K E C International Ltd Management Discussions.


FY21 was unprecedented as COVID-19 pandemic has affected every individual, industry, country as well as the global economy. The pandemic disrupted global supply chains, business models, financial ecosystems, and led to a long-lasting change in employee and consumer sentiments. The infrastructure industry suffered as construction came to a grinding halt amidst lockdowns, investments were postponed, and labour migrated from the project sites to their homeland. As per IMF estimates, the global economy likely contracted by 3.3% in 2020.

As the world adapted to a new normal post the pandemic-led recession, availability of vaccines raised hopes of survival and improved economic outlook. Governments, across the world, responded with accommodative monetary policies and used the budget promptly to announce USD 16 trillion in fiscal actions. Within advanced economies, the U.S. economic activity is expected to reach pre-COVID levels in the first half of 2021, followed by Japan and the U.K. In the MENA region, countries that started vaccination drives early (like the GCC nations) are expected to have better growth prospects compared to conflict-affected and fragile states. In LatAm, export-driven countries may likely benefit from the rebound in global manufacturing. Sub-Saharan Africa regions activity is expected to pick up pace in the second half of 2021 as vaccine availability increases. China, with its accelerating growth, leads the pack in Emerging Asia, while growth in the ASEAN region is expected to recover meaningfully with adequate policy support.

In line with the anticipated global economic recovery, commodity prices also increased steeply. Between August 2020 and February 2021, oil prices increased around 39% on the positive sentiment of vaccine roll-outs and economic recovery in Asia steered by China. Similarly, base metal prices increased by 30% in the same period, driven by the robust pickup in industrial production in China and some advanced economies and optimism about U.S. fiscal stimulus. The IMF expects the commodities to remain high for some time before the prices normalise.

The IMF expects global growth to rebound to around 6% in 2021 even though uncertainties persist on the path to recovery. International policy cooperation, synchronised fiscal stimulus, favourable interest rates and liquidity support may result in faster than expected recovery.


In line with the global economy, Indias economic trajectory was severely hit by the pandemic, as it affected the industry and service sector, paralysed consumption and led to inflation. Last years strict lockdowns and critical healthcare support helped in limiting the COVID-19 spread. Timely fiscal and monetary stimulus provided a cushion to the economy that showed positive growth after two quarters of degrowth. However, just when the economy was getting back on track, the second wave of the virus hit India on a much larger scale. The trade off between controlling the second wave and the continuation of economic activity had been challenging to balance. Indias growth will depend upon the ability to contain the impact of the current and any subsequent waves of the pandemic.

During FY21, the rural economy has been resilient, helped by a good monsoon season. The projections of a normal monsoon in FY22 strengthen the rural outlook. In addition, the industry sector bounced back meaningfully in the second half of FY21 when the economy gradually opened, as most industries embraced innovative and digital ways of working.

The Government implemented an expansionary budget along with a slew of other measures to pump up the economy in FY21. COVID-related support measures alone accounted for as much as 13% of GDP. In addition, recently announced Production Linked Incentive (PLI) scheme, with a budgetary outlay of Rs.1.9 lakh crore to promote manufacturing under Atmanirbhar Bharat, increasing FDI in insurance and defence along with the increased focus on road, railways, and urban infrastructure under NIP (National Infrastructure Pipeline) make way for solid economic development. On the monetary front, the RBI has reduced policy rates, announced various liquidity measures and provided additional support to MSMEs and NBFCs in order to boost the economy. India has also received robust foreign inflows on the expectations of strong post-pandemic recovery.

The Company hopes that the recovery will be as swift and wide, as witnessed during the first wave. Several factors work in favour of a potentially strong economic recovery in India: I. Higher government spending: To support the economy, Government has front-loaded its expenditure in FY22 and maintained an expansionary fiscal budget target at 6.8% of GDP.

II. Prudent monetary support: The RBI aims at maintaining an accommodative stance and providing ample liquidity support to help the economy recover faster.

III. Robust FX reserves: Amidst the global uncertainty and volatility across markets, the RBI managed to accumulate strong levels of FX reserves, providing sufficient buffer to cover imports of over a year.

IV. Lower current account deficit: Helped by lower import growth and stable exports growth, Indias current account deficit has narrowed significantly.

V. Stable rupee: The rupee has outperformed most emerging markets and has been relatively stable throughout the pandemic.


The global construction market is estimated to decline from USD 11.2 trillion to USD 10.6 trillion, a decline of more than 5% induced by COVID-19. The industry was impacted by factors ranging from lockdowns, reverse migration of labour, logistics bottleneck, volatile commodity prices, shortage of construction material, etc. It is expected that the industry will grow back to USD 11.5 trillion in 2021 on the back of economic recovery and large stimulus plans announced across countries. The construction industry plays a unique role in reviving economies and driving growth. Public spending on infrastructure development stimulates the demand as well as supply, boost economic well-being by creating jobs at the grassroots, and can be targeted towards the most impacted areas. The benefits of investments in infrastructure are not only realised in the short-term, but the dividends can be reaped in the long-term as robust infrastructure creates a virtuous circle of investments. It spurs growth in the industries such as Metals and Mining, Materials, Logistics, Transportation, Commercial Vehicles, Heavy Equipment, Real Estate, Food, etc.

In India, more than 50 million people are employed in the construction sector and the sector accounts for an average share of 7.7% in GVA over the last five years. Considering the impact of the pandemic, the Government of India has made its intentions clear that construction investments will gain priority due to its impact on improving the nations productivity, driving job growth with increased labour participation and a high multiplier effect on the overall economic output. Towards this, the Centre laid a strong focus on construction and capex-led economic recovery in the Union Budget 2021-22, through a ~34% increase in the FY22 infrastructure capex budget. The National Infrastructure Pipeline, with an outlay of Rs.111 lakh crore, promises significant opportunities for KEC, with large investments in sectors such as power, railways, residential and affordable housing, urban infrastructure, smart infrastructure, airports, and water.

Apart from these planned investments, the Governments push to promote and fast track development through necessary policy reforms is also a shot in the arm. Setting up of a new Development Finance Institution (DFI) to act as a provider, enabler and catalyst for infrastructure financing is further expected to provide a fillip to the domestic construction sector. A few other steps taken in this direction include allowing 100% FDI in select sub-segments, tax exemptions, swifter clearances and improved coordination between Centre and States through nodal agencies.

Through planned investments and new reforms, it is expected that the industry will play a crucial role in helping the economy to come out from the COVID-19-induced slowdown, lead India onto a new growth trajectory, and realise the goal of building a USD 5 trillion economy. The long-term outlook of the construction sector remains strong even though the current high levels of commodity prices pose a risk to the industry in the short term.





KEC is a global EPC major in the Power Transmission & Distribution (T&D) industry and offers integrated solutions ranging from design, manufacturing, supply, installation, and commissioning of Transmission Lines, Substations and Underground Cabling in both domestic and international markets.

With a footprint in 70+ countries, KECs T&D business spread across Asia (South Asia, Middle East, South East Asia, Central Asia), Africa, the Americas, Oceania and Europe, is the largest segment of the Company, contributing over 55% to both, overall revenue as well as order book.

The Company is one of the largest globally operating tower manufacturing companies, with six state-of-the-art tower manufacturing units spread across India, Brazil, Mexico, and UAE, supplying over 3.6 lakh tonnes of tower components annually. It is also among the few companies to own and operate four tower testing stations spread across India and the Americas.

During the year, the Company has successfully commissioned and commenced despatches from its sixth tower manufacturing unit in Dubai, which was acquired in FY20 to enhance KECs competitiveness and provide a strategic foothold to serve the high growth markets in MENA and other regions. With robust and well-integrated capabilities spanning the entire spectrum of ‘concept to commissioning, the Company has set a benchmark in the industry with its ahead of schedule deliveries, enabled by world-class engineering and design capabilities, global supply chain and deployment of the latest mechanisation and digital technologies.

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

I) South Asia business (India and SAARC)

During the year, the Company continued its growth momentum despite a challenging environment. The Company also successfully secured significant orders in South Asia T&D business.

