K E C International Ltd Management Discussions

Jul 24, 2024|03:32:19 PM

K E C International Ltd Share Price Management Discussions


The global economy grew by a modest 3.4% during 2022 owing to disruptions caused by lingering pandemic challenges and Russia-Ukraine conflict, which resulted in supply chain disruptions, unprecedented increase in energy & commodity prices, high inflation, and elevated interest rates globally. IMF expects global growth to decelerate further to 2.8% in 2023 but the indicators are pointing towards stabilisation and gradual recovery in many parts of the world.

Most of the economic weakness is concentrated in advanced economies such as in Europe, US and Latin America. In contrast, many developing economies are picking up, with an increase in year-on-year growth to 4.5% compared to 2.8% in 2022. Asian economies are expected to drive majority of the global growth in 2023 owing to reopening dynamics and relatively less intense inflationary pressures. Overall economic activity, production output and labour markets have remained resilient indicating strong demand in these economies.

Global inflation,which emerged as a big challenge post the geo-political conflict, is expected to fall to 7% in 2023 and 4.9% in 2024 from 8.7% last year, driven by rationalisation of energy and commodity prices, unwinding of supply chain disruptions and normalisation of global trade. Additionally, Chinas reopening, in a shift from its zero-COVID policy, will immensely contribute to tackle the sticky inflation problem. This is paving the way for a reduction in the pace and intensity of interest rate hikes by the worlds major central banks.

IMF expects the global real GDP to grow to 3.0% in 2024 and be more evenly distributed across regions. Tailwinds in 2024 for modest improvement in the global outlook will largely come from fading shocks related to the pandemic, commodity prices, elevated inflation, and monetary tightening.

It is noteworthy that, amidst the uncertainty and slowdown in the economy, infrastructure investments remained resilient in 2022. Secular trends such as energy transition, transportation decarbonisation, asset modernisation, and circular economy are driving investments in the infrastructure segment. During the year, the Company has experienced increased tendering activities across both developed as well as developing countries.


While the global economy is expected to slow down this year, Indias growth remains resilient despite some signs of moderation. The country, being the fastest growing major economy in the world, will alone contribute 15% of the global growth this year. As per World Bank forecasts, India is expected to deliver a healthy growth of 6.9% in FY23, driven by strong infrastructure spending by the government, buoyant private consumption, and growth in service exports.

The 2023 Union budget focussed on balancing development needs with fiscal responsibility by providing significant investments. The Government has announced 33% higher capital outlay of Rs 10 Lakh Crore, constituting 3.3% of the overall GDP, to significantly boost the infrastructure development. Similarly, the highest ever capex outlay of Rs 2.4 Lakh Crore has been planned for Railways. Large investments have been announced across sectors ranging from transportation, urban Infra, green energy, affordable housing, social infrastructure, highways, etc.

Private sector investment is also gradually picking up with initiatives like Production-Linked Incentive (PLI) scheme, PM Gati Shakti, and National Logistics Policy (NLP), which aids in boosting domestic manufacturing and export competitiveness. Further, investments by global multinationals to de-risk and develop alternative supply chains are also expected to boost capital outlay by the private sector. The improvement in the balance sheets of companies as well as of banks bodes well for the private sector capex investments. According to the economic survey, India saw private investment of Rs 3.3 Trillion in the first six months of FY23, up 50% from Rs 2.2 Trillion a year earlier. The recent labour market conditions suggests an increase in labour force participation and sustained job creation.

These developments also project India as an attractive investment destination and enhance the confidence of global investors to invest in India. The country is seeing healthy rise in foreign direct investments from countries such as Japan, UAE, UK, Taiwan, Singapore, etc. Further, recent free trade agreements will also benefit domestic manufacturing through integration with the global supply chain.

For FY24, the World Bank estimates India to grow at 6.3% on the back of easing global commodity prices, supportive fiscal and monetary policy, and increased infrastructure spending by the government. Overall growth of the construction industry is expected to be robust as the government continues to prioritise the development of infrastructure in the country. With an emphasisfinancing on for rebuildingcapitalinfrastructure, renewable energy ecosystem, sustainable buildings, and industries, construction companies that embrace the industrys changing landscape will have an edge over others.

Overall, while the economy is well poised to deliver strong growth, the downside risks to the economy arising out of Russia-Ukraine conflict, global financial instability, supply chain disruptions, currency volatility and inflation remain significant.

For FY24, the World Bank " estimates India to grow at 6.3% on the back of easing global commodity prices, supportive fiscaland monetary policy, and increased infrastructure spending by the government.


The global construction market output aggregated to USD 10.7 Trillion in 2020 and is expected to reach USD 15.2 Trillion by 2030. It is emerging as the key driver of economic growth with spending levels likely to reach 13.5% of the global GDP. Governments worldwide continue to champion major infrastructure projects to boost their economys productive potential and drive the post-COVID economic recovery. Emerging economies in Asia are expected to drive the global construction growth owing to rising population, urbanisation, and increased purchasing power leading to demand for urban infrastructure and residential construction. Increase in working population in countries such as India, Indonesia, Canada and Australia is also fuelling demand for workplace construction giving rise to growth in Commercial and Public Spaces infrastructure.

Coming to India, the Infrastructure Industry is expected to grow by 12% to reach Rs 45,907 Billion in 2023. The growth momentum is expected to continue with forecasted CAGR of 9.9% during 2023-27 to reach Rs 66,955 Billion by 2027. The National Infrastructure Pipeline (NIP) for FY 2019-25, supported by ~33% increase in the planned capital expenditure by the government, is targeted to provide world-class infrastructure to citizens, improving their quality of lives. Key components of the expanded infrastructure budget 2023-24 include a considerable rise in capital outlays for transportation through railroad infrastructure and multimodal logistics park, urban infrastructure, green energy transition, public utilities, etc. The government is working on the development of logistics which includes 100 critical transport infrastructure projects for first and last-mile connectivity of ports, coal, steel, fertiliser and foodgrains sector. An outlay of Rs 35,000 Crore has been announced for investments in Energy Transition projects to achieve net zero objectives.

The Green Hydrogen targets " by 2030 are likely to bring in over Rs 8 Lakh Crore investments with significant increase in projects for solar, associated transmission lines & substations as well as gas storage and pipeline projects for green hydrogen / ammonia.

The Green Hydrogen Mission will facilitate transition of the economy to low carbon intensity and reduce dependency on fossil fuel imports. This mission will result in development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030. The Green Hydrogen targets by 2030 are likely to bring in over Rs 8 Lakh Crore investments with significant solar, associated transmission lines & substations as well as gas storage and pipeline projects for green hydrogen / ammonia. Further, India continues to be a lucrative market for foreign direct investments due to comparatively low setup costs, improved government support and availability of well-qualified professionals.

To raise additional financing to implement infrastructure development, the government launched the National Monetisation Pipeline (NMP) in August 2021. The plan aims to unlock value in the brownfield projects by engaging the private sector and investing the revenue generated on new infrastructureprojects.Withasignificantly enhanced outlay of Rs 1.3 Lakh Crore (USD 16 Billion), efforts of the Central

Government are being complemented with continuation of the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivise them for complementary policy actions. increase in projects for

Government spending on infrastructure projects has remained strong in 2023, and the trend is projected to further continue in 2024. In January 2023, the Indian government has entered into loan agreement with the Asian Development Bank worth USD 1.2 Billion for funding infrastructure development in India. The agreement would cover projects for improving the power sector and highways in Tripura and Assam, metro rail connectivity in Chennai and improvement of key economic areas in Maharashtra.

Overall, outlook for Infrastructure sector is positive but current geo-political uncertainties, high inflation and interest rates, and tighter monetary policies across large economies do present unfavourable headwinds in the short term.


KEC, a global EPC major in the Power Transmission & Distribution (T&D) industry, offers integrated solutions ranging from design, manufacturing, supply, installation, and commissioning of Transmission Lines, Substations and Underground Cabling in both domestic and international markets. The business is known for delivering complex projects, across challenging geographies, ahead of schedule enabled by world-class engineering and design capabilities, global supply chain and leading construction practices.

