MANAGEMENT DISCUSSION & ANALYSIS Forming part of the Report of Directors for the year ended March 31, 2015 ECONOMIC OVERVIEW GLOBAL ECONOMY The World Bank in its Global Economic Prospects' published in January 2015 states that, the world economy is still struggling to gain momentum as many high-income countries continue to grapple with the legacies of the global financial crisis. The recovery in high-income economies has been uneven, as some (the United States and the United Kingdom) have exceeded br-crisis output peaks, but others (the Euro Area) are still below earlier peaks. Middle-income economies have also been less dynamic than in the past for cyclical reasons, but also due to a structural slowdown. Low-income countries continue to grow at a robust pace, despite a challenging global environment. The key features of the lacklustre global recovery have been accommodative monetary policies, falling commodity prices, and weak trade. These are expected to persist, although financial conditions are projected to tighten gradually. Risks to this fragile recovery are significant and tilted to the downside. The key policy challenge for developing countries is to adjust monetary and fiscal policies to changing cyclical conditions while addressing headwinds to long-term growth by implementing structural reforms. Development in major economies are likely to shape the outlook for developing countries. First, the beginning of monetary policy rate hikes in the United States, combined with continued accommodative polices in the Euro area and Japan, is expected to lead to modestly tighter global financing condition in 2015-16. Second, commodity prices, which have fallen on expanding supply and concerns about global growth, are expected to remain soft. Third, the anemic recovery in the Euro area and Japan- which together account for almost a third of global imports- will continue to weigh on global trade growth. As per 'World Economic Situation and Prospects 2015' published by United Nations in January 2015, the global economy continued to expand during 2014 at a moderate and uneven pace, as the prolonged recovery process from the global financial crisis was still saddled with unfinished post-crisis adjustments. Global recovery was also hampered by some new challenges, including a number of unexpected shocks, such as the heightened geopolitical conflicts in various areas of the world. Growth of world gross product (WGP) is estimated to be 2.6 per cent in 2014, marginally better than the growth of 2.5 per cent registered in 2013, but lower than the 2.9 per cent projected in World economic situation and prospects as of mid-2014. In the outlook period, brmised on a set of assumptions and subject to a number of uncertainties and downside risks, the global economy is expected to strengthen in the following two years, with WGP projected to grow by 3.1 and 3.3 per cent in 2015 and 2016, respectively. Six years after the global financial crisis, gross domestic product (GDP) growth for a majority of the world economies has shifted to a noticeably lower path compared to br-crisis levels. Excluding the three years from 20082010, which featured, respectively, the eruption of the financial crisis, the Great Recession and the policy-driven rebound, four fifths of the world economies have seen lower average growth in 2011-2014 than in 2004-2007. At issue is whether such a shift to a lower path of growth in most countries will become entrenched for a long period. According to some pessimistic views, major developed economies are highly likely to be entrapped in secular stagnation, while policymakers in China have indeed taken growth of 7.0-7.5 per cent as the new normal for the Chinese economy, compared with the average growth of 10 per cent that China achieved in the brvious three decades. Many other large emerging economies, particularly those outside of Asia, have also seen a much slower growth trajectory in recent years as domestic weaknesses interact with challenging international conditions. For the year as a whole, all major developed economies in North America, Europe and developed Asia have indeed aligned on an upward growth trajectory for the first time since 2011. Although the discrepancy in the growth rates of these economies has narrowed from the brvious year, the growth picture remains diverse: while the United States has managed to maintain an annual growth rate above 2 per cent in 2014, the economic situation in Europe is brcarious, particularly in the euro area, where growth is exceptionally weak, with some countries close to or already in recession. Meanwhile, in Japan, momentum generated by the fiscal stimulus package and monetary easing introduced in 2013 has receded. In the baseline outlook, further improvement is expected for developed countries, with growth projected to be 2.1 and 2.3 per cent for 2015 and 2016, respectively, compared with the 1.6 per cent estimated for 2014. However, downside risks remain significant, especially in the euro area and Japan, which have seen renewed weakness in 2014. Growth rates