The Company witnessed an uptick in the Transmission line and Substation tenders, highlighting the importance of the sector in driving growth and prosperity. The Company secured several orders from Power Grid Corporation of India Limited (PGCIL), state utilities, as well as private operators in India. The business bagged Tariff Based Competitive Bidding (TBCB) orders of close to Rs.1,500 crore in Green Energy Corridor from PGCIL in Rajasthan, further boosting its order book. The Company continues to maintain a strong presence across several states such as Bihar, Karnataka, Tamil Nadu, and West Bengal and is targeting entry into a few more states with a proven track record for timely completion of projects and secured payments.

The Company continues to grow and fortify its leadership position in the SAARC market. The Company is executing over 20 projects in the region and has an order book of over Rs.2,200 crore. In line with the strategy, the Company has diversified its presence in the region by securing its first substation order in Sri Lanka and a significant order in Afghanistan. Apart from the traditional T&D projects, the Company is also targeting entry into underground cabling and renewable energy projects in SAARC, on its own or through strategic partnerships.

The business successfully delivered 19 Transmission and Distribution projects in FY21. Some of the key projects commissioned include the 400 kV Pugalur-Arasur

Transmission Line in Tamil Nadu (part of PGCILs prestigious 800 kV Raigarh-Pugalur HVDC project), 765 kV Fatehgarh-Bhadla Transmission Line, 400 kV Pavagada-Devanhalli Transmission Line and 400 kV Devanhalli Substation, 400 kV Silchar and Misa Substations in Assam for the North Eastern Region Strengthening Scheme-II and 400 kV Banaskantha Substation in Gujarat, amongst others. The Company also received multiple client appreciations for the quality of execution and adoption of excellent EHS practices, especially for controlling the spread of COVID-19 at the project sites.

The Company has significantly enhanced its focus on mechanisation and digitalisation initiatives across project sites to increase productivity and to recoup time lost due to the lockdown. Cutting-edge solutions in areas such as execution (use of Drones for surveys and stringing, Gin Poles, High Capacity Boom Cranes, sophisticated concreting machinery, etc.), safety (Mobility-enabled safety platform, training through Mixed Reality platforms), workforce management (enhance workforce visibility, compliance and safety) and quality (virtual inspection using technology) have substantially enhanced operational efficiency by improving productivity and reducing time and costs across projects.

With a healthy order book of over Rs.6,000 crore, the Company is well poised to sustain its leadership position in the South Asian market.

Region-Wise Outlook & Opportunities a. India

In FY21, India added 12 GW of power generation capacity, taking the countrys total installed power generation capacity to 382 GW. The addition is 25% lower as compared to FY20, when India had added 15.8 GW of capacity. Notwithstanding the subdued growth, Indias energy demand is all set to increase substantially and is expected to overtake the European Union as the worlds third-largest energy consumer by 2030.

Significant focus on urbanisation through Government schemes in areas such as housing, roads, urban transport and water supply and driving industrial growth through ‘Make In India and ‘Atmanirbhar Bharat will ensure sizeable investments in the power sector. As per the 19th Electric Power Survey, Indias generation capacity is likely to touch 619 GW by the end of 2026-27. Development of high voltage transmission lines and substation infrastructure will thus need to keep pace with the generation capacity. Other factors that will drive growth in the T&D sector are the need for setting-up of inter-regional grid capacity to ensure seamless flow of power from one region to another, evacuation infrastructure for renewables and cross-border interconnections with SAARC countries. (Source: CEA, International Energy Agency (IEA))

The Rs.111 lakh crore National Infrastructure Pipeline (NIP) has allocated 24% of its capex, the highest portion, for energy infrastructure. The Union Budget 2021 has earmarked Rs.3.05 lakh crore spread over five years to develop the power sector. With the ongoing setup of cross-country national grid, huge investments are being planned by states to improve connectivity, reliability, and affordability. The Company is expecting an increase in large-sized transmission line as well as substation tenders and is focussing on enhancing its footprint across states on a selective basis.

The countrys renewable energy capacity is expected to increase from the current levels of about 100 GW to over 275 GW by FY27. The aggressive renewable expansion plan requires significant development in the Transmission sector to enable the flow of renewable energy into the National Grid Network. The Government of Indias focus to increase capacity of Green Energy Corridor (GEC) projects is a step in the right direction. The Company is currently executing several transmission line and substation projects under this GEC initiative in Gujarat and Rajasthan.

Rising private sector participation with favourable risk-return profile of power transmission projects will continue to support growth in the transmission sector, in a climate of stretched government finances and liquidity constraints. The central government continues to award a significant chunk of new projects through the TBCB route, driving participation and ownership from private players. Similarly, several states are also planning to adopt this route for their upcoming projects. Implementation of such projects places high importance to ahead of time delivery, quality, cost and safety parameters. KEC, with its mature processes, global supply chain, deep engineering and execution capabilities, cost competitiveness and a proven track record for ahead of schedule deliveries, is well placed to deliver growth in this area.

As the demand to build technologically-advanced substations increase, the Company expects that the share of investments in substations will continue to rise to about 40-45% of the total investments in the sector, especially towards GIS technology. In line with this, the Company has built deep expertise and forged strategic partnerships to capture a large share of this growing market.

The sector continues to transform and undergo radical changes and paradigm shifts. Advanced technologies for bulk power transmission and High Capacity Power Transmission Corridors (HCPTCs) are being developed.

Monopoles, Narrow Base Towers and innovative conductor technologies such as HTLS and Covered Conductors etc., are playing a crucial role in resolving issues related to Right of Way (RoW). Advanced technologies such as Static Synchronous Compensator (STATCOMs) are being embarked upon in substation projects. The Company is investing in building technological capabilities and strategic partnerships with leading technology players in this area.


The SAARC region has been a key growth driver for the Company and has been offering significant business opportunities consistently. The Company has achieved a healthy 33% revenue CAGR in the last four years. Even though the COVID-19 pandemic has delayed planned projects across several countries, there is continued interest of multilateral funding agencies to finance power infrastructure projects in the region.

Bangladesh continues to drive the SAARC market on the back of its expanding economy and industrial growth, leading to an increase in electricity demand. Between FY

2020-25, the country plans to add about 22 GW to its power generation capacity, 22,238 ckt km of transmission lines and 1,13,162 MVA substation capacity to provide quality and reliable electricity across the country. Major schemes under progress include the Dhaka-Chittagong Corridor and Rooppur Nuclear Power Plant Evacuation System, which shall further strengthen the power sector in the country. The Government also envisages that ~35% of the countrys power generation will be procured from renewable energy sources or clean power imports by 2041. The expected investment over the next 10 years in the power sector amounts to USD 80 billion, with 15-20% being in T&D. (Source: Bangladesh Power Development Board Annual Report FY20)

Nepal is emerging as another prominent market in SAARC, with planned capacity addition of 4.6 GW by 2025. About 4,300 km of transmission lines and 59 substations are expected to be built by 2035 in the country. Indo-Nepal Cross Border Transmission lines along with the Millennium Challenge Corporation (MCC) funded transmission lines and substations open up multiple opportunities for the Company.

Afghanistan government has planned construction of nearly 1,500 km of transmission lines and 34 substations between FY 2020-25. However, the business forecast and forthcoming projects have a high degree of sensitivity to the volatile security situation of the country. In addition to deploying elaborate security SOPs, the Company has sharp focus on ground conditions and continues to regularly engage with the Government authorities to allay security concerns and ensure smooth operations of the current projects. Sri Lankas annual demand for electricity is expected to increase by 4.9% over the next 20 years. The government has laid out plans to enhance its power generation capacity from 4,043 MW to 6,900 MW by 2025. This includes generation of close to 1,800 MW through renewable sources, as the country aims to achieve 100% electricity generation by renewable energy sources by 2030. Further, continued commitment of multilateral funding agencies to fund governments for various T&D projects, along with a USD 100 million Line of Credit by India for solar power development gives a positive outlook to the country. The BBIN (Bangladesh, Bhutan, India, Nepal) initiative supported by South Asia Sub Regional Economic Cooperation (SASEC) as well as Indias focus on inter-regional energy connectivity with these countries through power and transportation corridors open up significant T&D infrastructure opportunities for the region. It is expected that the SAARC T&D market will continue to grow and remain a key focus area for the Company in the coming years.

II) International Business

The Company strengthened its presence in the International T&D market by securing new orders of over Rs.3,700 crore in FY21, a growth of ~4X over last year. These include large-sized orders in Oman and Mozambique in addition to orders in MENA, Africa, and the Americas.

