HEC Infra Projects Ltd Management Discussions.

Company Overview:

HEC Infra Projects Limited is a leading Engineering, Procurement & Construction Company (EPC) Contractor in the Electro-Mechanical and Instrumentation Projects, offering multidisciplinary services in the area of Engineering Construction having its registered office at Bodakdev, Ahmedabad - Gujarat. The Company is incorporated since 2005 and has experience in the field of Electro-Mechanical contracting work from last 26 years, as before the incorporation of the Company, the Business was undertaken in the name of Harsh Electric Corporation for 14 years.

The Company has wide experience in the field of Electrical, Elecro-Mechanical, Civil and Instrumentation work. The company also has experience in providing wide range of Services in the field of Design, Supply, Installation, Testing & Commissioning of Transmission Lines, Switchyards up to 220KV/132KV/66KV/33KV & 11KV sub-station, Solar rooftop and power plants, Water pumping stations along with SCADA and communication facilities.

We have worked for many projects up to 220KV catering to industries like steel, Chemical, Cement, Refineries, Petrochemicals, Gas & Oil Sector, Textile, Pharmaceuticals, Power-generation Plants, Malls, Multiplexes, Hospitals, Airports, SEZ and for various government PSU. We have successfully executed different High voltage to Low voltage project orders related to lighting Installation, Computer Networking, Fire Alarm System, Door Access Control, CCTV Control, and PA System Including BMS. The Company is having a wide experience in the Mechanical & Installation work related to water management segments including wireless telemetry based centralized SCADA system for monitoring & controlling of different locations.

Overview of Economy:

India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018-19. On the other hand, the world output growth declined from 3.8 per cent in 2017 to 3.6 per cent in 2018. Indias growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years. The Indian economy grew at 6.8 per cent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year. This moderation in growth momentum is mainly on account of lower growth in ‘Agriculture & allied, ‘Trade, hotel, transport, storage, communication and services related to broadcasting and ‘Public administration &defence sectors.

On the external front, current account deficit (CAD) increased from 1.9 per cent of GDP in 2017-18 to 2.6 per cent in April-December 2018. The widening of the CAD was largely on account of a higher trade deficit driven by rise in international crude oil prices (Indian basket). The trade deficit increased from US$ 162.1 billion in 2017-18 to US$ 184 billion 218-19. Merchandise imports reduced from 21.1 per cent to 10.4 per cent. Growth in service exports and imports in US dollar terms declined to 5.5 per cent and 6.7 per cent respectively in 2018-19, from 18.8 per cent and 22.6 per cent respectively in 2017-18.

Rupee depreciated by 7.8 per cent vis-a-vis UD dollar, 7.7 per cent against Yen, and 6.8 per cent against Euro and Pound Sterling in 2018-19. During 2018-19, Indian rupee traded with a depreciating trend against UD dollar and touched Rs. 74.4 per US dollar in October 2018 before recovering to Rs. 69.2 per US dollar at end March 2019.

Gross Value Added reflected a decline in economic activity, registering a growth of 6.6 per cent in 2018-19, lower than 6.9 per cent in 2017-18. Growth of net indirect taxes was 8.8 per cent in 2018-19, lower than that of 2017-18 on account of loss of momentum of economic activity.

Service sector is the most dynamic sector in the economy and has remained the key driver of economic growth along with being a major contributor to GVA and export basket of the Indian Economy. Service exports has become one of the mainstay of Indias total exports increasing manifold, from Rs. 0.746 lakh crore in 2000-01 to Rs. 14.389 lakh crore in 2018-19, raising its share in total exports from 26.8 per cent to 38.4 per cent. Share of India in world service exports has also increased from 2 per cent in 2005 to 3.5 per cent in 2017. This share is much higher than that of manufacturing exports which stands at 1.8 per cent in 2017.

