HEC Infra Proj. Management Discussions


The global economic growth was es mated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic e ect). The rela vely slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented infla on, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quan ta ve ghtening by the US Federal Reserve. The baseline forecast is for the growth to fall from 3.2% in 2022 to 2.8% in 2023,before se ling to 3.0% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023. With further financial sector stress, global growth declines to about 2.5% in 2023 with advanced economy growth falling below 1.0%. Global headline infla on in the baseline is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity priced but underlying infla on is likely to decline more slowly. Infla ons return to target is unlikely before 2025 in most cases. The emerging na ons are expected to grow by 3.8% and 4.4% respec vely in the F.Y 2022 and 2023.Overall the global GDP growth is expected to be at 3.6% in the FY 2022 and 2023.Most emerging market and developing Economies are s ll lagging behind whereas sharp rebounds in the major economies can be seen. Almost 90% of the advanced economies are predicated to remain pre-pandemic per capita income levels by 2022,but roughly one-third of emerging market and developing Economies. The largest economies such as China, US, European Union, India,Japan,UK and South Korea are not in recession. Even though the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.


Indias growth con nues to be resilient despite some signs of modera on in growth, although significant challenges remain in global environment, India was one of the fastest economies in the world.

Indias economic growth is at 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fi h-largest global economy. India surpassed China to become the worlds most populous na on(Source: IMF, World Bank). The World Bank has revised its FY 2023-24 GDP forecast to 6.3% from 6.6%(December 2022).Rising borrowing costs and slower income growth will weigh on private consump on growth and government consump- on is projected to grow at a slower pace due to withdrawal of pandemic related fiscal support measures.

The Central Government is likely to meet its fiscal deficit target of 5.9% of GDP in FY 2023-24 and combined with consolida on in state government deficits, the general government deficit is also projected to decline. As a result, the debt to GDP ra o is projected to stabilize. On the external front, the current account deficit is projected to narrow to 2.1% of GDP form an es mat-ed 3.0% in FY 2022-23 on the back of robust service exports and a narrowing merchandise trade deficit. Till Q3 FY23, Indias current account deficit, a crucial indicator of the countrys balance of payments posi on, decreased to $18.2 billion, or 2.2% of GDP. Indias fiscal deficit was es mated in nominal terms at ~ H17.55 lakh crore and 6.4% of GDP for the year ending March 31, 2023. (Source: Ministry of Trade & Commerce)

India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. As of March 2023, Indias unemployment rate was 7.8 percent.

In 2022-23, total receipts (other than borrowings) were es mated at 6.5% higher than the Budget es mates. Tax-GDP ra o was es mated to have improved by 11.1 percent Y-o-Y in RE 2022-23.


The engineering industry in Gujarat reported exports worth US$ 25 billion contribu ng around 36% of the Indias engineering exports. FDI inflow for miscellaneous mechanical and engineering industries stood at US$ 4.14 billion between April 2000-June 2022 according to the data released by Department for Promo on of Industry and Internal Trade (DPIIT). In October 2022, exports of engineering goods from India stood at US$ 7.4 billion. The Indian engineering sector is of strategic importance to the economy owing to its intense integra on with other industry segments. The sector has been de-licensed and enjoys 100% FDI. Total budgetary support for investment in the sector has been increasing rapidly in the last four years and stood at around Rs. 1.4 lakh crore (US$ 16.8 billion) during FY23.(Source: h ps://www.ibef.org/industry/engineering-india)


The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sectors and represents 63% of the overall foreign collabora ons. Indias engineering sector has witnessed a remarkable growth over the last few years driven by increased investment in infrastructure and industrial produc on. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to Indias economy. India, on its quest to become a global superpower, has made significant stride towards developing its engineering sector.

The engineering sector in India a racts immense interest from foreign players as it enjoys a compara ve advantage in terms of manufacturing cost, technology, and innova on. The above, coupled with favorable regulatory policies and growth in the manufacturing sector, has enabled several foreign players to invest in India. Having achieved a strong market share, the focus is now on improving Opera onal excellence, Digitaliza on of key business processes, improving the Engineering methods by adop on of new techniques in general, execu on capabili es and leadership teams.

The Indian engineering sector is of strategic importance to the economy owing to its intense integra on with other industry segments. The sector has been de-licensed and enjoys 100% FDI. With the aim to boost the manufacturing sector, the Government has relaxed the excise du es on factory gate tax, capital goods, consumer durables and vehicles.


HEC is a leading EPC player in the field of Electro-Mechanical, Solar Projects, Ligh ng and ELV System. We o er integrated solu- ons and end-to-end services ranging from design, supply, installa on and commissioning of overhead transmission lines, sub-sta ons, underground cable lying, Switchyard, Water pumping sta ons, Ligh ng systems, Industrial and commercial electrifica- on, solar PV plants, ba ery energy storage system and mini / micro grid solar projects.


