing. In this context, the government has taken various steps to improve urban infrastructure. The Smart Cities Mission, a flagship programme is discussed for urban development. A number of initiatives have been taken to encourage public transport, for example Bus Rapid Transit Systems (BRTS) approved for 11 cities under the Jawaharlal Nehru National Urban Renewal Mission, to equip buses with Intelligent Transport System (ITS)and Metro Rail Projects.

Recent Initiatives for Development of the Infrastructure Sector in India:

The objective of making India a global hub of manufacturing, design and innovation, the Make in India initiative, which is based on four pillars —new processes, new infrastructure, new sectors and new mindset—has been taken by the government. The initiative is set to boost entrepreneurship, not only in manufacturing but in relevant infrastructure and service sectors as well..


The government has approved a scheme for the development of about 1177 km of NHs and 4276 km of state roads in Left Wing Extremism (LWE)-affected areas as a Special Project.

The government will take up improvement of about 4099 km road length s (2933 km of NH and 1166 km of state roads) by March 2017. Phase B, to be taken up after Phase A is completed, is to cover 3723 km (1285 km NHs and 2438 km state roads) of road.. The Arunachal Pradesh Package for Road & Highways Involving development of about 2319 km road length (2205 km of NH and 114 km of state/general staff/strategic roads) has also been approved by the government.

Bharatmala is a proposed umbrella scheme at an estimated cost of Rs. 2,67,200 crore for (i) Development of State Roads along Coastal areas / Border areas, including connectivity of non-major ports, about 7000 km for Rs. 80,250 crore;

(ii) Backward Areas, Religious, Tourist Places Connectivity programme, about 7000 km for Rs. 85,250 crore;

(iii) Setubhratam Pariyojana which is for the construction of about 1500 major bridges and 200 ROBs / RUBs for Rs. 30,000 crore; and

(iv) District Head Quarter Connectivity Scheme for development of about 9000 km newly declared NHs for Rs. 60,000 crore. The programme is targeted for completion by 2022.


Indian Railways (IR) is faced with a number of challenges. For speedy capacity creation, IR recognizes the importance of enhancing project execution capabilities. Considering the enormity of the resources required for plan investment in rail infrastructure, and given the limitation of public resources, efforts are on by IR togenerate sufficient internal surplus, and tapinnovative methods of financing, to meetthese needs. The focus is on prioritizing investments in important areas like dedicated freight corridors, high speed rail, highcapacityrolling stock, last mile rail linkages and port connectivity, and attracting private and FDI investments to supplement available resources.

Various measures to improve passenger amenities, infrastructure and services, and initiatives under Make in India, freight initiative, resource mobilization initiative and green initiatives, etc. have been taken

The Japan International Cooperation Agency (JICA) which undertook the study on the feasibility of this prestigious project, submitted its report in July 2015. The project was approved by the Cabinet Committee on Economic Affairs, in December 2015, to be implemented with Japanese technical and financial assistance. The memorandum of understanding for cooperation between India and Japan was signed on 12 December 2015. A new special purpose vehicle with 50 per cent equity participation from the Ministry of Railways and 50 per cent from the state governments of Maharashtra and Gujarat was to be set up to implement the project.

Urban Infrastructure:

With increasing urbanization, opportunities as well as challenges related to urban infrastructure are also increasing. In this context, the government has taken various steps to improve urban infrastructure.A number of initiatives have been taken to encourage public transport, for example Bus Rapid Transit Systems (BRTS) approved for 11 cities under the Jawaharlal Nehru NationalUrban Renewal Mission (JnNURM), to equip buses with Intelligent Transport System (ITS) and Metro Rail Projects.

New Initiatives taken for better urban development are given below:

• Swachh Bharat Mission (SBM)

• National Heritage City Development and Augmentation Yojana (HRIDAY)

• Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

The Government of India has launched a mission on Smart Cities, with the collaboration of states and UTs for implementation of the flagship programme for urban development. The purpose of the Smart Cities Mission is to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to smart outcomes.

The Smart Cities Mission targets promoting cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘smart’ solutions. The focus is on sustainable and inclusive development and the idea is to look at compact areas and create a replicable model which will act like a lighthouse to other aspiring cities. The core infrastructure development in a smart city includes adequate water supply; assured electricity supply; sanitation, including solid waste management; efficient urban mobility and public transport; affordable housing, especially for the poor; robust IT connectivity and digitalization; good governance, especially e-Governance and citizen participation; sustainable environment; safety and security of citizens, particularly women, children and the elderly; and health and education.