The Companys T&D business has footprints in 70+ countries, spread across Asia (South Asia, Middle East, Southeast Asia, Central Asia), Africa, the Americas, Oceania, and Europe. The business is contributing around 50% to both, overall revenue as well as order book and is executing over 160 transmission line, substation and cabling projects across the globe.

The Company is among the largest globally operating tower manufacturing plants in terms of capacities, having six state-of-the-art factories spread across India, Brazil, Mexico, and UAE. It has a capacity to supply over 3.6 Lakh tonnes of lattice towers, poles and transmission line hardware annually. The Company owns and operates four tower testing stations spread across India and the

Americas. Our geographically diversified manufacturing footprint helps build a deeper connection with customers and enhance competitiveness across markets.

The global T&D infrastructure market is estimated to witness investments of more than USD 1 Trillion over the next ten years. Most of these investments will be for the construction of new transmission lines to integrate renewable energy generation projects.

Significant planned for regional grid integration and cross-border interconnections. In developed economies, ageing grid replacement and upgradation will also drive the demand. At the same time, technological innovations are also providing an impetus to expansion and modernisation of transmission networks. KEC is strategically positioned to address the diverse needs of its clients and carry out technology-enabled projects with best-in-class standards of quality and safety.

During the year, the T&D business has delivered a growth of 27% in revenues with sustained focus on execution excellence, amidst challenges of unprecedented volatility in commodity prices and logistic costs. The business continues to strengthen execution processes and drive automation, mechanisation and digitalisation initiatives resulting in faster / ahead of time completion of projects. During the year, the business has also focussed on building a World-Class Engineering organisation with future-ready processes to deepen design capabilities across investments business segments, improve quality withare also being first time right designs, institutionalise design to value process to optimise project costs as well as reduce design cycle time by leveraging robotic process automation, artificial intelligence, and advanced analytics techniques.

The Companys region-wise outlook and opportunities are highlighted below:

I) South Asia business (India and SAARC)

In India, the Company has " consolidated its position as a leading provider of Engineering, Procurement and Construction services for Tariff Based Competitive Bidding (TBCB) projects, having secured a significant four large schemes during the year.

The South Asia Transmission & Distribution business secured orders of Rs 4,900 Crore, a staggering growth of over 60% over last year. The growth was primarily driven by an increase in footprint in the substations business, entry into new markets and clients, and foray into technology intensive areas such as HVDC terminal stations.

In India, the Company has consolidated its position as a leading provider of Engineering, Procurement and Construction services for Tariff Based Competitive Bidding (TBCB) projects, having secured a significant four large schemes during the year. The Company has secured strategic projects for transmission lines and substations from PGCIL, for evacuation of power from Khavda renewable energy park in Gujarat. During the year, the Company has achieved numerous breakthroughs in technology intensive projects. Notably, the Company takes pride in being awarded the first 765 kV Digital Substation order in India, as well as securing another order for a 400 kV Digital Substation. The Company has also received an order for +/- 320 kV HVDC Terminal stations in Maharashtra from a private client, making KEC the first non-OEM player in India to execute an HVDC projectshare in at such a scale. Additionally, the Company has secured a substation project with a first-time

KEC, with its state-of-the-art " EHV cables manufacturing facility and strong EPC capabilities, is well-positioned to capture a significant of underground EHV cabling market.

customer in Gujarat, as well as its first order in the refinery sector from a leading

Oil and Gas company in Panipat.

The Indian power sector is poised for promising growth, with transmission infrastructure planned for major renewable energy potential zones such as Leh, Ladakh, Rajasthan, Andhra Pradesh, Tamil Nadu, and Gujarat, to support the COP26 target of achieving 500 GW of non-fossil fuel power by 2030. Under the Inter State Transmission System (ISTS), the planned length of transmission lines and substation capacity for integrating additional wind and solar capacity is as high as 50,890 CKM and 4,33,575 MVA, respectively, by 2030, at an estimated cost of Rs 2,44,200 Crore. In addition, several HVDC transmission corridors are planned to evacuate bulk power and ensure system stability.

Similarly, the Underground EHV cabling market is witnessing an upsurge with increasing need for power in urban areas, development of smart cities and demand for uninterrupted power supply in cyclone-prone regions.

The expansion of refineries, steel industries, development of commercial and residential infrastructure, including urban infrastructures such as metros are further driving the market potential for EHV cabling. KEC, with its state-of-the-art EHV cables manufacturing facility and strong EPC capabilities, is well-positioned to capture a significant cabling market.

In the solar business segment, the Company is experiencing growth supported by favourable government policies, with a trend towards larger size EPC projects while module risk is being retained by the developers. There is expected increase in tenders issued by central PSUs, thanks to supportive policies from both state and central governments. Furthermore, the projects are increasingly being located in challenging terrains requiring large transmission lines, which highlights the importance of engineering-focussed solutions and reliable execution capabilities. With improving market dynamics and stable policies by the government, KEC is refocussing on the solar business and has established its presence in key solar hubs to enhance competitiveness. The Company has won its largest value solar project till date of ~600 MWp, worth over Rs 750 Crore, in Karnataka that will utilise tracker-based technology, share further enhancing our credentials in theof underground EHV growing renewables market.

With a healthy order book of " ~Rs 7,000 Crore and a strong tender pipeline across India and SAARC, the Company is well poised to sustain its leadership position in the South Asian market.

The policy developments are highly encouraging for achieving the targeted growth in this sector. The relaxation of Approved List of Models and Manufacturers (ALMM) for two years and the introduction of additional PLI schemes in renewables will accelerate the pace of solar projects under execution. Moreover, the policies for the wind power sector, such as repowering policy, wind power purchase obligations, and removal of reverse auctions will boost the sector, creating opportunities for transmission projects. Additionally, Indias Hydrogen Mission aims to produce 5 million metric tonnes of green hydrogen by 2030, with an initial budget of Rs 19,744 Crore, including Rs 17,490 Crore for the SIGHT programme. Implementation of Green Hydrogen will require significant across the value chain starting from renewable energy parks, transmission infrastructure, industrial units for water electrolysis, hydrogen storage and transportation systems, ammonia manufacturing complexes, etc.

This presents a significant for KEC, leveraging its end-to-end EPC expertise in solar, transmission lines, substations, oil & gas, and civil infrastructure.

In the SAARC market, the Company continues to maintain a strong footprint by securing order wins in Nepal and Bangladesh to further strengthen its presence in the region. In addition to Transmission & Distribution projects, the Company has also been targeting underground cabling and renewable energy projects throughout the SAARC region. Notably, the Company has won its first integrated Cabling and Substation project in Nepal.

The SAARC region continues to offer significant and has been a key growth driver for the Company. Countries such as Bangladesh, Bhutan, India, and Nepal are collaborating on a range of investments and initiatives aimed at improving regional cooperation in the areas of energy security, energy efficiency, and sustainable development.

The development of cross-border transmission lines, which will facilitate the exchange of power between these countries, will play a crucial role in meeting the increasing energy demands of the region.

Bangladesh is one of the major drivers of the SAARC power market on the back of its expanding economy and fast-paced growth in infrastructure, industrial, and export sectors. The government of Bangladesh has set ambitious goals for the countrys Transmission and Distribution sector to meet rising demand for electricity and promote sustainable development. The Bangladesh Power Development Board (BPDB) plans to add approximately 25,000 MW of generation capacity from 2022 to 2027 to provide quality, reliable electricity to all citizens. Additionally, theinvestments government plans to implement smart grid technologies, such as advanced metering infrastructure and distribution automation systems, to increase efficiency and reliability within the T&D sector.

Nepal is poisedopportunity to remain a region of high potential, with a particular focus on building 400 kV corridors across the country to improve the export potential for hydro power. These efforts are supported by a variety of multilateral funding organisations, including the EXIM bank of India. There is a concerted effort to develop more than 3,000 MW of hydroelectric power for export to India. Bhutan continues to build new hydropower capacities and associated transmission infrastructure, with support from Indian financial institutions, to leverage the vast hydro resources of the country. In Sri Lanka, with international funding support coming through, the rebuilding process will be in focus and new infrastructure is expected to be built to meet the demand of electricity. business opportunities

With a healthy order book of ~Rs 7,000 Crore and a strong tender pipeline across India and SAARC, the Company is well poised to sustain its leadership position in the South Asian market.