in developing countries and economies in transition have become more divergent during 2014, as a sharp deceleration occurred in a number of large emerging economies, particularly in Latin America and the Commonwealth of Independent States (CIS). A number of these economies have encountered various country-specific challenges, including structural imbalances, infrastructural bottlenecks, increased financial risks and ineffective macroeconomic management, as well as geopolitical and political tensions. In contrast, East Asia, including China, managed to register relatively robust growth, while India led South Asia to a moderate strengthening. In the baseline outlook, developing countries as a group are expected to grow at 4.8 and 5.1 per cent in 2015 and 2016, respectively, up from the 4.3 per cent estimated for 2014. Growth in the least developed countries (LDCs) is expected to continue exceeding the global average, at 5.7 per cent in 2015 and 5.9 per cent in 2016. Among the developed economies, the economy of the United States, after some erratic fluctuation in 2014, is expected to improve in 2015 and 2016, with GDP projected to expand by 2.8 and 3.1 per cent respectively, compared with an estimate of 2.3 per cent for 2014. INDIAN ECONOMY The Reserve Bank of India in Monetary Policy report published in April, 2015 stated that: OUTLOOK FOR GROWTH Real Gross Domestic Product (GDP) growth for 2014-15 was projected by the Reserve Bank at 5.5 per cent. The CSO's provisional estimates of GDP (base:2004-05) tracked staff's projected path well up to Q2 of 2014-15. The new GDP data (rebased to 2011-12) released by the Central Statistics Office (CSO) at the end of January 2015 and on February 9, however, came as a major surprise as it produced significantly higher growth at constant prices. The divergence between the new series and the old series in the pace of growth of the manufacturing sector has turned out to be stark; in particular, the robust expansion of manufacturing portrayed in the new series is not validated by subdued corporate sector performance in Q3 and still weak industrial production. In the financial and real estate sub-sector, the high growth of 13.7 per cent at constant prices is not corroborated by the observed sluggishness in key underlying variables such as credit and deposit growth, housing prices, rent and most importantly, the subdued performance recognise though that most of these surveys were conducted before the brsentation of the Union Budget and the easing of monetary policy on March 4. The Reserve Bank's consumer confidence survey (CCS) points to growing consumer optimism since June 2014, reflecting purchasing power gains arising from lower inflation as well as improved perception of income, spending and employment growth. Large declines in commodity prices and the benign inflation outlook for the near-term should provide a boost to growth. Nevertheless, there are downside risks to growth which could restrain growth prospects if they materialise. The ongoing downturn in the international commodity price cycle, which commenced in 2012, could reverse, given occasional signs of oil prices reviving ahead of global economic activity. In fact, the volatile geopolitical environment could even hasten the reversal. The consequent resurgence of inflation brssures could overwhelm the nascent conditions setting in for recovery. Risks to budgetary forecasts from tax shortfalls, subsidy overshoots and disinvestment under-realisation could impact the level of budgeted allocation for capital expenditure. Early warnings on the south-west monsoon, given the probability of about 50 per cent currently being assigned to an El Nino event,could dent the outlook for agriculture. Finally, if the decline in the gross saving as percentage of Gross National Disposable Income (GNDI) from 33 per cent in 2011-12 to 30 per cent in 2013-14 continues into the medium-term, it could tighten the financial constraint to growth unless productivity improves significantly. Growth projections combining these forward looking assessments and model-based forecasts, including time series forecasts such as autoregressive integrated moving average (ARIMA) and Bayesian vector auto regressions (BVAR), point to a gradual pick-up in growth. Quarterly projections relate to gross value added (GVA) at basic prices, because of more robust estimation relative to expenditure side GDP and also due to better clarity on key indicators that are used in the compilation of data by the CSO. Growth in GVA at basic prices for 2015-16 is projected at 7.8 percent, with risks evenly balanced around this baseline forecast. Possible revision to CSO's estimates for 2014-15 is a key risk to the forecast, with the revisions expected to be in the downward direction and consequently an upside bias gets built in, for 2016-17, real growth in GVA at basic prices is projected at 8.1 per cent, assuming gradual cyclical recovery on the back of a supportive policy environment, but without any policy induced structural change or any major supply shock. If the GDP