The civil aviation industry in Indiais experiencing a new era of expansion, driven by factors such as increasing private participation under Public Private Partnership (PPP), development of Greenfield airports, restructuring and modernization of airports, FDI in domestic airlines, increase in number of Low Cost Carriers (LCCs) and emphasis on regional connectivity, coupled with cuttingedge information technology interventions.

Major initiatives have been taken to augment airport infrastructure:

(a) commissioning of the greenfield KaziNazrul Islam Airport at Andal in West Bengal;

(b) signing of MoU for engaging Changi airport, Singapore, for executing Operations and Maintenance (O&M) contracts at Ahmedabad and Jaipur airports;

(c) ‘in-principle’ approval for setting up of a greenfield airport at Dholerain Gujarat;

(d) ‘site clearance’ for setting up of greenfield airports at four locations, namely Bhiwadi (Alwar) in Rajasthan and Bhogapuram, Dagadarthi and Oravakalluin Andhra Pradesh;

(e) greenfield airports at Mopain Goa, Navi Mumbai, Shirdi and Sindhudurg in Maharashtra, Shimoga, Hasan and Bijapur in Karnataka, Kannur in Kerala, Pakyong in Sikkim, Holongi (Itanagar) in Arunachal Pradesh, Datia in Madhya Pradesh, Kushinagar in Uttar Pradesh and Karaikkal in Puducherry are at various stages of planning/ execution;

(f) development of small airports in tier-II and tier-III cities, namely Hubliand Belgaum in Karnataka, Kishangarh in Rajasthan, Jarsuguda in Odisha and Tezu in Arunachal Pradesh is progressing.


In view of the growing need of the Indian economy, the government has embarked upon a massive programme to provide uninterrupted continuous access to power supply in the country. Several steps have been taken for increasing power generation, strengthening of transmission and distribution, separation of feeder and metering of power to consumers. In order torestructure the sector, various amendments are being brought in the Electricity Act, and tariff policy in collaboration with states.

As against the capacity addition target of 20037.1 MW set for 2015-16, 11,226 MW has been added till December 31, 2015. The cumulative capacity addition during the 12th Plan, as on December 31, 2015, is

72,240 MW, which constitutes 81.6 percent of the plan target.

The Prime Minister, on 5th January 2015, launched the 100 cities National LED Programmes with the aim of promoting use of the most efficient lighting technology at affordable rates.

Government has approved the establishment of a National Smart Grid Mission (NSGM) in the power sector to plan and monitor implementation of policies and programmes related to smart grid activities in India. Budget allocation for financial year 2015-16 for NSGM activities is R40 crore.


The Company operates in major infrastructure segments. It regards Business Segments as primary segments. The Business Segments are in line with AS-17. Segment Wise Performance of the company is provided in detail under the head Notes to Account forming part of Balance Sheet of the company.


There are multifarious issues and challenges faced by the agriculture sector and in order to revive it, a significantly different approach needs to be followed. So, measures need to be taken to step up productivity in agriculture and transform the sector.India has to address the challenges of not just providing employment but of increasing the employability of the labour force, which is correlated to knowledge and skills developed through quality education and training along with ensuring good quality of health. There are innumerable challenges in the delivery of efficient health services in India given the paucity of resources and the plethora of requirements in the health sector.

The General Budget 2015-16, post Fourteenth Finance Commission (FFC) recommendations, ushered in a new era of ‘co-operative federalism with shared responsibilities’ between the centre and the states, and among the states for achieving development goals together. It was presented in a relatively stable economic environment as compared to the just preceding years but the challenge was to ensure the delicate equilibrium between the concerns of stirring growth, accommodating the resources transfer that greater fiscal federalism entailed and ensuring fiscal consolidation. The equilibrium was sought through a higher capital expenditure, higher net resource transfers to states and higher gross tax revenues.The trends in enrolment reflect a decline in the percentage of enrolment in government schools in rural areas, from 72.9 per cent in 2007 to 63.1 per cent in 2014, as per the Annual Status of Education Report (ASER) 2014.

There are innumerable challenges to the delivery of efficient health services in India, given the paucity of resources and the plethora of requirements in the health sector. Population health is also significantly influenced by social and environmental determinants such as age at marriage, nutrition, pollution, access to potable water and hygienic sanitation facilities.The expenditures reflect the challengesthat India faces in the provision of affordableand accessible health care to the population. The NSSO also reports that coverage by government-funded insurance schemes has risen to 13.1 per cent of rural India and 12 per cent of urban population.