II) International Business

The Companys International T&D business significantly strengthened its footprint across regions in FY23. The business has delivered a staggering growth of 68% in revenues over last year. The business secured new orders of over Rs 4,000 Crore, a growth of 35% in order intake on a year-on-year basis. Total 822 kms of transmission line and 38 bays of substations have been completed during the year in 15 projects across regions.

In line with the objective of driving growth through diversification, the business has continued with geographic footprint expansion by securing breakthrough orders in the Middle East. The business continued focus on strengthening substation business has yielded positive results with significant

Middle East, Africa and South-East Asia aggregating close to Rs 800 Crore. Further, the business has forayed into underground cabling segment through a maiden order in Dubai. The International T&D business has also strengthened tower supplies with new orders of over Rs 700 Crore, including a strategic tower supply order with one of the largest utilities in USA.

The Companys subsidiaries, KEC Towers LLC and KEC EPC LLC, in UAE have enhanced the competitive advantage of the business in the Middle East, especially with increasing localisation requirements of countries in the region. KEC Tower LLC, a 50,000 MT tower manufacturing facility in Dubai, caters to tower supply orders in MENA, Africa and European markets. Further, the subsidiary is exploring opportunities in allied areas for supply of transmission line hardware components. Additionally, the Company is currently executing four EPC orders, including three new orders received in FY23, under its subsidiary KEC EPC LLC in UAE. The subsidiary is now well positioned to execute orders in the across

MENA region and is targeting to expand its regional presence.

In the Middle East, the countries are focussing on building power transmission infrastructure as is evident from the improved tender pipeline of USD 4.2 Billion in FY23. Tendering activities are expected to gain further momentum as the countries continue to diversify from oil-based economies, build and integrate renewable energy sources into transmission networks, and improve interconnections between the regional grids. Saudi Arabia and United Arab Emirates will continue to be the biggest markets with investments of up to USD 13 Billion envisaged till FY25 for power evacuation, grid expansion and modernisation. Countries such as Kuwait, Oman and Qatar have also planned investment of ~USD 1.5 Billion in the transmission sector. In FY23, the Company has bagged two breakthrough EPC projects of over Rs 900 Crore from Gulf Cooperation Council Interconnection Authority (GCCIA). With a robust order book and tender pipeline, the business is confident of delivering healthy growth in the region.

Africa continues to be the second largest region for International business. The Company has a presence in both West and East Africa and over the years has strengthened its relationship with the local utilities, communities, and multilateral funding agencies. The key driver for growth in the region for the transmission business is grid expansion for improving the overall access to electricity for the population. Power sector reforms undertaken in most of the countries, under guidance of funding agencies, will further improve tender pipeline and increase opportunities for different models of project financing. Investment of up to

USD 3 to 4 Billion per annum is expected in the region till 2040, and it will continue to be an attractive business destination for the Company.

In terms of project execution in Africa, the business has completed its first transmission line project in Burkina

The Companys International

" T&D business significantly strengthened its footprint across regions in FY23. The business has delivered a staggering growth of 68% in revenues over last year. The business secured new orders of over Rs 4,000 Crore, a growth of 35% in order intake on a year-on-year basis.

Faso and received another EPC order for 132 kV substation in the country. A notable achievement is completion of four substations for the critical electrical interconnection project between the countries – Ivory Coast (C?te dIvoire), Liberia, Sierra Leone, and Guinea (CLSG) – to Western-African Power Pool (WAPP). Additionally, one transmission line and one substation project have been successfully energised in Mali and Senegal respectively. Presently, eight transmission line and substation projects are under execution in Mozambique, Uganda, Togo, and Burundi.

In South-East Asia, the Company has successfully energised three substations and one transmission line in Thailand and Malaysia. The business has also received its first 500 kV GIS substation order in

Thailand and one 500 kV transmission line project is under execution in the country. In line with its rapid economic development, South-East Asias energy demands are expected to rise by 60% by 2040. The region imports 40% of its energy, which calls for urgent need towards transitioning to a sustainable energy system, including expansion of renewables and natural gas, and regional interconnection and trade. The ASEAN countries are also working to develop a regional grid that will involve multiple inter-connection projects across countries. With these opportunities, an improved tender pipeline is expected in the region.

The Company is also executing projects in Moldova and Georgia that are progressing as per schedule. Further, the business is expanding its footprint in Central Asia with significant these countries. The energy sector in Central Asia has been impacted by the collapse of regional grid system after the dissolution of the Soviet Union. Tajikistan, Uzbekistan, and Kyrgyzstan have significant generation and transmission capabilities. With the governments recognising the need for increased regional power trade and modernising Soviet-era grids and the willingness of funding agencies to finance projects, better tender pipeline is expected in the region.

The standalone tower supply business has grown significantly in FY23 with an overall order intake, of over Rs 2,000 Crore. The business has secured multiple breakthrough orders in USA, Oman, and Ivory Coast amongst others. To expand the tower supply business footprint, multiple pre-qualifications and certifications required for parti cipation in USA and European markets have been completed and others are under progress. With the increase in tendering activities across regions, the business is expected to gain further momentum.

order SAEintake Towers,expected the Companysfrom wholly owned subsidiary in the Americas, has completed all the EPC projects, including four transmission lines spanning 900 km and three substations totalling to over 1,000 MVA in Brazil. Theneeds for setting up Company has secured supply orders of over Rs 1,500 Crore during the year. In a significant

SAE Towers Brazil has secured largest ever order with 32,500 tonnes of tower supplies. In the hardware product category, the business has received the largest-ever order to supply hardware fittings for 1,000 km of 500 kV line with extra-expanded bundle configuration. The business has also increased its hardware portfolio with fittings for OPGW and Cross-rope steel wire. The capacity of the hardware plant has been significantly enhanced to cater to growing demand in the local market and to prepare for the expansion of North America and LATAM market.

The Brazilian government has outlined elaborate plans to upgrade the transmission network and add renewable energy capacities. The 10-Year Energy Expansion Plan 2031 (PDE 2031) announced by the Ministry of Mines and Energy (MME) envisages investments to the tune of BRL 126.4 billion for the 10-year period starting 2022 in the transmission segment. PDE 2031 mentions additional generation capacity of 75GW, 33,600 km of transmission lines, and 117,100 MVA of substations. The Company will be participating in the upcoming ANEEL transmission auctions by the Brazilian Electricity Regulatory Agency for tower and hardware supplies.

North Americas comprehensive plans to upgrade the existing infrastructure, integrate new renewable capacities and distributed energy resources, and respond to a rapidly changing energy mix is under execution. In USA, the current administration is accelerating the transmission infrastructure buildout, with the largest investment ever in upgrading the power grid, to deliver affordable and clean electricity. To facilitate evacuation, the Government is targeting to spend USD 100 Billion towards re-energising the countrys power infrastructure and upgrading the nations electricity transmission system. The Company is delivering towers for well-known projects such as the Ten West Link transmission line from Arizona to California, with potential to unlock up to 3,200 MW of clean energy. Additionally, SAE Towers is increasing its market share in the Pole business with references up to 345 kV and further obtaining pre-qualification certifications from several utilities.

In South America, the transmission infrastructure industry is moving towards opening the sector for private participation, to promote renewable energy integration in power grids, encourage growth in capacities, drive efficiency improvement through adoption of new technologies, and support ESG initiatives. Several South

American countries such as Colombia and Chile are working on these initiatives. Chile is already in progress to implement their first HVDC project.

These measures are expected to support transmission grid networks in the region, with countries such as Brazil, Chile, Colombia, Argentina, and Peru likely to garner more than 90% of the total investments.

In Mexico, after a notorious slowdown in the energy sector during 2019-2022, even with an increasing demand, the government has released important investments in renewables that involve long transmission lines. There are plans to add 4.3 GW of generation capacity in the near term and make large-scale investments in energy transmission and distribution. SAE Mexico has successfully secured orders for lattice steel structures, further strengthening its position in the country.