growth for 2014-15 is revised down by the CSO, the trajectory will change accordingly. The Reserve Bank's professional forecasters' survey indicates an average GVA growth of 7.9 per cent for 2015-16. Balance of Risks The baseline paths projected for growth and inflation are subject to realisation of a set of underlying assumptions. The likely paths relative to the baseline that may evolve under plausible risk scenarios are set out below:- (a) Sharp Increase in Crude Oil Prices - Global crude oil prices are assumed to increase gradually over the forecast horizon in the baseline projections. There is, however, a non-trivial risk of a sharp increase in international crude prices triggered by the materialisation of geo-political tensions and other supply disruptions. (b) Below Normal Monsoon in 2015-16 - As against the normal monsoon assumption in the baseline, there is a risk of monsoon turning out to be deficient in 2015. This could lead to a lower agriculture output which, in turn, would lower the overall GVA growth by around 40 bps in 2015-16. Food prices could consequently increase, leading to inflation rising above the baseline by 80-100 bps in 2015-16. (c) Debrciation of the Rupee - Uncertainties surrounding the exchange rate persist. The key risk is that normalisation of monetary policy by the US Fed which may spark off safe haven capital flows into US treasuries and spur further apbrciation of the US dollar. On the other hand, deflation risks in some of the advanced economies could warrant further monetary accommodation. A debrciation of the rupee by around 10 per cent, relative to the baseline assumption of the current level of exchange rates continuing, could raise infl ation by around 20 -30 bps in 2015-16. (d) Easing of Food Inflation - Headline inflation could also undershoot from the baseline if food inflation moderates by more than what is envisaged. This could be brought about by positive supply shocks, especially through improvements in the supply chain, reforms in market infrastructure and a step-up in investment in agriculture. (e) Crude Oil Price Declining Further - If crude oil prices decline below the baseline by US$ 15-20 per barrel in the near-term as a result of excess supply conditions/low global demand in a stable geo-political environment, inflation could turn out to be 30-60 bps below the baseline by the end of 2015-16. Such a decline in crude prices would also raise GVA growth by 10-30 bps above the baseline in the next two years under different pass-through scenarios. (f) Pick-up in Investment Demand - If the boost to investment expenditure announced in the Union Budget for 2015-16 helps in crowding in private investment, and correspondingly, if investment demand picks up, GDP growth may turn out to be over 50 bps above the baseline in 2015-16. With augmentation of capacity but a still negative output gap, the impact of higher investment demand on inflation in 2015-16 could be minimal. The balance of risks and possible deviations of inflation and growth paths from their projected baselines warrant a careful appraisal of forward guidance, especially the underlying conditions that drive such guidance. The outlook for growth and inflation is informed by the assessment of macroeconomic and financial conditions. Barring unforeseen shocks, the near-term appears to be characterised by continuing slack in the economy. Fiscal consolidation intentions and weak rural consumption demand are likely to keep demand side risks to inflation contained. From the supply side, risks in the form of reversal in global commodity prices, uncertainty surrounding monsoon outcomes, and possible exchange market brssures arising from volatility in capital flows associated with US monetary policy normalisation would need to be monitored carefully and continuously, given the past experience with spillovers from taper talk. The room for accommodating supply shocks in the conduct of monetary policy remains limited, even as supporting the revival of investment demand assumes high importance OUTLOOK FOR GROWTH As per "Economic Survey" published in February, 2015, in the short run, growth will receive a boost from lower oil prices, from likely monetary policy easing facilitated by lower inflation and lower inflationary expectations, and forecasts of a normal monsoon. Medium-term prospects will be conditioned by the "balance sheet syndrome with Indian characteristics," which has the potential to hold back rapid increases in private sector investment. In the coming year, real GDP growth at market prices is estimated to be about 0.6-1.1 percentage points higher vis-a-vis 2014-15. This increase is warranted by four factors. First, the government has undertaken a number of reforms and is planning several more. Their cumulative growth impact will be positive. A further impetus to growth will be provided by declining oil prices and increasing monetary easing facilitated by ongoing moderation in inflation. Simulating the effects of tax cuts, declining oil prices will add spending power to households, thereby boosting consumption