vks projects ltd Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

Our company is an ISO 9001:2008, OHSAS 18001:2007 & ISO 14001:2004 certified Engineering Procurement and Construction Company (EPC Contractor) engaged in the business of undertaking EPC Contracts of S/SS/Alloy Steel Turnkey Piping, Civil Land Development, Industrial/Commercial Infra Projects, Structural Fabrication and Erection of Equipments, Fire Fighting Projects and Commissioning of Chemical Plants for various industries including but not limited to Chemicals, Oil and Gas (on-shore and offshore), Refinery, Petrochemicals, Dyestuff, Pharma& Bulk Drugs, Metallurgy, Power and Textiles. We provide services to industries in different sectors such as Oil and refinery, Textiles, Petro-Chemical, Pharmaceuticals, Food & beverages, Power, Steel, Air conditioning & Refrigeration, Glass, Port etc. Our key expertise is in Fabrication & Erection of Key Industry Equipments/Plants includes but is not limited to Reaction Vessels, Auto Claves, Vacuum Tray Driers, Storage Tanks, Chilling Plants, Hydrogenerators, Fire Fighting Units, Heat Exchangers/Condensers, Rotary Vacuum Tray Driers, Centrifuges, WHR boilers, Crystallizers, Scrubbers, Distillation Units, and Flakers etc. We have more than a decade of experience in this field and have successfully completed projects for various companies in diversified sectors. The market prospects for EPC activities looks promising and the industry is expected to grow significantly as Engineering, procurement construction activity is integral to the overall infrastructural and industrial development. Directorate of Maharashtra Fire Services has granted us the license to act a Licensed Agency for the purposes of Fire Prevention and Life Safety Measures.

FINANCIAL PERFORMANCE

Total loss (net of taxes) amounted to Rs. 10,892.31 lacs compared to loss of Rs. 76.72 lacs of the previous year. The operating loss before tax amounted to Rs. 10.892.31 lacs compared to the loss of Rs. 131.41 lacs reported last year.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

Growing technological &infrastructuaral advancements in the country paves the way for our growth and achievement. Due to new Government policies, positive movement towards EPC/ Infrastucture Companies, we will undertake lot of projects. Your Company has developed expertise in its line of operations to meet the growing industrial needs in the global competitive market. We have qualified and experienced Management team, Multilocational& multi-sectoral client base. We have been in this EPC business for the last thirteen years and have developed Project execution capabilities and cost competitiveness. Due to present recession in our Infrastructure segment, bad debts are the major threats. Your Company has been exposed to financial market risks from changes in Interest rates and Inflation, as we continue to undertake EPC projects of increasing size; we may become increasingly exposed to the risk of adverse deviations from our cost estimates, particularly to the extent that the project execution gets delayed over a period of time. Our contracts expose us to significant construction and cash flow risk.

Your Company caters to multi locational and multi sectoral client base spread across wide geographical sectors and thus has to maintain strong relations with various clients in diversified sectors and locations. The Company has to meet certain pre-qualifications in terms of technical expertise, capital, infrastructure, manpower, past project execution to qualify as a bidder. To mitigate these risks, we have developed risk controls that include bidding on projects, efficient project management and disciplined cash flow management.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Effective governance consists of competent management, implementation of standard policies and processes, formulation of risk management techniques, internal control, information and communication procedures. The Company has sound internal control systems in all spheres of activities commensurate with the operations of the Company since they are critical to the Companys growth and expansion plans. The Company has a well defined organizational structure, guideline policies, structured and definite authority matrix. Such adequate internal control system helps to advantageously assimilate information and make more intellectual and efficiency driven decisions. The internal control system is supported by effective internal audit being carried out by an external firm of chartered accountants. The Audit Committee of Directors regularly reviews the findings of the Internal Auditors and effective steps to implement the suggestions/observations of the Auditors are taken and monitored regularly. The Company has a well defined system of management reporting and periodic review of business to ensure timely decision making.

STRATEGIC PLANS AND ORGANIZATIONAL DEVELOPMENT

Our strategic objective is to consolidate our position as a professionally managed Engineering Construction Company in India. Our focus remains on enhancing our engineering and design capabilities, geographical expansion of business, increase pool of Owned capital and improved performance and satisfactory project execution. We also intend to continue to optimize operations by minimizing operational/overhead costs and increasing productivity thereby maximizing our operating margins. To increase our business opportunities, we will continue to develop strong relationship and strategic alliance with our clients and suppliers. We have expanded our operating activities by opening Design Studio/Office and Training Centers at various locations across India. We continuously thrive to enhance the capital equipments base of our EPC Company to increase our operational and financial efficiencies geographically w.r.t project executions. Our strategy is to raise the working capital and equity through GDR & Preferential issue to the promoters

HUMAN RESOURCES

Your Company has HR policies and procedures that encourage human development. The management understands that motivated and appropriately qualified employees are key to the success of its business. The Human resource policy ensures that the Company provides a safe, professional and stable working environment and transparent processes for rewarding performance and retaining talent. Further, we intend to continuously strengthen our execution capabilities by adding to our existing pool of skilled and unskilled labors, attracting new graduates, and facilitating continuous learning with in-house and external training opportunities to our staff and our local subcontractors. Being a labour intensive Company, all the Government rules and regulations have been complied with.

OUTLOOK

We are now a listed Company and our focus continues on increasing our market share, serving clients, customers, shareholders laying thereby a robust foundation for sustainable growth. With the global growth in the industrial sector, it is expected that there will be further growth in EPC business.

We are continuing with our efforts on improvement in efficiencies, margins, profitability and sales while re-looking at business strategies and models, wherever necessary and barring, unforeseen circumstances, we expect to achieve better results for the year 2016-17.