All the above are expected to unfold substantial opportunities for the Company in the Americas.


KEC is one of the leading companies with a diverse portfolio of projects in railways across overhead electrification laying of new railway lines, doubling and tripling of tracks, gauge conversion, port connectivity, signalling and telecommunication, tunnel ventilation, speed upgradation, and construction of railway stations, platforms, bridges, residential quarters, depots, workshops, and railway sidings. During the year, in line with the diversification

Company forayed into implementation of Indias indigenously developed Train Collision Avoidance System - KAVACH and Automatic Block Signalling. The Company is also present in Urban Infrastructure segment delivering power supply systems, electrification

– both overhead and 3rd rail systems, and ballast-less track laying projects for metros.

Railways business generated a revenue of over Rs 3,700 Crore in FY23 and secured new orders of ~Rs 2,900 Crore, a year-on-year order intake growth of 15% compared to FY22. The business is proud to commission railway lines of 198 route kms and completed electrification kms during the year. The business has well-diversified unexecuted order book of over Rs 4,000 Crore from clients across central public sector undertakings, zonal railways, metro sector, private players, and government establishments in international markets. The outlook for the business is positive with buoyant investment in domestic and international railway markets.

The National Rail Plan 2030 proposes to develop a future-ready railway infrastructure for the country to meet demand up to 2050. The goal is to build capacity before the demand and increase the freight modal share of railways from the current 27% to 45% by 2030. In FY24 budget, Indian Railways has witnessed significant the highest-ever allocation of Rs 2.4 Lakh Crore. Vision 2024 of the National Rail plan allocated Rs 1.15 Lakh Crore to prioritise accelerated implementation of 126 critical projects such as

100% electrification, multi-tracking of congested routes, upgradation of speed to 160 mph on Delhi-Howrah and Delhi-Mumbai routes, upgradation of speed to 130 kmph on all other Golden Quadrilateral-Golden Diagonal routes and elimination of all Level Crossings on all Golden Quadrilateral and Golden Diagonal routes to enhance safety and speed. Additionally, Railways is targeting new track laying of 19 kms per day in FY24, an increase from 12 kms of track laying per day in FY23. work for

Further, the Government is focussing on increasing capacity, speed and safety of Indian Railway network through upgradation of existing OHE network and implementation of Automatic Block Signalling and Kavach technologies. The Railways is upgrading OHE to 2x25 kV to operate faster trains such as Vande(OHE), Bharat and heavy haul goods trains. During the year, the Company extended its leadership in 2x25 kV electrification by adding 622 kms of projects. The Company is now executing 11 projects of 2x25 kV OHE totalling 2,400 route kms. Automatic Block Signalling projects are also under implementation across the railway network to increase agenda, the line capacity through automation and the Companysupport has securedwith projects in the segment. Automatic Block Signalling is commissioned over 3,447 route kms of the network and the Indian Railways has identified additional 15,000+ route kms for upgrade, presenting significant opportunities for the Company. Further, Indian Railways indigenously developed Train Collision Avoidance System (KAVACH) will improve safety and speed of the existing railway. The Company is presently implementing KAVACH system on over 750 kms of the railway line in the Chipiyana-Kanpur-Pandit Deen Dayal Upadhyay section of North Central Railway. Indian Railways proposes to implement KAVACH in over 34,000 km of the railway line with 1,564 an investmentroute of Rs 34,000 Crore over the next 5 years.

The Company executed Signalling and Telecommunication project from Reasi to Salal and Dugga stations, that includes worlds highest railway track on the Udhampur-Srinagar-Baramulla rail link on the Chenab river in Jammu and Kashmir. The experience of working in difficult terrains provides competitive advantage to participate in opportunities with Indian Railways mission to connect 8 capitals of North-East States, with priority on strategic projects in Sikkim, Arunachal Pradesh and Manipur.

IntheUrbanRailwayinfrastructuresector, the Company is implementing projects in metro electrification, power supply systems, and track laying for clients in Mumbai, Patna, Kochi, Chennai, Ahmedabad, Kolkata, and New Delhi. In next phase of metro expansion, 1000 kms of new metro is proposed in more than 10 cities that includes Mumbai, Thane, Hyderabad, Nagpur, Lucknow, Varanasi, Gorakhpur, and Noida. Urban Rail based transport continues to receive financial support from the

Government of India and multilateral banks providing opportunity visibility in the sector up to 2027 and beyond.

The Company has worked on two projects for Delhi - Meerut Regional Rapid Transit System (RRTS), now renamed as RapidX, which will provide faster connectivity between Delhi and Meerut with a speed of over 160 Kmph and reduced travel time of 55 minutes. Successful trials have been conducted on the priority section of the line between Duhai depot and Sahibabad station, both of which have been built by us, and is expected to be operational in 2023. The government has proposed to develop 5 additional Rapid Rail lines to provide faster commuter connections to Alwar, and Panipat in the first phase and Palwal, Khurja, Rohtak, Hapur, and Baraut in the second phase.

The Company is committed to improving and strengthening project engineering and execution practices to reduce costs and shorten delivery timescales. The Company developed and deployed technological solutions such as connected IoT for remote monitoring of equipment, track and trace tools for workforce management at sites, and robot to monitor incoming trains for enhancing safety of on-site staff. Additionally, the Company is focussing on precast structures in civil works to reduce construction time and digital enablement of processes, such as checklists for electrification improve quality.

The Company has backward integrated into manufacturing of supplies to enhance supply chain reliability, improve quality and drive competitive advantage in the market. The Company manufactures railway cables, signalling cables, PIJF cables, contact wires, feeder, jumper and dropper wires, catenary and contact conductors, Quad cables, etc. at its cable manufacturing plant. The Company also manufactures Over

Head Electrification manufacturing units for Transmission & Distribution structures.

The Company is proactively working on expanding the railway business to the international market by leveraging its reach in the Transmission & Distribution business. In view of the buoyant investment outlook in the railways sector, the business with its multidisciplinary expertise is expected to deliver growth over the next few years.


KECs Civil business is delivering exponential growth, with a focus on large projects, in segments such as buildings & factories, public spaces, water pipelines and water treatment plants, defence, data centres, logistics, and warehouses. The business has delivered revenues of over Rs 3,300 Crore, an impressive growth of ~75% compared to last year. Just over half a decade old, the business has established itself as a leading player in the EPC construction and is serving marquee private as well as government clients.

In FY23, the business achieved its highest ever order intake of over Rs 6,600 Crore. During the year, the business has deepened its footprint across sectors such as water, data centres, buildings & factories, etc. The business has secured a mega water supply scheme project worth over Rs 2,000 Crore in Madhya Pradesh. This is the largest order by value in the history of the

Company. In line with the diversification strategy, the business has received orders in the high growth areas of commercial buildings and logistics sectors. The business has also moved into the hydrocarbons sector by securing multiple orders for process units, buildings, and infrastructure for a leading refinery.

The Indian Infrastructure sector is the backbone of the Indian economy and a key driver to help India achieve its goal to become a USD 5 trillion economy over the next few years. The Union Budget 2023-24 has allocated a capex budget of Rs 10 Lakh Crore; a 33% year-on-year increase for the third consecutive time since 2020. This capex budget constitutes 3.3% of Indias GDP and highlights Governments commitment towards initiating investments and ensuring time-bound completion of infrastructure development as planned under the flagship National Infrastructure

Pipeline initiative. Further, the PM Gati Shakti Programme for economic growth and sustainable development has more than 150 critical projects identified across the seven growth engines of Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.

With the vision to realise the PM GatiShakti Programme, measures are also being taken to enhance financial viability of projects through Public Private Partnerships (PPP), with technical and knowledge assistance from multilateral agencies. These and other investments will create opportunities in the development of industrial clusters near highways & rail freight corridors, building of health infrastructure, real estate, defence, airports, warehouses, etc. During the year, the Company has secured a large order in logistics infrastructure to develop around 1.2 million sq. ft. of warehousing space for a Singapore-based developer.