Amidst strict COVID-19 restrictions in many countries, the Company delivered a decent performance backed by robust execution in the Middle East, Africa and the Americas. The Companys strategy to fortify the substation portfolio internationally continues to bear fruits with new substation orders of over Rs.500 crore. This year, KEC commissioned its sixth tower manufacturing facility, which was acquired in FY20 by the Companys wholly-owned subsidiary KEC Towers LLC. The timely acquisition of the 50,000 MTPA facility in Dubai is already proving beneficial for the Company, especially owing to the surging Middle East T&D market on the back of increased oil prices. The facility is enabling the Company to secure business from reputed utilities and private players in the Middle East and other regions, while increasing cost competitiveness due to fiscal and logistical benefits. The Company has created a strong foothold with multiple new orders in Oman aggregating to over Rs.1,500 crore. With a pick-up in tendering activity across the region, the Company is confident to secure significant orders to maintain its leadership position.

The Company further strengthened its footprint in the Rest of Africa (ROA) region and re-entered Uganda and Mozambique during the year. The Company maintained execution focus despite pandemic-related hurdles and commissioned Tanzanias first 400 kV substations at Dodoma and Singida, in addition to 132 kV transmission lines and an associated substation in Zambia. The Company also made significant progress in fortifying transmission networks of countries such as Senegal, Ghana and Ivory Coast through several transmission lines and substations.

The Company continues to bolster its presence in South East Asia and has secured multiple AIS and GIS substation projects in Thailand and Malaysia. In a significant achievement demonstrating execution excellence, the Company has commissioned the 500 kV Pluak Daeng Substation project in Thailand four months ahead of schedule, earning appreciation from the client. The project involved erection of the countrys largest substation gantries and integration of the newly constructed substation with existing systems. The Companys projects in Papua New Guinea and Nicaragua are progressing well despite RoW issues and execution challenges.

SAE Towers, the Companys wholly-owned subsidiary in the Americas has added three new EPC projects to its portfolio this year, including its first substation EPC order in Brazil. The business has faced considerable challenges in FY21 on account of COVID-19 and unavailability of steel, resulting in delays and cost escalations on the projects. The business is currently executing six projects and 900 km of transmission lines in Brazil. Additionally, KEC is focussing on pivoting its SAE Mexico business from a manufacturing to an EPC driven company.

Region-Wise Outlook & Opportunities a. Middle East and North Africa (MENA)

The power sector continues to grow throughout the MENA region, driven by demand from increasing population and the need to reduce dependence on an oil-based economy. The region is expected to add 88 GW of generation capacity, which translates to an overall investment of USD 142 billion in generation and a further USD 68 billion for transmission and distribution (T&D). A significant portion of this capacity is already under execution, driven by the UAE (19%), followed by Saudi Arabia (17%) and Egypt (16%) respectively.

A recent report on the impact of COVID-19 on the power sector states that compared to other energy sectors, the investment landscape in the power sector is relatively steady despite the pandemic and the sector will play a vital role in accelerating the post-pandemic recovery process. Planned investments in power transmission and distribution to strengthen the grid is expected to increase in the MENA region over the next five years, driven by the rise of renewables and focus on boosting regional interconnectivity.

In UAE, the government is pushing strongly to diversify its energy sources in the power mix, especially renewables and nuclear. As per the countrys Energy Strategy 2050, it aims to double the contribution of clean energy in the total mix to 50% by 2050. The UAE is also planning to invest at least USD 16.2 billion to meet the expected additional 8 GW capacity requirement over the medium term. These factors are expected to drive the T&D infrastructure-related markets in the coming years.

Saudi Arabia has recently announced significant reforms in the electricity sector for long-term health and sustainability of the sector, in line with its goals for Vision 2030. A key focus area is to increase the Transmission and Distribution network security and reliability to enable effective integration of renewable energy and interconnection with neighbouring countries, which augurs well for the business. The government plans to invest around USD 9 billion to augment generation and T&D capacities in the Kingdom for its growing energy demand, expected to grow at 8-10% by 2024.

In Oman, demand for electricity is expected to increase from 7.7 GW in 2019 to 16 GW in 2030. The country announced significant investments to augment transmission lines and substation capacity to strengthen the countrys grid. The Company successfully captured these new opportunities and secured three orders totalling over Rs.1,500 crore in the country in FY21. The country also has a significant potential for renewable energy, as it possesses one of the worlds highest solar energy densities.

North Africa too is expected to see a considerable investment in power generation, and transmission and distribution. In Egypt, demand for electricity will grow at a CAGR of 5.1% by 2023. Morocco is planning to implement electricity projects worth USD 2.6 billion under its new 2019-23 strategy to improve electricity access across the country. The country is also focussing on renewable energy development aided by multilateral funding institutions, further necessitating the investments in transmission networks. The Company is also expecting opportunities in countries like Algeria, Tunisia and Libya.

KEC will continue to maintain its focus in the region and aims to further increase its market share especially in UAE, Saudi Arabia, Oman and North African countries.

b. Africa (excluding North Africa)

Electricity remains unaffordable to a large part of the population in Africa and its access is limited by irregular distribution of transmission lines, limited interconnections and prevailing system adequacy issues in improving electrification. Planned efforts to provide access to modern energy services barely outpace population growth. Rapid growth, both in terms of economy and population, will have significant implications for the energy sector in the region.

Despite COVID-19 hurdles, the Company has seen an increase in tendering activities in FY21 post relaxation of COVID-19 lockdowns in countries such as Mozambique, Uganda, Guinea, Nigeria, and Mali. The Company has also been successful in securing significant orders from Mozambique and Uganda during the fiscal year. The Company is expecting the momentum to continue in large interconnected electricity transmission infrastructure projects, including Angola-Nambia project, Burundi-Rwanda project and Tanzania-Zambia project. Countries such as Senegal, Ethiopia, Kenya and Tanzania are also expected to see a pick-up in renewable energy capacity addition under hydro and geothermal power. The Company is also witnessing a growth in financing projects, which offers significant opportunities for large players such as KEC, in partnership with global funding agencies.

It is estimated that around USD 80 billion will be invested in Africa by 2040 to build the transmission infrastructure to absorb current and planned power generation capacities. This amounts to an opportunity of USD 3-4 billion per annum for transmission network expansion.

Africa will continue to be a key growth driver, as the Company continues to build the regions transmission and distribution network.

c. South East Asia

In terms of electricity demand, South East Asia is one of the fastest-growing regions globally, where demand has grown by more than 6% annually over the past 20 years on average. The region has close to 20 GW of new generation capacity under construction. Greater emphasis is also being placed on expansion of renewables and natural gas, in addition to regional interconnection and trade.

(Source: IEA)

Malaysias economic development and population growth have resulted in a substantially higher electricity demand during the past decade. The country plans to add about 29 GW of generation capacity from 2018-2025 along with corresponding investments in domestic and regional grid networks. There is also an increasing thrust on expanding the countrys renewable capacity to support power demand growth as well as to meet the national emissions target.

Thailand has witnessed an increase in electricity demand post July-August 2020, after a slowdown due to COVID-19 restrictions and lockdown. The government has announced significant stimulus and recovery measures, including an "Energy for All" policy, with a two-pronged approach – to counter the slowdown, and support the growth of renewable energy. The government believes that "energy transition towards energy security" is key to achieve a sustainable energy future and has committed to increase renewables concentration in Thailands energy mix to 30% by 2037. The countrys main energy utility, the Electricity Generating Authority of Thailand (EGAT) plans to achieve this by bringing together innovation and smart-integrated solutions to ensure energy security, innovate power solutions and grow regional cooperation and partnerships, especially with ASEAN countries. EGAT is expected to invest over USD 6 billion to strengthen the transmission infrastructure in Thailand over the next few years.