Overview of EPC Electro-Mechanical Sector:

The Indian engineering sector is divided into two major segments - heavy engineering and light engineering. The turnover of capital goods industry in India is estimated at US$ 70 billion in 2017 and is expected to grow to US$ 115.17 billion by 2025. Likewise, electrical equipment production is expected to reach US$ 100 billion by FY 2021-22 from US$ 27.3 billion in 2017-18. The electrical equipment industry grew 13.7 per cent year-on-year during April 2018-January 2019.

Comparative advantage vis-a-vis peers in terms of manufacturing costs, market knowledge, technology and creativity has been a driving force for engineering exports from India. Indias engineering exports reached an all-time high in FY19, surpassing the US$ 80 billion mark. Engineering exports grew 6.32 per cent year-on-year to US$ 81.02 billion in FY19. Engineering exports reached US$ 6.49 billion in April 2019.

Companies engaged in the engineering sector are virtually on a roll. Capacity creation in sectors like infrastructure, power, mining, oil & gas, refinery, steel, automotive, and consumer durables has been driving demand in the engineering sector. Separately, the approval of significant number of special economic zones (SEZs) across the country and the development of the Delhi Mumbai Industrial Corridor (DMIC) across seven states is expected to further bolster the engineering sector.

Foreign Direct Investment (FDI) allowed 100 per cent through the automatic route, and initiatives like ‘Make in India, major international players have entered the Indian engineering sector due to significant growth opportunities available. Miscellaneous mechanical and engineering industries have received FDI inflows worth US$ 3.58 billion during April 2000 to March 2019.

Engineering Services:

HEC is a leading EPC player in the field of Electro-Mechanical, solar Projects, Lighting and ELV System. It offers integrated solutions and end-to-end services ranging from design, supply, installation and commissioning of overhead transmission lines, substations, underground cable lying, Switchyard, distribution networks, power quality improvement projects, infrastructure electrification, solar PV plants, battery energy storage system and mini / micro grid projects.


HEC has providing EPC solution in providing transmission Projects and having core strength of handling engineering solutions in EPC projects from procurement to construction services. The areas of service in Transmission project is of Switchyard, Overhead Transmission Line, and cable laying. The Companys substation business focuses on providing turnkey solutions for extra high voltage air insulated / gas insulated substations for utilities and power plants, EHV cable & communication backbone networks and complete electrical & instrumentation solutions for various infrastructure projects. The Company has a wide experience for execution of projects on Turnkey basis for Switchyard up to 220 KV, Overhear transmission line up to 220 KV, and underground cable laying up to 66 KV, Air insulated substations up to 220KV, Smart distribution sub-station and SCADA systems.

During the year the company has executed switchyard work forHPCL-Mittal Pipelines Ltd. The company has also working for Switchyard and Cable laying workat Gujarat Energy Transmission Corporation Limited, Vadodara.


HEC has the ability to provide turnkey projects to clients who are seeking single company approach to project design and implementation. Our vast knowledge and experience in the water pumping station link us to the best resourced companies in the world capable of implementing complete package projects. The Company executes various projects on turnkey basis involving mechanical, electrical instrumentations 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 Distribution 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 & Automation systems.

During the year the company has executed various projects for Ahmedabad Municipal Corporation and Gujarat Water Infrastructure Ltd.


HEC provides end to end solution EPC (Engineering procurement and construction) in PV solar plants. Installation of medium/large scale grid solar power plants. The Company provides services starting from designing stage till Operations and Maintenance of Projects , guiding customers in government policy issues, land procurement issues, provide the project reports forand approvals for solar plants. HEC also provides roof top solar solutions in Solar PV solution with and without battery backup. We have also provide solutions for specific requirements for any type of roof top such as flat concrete rooftop, metallic rooftop, inclined and tiled rooftop. The Company has executed Rooftop projects for more than 1MW and Solar Park up to 5 MW till the 31st March, 2019.