Government policies towards "Make in India" through Production Linked Incentive (PLI) schemes coupled with reforms implemented to increase ease of doing business in the country, are expected to re-energise the private sector investment cycle. Driven by the "China Plus One" strategy to de-risk supply chains, multiple global firms are channelising their investments and looking at India to expand their manufacturing capacities. During the year, the Company has forayed into EPC of industrial projects in the metals & mining sectors for a leading Aluminium producer in the country. Currently, the business is executing 15 industrial projects with leading private sector companies across sectors such as paints, chemicals, cement, metals & minerals, etc.

In the Water segment, the business is among the leading national players executing large water pipeline and supply scheme projects contributing to Government of Indias Jal Jeevan

Missions flagship ‘Har Ghar Jal programme. During the year, the business has secured orders worth over Rs 3,500 Crore in Odisha and Madhya Pradesh. The business is constructing water pipelines spanning thousands of kilometres, more than 850 Elevated Storage Reservoirs (ESR), water intake wells, water treatment plants, envisioned to provide safe and adequate drinking water through individual household tap connections to over seven Lakh households. As part of the National Infrastructure Pipeline Scheme, more than 200 projects for water supply, water treatment and irrigation have been planned in various states of India, with an outlay of over Rs 4.97 Lakh Crore. This represents a tremendous opportunity for the Company to further cement its position as a leading player in the water sector in India.

The Data Centre industry in India is witnessing unprecedented development and is one of the fast-paced growth sectors. It is estimated that there will be an addition of over 800 MW capacity by 2024 with over 9.7 million sq. ft. of real estate space, and an investment of USD 5.5 Billion in setting up Data Centre facilities. To make India a global data centre hub, the Government has already granted infrastructure status to the data centre industry. The Company has expanded its footprint in this space by securing two new orders from leading

The Data Centre industry " in India is witnessing unprecedented development and is one of the fast-paced growth sectors. It is estimated that there will be an addition of over 800 MW capacity by 2024 with over 9.7 million sq. ft. of real estate space, and an investment of USD 5.5 billion in setting up Data Centre facilities.

hyperscale Data Centre developers in India. With current operations in major Data Centre cluster zones in the country and ongoing development of ~70 MW Data Centre capacity, the Civil business is confident of growing this business significantly.

The business, with its focus on constructing Government buildings, airports, and public spaces of national importance, is working on marquee Srinagar High Court and Tuticorin Airport projects, with fast-track completion underway. The Company is also working on the prestigious MLA Staff Quarters project in Odisha to be developed on EPC basis. The UDAN Yojana launched by the Government has facilitated the growth of India Aviation Market and further investments are planned to develop fifty more airports.

The Company is well-positioned to tap into this wave of rapid development in the aviation sector by providing turnkey execution capabilities for the envisaged projects.

In the real estate sector, the demand for residential and commercial properties has increased significantly in the second half of the year with sustained private sector investments in cities like Bengaluru, Mumbai, and the NCR region fuelling growth expectations in 2024. The Company is well entrenched in the buildings sector and has emerged as the preferred contractor of carefully selected and financially estate developers. During the year, the Company has expanded its client portfolio and made a breakthrough in the commercial buildings segment with an order from one of the most reputable global asset management companies in the world. The Civil business is currently executing over 35 high-rise towers with a built-up area of more than 5.5 million sq. ft., and developing township spread over 40 acres of land area.

With a view to complete projects ahead of schedule, with highest safety and quality standards, the Company has steadfast focus on enhancing its capabilities in areas such as cutting-edge technology deployment, design & engineering expertise, and execution excellence. The Company undertook a transformation programme, in collaboration with a leading global management consultant, to develop end-to-end execution and project management processes as part of the Civil Execution Excellence initiative. In conjunction with the trend of modular construction in the industry worldwide, the Company has also built precast structure solutions for its ongoing projects. Further, digital initiatives such as Assets tracking and management systems, Concrete Management Systems, Fuel Monitoring System for mobile assets, BIM, and IoT in project lifecycle for project design & monitoring, have been deployed to enhance the business value proposition to clients.

Since its inception, the business has invested in the latest formwork technology and has successfully completed complex silo constructions using Slipform technology. Aluminium formwork systems are being used for high-rise buildings to reduce floor construction cycle time and achieve superior finishing levels. The Company has steadily built capabilities in installing large electro-mechanical systems such as industrial HVAC, clean rooms, and heavy equipment such as cement mills, wagon tipplers, stacker reclaimer, rod mills, conveyor systems etc., thus offering end-to-end service offerings to clients for EPC projects.

As a result of sound its unwaveringreal focus on Safety and Quality, the Company has been recognised on various platforms. The Civil business has won six awards at the 13th CIDC Vishwakarma Awards for excellence in Health, Safety & Environment. Ministry of New and Renewable Energy (MNRE) and The Energy and Resources Institute (TERI) have conferred upon KEC the ‘Exemplary Performance Award. The Company secured runner-up position at the Construction Times Award 2023 in the ‘Best Construction Company category.

Civil business has been awarded Gold Trophy for developing and implementing Quality Processes in Kaizen (continuous improvement focus) competition organised by Confederation of Indian Industry (CII).

With a strong diversified over Rs 10,000 Crore, the business is confident of leveraging the upcoming growth opportunities through its diversified strong project management and execution capabilities, financial strength, and persistent focus on implementing leading-edge construction technologies at its projects.



The Companys Urban Infrastructure business focusses on the end-to-end construction, spanning civil works, system works, and finishing works, for

Metro rail and Regional Rapid Transit System (RRTS) projects. The business is building elevated viaducts, stations, river over bridges, depots, and workshops. Beyond the civil works, the Company is expanding its presence in technology driven system areas such as power supply systems, electrification OHE as well as Third Rail and ballast-less track laying works for Metros.

In FY23, the Company secured five systems projects for Overhead Electrification, Ballast-less track laying, and Power Supply Systems for Metro rail works.TheCompanyhasaddedtwonew clients, Gujarat Metro Rail Corporation Ltd and Mumbai Metropolitan Region Development Authority, in addition to the existing clients such as Delhi Metro Rail Corporation, Chennai Metro Rail Limited, National Capital Region Transport Corporation, Madhya Pradesh Metro Rail Corporation, Kochi Metro Rail Corporation, and Rail Vikas Nigam Limited. The Company is now executing 21 projects spanning 55 kms of viaduct, 60 stations, 2 depots, 30 kms of track laying, 40 kms of electrification, etc.

During the year, the Company focussed on accelerated delivery of projects despite challenges such as right of way issues, volatility in commodity prices, and labour availability. In a significant achievement, KECs first metro project, encompassing viaduct, stations and ballast-less track works, for Kochi Metro Rail Corporation Limited has started commercial operations from June 2022.order bookof The Company is proud that the project has been delivered as per contractual timelines, quality, and safety norms. Similarly, successful trial presenceruns have been started on Indias first across sectors,

RRTS project, connecting Delhi and Meerut, between Sahibabad station to Duhai depot. The work is progressing well on the two Delhi Metro projects, where the Company is constructing complex structures such as a 1.4 km double decker viaduct and a 560m long Balanced Cantilever bridge over River Yamuna. The Company is making fast-paced progress in the two Chennai

The Company is proud that the " Kochi metro project has been delivered as per contractual timelines, quality, and safety norms. Similarly, successful trial runs have been started on Indias first RRTS project, connecting Delhi and Meerut, between Sahibabad station to Duhai depot.

Metro projects, which are expected to ease congestion in heavy traffic areas of the city.

During the year, the Company, in collaboration with a global consultant, has undertaken a holistic programme to strengthen engineering and execution capabilities for Metros. The programme focussed on streamlining processes, enhancing project management capabilities, implementing transformational initiatives for cost optimisation and deployment of automation and mechanisation techniques to fast-track on-ground construction activities. The Company is implementing BIM (Building Information Modeling), conducting drone-based surveys, leveraging Ground Penetrating Radar (GPR) for utilities identification, etc. for better planning and monitoring of projects. The Company has also developed significant establishing and operating state-of-the-art precast / prefab yards and erection capabilities for installation of various precast elements. Currently, the Company is running six Precast yards with output capacity of 2,500 cubic metres of concrete per day. The Company has received safety awards from National Safety Council of India and Construction Industry Development Council for achieving over one million safe person hours on several projects that resulted in 52 million safe person hours since 2018.