Other countries in the region have lined up significant investments to achieve 100% electrification in the coming years. KEC has built significant capabilities in this market and continues to strengthen its position in the region, especially in Malaysia and Thailand.

d. Central Asia

The Central Asia region is seeing a rise in demand for power. The regions focus has been on integrating electricity grids and upgrading transmission lines, which will reduce the frequency of power shortages. Several ambitious plans such as TUTAP cross-regional power interconnection projects connecting Central and South Asian countries, and the USAID Power Central Asia programme to assist Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan are in the pipeline to harness the regions electricity generation potential and increase opportunities of electricity trade between the regions. Additionally, Georgia is planning to expand its T&D network to implement four transmission lines projects in the country. These investments provide opportunities for KEC to expand its presence in the region.

e. North America

North America has outlined significant plans to upgrade the existing infrastructure, integrate new renewable and distributed energy resources, and respond to a rapidly changing energy mix. In March 2021, the US President has announced an ambitious USD 2 trillion infrastructure plan, out of which the Government proposes to spend USD 100 billion towards re-energising Americas power infrastructure and upgrading the nations electric transmission system. This is in line with the administrations plan to modernise the countrys ageing electric grid and produce 100% carbon-free electricity by 2035. It has already identified more than 20 major transmission projects that are positioned to move from an advanced planning stage into construction. Several individual states in the U.S. have made commitments to invest greater in renewable energy sources to enhance transmission from areas rich in renewables to areas of high demand. Over 44,000 km of lines at 115 kV and above voltage levels are planned to be added to the North American power grid by 2027. (Source: Global Electricity Transmission Report 2018).

In Mexico, the government has announced infrastructure projects aimed at revitalising the countrys economy and aiding the state-owned power utility Commission Federal de Electricidads (CFE) strategy of increasing its generation capacity. The federal government and private industry plan to launch nine new projects in the electricity sector that will require total investments of USD 11.1 billion. The country plans to add 4.3 GW of generation capacity in the near term and make large-scale investments in transmission line capacity addition to construct around 20,000 circuit-km of line length during the 2019–32 period. Mexico currently generates 15% of its power from clean sources and aims to generate 35% by 2024 and 50% by 2050.

Utilities in Canada are expected to invest around CAD 4.5 billion annually over the next 4-5 years. There is a growing need to connect new renewable generation capacity and several cross-border projects between Canada and U.S., which is acting as a key enabler for the growth of electricity transmission in Canada.

These commitments are expected to boost demand for transmission structures and other products for SAE Mexico, apart from EPC opportunities in the region.

f. South America

The South American Transmission industry is undergoing a phase of regulatory changes to open the sector for private participation, promote renewable energy integration in power grids and encourage sectoral growth. These measures are expected to provide a huge fillip towards augmenting transmission grid networks in the region, with countries such as Brazil, Chile, Argentina, and Peru likely to garner more than 90% of the total investments.

In Brazil, the 10-Year Energy Expansion Plan 2029 (PDE 2029) announced by the Ministry of Mines and Energy (MME) envisages investments to the tune of BRL 2.3 trillion for the 10-year period starting 2020. Of the total investments, approximately 20% will be utilised for enhancing electricity generation and transmission in the country. The government has outlined elaborate plans to upgrade the transmission network and add renewable energy capacities. Under PDE, MME is projected to invest about BRL 73 billion in transmission lines and BRL 30 billion in substations, to construct ~49,000 km of transmission lines and about 162 GVA of transformer network in the country.

In December 2020, ANEEL, the Brazilian Electricity Regulatory Agency hosted transmission auction and allotted 11 transmission lots in various areas including, Minas Gerais, Rio de Janeiro, Rio Grande do Sul, and So Paulo with an investment of BRL 7.3 billion. These projects will add a total line length of 1,959 km and 6,420 MVA capacity to the Brazilian grid. Several large transmission lines in this auction were for underground solutions. Brazil is expected to host a large power transmission auction in December 2021. The Company targets to leverage these upcoming opportunities and build a substantial portfolio of EPC and tower supply projects in the country.

Several other countries in the region have announced major plans to augment their power infrastructure over the next 10-15 years to serve the growing electricity demand. Chile is addressing this need by strengthening its national & regional grids by adding 5,000 km of transmission lines and associated transformer capacity. The country has committed to generate 60% of electricity through renewables by 2035, thus necessitating the need to build new transmission lines. Argentina is focussing on the public–private partnership (PPP) model and has already identified multiple projects under its national budget. The country is planning to award over 3,300 km of transmission lines in the coming years through PPPs. Perus electricity demand is primarily being driven by the growing mining sector and the burgeoning middle-class. The country is investing significantly in building up generation and transmission capacity to ensure its energy goals. The government plans to add 6,205 MW of power generation capacity during 2018-2028 and has approved the 10-year transmission development plan for the period 2019-2028, which includes the development of 13 projects at an investment of USD 511 million.

All of the above are expected to unfold substantial opportunities for the Company in South America.



KEC is a leading engineering, procurement, and construction (EPC) player for Railways. The Company has vast experience in various works for Railways such as overhead electrification (OHE), traction power supply, track laying and linking for new railway lines, doubling and tripling of tracks, gauge conversion, signalling and telecommunication (S&T) and civil works such as bridges, stations & platforms, residential quarters, depots, workshops, etc. The Company is also executing projects in areas such as tunnel ventilation, speed upgradation and railway infrastructure for the private sector. Additionally, the Company is diversifying into technology-intensive areas of electrification, power supply systems and track laying for metros.

The business continues to be one of the Companys biggest growth drivers delivering a revenue CAGR of ~75% over the last five years. During the year, the Company delivered a revenue growth of ~34% in the Railway business. The business continued to contribute to the Governments mission of 100% electrification and completed overhead electrification of 1,329 route kilometres (RKM), which is nearly 22% of the countrys overhead electrification lines commissioned during the year, in addition to commissioning railway tracks totalling to 171 RKM. The Company has delivered around 30% of Indias overall railway electrification till date, spanning more than 18,800 km, and continues to dominate the OHE segment.

The Company has bolstered its leadership position in the business and strengthened its order book to over Rs.4,500 crore to drive growth in the coming year. In line with the strategy to diversify into adjacencies, the Company has successfully transitioned into a technology player from a conventional EPC player. The Company is now executing complex and technology-intensive projects in the areas of Metro, DFCC and High-Speed Rail. Over 50% of the order intake in FY21 comprise of orders from these new areas.

FY21 was a challenging year due to the ongoing COVID-19 pandemic; however, the Company has been able to ramp up its operations through timely mobilisation and testing of the workforce, strict adherence to COVID-19 SOPs at sites, and deployment of mechanisation and digitalisation initiatives, which has enabled the business to deliver projects ahead of schedule. During the year, the Company executed 11 projects, all of which were commissioned ahead of contractual schedule. The Company has also received early completion bonuses from RVNL and CORE. The business has also improved profitability through strict focus on controlling costs and managing cashflows.

The Company further strengthened its supply chain through backward integration by augmenting the manufacturing capacities of railway contact and catenary conductors and by introducing new products such as Quad cables, Contact wires, Dropper, Jumper & Feeder wires and Earthing conductors at its Vadodara Cables factory. The Company also manufactures signalling control cables, Railways OFC & PIJF cables, and Overhead Electrification structures, which gives the Company a competitive advantage in terms of enhanced supply security and better control over costs & quality.

The Company is also selectively bidding in international markets by leveraging on the global strengths and experience of its Transmission and Distribution business.

Outlook & Opportunities

The outlook for the Railway sector remains positive, with clear plans set by the Government for conventional railways such as 100% railway electrification by December 2023, speed upgradation of existing tracks to enhance the speed of passenger trains by March 2024. Further, the development of high-speed rail (HSR), semi-HSR, Suburban Rail, NeoMetro, and various metros across cities are the top priority of the Government. The railways sector received a budgetary allocation of Rs.1.1 lakh crore and an outlay for capital expenditure amounting to

Rs.2.14 lakh crore for FY22. As per the Vision 2024 document of the Indian Railways, the sector is expected to see an investment requirement to the tune of Rs.2.19 lakh crore from 2021-22 till 2025-26 for all priority projects of the Government. This offers promising business opportunities for the Company.

Going forward, the Company expects significant opportunities in the areas of electrification, power supply systems, track laying, signalling & telecommunication, etc., in both conventional as well as Metro segments. The Company is also exploring international projects from countries in SAARC, Africa and other regions.

The sector has contributed significantly in propelling Indias overall development and enjoys significant focus from the Government for investments that would ensure the time-bound creation of world-class infrastructure in the country. Given the key developments in both domestic and international markets, the Railway business has emerged as a major growth driver for the Company and we expect the momentum to continue in the years ahead.