HEC has providing EPC solu on in providing transmission Projects and has core strength of handling engineering solu ons in EPC projects from procurement to construc on services. The areas of service in Transmission project is of Switchyard, Overhead Transmission Line, and cable laying. The Companys substa on business focuses on providing turnkey solu ons for high voltage air insulated substa ons for u li es and power plants, EHV cable & communica on backbone networks and complete electrical & instrumenta on solu ons for various infrastructure projects. The Company has a wide experience for execu on of projects on Turnkey basis for Switchyard up to 220 KV, Overhead transmission line up to 220 KV, and underground cable laying up to 66 KV, Air insulated substa ons up to 220KV and SCADA systems.

During the year company has received Transmission work including layering, erec on, tes ng and commissioning from Gujarat energy transmission corpora on Limited, Vadodara, Hariyana Vidyut Prasaran Nigam Limited and Ventana Speciaility Private Limited.


HEC has the ability to provide turnkey projects to clients who are seeking single company approach to project design and im-plementa on. Our vast knowledge and experience in the water pumping sta on link us to the best resourced companies in the world capable of implemen ng complete package projects. The Company executes various projects on turnkey basis involving mechanical, electrical instrumenta ons in government, private and industrial pumping schemes. The Company has in house manufacturing (by way of manufacturing by sister concern companies) of HT panels, LT panels and Distribu on Boards (DB) which gives added advantage to end clients. We have executed pumping projects which includes HT Motors up to 6.6 KV along with PLC, SCADA & Automa on systems. During the year the company has received and executed Electro-Mechanical & instrumenta on works along with Opera on and Comprehensive repair & Maintenance work for Ahmedabad Municipal Corpora on and also that of Augmenta on work for Supply of HT panel and transformer of di erent size for various sewage & storm water pumping sta on and also that of dismantling of exis ng old HT panel & transformer of AMC and also of Vadodara Municipal Corpora on which includes work of supply, installa on,tes ng and commissioning of Diesel generator set for Pumping machines & 5 years of comprehensive maintenance work at various water sources of Vadodara Municipal corpora on.


HEC provides end to end solu on EPC (Engineering procurement and construc on) in PV solar plants. Installa on of medium/ large scale grid solar power plants. The Company provides services star ng from designing stage ll Opera ons and Maintenance of Projects, guiding customers in government policy issues, land procurement issues, provide the project reports for and approvals for solar plants. HEC also provides roof top solar solu ons in Solar PV solu on with and without ba ery backup. We also provide solu ons for specific requirements for any type of roof top such as flat concrete roo op, metallic roo op, inclined and led roo op.


The Company provides EPC for both indoor and outdoor ligh ng solu ons. Airports, hotels, industrial plants, Hospitals etc. are the sectors in which the company has provided the ligh ng solu ons. The Company has an EPC team which is highly e cient and capable for indoor and outdoor jobs, especially in the field of outdoor ligh ng. We provide all types of outdoor ligh ng op ons including Solar Ligh ng, Smart Street Ligh ng, Industrial Plant Ligh ng, River Front Ligh ng, Highway Ligh ng, etc. During the year under review, During the year under review, the company has received and executed work for street ligh ng projects under Ahmedabad Municipal Corpora on (AMC) for the whole western zone of Ahmedabad.


The Company provides ELV Systems to complete the building under EPC Contracts. We have a vast experience in Supply and install complete electrical infrastructure and systems to the highest standard-right down to the system which operates on extra low voltage (ELV) such as CCTV, Access Control, Fire Detec on/ alarm, Data Networks, EPBAX, Background Music System and Voice Evacua on System, HVAC work, Building Management System and TV Distribu on. During the year, the company received and executed project of MEGA -BMS Work and Venus Infrastructure and Developers Pvt. Ltd.


The Company recognizes that risk is inherent in every business ac vity. E ec vely managing these risks is key to achieving our strategic objec ves and the long-term sustainable growth of the business. At industries, risk management encompasses an organized and coherent process of iden fying, assessing and managing the exis ng and poten al risks in a planned manner. The Company has framed a comprehensive Risk Management Policy which inter-alia lays down detailed process and policies in the various facets of the risk management func on.

The management strives hard to balance business risks and opportuni es and analyses poten ally nega ve or posi ve outcomes. The risk management func on is integral to the company and its objec ves includes ensuring that cri cal risk are iden-

fied con nuously, monitored and managed e ec vely in order to protect the companys business.

However, the changes in the tax laws, Government policies and regulatory requirement might a ect the companys business. Uncontrolled varia on in price of input materials could impact the companys profitability to the extent that the same are not absorbed by the market through price increase and / or could have a nega ve impact on the demand in the market. The company has addressed these reali es through a selec on of projects around an engagement with large and liquid cus-tomers,profitable hurdle rate,talent reten on, mely comple on of projects,sustained engagement with customers and an experienced talent pool.