As per World Bank estimates, in India, almost 600 million people constituting 40% of the population, will live in urban areas by 2036. India will need to invest USD 840 Billion over the next 15 years to meet the increased demand on urban services. The country is investing in development of urban transport infrastructure as central and state governments have increasingly taken up new projects with support from multiple global lenders. The country has added over 900 kms of metro and Rapid Rail in last 20 years and additional 1000 kms+ are proposedcapabilitiesin nextin 4-5 years. Historically, metropolitan cities have been leading the introduction of new metro rails. Now, 20+ non-metropolitan cities in Maharashtra, Uttar Pradesh, Tamil Nadu, Gujarat and Madhya Pradesh have metro projects in various stages of progress. Further, Government is also proposing Metro Neo and MetroLite as an alternative to heavy metro for cities with population over 20 Lakh.

KEC, with its deep expertise and presence across the value chain of urban transportation, is well placed to tap into the wide range of opportunities arising in the sector in the coming years.

The Company has received " safety awards from National Safety Council of India and Construction Industry Development Council for achieving over one million safe person hours on several projects that resulted in 52 million safe person hours since 2018.


KECs Oil & Gas pipeline business focusses on laying cross-country Oil & Gas i.e. Crude, Natural Gas and Petroleum Product pipelines across the country. During the year, the business has secured new orders of ~Rs 500 Crore from marquee PSU clients such as IOCL, IGGL, GAIL, etc. The business has forayed into construction of station works, which help refineries to augment the pipeline capacity by erecting compressor / pump stations comprising complex mechanical, electrical and instrumentation equipment. Beyond Oil & Gas, the business is also undertaking projects for laying iron ore slurry pipelines as well as water pipelines.

In FY23, the Company has seamlessly completed integration of KEC Spur Infrastructure Limited into KECs systems, processes and policies. The Company has delivered revenues of over Rs 480 Crore, a staggering growth of 2.7 times over FY22, supported by enhanced people and asset capabilities. During the year, the business has invested in building specialised capabilities in Horizontal Directional Drilling (HDD) and automatic welding.

With an objective to deliver projects ahead of time as well as improve pre-qualifications, the Company is putting special focus on thorough planning and fast-track execution, by implementing best practices in project management, building an efficient supply chain, and enhancing EHS and quality practices across projects. In a notable achievement, the Company has successfully commissioned the 16" X 126 Kms Tundla - Gawaria Project, which has paved the way to quote for larger diameter pipeline projects. The business continues to focus on building required pre-qualifications to increase the size of addressable market.

The energy sector continues to play a crucial role in fuelling the growth of Indian economy. Government of India is planning large-scale investments of over Rs 7.5 Lakh Crore on oil and gas infrastructure, which include refineries, pipelines, and new LNG import terminals, amongst other assets. The country is poised to increase oil and gas exploration in the coming years with planned investments from players such as ONGC. Further, the Government is targeting to increase refinery capacity from 248 MMTPA currently to 440

MMTPA. Moreover, Indias gas demand is expected to grow over 500% in the foreseeable future as the country has set a target to raise the share of gas in the countrys energy mix to 15% by 2030, from about 6% currently. The increase in gas demand is driven by demand from industries such as power generation, city gas distribution, and other industrial requirements. As a part of the nations gas grid, a total of around 22,000 km of natural gas pipelines are operational and about 13,000 km of gas pipelines are under construction as of 2022. India targets increasing the pipeline coverage to around 35,000 km over the next couple of years. Further, all states are targeted to be connected by a national trunk pipeline network by 2030.

The slurry pipeline market is expected to pick up pace as well. It is anticipated that a crude steel capacity of 300 million tonnes per annum will be required by 2030 based upon demand projections. With growing demand for steel, transportation of iron ore slurry through economical and environmentally sustainable means from mines to steel plants becomes essential. In line with the above, major steel operators are planning additional slurry pipelines over the next few years.

In International markets, owing to the impact of Russia-Ukraine conflict, many countries are re-evaluating their energy strategy and expected to invest in rebuilding their energy supply chains. Additionally, fuelled by increase in oil and gas prices, major operators such as ADNOC and Saudi Aramco are expected to invest significant in enhancing their oil and gas output, thus leading to potential opportunities in building network of oil and gas pipelines and allied works. The Company is leveraging its international Transmission & Distribution presence to foray into the international oil and gas EPC space and is focussing on opportunities in the Middle East and Africa.

The growth prospects of the sector look promising in the coming years on the back of healthy demand and favourable cost economics of projects. These investments and asset expansion plans offer sizeable market opportunities for your Company.


The Cables business offers a wide range of cables, overhead conductors and turnkey cabling solutions across 90+ countries around the globe. The business manufactures extra-high and high voltage, medium voltage, low voltage Power cables, Control and Instrumentation cables, Railway cables, Telecom cables, and special cables such as Solar cables, Submersible cables, Green cables, EV charging cables, Mining cables, etc. The Company has relaunched its cables under the "Asian Cables" brand to leverage upon a name that is well respected, across the industry and customers, for its quality and reliability. The Company has two fully integrated manufacturing facilities at Vadodara and Mysuru, both in India.

The Cables market grew during the year owing to resurgence of demand post COVID-19, thrust on government spend on infrastructure development, private and PLI-related investments. The wires & cables industry in India, currently at Rs 650 - 700 Billion, is expected to grow at a CAGR of 8 – 10% over next 5 years. The industrys expansion will be driven mainly by Governments push on infrastructure development supported by substantial increase in capex outlays, renewables energy generation, investment in Power Transmission and Distribution infrastructure, demand in real estate sector driven by rising urbanisation, capacity addition in manufacturing sector supported by "Make in India" and trend of diversification & de-risking of supply chain. Additionally, focus on sunrise areas such as digital connectivity, establishment of 5G network and ecosystem, data centres, EV charging infrastructure, defence and reforms to improve the financial health of the DISCOMs will benefit the industry.

Increasing investments in Railways by the Government towards enhancing safety through indigenously developed KAVACH system, infrastructure projects in segments such as high-speed rail, signalling and telecommunications and Dedicated Freight Corridors to create a future-ready railway system is also expected to increase the demand for several types of railway cables and conductors. Despite market tailwinds, the cables industry witnessed challenges in the form of volatile prices of raw materials such as Copper, Aluminium, XLPE, PVC and GS wires.

In a significant business has delivered highest ever revenue, profitability during FY23. The improvement in performance is attributed to growth in market segments such as Metros, Industrials, Telecom, Data Centres, Railways, etc., higher capacity utilisation of manufacturing assets and implementation of cost reduction initiatives across the value chain. The business focus on deepening its relationships with key clients, securing approvals from domestic as well as international utility companies, and strengthening the dealer network helped to significantly grow the LT and Telecom cable segment. The Companys order intake from exports market grew by ~20% over FY22. The Company exported cables and cabling solutions to 30 countries across the globe in FY23, including three new countries.

The Company continued its focus on new products and developed 10 products catering to domestic as well as international clients and to support varied requirements of KECs EPC businesses such as Railways, Urban Infrastructure, Substations, Underground Cabling, Oil & Gas, Data Centres, etc. During the year, the business has developed new products such as Submersible cables, LVachievement,theCables Hybrid cables, PV Solar cables, Concentric cables, Cathodic Protection cables, and Railways order intake Signalling Power cables, etc. Further, the Company has developed Green Power and Control cables that are RoHS (Restriction of Hazardous Substances) and REACH compliant. Being a strategic enabler for the Companys other businesses is significantly helping the Company to improve the performance of the Cables business, and simultaneously, enhance the competitiveness of respective business segments.