The Company forayed into Civil construction a few years back to unlock new avenues of growth and expand into adjacent EPC segments. The business continues to successfully tap the mid to large-size market segment in the areas of industrial, residential & public spaces, urban infrastructure, data centres, warehouses, water pipelines and sewage & water treatment plants.

The Companys strategy to drive growth through diversification into new and promising areas has proven to be successful. In FY21, the business has bagged breakthrough orders in the warehouse and water pipeline segments, opening up large opportunities for the Company. In a short span, the business has become one of the Companys major growth engines, clocking a revenue of Rs.1,080 crore in FY21, a growth of ~3X compared to last year.

During the year, the Company bolstered its presence in the industrial sector by foraying into the chemical, hydrocarbon & _ue-gas desulfurisation segments. Owing to the business focus on quality and timely delivery of projects, the Company secured repeat orders from its reputed clients and continued to be a preferred civil partner in the cement, automobile and auto-ancillaries segments. The Company commissioned four industrial projects during the year, two each for renowned automobile and cement players. The Company has also strengthened its foothold in the residential segment in FY21 and secured three repeat orders to construct high-rise towers from a renowned real estate developer. The business is currently executing eight residential projects comprising of over 25 high-rise buildings, with a built-up area of approximately 50 lakh sq. ft., for marquee clients in fast-growing cities such as Mumbai, Bangalore, Pune, and Goa.

After the successful entry into the strategic Defence segment in FY20, the Company secured a repeat order from Military Engineer Services (MES) as a testament to its efforts towards delivering execution excellence with a special focus on quality and safety. The business is now executing three projects for MES and Defence Research and Development Organisation (DRDO), including an order in the technology-intensive area of Data Centres.

The Company is developing pro_ciencies in installing heavy mechanical equipment such as cement mills, stacker reclaimers and wagon tipplers, which are pivotal to the success of cement plants. The Company is streamlining its execution processes to enhance productivity by leveraging state-of-the-art equipment such as heavy cranes & gantries, mobile batching plants, and latest formworks. The Company has deployed innovative digital solutions such as drones, photogrammetry, BIM, IoT in construction machineries to unlock value for its clients and differentiate itself from the competition. In recognition of its efforts towards a consistent focus on safety and quality, the Company has won top honours from National Safety Council of India (NSCI), in addition to a National Health and Safety award at the Global Safety Summit 2020 and Construction HSE & Corona Warrior award at CIDC Vishwakarma Awards.

In the post-COVID era, the Company is expecting significant investments to develop healthcare infrastructure, warehouses & data centres and plans to tap these segments, in addition to opportunities in segments such as industrial, residential, commercial and water.

Outlook & Opportunities

The construction industry is a key driver in achieving Indias goal of a USD 5 trillion economy. The Government has laid out its vision through the National Infrastructure Pipeline, with investments of Rs.111 lakh crore, covering 7,400 projects in the coming years. This push has been demonstrated by a 34% increase in infrastructure capex to Rs.5.5 lakh crore in the Union Budget 2021. While the COVID-19 pandemic may affect investments in the short term, the medium to long term India growth story and infrastructure development plan shall remain intact. A KPMG study expects India will become the third-largest construction market globally by 2025, rising at a CAGR of 7.2%. The construction sectors contribution is expected to increase from 9% to 15% of GDP by 2030.

The slew of reforms and initiatives taken by the Government to attract foreign investments for the development of alternative global supply chains, strengthen industrial infrastructure and improve ease of doing business in the country to counter the slowdown and bolster growth have been very encouraging. The success of InvIT and REIT showcases the trust of investors in the infrastructure and real estate segment and lays a platform to bring significant private/foreign capital. These investments will create opportunities in the development of industrial clusters near highways & rail freight corridors, building of health infrastructure, mining & associated supply chain infrastructure, real estate, defence, airports, warehouses, etc.

With the long-term trend of increasing private investments, rapid urbanisation, consumption-driven growth and sustainable economic development, the future looks promising for the sector. The Company is confident of leveraging these opportunities with its financial strength, leading-edge construction technologies and diversified presence across the globe.

The following is the sector-wise outlook and opportunities for the Civil business:

a. Industrial Plants

The Government continues to implement measures on the fronts of Foreign Direct Investments (FDI) policy reforms, investment facilitation and ease of doing business under the ‘Make in India initiative. According to a CII-EY report, the country is expected to attract FDI of USD 120-160 billion per year by 2025, a clear endorsement of its status as a preferred investment destination amongst global investors.

The Government has also recently introduced Production Linked Incentive (PLI) scheme primarily to promote manufacturing in the country in several sectors, including electronics, food processing, battery storage, automobile components and speciality steel. The incentive payments are expected to reach Rs.2 lakh crore, majorly driven by automobile (Rs.57,000 crore), electronics (Rs.51,000 crore) and pharma sector (Rs.15,000 crore). These large-scale investments are expected to further strengthen Indias manufacturing sector.

The Company is also expecting significant investments in the automobile and auto-ancillary, cement, metals & mining, chemicals and warehousing space.

b. Residential and Commercial Buildings

Residential markets have been resilient even during the ongoing COVID-19 pandemic. A permanent shift towards work from home has increased the demand for home ownership, especially larger homes. The sector is already attracting significant FDI and Private Equity investments and is expected to receive a further boost with the recent success of Real Estate Investment Trusts. The long-term trend of the real estate market is optimistic, with the market expected to grow to Rs.65,000 crore by 2040 from Rs.13,000 crore in 2020. These developments are expected to provide a boost to the residential segment. The Company has built a formidable reputation in the sector. The strategy of working with financially stable developers has proved to be a boon. The Company has secured several new and repeat orders in this sector. The Company will continue to be selective and work with only marquee clients to minimise execution and cash flow risks.

On the commercial buildings front, the sector continues to expand, however, with lower growth than previous years due to the pandemic. The growing economy along with rapid urbanisation will continue to drive demand for commercial spaces across cities once the threat from the pandemic subsides. The Company plans to strengthen its presence in this segment, including tapping new opportunities in health infrastructure and data centres.

c. Airports

India has become the third largest domestic aviation market in the world and is expected to overtake UK to become the third largest air passenger market by 2024. The long-term trend of growth in the sector should continue post the current COVID-19 setback. Indias aviation industry is expected to witness investments of close to USD 5 billion in the next four years, which includes USD 1.83 billion for development of airport infrastructure and allied services. The Government under its UDAN scheme has proposed to increase the number of operational airports to 190-200 by FY40, from 103 airports in 2019. New projects in Maharashtra, Karnataka, Tamil Nadu, Kerala, Arunachal Pradesh, and Rajasthan are going to gain traction. The Company plans to target airports in growing Tier – II & III cities, in line with the strategy to tap into the mid-size EPC market. (Source: India Brand Equity Foundation)

d. Defence

The Government gave defence modernisation a historic push in the Union Budget 2021-22, with a 19% increase in capital outlay towards modernisation and infrastructure development of Armed Forces. The Budget also proposed the opening of 100 new Sainik Schools in the country in partnership with States, NGOs and private institutions. The Company is already executing three projects for MES and DRDO.

e. Water

Ensuring clean and reliable water supply for household consumption as well as for irrigation is a major priority for the country. Towards this, the Government has proposed an outlay of Rs.2.87 lakh crore over five years to provide household tap connections and universal water supply under the Jal Jeevan Mission in the Union Budget 2021-22. This will be used to augment local water resources and laying cross-country water pipelines as well as distribution infrastructure to ensure adequate water supply to every corner of the country. The Company has already tapped into the growing integrated water supply scheme segment and has secured two large projects in the state of Odisha. The Company expects significant opportunities going forward and is confident of foraying into a few more states and establishing itself in this critical infrastructure segment.



The Solar business offers comprehensive state-of-the-art engineering, procurement and construction services across ground-mounted and rooftop solutions, including industrial solar power plants. Launched five years ago, KECs solar business is amongst the few EPC players in India with capabilities to execute large-scale projects of up to 150 MW, with significant experience in Single Axis Tracker implementation.

