pec ltd Management discussions

PEC LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS HIGHLIGHTS: During the year 2006-07, PEC has achieved highest ever trading and net profit. While sales turnover at Rs.45179.05 million increased by 21 per cent over the last year, trading profit at Rs.685.48 million grew by 50 per cent, profit after tax at Rs. 275.53 million soared by 108 per cent. PEC continues to achieve high productivity in terms of sales turnover and profit per employee. NEW INITIATIVES: PEC continues to strive for new markets, new products and new associates. We are targeting thrust countries for export of turnkey projects, engineering equipment and manufactured goods in Africa, Asia, Latin America and Caribbeans. PEC has initiated steps for both backward and forward linkages for assured supply and sale of coal. We have also identified new opportunities in the trading of agro commodities where we take positions on our own. We also plan to enter future trading gradually to hedge price risk. EXPORTS: During the year, PEC secured contracts for setting up 2000 TPD Clinker Grinding Plant worth Rs. 445 million in Benin, against stiff competition. In respect of contract for pre-fabricated steel structures for 400 units worth Rs.112 million in Sierra Leone secured last year, supplies worth Rs.41.42 million were made during the year. Erection and commissioning work is in progress and expected to be completed by end 2007. Other major exports during the year were Cables and Transformers to Bhutan and Nepal, Conductors to Mauritius and Line Hardware to Nepal and Syria, etc. Medical and healthcare supplies worth Rs. 75 million were exported to Zambia, Malawi, Ethiopia and Sri Lanka. Exports of rice, sugar, maize and soyameal aggregate to Rs. 1808.08 million., Defence stores and goods worth Rs. 442.64 million were also exported during the year. Cotton yarn and fabric worth Rs. 183.7 million were exported to various countries. IMPORTS: PECs import turnover of Rs. 38305.47 million during the year increased from last years Rs. 31844.29 million. Bullion import aggregate to Rs.12853.23 million during the year. PEC undertook bulk import of coal, zinc, cement clinker, manganese ore, staple fibre, petroleum products, industrial chemicals, diamonds, etc. during the year. Agricultural commodities like wheat, pulses and jute were also imported during the year DOMESTIC TRADE: Braving intense competition, PEC secured contracts for supply, erection and commissioning of Power Sub station and Transmission Line projects worth Rs. 800 million from Karnataka Power Corporation. The work at site is in progress and the projects are scheduled to be completed in 2007. During the year, domestic sales in wheat, pulses, cotton yarn, coal, zinc, steel, defence stores, etc. aggregate to Rs. 3305.89 million. HUMAN RESOURCE: The thrust of HR initiatives during the year aimed at manpower restructuring, identifying training needs for upgrading skills and capabilities of workforce and developing consumer satisfaction index to give the Company competitive edge needed in the international trade. The studies were conducted by organizations of repute and their findings and recommendations are being implemented. Development through training continued to remain in focus. Training opportunities were offered to employees at various levels. PEC also conducted an in-house training programme on management development. The directives on employment of persons from reserved categories are being followed. PROMOTION OF HINDI: PEC continue its efforts to further accelerate use of Hindi in its working. Hindi books on literature and trade were made available for library at Head Office and branches. Incentives were given to employees to promote use of Hindi in official work. Hindi Pakhwara was organized in September 2006 where various competitions were held and prizes given to the winners. VIGILANCE: PEC laid emphasis on preventive aspects of vigilance, compliance with instructions and creating awareness of vigilance requirements among the employees. BRANCH NETWORK: Network of 4 regional and 14 branch offices continues to provide service to customers across the country. EXPORT EXCELLENCE: During the year, Engineering Export Promotion Council (Northern Region) awarded Regional Trophy for Top Exporters to PEC in appreciation of its outstanding export performance during the year 2003-04.