An assessment of the performance of states/ULBs in the challenge, some reallocation of the remaining potential smart cities among states may need to be done by the Ministry of Urban Development. The Smart City Mission will be operated as a Centrally Sponsored Scheme and the central government proposesto give it financial support to the extent of Rs. 48,000 crore over five years, i.e. on an average Rs. 100 crore per cityper year. An equal amount, on a matching basis, will have to be contributed by the state/ULB; therefore, nearly one lakh crore of government/ULB funds will be available for smart cities development. In the first phase of implementation, twenty cities have been shortlisted to roll out the programme.


Infrastructure projects take a long time to plan and implement. Delays in the execution of projects not only lead to shortfalls in achieving targets but widen the availability gaps. Time overruns in the implementation of projects continue to be one of the main reasons for underachievement in many infrastructure sectors. Delays in land acquisition, municipal permission, supply of materials, award of work, operational issues, etc. continued to drag down implementation of these projects. A large number of major central-sector projects are delayed with respect to their latest scheduled dates of completion.

Our exposure to BOT Projects, particularly in the area of Road and Transportation wherein revenues from toll-based projects are a function of actual traffic volume, has increasingly led to additional risks associated with such projects, including traffic volume risks, availability risks and financial closure risks. Adverse deviations between actual traffic volumes from projected volumes, delays in completion of related projects components or failure to achieve a financial closure could result in significant loss of revenue.

Policy hurdles such as delay in awarding projects, environmental clearances, land acquisition and lack of cheaper financing options still continue to be pertinent to the sector. Particularly, the fund crunch issue is a major challenge for the industry.

However, while the infrastructure sector continues to operate in a difficult framework in India, we are optimistic about reviving growth in the infrastructure sector. With the government proactive policies and announcements to support the private sector involvement in Indian infrastructure, the future looks promising for EPC companies in year 2015. Infrastructure is picking up in India and these moves will certainly pave the way to recovery for the infrastructure sector. Finally, over the years, India has shown that it has a momentum and dynamic of its own and is less impacted by the economies of developed countries than would ordinarily have been imagined.


Company has a proper and adequate internal control procedures & systems commensurate with the nature and size of its business. The Company’s internal control system primarily covers aspects such as:

1. Operating parameters and various factors relating to production.

2. Efficient use and protection of resources.

3. Accuracy and Promptness of financial reporting.

4. Compliance of laws and regulations.

5. An effective MIS & ERP system.

Company has a well-defined organizational structure, well documented policies, guidelines and clearly defined authority levels.


The assets of your Company are adequately secured/ covered under appropriate policies and your management reviews it from time to time. Your Company has on 12th November, 2014 constituted a Risk Management Committee and adopted Risk Management Policy is making its best endeavors in identifying elements of risks and in development & implementation of the policy.


(Rs. In Lacs)

Particulars Year Ended 31st March, 2016 Year Ended 31st March, 2015
Total Income 1,21,996.95 1,73,950.57
Profit (Loss) before depreciation & tax (1,11,543.56) (44,255.45)
Depreciation 19,620.83 19,793.72
Profit (Loss) before tax & Extra Ordinary Items (1,31,164.39) (64,049.17)
Exceptional Items - 1,560.77

(Rs. In Lacs)

Particulars Year Ended 31st March, 2016 Year Ended 31st March, 2015
Profit(Loss) before tax Provision for tax (1,31,164.39) (65,609.94)
- Current Tax - -
- Deferred Tax - -
- MAT Credit/Fringe Benefit Tax - -
- Tax adjustment for earlier years - 79.45
Profit (Loss)after tax (1,31,164.39) (65,689.39)
Proposed Dividend together with Tax thereon - -
Transfer to General Reserve - -
Transfer to Debenture Redemption Reserve - -
Surplus (Deficit) carried to Balance Sheet (154849.63) (23,685.24)

The turnover of the Company for the year ended 31st March, 2016, was Rs. 1,21,996.95 lacs as compared to Rs. 1,73,950.57 lacs in the previous year.

Loss before depreciation and taxation was Rs. 1,11,543.56 lacs and after providing Rs. 19,620.83 lacs towards depreciation, the net loss amounts to Rs. 1,31,164.39 lacs.


During the year, the company has focused at consolidating the work culture embodying values and ways of doing things that may exert sharpening influence on the individual’s efforts towards excellence and fulfillment of Organization’s vision. Efforts have also been made to integrate the needs and aspirations of the employees into strategic objectives and mission of the Organization; and to proactively deal with the issues as movement to develop Organizational capabilities to manage change and Challenge. The underlying HR philosophy based on its belief in limitless potential of human beings, trust in their basic integrity and respect for their dignity led to creation of work climate in the company where employees experience a sense of involvement and belongingness; where employees find fulfillment in work and seek newer horizons for self-development and organizational growth.

There has been complete Industrial peace and harmony across the Organization during the year.