During the year, the Company expanded its services portfolio to offer innovative solutions to industries. The Company is executing Indias largest carport project, a 20 MW Solar Carport for a leading automobile manufacturer. The business is also constructing 13.6 MW rooftop power plants in the industrial segment for an automobile ancillary company. The Company successfully commissioned a 14 MW ground mount project in Maharashtra, which was completed within 90 days after land handover. As a testimony to the Companys engineering and operations capabilities, the business is presently handling Operations and Maintenance of more than 15 projects and is exceeding generation performance guarantees in all projects.

The Company continues to adopt a cautious approach in the domestic market due to the ongoing uncertainties and is focussing on bidding for select large tenders. The Company has also increased its focus on the international market and is exploring opportunities in SAARC, the Middle East, Africa, EAP, and CIS regions.

The Company has developed significant control on the supply chain through backward integration by manufacturing a variety of solar structures and cables at its units, in addition to forging partnerships with reputed inverter, tracker and transformer manufacturers. The Company is leveraging its vast T&D presence across geographies to fast-track mobilisation and construction of solar projects.

Outlook & Opportunities

The Indian Renewable Energy (RE) sector continues to hold a positive outlook. The Government remains committed to accomplishing the ambitious target of 500 GW of clean energy capacity by 2030. As per estimates given by the Central Electricity Authority, the share of renewable energy generation would increase to 44% by 2029-30. The Indian solar market has added about 3.2 GW of capacity accounting for 48% of new additions during the year. The large-scale solar project pipeline stood at 47 GW, with another 24 GW of tendered capacity pending auctions.

Over the last few years, the Indian solar market has slowed down owing to multiple factors such as poor financial health of DISCOMs, PPA renegotiations by states, liquidity and financing issues, etc. During the year, rise in module prices, increased shipping and freight charges, and surge in raw material costs have impacted the industry in addition to COVID-19 related lockdowns.

The Indian Governments enhanced push for Renewable Energy may help re-accelerate growth in the sector. The Governments thrust on setting up Solar Parks and Ultra Mega Renewable Energy Parks, laying new transmission lines and creating substation capacity under the Green Energy Corridor Scheme for evacuation purposes is a step in the right direction.

In the international markets, global solar installations witnessed 10% growth surpassing 150 GW despite the pandemic-induced impacts. Markets such as Middle East, Africa, East Asia Pacific and Latin America are expected to drive growth in solar installations and aligns with KECs presence in these markets. Amongst neighbouring countries, there has been a keen interest in expanding power generation through Solar in the SAARC region, especially Bangladesh.

These opportunities and developments are expected to benefit large developers as well as EPC players like KEC.



The Company forayed into the Urban Infrastructure sector in FY20 to cater to the rapidly growing Metro and Regional Rapid Transit System (RRTS) segments in the country. Post securing multiple orders in the elevated viaduct segment last year, the Company expanded its footprint in FY21 and bagged several new orders in varied sub-segments, which further propelled the Company into the league of elite players capable of executing large, complex and technology-intensive projects.

The Company secured two new elevated viaduct orders/L1; one from Chennai Metro Rail Limited and a second from Kochi Metro Rail Corporation. The Company is now executing six Metro and RRTS projects with a combined value of Rs.3,833 crore, which include two projects each for Delhi Metro Rail Corporation and Kochi Metro Rail Corporation, one for Chennai Metro Rail Limited, and one for National Capital Region Transport Corporation to construct the Delhi-Meerut Regional Rapid Transit System (RRTS). The Company has also ventured into the technology-enabled areas of Urban Infrastructure and is executing projects in Metro Electrification - OHE as well as Third Rail, power supply systems, and ballast-less track works for Metros, in addition to constructing depots for Urban Infra projects.

The Company has made significant progress across projects, despite the challenges posed by the pandemic. In line with the focus on accelerated project execution, the Company commissioned the Panamkutty River Over Bridge in Kochi, part of the Kochi Metro project, six months ahead of schedule. The Company deployed innovative, efficient, and cost-effective construction techniques to execute the project in a short timeframe, earning appreciation from the client and local citizens. The Company has already handed over a portion of the viaduct to the client for track laying.

The Company continues to leverage its vast experience in project management, execution, and technological capabilities to drive innovation and operational efficiency in this sector. Adoption of precast/prestressed construction methodology and deployment of advanced digital technologies such as Ground Penetrating Radar (GPR) for utility detection, drones for topographical surveys and BIM to design and monitor projects has enabled the Company to fast-track project execution and move closer towards its objective of delivering these projects as per stringent timelines. Along with driving growth, these projects are helping the Company build robust credentials to participate in similar large-size infrastructure projects in the future on its own.

Outlook & Opportunities

Over the last few years, Indias urban transport infrastructure network has grown rapidly to figure among the top 10 largest networks in the world. The Government remains committed to develop Indias urban mobility network at a swift pace and provide world-class infrastructure to its citizens to improve quality of life.

The Union Budget 2021 placed a huge focus on investment in this sector to raise the share of public transport in urban areas through expansion of Metro rail networks. The Government has announced an allocation of over Rs.88,000 crore to develop new Metro lines in Kochi, Chennai, Bangalore, Nagpur and Nashik. Additionally, two new technologies, MetroLite and MetroNeo, will be deployed in Tier-2 cities and peripheral areas of Tier-1 cities to provide metro rail systems at much lesser costs with the same experience, convenience and safety.

Both state and central governments are committed to easing the infrastructure roadblocks resulting from a growing urban population. With over 1,000 km of Metro and RRTS lines under construction in 27 cities across India at an expected investment of close to Rs.3 trillion over the next five years, the Company envisages significant opportunities for the Urban Infrastructure business.



The Company ventured into the Smart Infrastructure business with a focus on Smart Cities, Safe Cities, Communication, Smart Mobility and Smart Utility segments. The Company plays the role of a Master System Integrator (MSI) and works closely with central and state governments, urban local bodies, and other agencies for creating smart and digital infrastructures.

The business has achieved key milestones in the execution of its first two Smart City projects at Aurangabad and Bidkin in Maharashtra. A state-of-the-art Command Control Centre at Police Headquarters in Aurangabad, a modern video wall, surveillance cameras and a data centre that can record and store data of 30 days has been deployed for real-time monitoring of various locations across the cities. In addition,

Digital Display Systems, Public Transport Vehicle Tracking System, Environmental Sensors, Solid Waste Management and other Business Intelligence-driven software solutions are developed for the client to help them grow in their digital journey.

The Company has forayed into executing smart solutions for the Defence sector and is deploying Airport Perimeter Security Systems for the client. Execution and commissioning of these projects will help the Company build significant capabilities to target similar projects in PSU and Defence establishments with enhanced scope. The Company has also strengthened its capabilities to deliver solutions for Industrial Corridors and is constructing an Integrated Command and Control Centre for a greenfield project in Greater Noida, in addition to installing several Smart City components.

The business continues its focus on providing the latest technology-oriented solution, building partner ecosystem with large international and Indian players and working closely with customers, to create customised solutions and the right value proposition.

Outlook & Opportunities

The current pandemic situation across the country and the world has highlighted the importance of having a robust IT and Digital infrastructure. In India, the main initiatives of the Government that continue to see investments include the Smart City Mission, to develop smart cities across the country and making them citizen-friendly and sustainable, upgradation of digital infrastructure like Data Centres, and National Smart Grid Mission, to accelerate Smart Grid deployment in India.

The Union Budget 2021 allocated Rs.6,450 crore for the ongoing Smart Cities Mission. During the pandemic, cities with developed IT infrastructure were able to handle the crisis effectively using Control and Monitoring Centre, Smart Healthcare, e-Governance, and other such applications. We expect a push forward in the digital journey of the cities, which will give rise to new opportunities for developing ICT ecosystems, surveillance systems, traffic management solutions, Wi-Fi connectivity, IoT-based sensors and Command and Control Centre. Under the Safe City project of the Government, several cities are expected to launch public safety initiatives such as surveillance systems, traffic monitoring & intelligent transport systems, communication infrastructure, command centre and other emergency services in Metro cities as well several B-class cities across India.

The Company is working with two cities for developing their scalable Data Centre as part of its ongoing project and will focus on standalone Data Centre opportunities as well going forward. In the Smart Grids domain, the Government is focussed on improving grid infrastructure through analytics enabled on ICT infrastructure. The Company plans to leverage its existing competencies in utilities, to expand it to grid automation and identifies it as a key area of growth.