The Company also expects a significant telecom cables owing to wide-scale deployment of Fibre Optic networks, planned rollout of 5G services in India, fiberisation of telecom towers and last-mile FTTH connectivity, in addition to the Governments thrust on BharatNet

2. The Company manufactures and supplies an extensive range of telecom cables, including optic fibre cables and PIJF cables. The Company is further developing Ribbon Cables and Micro-ducts to cater to the emerging needs of telecom service providers, ISPs, Data Centres, and EPC companies.

Furthermore, underground cabling is gaining momentum among state and central transmission utilities to improve safety and reliability, reduce transmission losses and resolve RoW issues in densely populated areas. Fast-paced urbanisation, growth of Smart cities and the need for reliable power supply, especially in areas with severe weather conditions & cyclones, and areas that are sensitive from security perspective will accelerate the shift towards underground cabling. The Company offers unparalleled expertise to execute large scale Underground Cabling projects and expects a significant boost in opportunities in India and overseas markets.

Overall, the Companys product and services portfolio and manufacturing capabilities are well poised to capture the increasing demand of cables in the Indian as well as international markets.


Analysis of Profit and Loss statement and Balance Sheet including the key ratios based on consolidated results is mentioned as follows:

Profit and Loss Statement Analysis

Revenue for FY23 stands at Rs 17,282 Crore with a growth of 26% Y-o-Y, despite a challenging environment. The growth has been delivered by both T&D and non-T&D businesses.

We have achieved an EBITDA of increaseRs 830 Crorein demandwith EBITDAfor margin of 4.8% for the year. The margins have been impacted primarily due to cost and time escalations in EPC projects in the Companys subsidiary in Brazil, and significantly higher commodity prices and logistics cost during the year.

Interest costs to sales ratio has increased to 3.1% in FY23 as against 2.3% in FY22 owing to elevated debt levels and higher interest rates.

Net profit for FY23 stands at Rs 176 Crore. The net profit has been impacted owing to a lower EBITDA and higher interest cost.

Earnings per Share (EPS) stands at Rs 6.85 in FY23 against Rs 12.92 in FY22.

Recommended a Dividend of Rs 3 per equity share i.e. 150% of the face value of Rs 2 each for FY23 – Total outflow ofRs 77 Crore.

Balance Sheet Analysis

Net Worth increased to Rs 3,771 Crore from Rs 3,620 Crore in FY22. The Company has not raised any Equity Capital during the year, keeping the Equity Share Capital unchanged at Rs 51 Crore. Reserves and Surplus increased to Rs 3,720 Crore from Rs 3,569 Crore in FY22.

Book Value per share increased to Rs 147 from Rs 141 in FY22.

Gross Borrowings increased to Rs 3,216 Crore from Rs 2,875 Crore in FY22.

The Companys Net Working Capital days have reduced to 118 days from 137 days in FY22.

Key Financial Ratios

Key Financial Ratios (1)

2022-23 2021-22 Change (%)
Debtors Turnover 2.4 2.5 -3.4%
Inventory Turnover 15.2 12.9 17.9%
Interest Service Coverage Ratio 1.6 2.9 -44.9%
Current Ratio 1.1 1.1 -1.5%
Debt Equity Ratio 0.9 0.8 7.4%
Operating Profit Margin % 4.8% 6.6% -27.0%
Net Profit Margin % 1.0% 2.4% -57.8%
Return on Net Worth % 4.8% 9.5% -49.9%

Interest Service Coverage ratio, Operating Profit Margin, Net Profit Margin and Return on Net Worth have decreased owing to a reduction in EBITDA, primarily due to cost and time escalations in EPC projects in the Companys subsidiary in Brazil coupled with significantly higher commodity prices and logistics cost. There were no other significant changes (25% or more) in any of the above key financial ratios [1] Assessment of key ratios have been derived as follows: (Debtors Turnover = Revenue from Operations/Trade Receivables) (Inventory Turnover = Revenue from Operations/Inventories) (Interest Service Coverage Ratio = Profit Before Depreciation and Amortisation, Interest and Tax/Interest) (Current Ratio = Current Assets/Current Liabilities) (Debt Equity Ratio = Total Debt /Total Equity including all reserves) (Operating Profit Margin % = EBITDA/Revenue from Operations) (Net Profit Margin % = Net Profit after Tax/Revenue from Operations) (Return on Net Worth % = Net Profit After Tax/Average Net Worth (Total Equity including all reserves))


At KEC, Internal Control serves as a fundamental pillar of Corporate Governance. The Company has implemented an Internal Control mechanism that aligns with its evolving needs. This mechanism operates through the ERP system, SAP, and incorporates effective Internal Controls to safeguard the Companys resources, ensure operational efficiency, monitor systems, and comply with laws and regulations.

The Internal Control mechanism is tailored to the nature, size, and complexity of the business at both the entity and process level. It ensures integrated, objective, and reliable financial information. The Internal Audit department conducts audits at various locations, covering all major functions with focus on operational areas and Internal Control systems. This comprehensive approach ensures that all Company operations are audited at least once every three years. The department provides assurance across all areas of risk, including strategic, commercial, safety, operational, compliance, and financial risks in all business segments of the Company. The management and the Audit Committee of the Board of Directors receive periodic recommendations on process improvements and implementation status reports. The Audit Committee periodically reviews the adequacy of the Internal Control system, provides guidance, and directs further action, if necessary, including benchmarking best practices externally.

Throughout FY23, the internal audit findings & implementation status of actions taken with respect to recommendations against audit findings were shared with the Audit Committee through presentations. The Audit Committee expressed satisfaction with the adequacy of the Companys Internal Control system and procedures.

Employees are guided by the ‘RPGCode of Corporate Governance & Ethics, which reflects and reinforces the unique corporate culture and values prescribed by KEC and the RPG Group. The Internal Control system includes a whistle-blower mechanism, which encourages directors, employees, and third parties to report genuine concerns, misconduct, or fraud without fear of unfair treatment or punishment. In exceptional cases, they have direct access to the Chairman of the Audit Committee.


The Company engages external specialists to conduct reviews of critical initiatives such as Enterprise Risk Management (ERM) and audits of Information Technology (IT), specific manufacturing facilities and project sites.

ERM reviews include the identification and assessment of risks across the Company, review of mitigation plans, and the presentation of the risk profile to the Risk Management Committee and the Board of Directors.


The Company works predominantly in the Engineering Procurement and Construction (EPC) business and has developed robust risk management processes. With widespread operations across 30+ countries, the Company faces various risks associated with turnkey projects, whose long-term success largely depends on the existence of a robust risk identification and management system that helps identify and mitigate various risks.

KECs robust risk management framework helps manage risks at various levels across the Company and ensures that the systems are reviewed periodically to align them with current internal and external environment.

Some of the enterprise-level risks identified by the Company and the mitigation measures being implemented are:

1. Geopolitical Risks:

Unexpected political unrest or changes in some of the developed/developing countries, ongoing Russia-Ukraine war, trade barriers, increasing conflict in the

KECs robust risk management " framework helps manage risks at various levels across the Company and ensures that the systems are reviewed periodically to align them with current internal and external environment.

Middle East are some of the risks which can disrupt supply chain & impact the execution/progress of its projects.

Mitigation: The Company monitors such risks and develops suitable mitigation strategies addressing the feasibility of operating in the country, strategic sourcing options, and evaluating the impact of war and working out strategies to overcome the risks.

2. Commodity Price Variations and Currency Fluctuations:

The Company deals with various commodities, such as steel, zinc, copper, and aluminium. Fixed price contracts can have a negative impact on the Companys profits if input costs rise without proper hedging mechanisms. Additionally, with operations in several countries, adverse movement in any currency can negatively impact financials.

Mitigation: The Company believes in keeping its commodity and currency exposures hedged to optimum levels and measures and manages these risks centrally. It carries out periodic reviews of these risks at appropriate levels. In some projects, the supply of project material is kept in customers scope.

3. Cyber Security:

Cyber-attacks and threats may impact the security of IT infrastructure and critical IT assets of the Company.

Mitigation: The Companys IT systems are protected with anti-virus and its network security through firewall to avert any cyber-attacks.

New generation Security Operations Centre Services have been deployed which not only records but automatically disables any network intrusion. Audit recommendations and suggestions provided by an external IT specialist are implemented to further strengthen the IT security.