The Company provides EPC for both indoor and outdoor lighting solutions. Airports, hotels, industrial plants, Hospitals etc. are the sectors in which the company has provided the lighting solutions. The Company has an EPC team which is highly efficient and capable for indoor and outdoor jobs, especially in the field of outdoor lighting. We provide all types of outdoor lighting options including Solar Lighting, Smart Street Lighting, Industrial Plant Lighting, River Front Lighting, Highway Lighting, etc. During the year under review, the company has executed projects for Ahmedabad Municipal Corporation, HSCC (I) Limited and Ahmedabad Urban Development Authority and MEGA Metro Project, Ahmedabad.

ELV (Extra low voltage) SYSTEMS:

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 Detection/ alarm, Data Networks, EPBAX, Background Music System and Voice Evacuation System, HVAC work, Building Management System and TV Distribution. During the year 2018-19, the company has executed project for Central Public Works Department, IIT Gandhinagar and MEGA Metro Project, Ahmedabad.

Risk & Concern:

The Company recognizes that risk is inherent in every business activity. Effectively managing these risks is key to achieving our strategic objectives and the long-term sustainable growth of the business. At industries, risk management encompasses an organized and coherent process of identifying, assessing and managing the existing and potential 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 function.

The management strives hard to balance business risks and opportunities and analyses potentially negative or positive outcomes. The risk management function is integral to the company and its objectives includes ensuring that critical risk are identified continuously, monitored and managed effectively in order to protect the companys business.

However, the changes in the tax laws, Government policies and regulatory requirement might affect the companys business. Uncontrolled variation 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 negative impact on the demand in the market.

Internal Control System and their adequacy:

The Company has adequate internal control systems appropriate for the business commensurate with the size and nature of its business having regard to efficiency of operations and for compliance with applicable laws. The primary objective of the internal control system is to ensure that all its assets are safeguarded and protected and prevent any revenue leakage and losses to the Company. The Company has proper system of Identification, treatment and mitigation of risk time to time. The controls are reviewed periodically and strengthened in view of changed processes, systems and regulations. In addition, the external auditor and internal auditors of the company carries out periodical review of the functioning and suggest changes if required.

The Audit Committee of the Board meets periodically to review various aspects of performance of the Company and also reviews the adequacy and effectiveness of the internal control system and suggests improvement for strengthening them from time to time. External Auditor also attends the Meeting and conveys their views on the business process and also of the policies of financial disclosures. When found necessary, the Committee also gives suggestions on this matter.

Human Resource & Safety:

Our Company believes that the human capital is key to bring in progress. The Company believes in maintain cordial relation with its employees which is one of the key pillars of the Companys business. The Companys HR policies and practices are built on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on 31st March, 2019, the total employees on the Companys rolls stood at 53.

Financial Performance:

During the financial year 2018-19, Total Revenue declined by 3 % to 8108.75 Lakhs. Profit before tax and Profit after tax turned negative to 252.50 Lakhs and 195.33 Lakhs respectively.

For the year ended on

31st March, 2019 31st March, 2018
Revenue from Operations 8008.26 8263.49
Other Income 100.49 77.91
Total Revenue 8108.75 8341.40
Purchase of Stock-in-Trade 5317.89 5552.27
Changes in Inventories of Finished Goods, WIP and Stock-in-Trade -262.74 -371.41
Employee Benefit Expenses 476.47 316.72
Other Expenses 1888.42 1971.92
Total Expenditure 7856.25 7856.76
EBIDT 688.71 871.90
Finance Cost 404.91 355.78
Depreciation and Amortization 31.29 31.49
Profit Before Extraordinary Item and Tax 252.50 484.63
Extraordinary Items 0.00 0.00
Profit Before Tax 252.50 493.24
Net Tax Expenses 57.17 159.11
Profit for the year 195.33 334.13

Opportunity and Threat:


• Strategic Joint Venture strengthening business

• Entering in to a New projects

• Favorable contract terms

• Reliable Investors

• Favorable financing method according to the advance rate and payment dynamics

• Developing a Functional and coordinated Project team


• Rise in cost of material, cost of transportation may affect the margin

• Changes in Government Policies

• Intense competition may reduce profitability

• Act of God

• Client Dissatisfaction

• Customers inability to pay