Smart Infrastructure is expected to receive a push in the post-COVID environment and the Company is well prepared to leverage these growth opportunities.



The Company forayed into Engineering, Procurement and Construction of Oil & Gas cross-country pipelines, in line with the vision to grow through strategic diversification in adjacent areas. With proven project management capabilities and years of experience executing cross-country linear projects, and managing Right of Way (RoW), the Company is confident of its success in the sector.

India is also dependent to a large extent on imported crude and gas to satisfy its energy needs. The crude needs to be transported from ports to refineries and similarly petroleum products and gas need to be transported to consumption centres. Cross-country pipelines, considered as the lifelines of energy security of our country are the safest, cost-effective, energy-efficient, environment-friendly, and green mode for transportation of crude oil, petroleum products and gas.

The Company has made progress in building its asset and people capabilities for the sector, including well-experienced business development as well as execution teams. The Company has already participated in a few bids for projects during the year and is looking forward to securing its first order in FY22.

Outlook & Opportunities

The Indian Oil and Gas sector is likely to witness an investment of USD 206 billion in the next eight to ten years. The Government is targeting to increase refinery capacity from 248 MMPTA currently to 440 MMTPA and raise the share of natural gas in the energy basket from 6% to 15% by 2030.

As India moves towards building a gas-based economy, an estimated 14,700-km of cross-country gas pipelines are being added to the existing network of 16,800-km to form a national gas grid. Towards this, the Centre has decided to allocate approximately USD 66 billion to develop gas infrastructure, including pipelines, amongst other assets under the One Nation - One Grid programme. (Source: 3rd REINVEST 2020). It is also expected that 800-1,000 km of crude and product pipelines will be laid every year. These investments shall offer a sizeable market opportunity for a Company like KEC.

The Company believes that there is a good window of opportunity in this segment, given the Governments keen interest to promote green energy, which will see a surge in pipelines being laid across the country. Given the lack of focus and paucity of projects in this sector earlier, several players have exited the market. The sector is now seeing a sharp revival with huge investment plans made by large central, state and private enterprises.



The Cables business manufactures a wide range of cables, railway conductors and also offers turnkey cabling solutions across 80+ countries. The business manufactures and markets Power cables, Control and Instrumentation cables, Railway cables and conductors, Telecom cables, and Special cables such as Solar cables, Hybrid cables and Mining cables. Over the last seven decades, the Company has built a broad customer base across industries, utilities, EPC companies and distributors aided by rich experience in quality-driven manufacturing and expertise in project execution. The Company has two fully integrated manufacturing facilities at Vadodara and Mysuru, both in India.

In FY21, despite the impact of COVID-19 related lockdown leading to delays in several infrastructure projects, the business has successfully grown its order booking vis--vis FY20. The business has also clocked a revenue growth of 9% on the back of higher sales in HT and Railway products. The Company has also commenced third party sale of Railway cable products during the year. With a significant presence in the international market, the Company has exported cables and cabling solutions to 32 countries across the globe.

In order to enhance the competitiveness of EPC business segments such as Railways overhead electrification, Urban Infra power supply systems, Solar, Substation and

Underground cabling, the Company continues to strengthen its backward integration by developing new products for these business segments and augmenting capacities of railway contact & catenary conductors and signalling cables. The Company has already received approvals for manufacturing new products such as Quad cables, Contact wires, Dropper, Jumper & Feeder wires, Earthing conductors and Hybrid cables, and is on track to commercialise them in FY22. The strategy of consistently expanding the product offerings over the past few years is reaping rich benefits for the Company, by driving growth as well as profitability of the Cables business.

Outlook & Opportunities

The domestic Cables market is likely to grow at a CAGR of about 11% to reach Rs.1,000-1,100 billion by FY 2023-24 from Rs.646 billion registered in FY 2018-19, according to a CRISIL report. This growth will be driven by rising urbanisation and industrialisation, in addition to emphasis on building infrastructure across the country. Focus on renewable energy, smart cities and reforms to improve the financial health of the DISCOMs will also be a boon to the industry.

The Cables industry in India was also impacted due to COVID-19, decelerating by ~27% in absolute terms in H1 FY21. While the scenario improved in H2 FY21, the overall market remained subdued compared to FY20 owing to growth slowdown in the domestic economy. Increase in key raw material prices and volatility affected contract finalisations and reduced margins of orders under execution. On the positive side, as a strategic partner to the Companys Railway segment, the business has delivered a ~70% growth in the revenue from Railways products during the year.

In the Power cables segment, the Company expects that the Governments continued focus on large-scale infrastructure projects in the areas of Metros, Smart Cities, Affordable Housing and Highways, amongst others will continue to provide a significant boost to the domestic power cable market. Rapid urbanisation, need for enhanced reliability in power supply, especially in severe weather conditions and cyclone-prone areas along with the use of EHV cables to connect new GIS substations to the grid is expected to increase the demand for EHV cables and turnkey cabling solutions. The Company also foresees significant growth in the Underground Cabling segment, in India as well as international markets, especially in the MENA region. The Company offers unparalleled expertise to manage and deliver these underground cabling projects.

The Governments thrust on BharatNet 2, dedicated communication network for Defence and development of Smart Cities, in addition to the 5G spectrum auctions will lead to a boost in demand for Telecom cables. The Company also expects an increase in demand for several types of railway cables and conductors owing to the Governments plan to achieve 100% railway electrification by December 2023 and undertaking projects on track doubling and tripling, speed upgradation, advanced signalling & telecommunication systems, and Dedicated Freight Corridors. The Company is confident to serve the growing requirement through its comprehensive offerings for the Railway segment.

The Companys exports business remained stable as compared to last year. The business has secured various approvals from key industrial customers as well as utilities, both government and private. The Company expects to gain from the increasing demand from Africa, Middle East, and Australia.


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


Revenue for FY21 stands at Rs.13,114 crore with a robust growth of 10% Y-o-Y, despite a challenging environment. The growth has been largely delivered by non T&D businesses, namely Railways and Civil.

Despite the significant issues, we have achieved an EBITDA of Rs.1,141 crore with EBITDA margin of 8.7% for the year. The margins are slightly lower due to the extra cost incurred on account of COVID-19, cost escalations in SAE Brazil amidst the pandemic and a continuous increase in commodity prices globally.

A better management of working capital during the year has resulted in bringing down interest costs to Rs.263 crore in FY21, which is a significant reduction of 15% Y-o-Y. Interest costs to sales ratio has also reduced to 2.0% in FY21 as against 2.6% in FY20.

Net profit for FY21 stands at Rs.553 crore which is largely in line with FY20.

Earnings per Share (EPS) stands at Rs.21.5 in FY21 against 22.0 in FY20.

Recommended a Dividend of Rs.4 per equity share i.e. 200% of the face value of Rs.2 each for FY21 – Total outflow of 103 crore.


Net Worth increased to Rs.3,360 crore from Rs.2,798 crore in FY20. 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.3,308 crore from

2,746 crore in FY20.

Book Value per share increased to Rs.131 from Rs.109 in FY20.

Gross Borrowings decreased significantly to Rs.1,928 crore from Rs.2,380 crore in FY20.

The Companys Net Working Capital days have decreased to 112 days from 119 days in FY20.


Key Financial Ratios (1) 2020-21 2019-20 Change (%)
Debtors Turnover 2.4 2.2 7.2%
Inventory Turnover 15.6 15.4 1.0%
Interest Service 4.5 4.0 10.2%
Coverage Ratio
Current Ratio 1.2 1.1 1.9%
Debt Equity Ratio 0.1 0.2 -46.1%
Operating Profit Margin 8.7% 10.3% -15.6%
Net Profit Margin % 4.2% 4.7% -10.8%
Return on Net Worth % 18.0% 21.6% -16.9%

Debt Equity Ratio has improved due to increase in Net

Worth and reduction of debt on account of prepayment/ repayment of debentures and term loans from banks.

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 at 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 = Long Term Loans and Debentures including current maturities/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 Controls are a key pillar of Corporate Governance. The Company has an internal control mechanism, which is aligned with its evolving needs. It operates through ERP system – SAP and has implemented adequate internal controls, which safeguards the Companys resources and ensures efficiency in operations, effective monitoring systems, and compliance with laws and regulations.