The Company implemented suitable controls to ensure its opera onal, compliance and repor ng objec ves. The Company has adequate policies and procedures in place for its current size as well as the future growing needs. These policies and procedures play a pivotal role in the deployment of the internal controls. They are regularly reviewed to ensure both relevance and comprehensiveness and compliance is in grained into the management review process. The Board has adopted policies and procedures for ensuring that all transac ons are authorized, recorded and correctly reported, all assets are safeguarded and protected against loss from unauthorized use or disposi on, reducing wastage and maintenance of proper accoun ng records for ensuring accuracy and reliability of its financial informa on. The Board has cons tuted an Audit Commi ee which meets periodically to review the financial performance and the accuracy of financial records and accordingly appropriate ac ons are taken by the management. The significant findings, along with management response and status of ac on plans are also periodically shared with and reviewed by the Audit Commi ee. Adequacy of controls of the key processes is also being reviewed by the Internal Audit team. Sugges ons to further strengthen the process are shared with the process owners and changes are suitably made. Significant findings, along with management response and status of ac on plans are also periodically shared with and reviewed by the Audit Commi ee. It ensures adequate internal financial control exist in design and opera on financial disclosures. When found necessary, the Commi ee also gives sugges ons on this ma er. The audit commi ee regularly evaluates the execu on of the Audit plan,the relevance and impact of the internal audit systems, oversees the implementa on of internal audit recommenda ons including those which help reinforce the companys risk management policies and systems.


Par culars For the year ended on
March 31,2023 March 31,2022
Revenue from Opera ons 5173.39 4372.48
Other Income 134.20 75.05
Total Revenue 5307.59 4447.53
Purchase of Stock-in-Trade 2356.45 2539.00
Changes in Inventories of Finished Goods, WIP and Stock-in-
(20.93) (74.28)
Employee Benefit Expenses 333.29 364.71
Other Expenses 2173.76 1279.14
Total Expenditure 5187.29 4391.75
EBIDT 465.02 338.95
Finance Cost 322.68 259.67
Deprecia on and Amor za on 22.04 23.50
Profit Before Extraordinary Item and Tax 120.30 55.78
Extraordinary Items 0.00 0.00
Profit Before Tax 120.30 55.78
Current Tax 38.50 15.00
Taxa on in respect of the earlier year 2.74 (10.24)
Profit for the year 78.83 51.45


Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key cial Ra os and any changes in return on net worth of the Company (on standalone basis) are given below:

Par culars March 31,2023 March 31,2022 Changes
Debt service coverage ra o 0.86 0.00 122%
Inventory Turnover ( mes) 1.49 0.00 (0.44)%
Interest Coverage Ra o ( mes) 1.44 1.31 10.40%
Current Ra o ( mes) 2.34 2.53 7.60%
Debt Equity Ra o ( mes) 1.04 1.20 13.23%
Net Profit Margin (%) 0.02 0.01 29.48%
Return on capital employed (%) 0.07 0.05 48.07%
Return on equity ra o(%) 0.03 0.02 49.20%
Net Capital turnover ra o(%) 1.17 0.95 22.64%



Growing Transmission line projects

Reduced Bank guarantee requirements in specific government PSUs 90% payment terms on supply are now applicable in tenders Scou ng for reliable and long term Investors

Favorable financing method according to the advance rate and payment dynamics Developing a Func onal and coordinated Project team


Changes in Government Policies

Intense compe on may reduce profitability in conven onal projects Act of God Customers inability to pay


Our Company believes that the human capital is key to bring in progress. The Company believes in maintain cordial rela with its employees which is one of the key pillars of the Companys business. The Companys HR policies and prac ces are on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and reten on of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value our shareholders. Our company is having on roll 38 employees as on March 31,2023. Company maintains smooth rela with whole of the workforce and incen ves are provided from me to me to ensure that employees remain devoted to organiza on for a long term.


The major and material ac vi es of the company are restricted to only one segment i.e. EPC Engineering Designing & Construc on, hence the secondary segment disclosures are not applicable.


The Company adopted Indian accoun ng standard ("Ind As") prescribed under sec on 133 of the companies act, 2013 with relevant rules issued there under and in terms of Regula on 33 of the SEBI (LODR) Regula ons, 2015 and the Companies (Indian accoun ng Standards) (Amendment) Rules, 2016.

CAUTIONARY STATEMENT: Certain statements in the reports of the Board of Directors and Managements Discussions and Analysis may be forward ing statements within the meaning of applicable securi es laws and regula ons. Actual results may vary from those expressed or implied depending upon economic condi ons, Government policies and other incidental factors. Taxa on laws, economic development, cost of raw materials, natural calamity, current rate of interest and power cost are the few extraneous variables that influence the Companys opera ons and company does not have any direct control. There is no obliga on to publicly date any forward-looking statements, whether as a result of new informa on, future events or otherwise.