4. Interest Rate Fluctuation Risk:

Volatility in interest rates impacts the profitability of the Company.

Mitigation: The Company closely reviews its borrowing levels to ensure reduction in working capital intensity, improvement in cash flows and optimise mix of foreign currency borrowings.

5. Execution Challenges:

The Company faces execution challenges such as geological surprises, land acquisition and Right of Way (RoW) issues, pending approvals and clearances from Government agencies, working in difficult terrains, manpower issues, etc.

Mitigation: The Company closely monitors the risks for each project and deploys suitable strategies to affect timely mitigation. The Company engages various technologies to assess terrains and soil conditions at project sites. The Company has deployed several mechanisation, automation and digitisation initiatives across projects to improve productivity and quality of execution.

6. Demand Risk:

Infrastructure investment slowdown can lead to lower order intake and lower sales.

Mitigation: The Companys robust global presence helps it minimise the impact on business during a slowdown in investment in a country or region. It has a significant several underdeveloped and emerging economies, where infrastructure investment remains a key priority for sustainable growth. Further, the

Company has a diversified portfolio which includes Substations, Railways, Civil, Solar, Urban Infrastructure, Oil & Gas Pipelines, Smart Infrastructure, and Cables, all of which provide ample growth opportunities in the future.

7. Pandemic Risk:

The Company is primarily involved in construction and manufacturing activities. Due to the onset of the COVID-19 pandemic since FY20 and other infectious diseases, there is an inherent risk to health and safety of the employees and workers, and risk of disruption in production due to lockdown.

Mitigation: The safety of its employees and all its stakeholders is foremost to the Company and forms an essential part of its DNA. Environment, Health & Safety (EHS) is included in the Key Responsibilities of the main stakeholders of each project and region. The Company is complying with all MHA guidelines and KEC Standard Operating Procedures (SOP) introduced during the pandemic. The Company has institutionalised a Work from Home (WFH) policy since

March 2020 for all corporate offices and standard operating procedures are rolled out for employees working from home. Subcontractors are provided training and made to sign the EHS Code of Conduct before beginning a project. Additionally, a detailed Standard Operating Procedure (SOP) is documented for each activity and Hazard Identification and Risk

Assessment (HIRA) is also completed. Each site is manned by a supervisor, who monitors the work done as per the SOP, along with a Safety Officer deployed at each site. Additionally, the Companys Corporate Safety Audit team conducts regular audits, which are reviewed monthly in the EHS Steering Committee meeting and actions are taken accordingly. KEC had successfully conducted vaccination camps across its offices, plants and project sites for its employees (including contract labour and consultants).

8. Succession Planning Risk: presence

Risk of inadequate succession planning for key personnel poses challenges to long-term sustainability and growth. Mitigation: Topbusiness talent and critical positions are identified annually in the organisational management review. The leadership pipeline has been strengthened and proper processes are implemented for hiring and retaining the best talent. Additionally, the Company periodically reviews the succession plan for its senior management team to ensure continuity in leadership.


Attracting, motivating, and retaining talent are crucial for KECs ongoing success, and the Company accomplishes this by implementing forward-thinking policies, consistently investing in enhancing employees skills, and enabling them to fulfil their maximum potential. The Company has demonstrated significant in enhancing its People Practices over the past few years, by creating a modern, inclusive, and secure workplace.

At the core of the Companys people agenda lies a focus on Happiness, which is an intrinsic value shared by both the RPG Group and KEC. This led to the launch of the Groups new brand tagline - Hello Happiness - a few years ago. With Happiness as the central theme, supported by the RPG Groups Vision, Values, and Capability tenets, KEC is fostering a performance-driven environment that encourages learning, transformation, and growth throughout the organisation. To gain insight into the opinions of our employees, KEC conducted the "Happiness Survey" and achieved 81% Happiness quotient in FY23, which implies that employees value the work environment, opportunities for growth, transparency, and mutual respect within the Company.

The organisation has taken various initiatives to promote employee happiness and wellness. One such initiative is the establishment of a Happiness Council, which is chaired by senior leaders who design and implement new people initiatives.

Additionally, the organisation conducts action planning workshops across all departments to increase the overall Happiness Quotient of employees. To recognise and appreciate individuals and teams who contribute to employee happiness, the organisation has introduced the Happiness Champions Awards. To promote employee wellness, the organisation collaborates with reputed agencies and medical professionals to conduct regular wellness sessions for employees. The organisation also offers a hybrid way of working to its employees, which allows them to work both remotely and, in the office, providing flexibility improving work-life balance.

KEC focusses on continuously increasing the Happiness Quotient by implementing sustained, employee- focussed initiatives that address areas such as growth, culture, recognition, and work-life balance.

Continuous learning is now an essential element for both individuals and organisations to thrive in todays fast-paced and ever-changing business landscape. At KEC, we understand the significance of ongoing professional development and endeavour to foster a culture of learning. To equip our employees with the requisite skills and knowledge to adapt to new challenges and stay competitive in their respective fields, we offer diverse training programmes, workshops, and mentorship opportunities. KEC has also launched a Project Management

Excellence Certification Programme in partnership with NICMAR faculty to establish an internal pool of Project Managers, and a Procurement Academy. Our investment in our employees growth and development not only benefits them but also enhances the overall performance and success of our Company. To promote a culture of self-improvement, KEC successfully conducted the Digital Learning

Championship, which uses gamification to encourage e-learning and improve the employee experience. We have also introduced novel virtual learning initiatives, such as Knowledge Caf? and Learning-On-The-Go, and DEAL (Drop Everything and Learn) sessions, which include interactive sessions conducted by senior leadership at KEC and external speakers on various business-related topics.

KEC has recognised the significance of utilising technology to improve our HR operations and provide our employees with an exceptional experience. We have achieved notable progress in digitising our HR procedures, from recruitment and onboarding to performance management and employee engagement. Our adoption of HR digitisation has equipped us to attract, retain, and develop top talent, facilitating our Companys growthandand success. Moving forward, we are committed to continuing our investment in technology to improve our HR capabilities and offer an effortless employee experience.

Additionally, we have made significant advancements in our AI-based chatbot, Electra, which provides 24/7 assistance to employees with their queries.

The organisation continues to maintain its status as the most preferred employer among top engineering and business school campuses in India. This year, the organisations flagship Engineering

Leadership Programme has taken on board more than 300 engineering graduates and postgraduates from prestigious institutions such as IITs, NITs, and NICMARs across India. Additionally, the organisation has enhanced its Group Management Resource programme, which recruits talented individuals from leading business schools, and the Future Leaders Board programme, aimed at identifying and nurturing exceptional talent to become future leaders of RPG Group Companies, in alignment with the Groups Vision of Unleashing Talent. The organisation intends to expand these talent acquisition initiatives to hire international candidates for its overseas locations.

In line with our commitment to creating a workplace that fosters diversity and inclusivity, we recognise the significant role of a diverse workforce in achieving our organisational goals. To this end, we have implemented several initiatives aimed at promoting diversity, with a particular focus on gender. One of these initiatives is Womenocity, a programme

KEC focusses on continuously " increasing the Happiness Quotient by implementing sustained, employee-focussed initiatives that address areas such as growth, culture, recognition, and work-life balance.

designed to gain insights into the experiences of our female employees and identify ways to improve their working conditions within the EPC industry. Additionally, we launched LIT, a self-help group that offers support, guidance, and engaging activities on themes such as mental health awareness, parenting and family, and veteran support.

We also recognise the importance of hiring diverse candidates, including women returning to work after a career break, persons with disabilities, and individuals from the transgender community. We have prioritised the recruitment of such candidates to further advance our diversity and inclusivity objectives in line with our ESG Goals.

Employee Count as on March 31, 2023: KEC has 7,779 employees (including subsidiaries).


Statements in this report describing the Companys objectives, expectations, predictions, and assumptions may be ‘forward-looking within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those expressed herein. Important factors that could influence the Companys operations include global and domestic economic conditions affecting demand, supply, price conditions, natural calamities, change in Governments regulations, tax regimes, other statutes, and factors such as litigation and industrial relations.

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