In order to cope up with manpower requirement on account of diversification and expansion of business activities, the company has further strengthened its Engineering, Marketing, Commercial and Operational cadres. Today we have a strong complement of about 1600 quality manpower on the rolls of the company. Their matchless competencies and expertise are the backbone of the company.

The process of human resource management which has moved from strength to strength over the years has been further augmented, inter alia, through following initiatives:-

1. In order to keep the employees of the company abreast of latest knowledge in their respective field of specialization, the company had deputed a good number of employees, both to external and In house training programs; and professional Seminars.

2. Quality management systems (QMS) have been steered across the Organization in order to strengthen initiative and commitment of the employees in continuous improvement. Number of seminars and conferences have been organized to generate quality awareness and commitment amongst every employee segment. In collaboration with prestigious clients like Delhi Metro Rail Corporation (DMRC) a good number of client specific/ Job specific Quality conformance programs have also been organized.

3. The induction of fresh graduate engineers in multi-disciplines under the scheme named as ‘UDAAN", launched in the year 2011 proved as an asset in meeting out the growing requirements of specialized manpower and also in providing for replacements against normal attritions. Through this scheme, a large number of fresh Engineering talents have been hired from the best Engineering Institutions of the Country, thereby strengthening the pool of highly skilled, specialized and motivated man power of the company.

4. In order to achieve and maintain lean and cost effective organization structure at all the levels of the company operations, system of periodical review adopted continues to be applied in the organization under the direct supervision of the Chairman and Managing Director.


A) EPC division (National & International)

Business overview

The surge in construction activity has led to exponential growth in infrastructure development across the country. This has naturally resulted in an increase in demand in construction activities, raising the potential bar manifold, which in turn has enabled the EPC Division of your company to foray into some of the most lucrative and growing segments of the infrastructure space. This division executes infrastructure development contracts across the spectrum for both external customers as well as for captive consumption. The division’s business extends across major sectors of infrastructural growth and it broadly encompasses Roads/ Highways, Power, T&D, Metro, Aviation, Social Infra, Industrial Refinery. Through this division, Era Infra Engineering is executing projects for some the biggest names in the industry.

Building lifelines of tomorrow

Attracted by the unfolding opportunities across newer infrastructure segments such as hydro & nuclear power, irrigation, ports, multilevel car parking, dedicated freight corridor, the EPC division is diversifying its presence across these key verticals of infrastructure development. It is concurrently consolidating its presence in the existing sectors by executing large-sized projects. The division’s future strategy also includes enhancement of pre-qualification strengths through strategic alliances.

B) Equipment Management division

Business overview

The Equipment Management division of Era Infra Engineering has been set up to cater to the growing in-house and externaldemand for a wide range of construction machinery. The division’s large Equipment Bank spans machinery for diverse uses and includes:

Cranes/ Material Handling Equipment

• Cranes (All Terrain / Rough Terrain / Crawler / Tower Cranes), Fork Lifts, etc. are in huge demand across all levels of construction industry

• Intends to acquire state-of-the-art specialized, standardized and newer machinery along with experienced personnel to handle

Pilling Equipment

Piling equipment i.e. Piling Rigs, Extractor, Pile Drivers etc. are used to build solid foundations for the construction of all major infrastructure projects, bridges, etc. These machines are used for construction of Cast-in-Situ bore piles. Piling work is the first civil work for any major construction activity such as power plant, steel plant, refineries, bridges, etc.

Piling machines has revolutionized the piling works in India, earlier piling used to be carried out with standard DMC (Direct Mud Circulation) method which used to be very crude, time consuming, and not accurate. With the help of these machines, the productivity is very much improved along-with the quality of the work done, accuracy of the work done is also enhanced.

Aerial Platform & Boom Lifts

• As with growing safety concerns, working at heights with Aerial Platforms, Boom Lifts, Scissor Lifts, etc. is mandatory

• Scope for use in airport projects and building maintenance

Other Equipment

Motor Graders – with ongoing road projects, Motor Graders have achieved significance in equipment requirements

Building lifelines of tomorrow

With the booming construction industry progressively raising the demand for high-end machinery, the Equipment Management division is constantly upgrading itself to meet the growing requirements of the Indian infrastructure industry.

Going forward, the division’s focus will be on enhancing utilization of machinery and increasing the life and productivity of machines through proper maintenance and upkeep. There are plans afoot to increase the equipment fleet to enable it to bid for bigger orders and provide complete equipment solutions to customers across the industry.


Statements in the Management Discussions and Analysis describing the Company’s objectives, projections, estimates, expectations are" forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations includes economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax, corporate and other laws and other incidental factors.