ub engineering ltd Management discussions

INDUSTRY OVERVIEW:

Despite policy initiatives by the Government, the infrastructure sector witnessed pressure with delayed projects, poor financials of public sector undertakings and increased level of NPAs.

The future growth will depend upon improvement in investment and certainty in Global economic conditions.

REGULATORY ENVIRONMENT:

Your company being mainly engaged in the business of providing integrated design engineering, procurement, construction and project management services for infrastructure and energy sector in terms of construction contract, no specific regulations govern the business of the Company. However the Company has obtained licenses and approvals for execution of jobs and fabrication shop, as applicable.

BUSINESS ANALYSIS:

The sphere of operations of your Company comprising infrastructure and industrial projects are directly related to sectors like power generation and distribution, oil and gas, petroleum, steel, cement, fertilizers etc.

Your Company operates in two primary Business Segments viz. Mechanical Erection / Engineering Procurement and Construction (EPC) and EPC Electrical besides Fabrication which is reportable segment. The operations of Fabrication Unit at Durg (Chattisgarh) were suspended since November, 2014.

Implementation of sustained efficiency programme across the enterprise, cost reduction, HR policies will improve the operational efficiencies.

Mechanical Erection Division-

The mechanical erection division of the Company had been the main stay of the operations since inception.

With the company s extensive and vast experience in Electro-Mechanical Installation jobs, the Company has been successful in bagging prestigious contracts as well as repeat orders from reputed clients.

EPC Mechanical Division-

The Company s experience in erection and commissioning jobs and its expertise in technical evaluation of projects led it to focus on execution of projects in Steel, Cement, Power, Refineries, Fertilizers, Oil & Gas, Water, Effluent Treatment and other sectors combining both procurement of equipment and erection and commissioning jobs.

EPC Electrical Division-

The Company s EPC Electrical Division had been undertaking business for HV& EHV Sub-Station upto 500 KV class in India and associated transmission lines right from conceptual stage to commissioning. The Division also undertakes Rural Electrification projects on turnkey basis.

Overhauling & Maintenance Services (O &M)-

Allied to the main stay of operations, Company had been offering overhauling and maintenance services for Power Plants since 1980. The company has provided such services for more than 30,000 MW generating capacity and has reflected consistent workmanship, quality and widespread industrial acceptance.

RISKS, CONCERNS AND MITIGATIONS:

(a) (i) Risks & Concerns:

Your Company follows a risk management process for identification, categorization and of various risks like operational, financial, legal and other business risks.

(ii) Major risks foreseen:

i) Your Company is exposed to risks due to various legal cases filed by the purported creditors. ii) Your Company is exposed to legal cases/ recovery actions initiated by the lenders / other statutory authorities.

iii) Early termination of existing jobs in view of cash crunch and invocation of Bank Guarantees with consequential threat of loss of revenue, material / other infrastructure.

(b) Risk Identification process

Your Company has put in place a risk identification and mitigation process as part of internal control mechanism.

INTERNAL CONTROL SYSTEM:

The Company is in process of strengthening the adequate internal control system to improve its effectiveness further.

For and on behalf of the Board of Directors

	J.K. SARDANA
	MANAGING DIRECTOR
	DIN 02222792
Place : Pune
Date : November 8, 2016