The Internal Control system is commensurate with the nature, size, and complexity of the business, both at entity and process levels. The system assures integrated, objective and reliable financial information. The Internal Audit department conducts audits at its various locations and covers all the major functions, with a focus on various operational areas and internal control systems and ensures that all the operations of the Company are covered at least once every 3 years. The department has been set up as a multi-disciplinary unit that delivers assurance across all areas of risk including strategic, commercial, safety, operational, compliance, control, and financial risks across all the Companys businesses. Suggestions, recommendations and implementation are placed before the Management and the Audit Committee of the Board of Directors periodically. The Audit Committee periodically reviews the adequacy of the internal control systems and provides direction and guidance, including external benchmarking of best practices for further action, if any.

During FY21, the findings of the Internal Control system were shared with the Audit Committee by way of presentations from time to time. The Audit Committee was satisfied with the adequacy of the Internal Control systems and procedures of the Company in respect to monitoring these systems.

Employees are guided by the ‘RPG Code of Corporate Governance & Ethics, which reflects and reinforces the unique corporate culture and values prescribed by KEC and RPG Group. Whistleblower mechanism, an important element of the internal control system, encourages the directors and employees to report genuine concerns, misconduct or fraud without any fear of unfair treatment or punishment with direct access to the Chairman of the Audit Committee in appropriate and exceptional cases.


The Company engages external specialists for audits and reviews of various critical functions, such as Enterprise Risk Management (ERM), Information Technology (IT), and internal audit of certain manufacturing facilities and project sites. ERM review includes identification and assessment of risks across the Company, review of mitigation plans, and presentation of risk profile to the Risk Management Committee and the Board of Directors. The internal audit reports are presented to the Audit Committee.


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 works at various levels across the Company and reviews its systems periodically to ensure they are in line with current internal and external environments.

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

1. Pandemic Risk:

The Company is primarily involved in construction and manufacturing activities. Due to the onset of the COVID-19 pandemic in FY21, 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, with concurrent audits being conducted by Internal Audit department to review the adherence to MHA guidelines. 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. To mitigate the risk of disruption in production due to lockdown, the Company has paid full wages, provided food and shelter facilities to contract workers during the lockdown period to retain the labour.

2. 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 weather conditions, manpower issues, etc.

Mitigation: The Company closely monitors the risks for each project and deploys suitable strategies to effect timely mitigation.

3. 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.

4. Geopolitical Risks:

Unexpected political unrest or change in some of the developed/developing countries, trade barriers, increasing conflict in the Middle East are some of the risks that the Company faces.

Mitigation: The Company monitors such risks and develops suitable mitigation strategies addressing the feasibility of operating in the country, strategic sourcing options, and regularly monitors international sanctions and funding to cover its exposure in the local markets.

5. 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 presence in several underdeveloped and emerging economies, where infrastructure investment remains a key priority for sustainable growth. Further, the Company has diversified its business portfolio to include Substations, Railways, Civil, Solar, Urban Infrastructure, Oil & Gas Pipelines, Smart Infrastructure, and Cables, all of which provide ample growth opportunities in the future.

6. 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. The Company had engaged an external specialist to carry out cyber security audit, post which, audit recommendations and suggestions were implemented to further strengthen the IT security.

7. Succession Planning Risk:

Risk of inadequate succession planning for key personnel posing challenges to long-term sustainability and growth.

Mitigation: Top 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.


The Company continues to successfully strengthen its position as a contemporary, open, and an exciting place to work. The ability to attract, motivate and retain talent is crucial for the success of the Company, which is primarily achieved through forward-looking policies, continued emphasis on upgrading employee skills and empowering them to realise their full potential.

The world went through unprecedented times in FY21 due to the COVID-19 pandemic and resultant lockdowns, which posed multiple challenges for employees across offices, project sites and manufacturing units. The Company provided unstinted support to its employees during the pandemic. Promptly responding to the crisis, the Company introduced a distinct Remote Working Policy to safeguard health and safety of employees, which gave them a choice to work remotely wherever viable. This forward-thinking policy empowered employees to adopt new and contemporary methods of working, while improving their well-being and enhancing their efficiency and business output. Deploying Rapid Action Task force and Emergency Response Plan across locations, along with strict implementation of Standard Operating Procedures mandated by local authorities helped the Company mitigate risks effectively and contain the spread of the virus. Periodic COVID-19 testing camps, awareness workshops and counselling sessions at the grassroot level, and collaborating with an online counselling platform to launch an Employee Emotional Wellness Program enhanced the mental health and emotional wellbeing of employees. The Company continued to be the strength of its employees diagnosed with COVID-19 and presented them with customised COVID Care kits, consisting of special sanitisation, nutrition and immunity-building products to help them stay safe and aid a smoother recovery.

During the year, the RPG Group launched ‘Happiness Survey 2021 where KEC recorded a Happiness Quotient of 80%, with individual parameters such as ‘I Love My Work scoring as high as 87%. The results reflected the perspectives of the Companys diverse set of employees on factors such as work profile, professional and personal growth, open and transparent culture and being valued by and connected with each other, all of which enables the Company to strengthen and elevate employee happiness.

KEC continues to focus on skill upgradation by promoting a culture of self-development throughout the organisation. The Company rolled out the 5th edition of the Digital Learning Championship, an intra-business competition for e-learning through gami_cation for an enhanced employee experience. The technology-driven learning championship focusses on building employee capabilities across behavioural, functional, and technical competencies. The contest was widely appreciated by employees across businesses and witnessed a completion of over 5.4 lakh learning sessions, as compared to 3.7 lakh sessions in FY20. To encourage virtual learning, the Company also launched two novel initiatives - Knowledge Caf & Learning-On-The-Go, where interactive sessions were facilitated by KECs senior leadership as well as external industry experts on varied topics pertaining to the Companys businesses and functions.

On the HR digitalisation front, the Company continues to make significant progress to push digital to enhance employee experience. Leveraging digital tools and technology, the Company implemented digital onboarding for over 500 new employees in FY21 amidst pandemic-related constraints. It continued to further develop its 24x7, AI-powered chatbot, Electra, launched in 2018 to solve employee queries. In addition to Leave Management, Appreciation, and Grievance Management, the chatbot has now been integrated with more functionalities such as Payroll, Employee Directory, Attendance Management, Learning-On-The-Go, and Coronavirus advisories, amongst others. In the next phase, the Company plans to integrate employee onboarding process with the chatbot, to enhance joining experience of new recruits. As a testament towards the Companys contribution and innovative work in the field of HR excellence and adoption of latest technology to enhance employee engagement and experience, KEC was presented with the Runners Up award in the "Digital Transformation & Technology Adoption" stream at the 4th CII National HR Circle Competition 2020.

The Company continues to attract top talent from leading engineering and B-School campuses across India. In its 6th year currently, the Companys flagship Engineering Leadership

Program has onboarded 200+ graduate and post graduate engineering trainees from IITs, NITs and NICMARs across India. During the year, the Company further strengthened its Group Management Resource program, which hires the best minds from premiere B-Schools; the Armed Forces Personnel Program, aimed at strengthening its leadership capabilities and the recently launched Commercial Leadership Program, which hires commerce graduates from campuses across India. The Company also fortified its Future Leaders Board programme, designed to encourage and develop top talent to become future leaders of RPG Group Companies, in line with the Groups vision of Unleashing Talent. The carefully selected team honed their skills & capabilities and experienced working on live projects, underwent leadership & personality development trainings, and developed business acumen through various avenues. Going forward, the Company plans to extend these talent acquisition programmes for hiring international candidates for overseas locations.

The Company is committed to providing equal opportunity and promoting a culture that values diversity to create an inspiring workplace. Some of the prominent initiatives that the Company has been taking to promote diversity, especially in gender include deputing a larger percentage of women employees at international locations, adequate representation of women employees in leadership programmes, and constant sensitisation and awareness training programmes for its large workforce. The Company has also launched a ‘Womentoring programme for its women top talent, to mentor and guide them in their professional journey. It is also making a concerted effort towards hiring people with special abilities, in addition to employing candidates with diverse educational backgrounds.

Employee Count as on March 31, 2021: KEC has 9,258 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.