Management Discussion & Analysis

FY 2017-18  



Indian economy

The domestic market had its fair share of upheavals in the financial year under review. A combination of deferral of award decisions and the implementation of long term reforms causing short term economic turbulence have led to a muted environment for project execution. For example, the introduction of GST from 1st July, 2017 caused disruption for a few quarters during which time businesses and Government agencies grappled with this new nationwide taxation system. Other reform measures such as Demonetisation, RERA and the Insolvency & Bankruptcy Code have also impacted business momentum in the short term, but are expected to lead to sustained economic growth in the long run.

Some positive effects have already started being felt through higher tax revenues and the gradual formalisation of the economy with its consequent widening of the tax base. This is likely to give the Central Government better wherewithal to allocate higher levels of funding for essential infrastructure projects. These investments are being supplemented by increased State Government spending, greater capex by financially strong PSUs and increased quantum of soft lending by bi-lateral and multilateral lending agencies.

Some areas of public sector infrastructure capex have seen strong investment momentum and some large investment programs have been kicked off. The thrust of the Government on roads, conventional and metro railways, water management systems and irrigation projects, power generation facilities, power transmission & distribution, affordable housing, healthcare facilities, build out of smart city infrastructure, and tying up of energy security through stronger oil & gas infrastructure has given an impetus to domestic awards during the year.

Rural development

The Government has also been focusing on developing core infrastructure in rural areas, mainly focused on roads, power availability to rural households through intensive electrification, irrigation of cultivable land and direct transfer of subsidies to families in the BPL segment through the expanding base of Jan Dhan Bank Accounts linked with Aadhar. Considerable headway has been made in all these areas and millions of rural people have been lifted out of the ‘BPL zone’ over the last few years.


Private sector investments

Private sector investments have remained muted and are expected to take some more time before a wholesome revival can be seen across sectors like Infrastructure PPP, industrial capex, consumption driven capex and real estate growth. The growing impact of non-performing loans on the balance sheets of banks continues to impact the credit growth of the banking system.

Global economic scenario

International markets have witnessed noticeable volatility, triggered by geo-political events, significant movements in currency and commodities, protectionist policies including tariff barriers, a prolonged bout of low oil prices, and constrained fiscal positions of oil producing nations. The recent hardening of oil prices is likely to now give better leeway to policy makers in GCC countries to allocate increased outlay on essential infrastructure.

The Company has also been reducing its dependence on business from the Middle East and is focusing on expanding business in East & North Africa Region (including Algeria and Egypt) as well as East Asian countries.

Focus on long term profitable growth

The ongoing initiatives currently under way include a focus on digitalization, strengthening execution and operational efficiency, unlocking business value, better asset utilisation, judicious use of working capital, business portfolio rationalisation and higher shareholder payouts are enabling the company to perform well on key parameters and improve Returns on Equity.

Infrastructure Business

Power Business

Heavy Engineering Business

Electrical & Automation Business

Hydrocarbon Business

Information Technology Business

Technology Service Business

Financial Services Business

Developmental Projects Business

Financial Review

Chairman's Speech Board Report