and growth. Oil is also a significant input in production, and declining prices will shore up profit margins and hence balance sheets of the corporate sector. Declining input costs are reflected in the wholesale price index which moved to deflation territory in January 2015. Further declines in inflation and the resulting monetary easing will provide policy support for growth both by encouraging household spending in interest-sensitive sectors and reducing the debt burden of firms, strengthening their balance sheets. The final favourable impulse will be the monsoon which is forecast to be normal compared to last year. Using the new estimate for 2014-15 as the base, this implies growth at market prices of 8.1- 8.5 percent in 2015-16. The power of growth to lift all boats will depend critically on its employment creation potential. The data on longer-term employment trends are difficult to interbrt because of the bewildering multiplicity of data sources, methodology and coverage. One tentative conclusion is that there has probably been a decline in long run employment growth in the 2000s relative to the 1990s and probably also a decline in the employment elasticity of growth: that is, a given amount of growth leads to fewer jobs created than in the past. Given the fact that labour force growth (roughly 2.22.3 percent) exceeds employment growth (roughly about 1% percent), the challenge of creating opportunities will remain significant OUTLOOK FOR REFORMS As per Economic Survey published in February, 2015, in the months ahead, several reforms will help boost investment and growth. The budget should continue the process of fiscal consolidation, embedding actions in a medium-term framework. India's overall revenue-to-GDP ratio (for the general government) for 2014 is estimated at 19.5 percent by the IMF. This needs to move toward levels in comparator countries—estimated at 25 percent for emerging Asian economies and 29 percent for the emerging market countries in the G-20. At the same time, expenditure control should be consolidated while ensuring that there is switching from public consumption to public investment, with a focus on eliminating leakages and improving targeting in the provision of subsidies. To provide legal certainty and confidence to investors, the ordinances on coal, insurance, and land need to be translated into legislation approved by Parliament. At the same time, the constitutional amendment bill to implement the goods and services tax (GST) also needs to be enshrined in legislation first by Parliament followed by ratification by the States. A single GST rate (across States and products) set at internationally competitive levels with limited exemptions would maximize its pro-growth, pro-compliance, and proingle market creating potential. While the framework for a modern and combrhensive indirect tax system is being put in place with the GST, parallel efforts are required create a competitive, brdictable, clean, and exemptions-light tax policy regime that will lower the cost of capital, incentivize savings, and facilitate taxpayer compliance. Recent developments in India & your company's perception about future growth: The recent developments in the Indian Economy due to stable Government at centre providing positive sentiments all-around are quite encouraging & promising as far as the industry & commerce is concerned. The future seems to be bright enough and industry looks towards a strong growth path ahead. In the given environment of India being fairly poised towards growth, your Company stands in a strong position to grow rapidly due to its brsence basically in the infrastructure sector, which is the backbone of country's overall growth & development. The Company is making every effort to increase its business and profitability while reducing costs to the extent possible. COMPANY'S BUSINESS The Company's business can be broadly classified in the following sectors: 1. Engineering & Construction 2. Manufacture & Marketing of Cement 3. Energy (Power & Transmission) 4. Exbrssways 5. Real Estate and 6. Hospitality 7. Sports (pursuant to merger of erstwhile Jaypee Sports International Limited into Company on 16.10.2015, w.e.f. 01.04.2014) INDUSTRY STRUCTURE AND DEVELOPMENTS RELATING TO COMPANY'S LINES OF BUSINESS 1. ENGINEERING & CONSTRUCTION As per 'Indian Brand Equity' (a initiative of Ministry of Commerce & Industries) stated that Infrastructure is highly responsible for propelling India's overall development. The industry enjoys intense focus from the top officials of the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. This sector includes power, bridges, dams, roads and urban infrastructure development. The Indian power sector has an investment potential of US$ 250 billion in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment, according to Mr Piyush Goyal, Union minister of coal, power and renewable energy. The total approximate earnings of Indian Railways on originating basis during April 1, 2014 to December 31, 2014 were 7 114,656.13 crore (US$ 18.42 billion) compared to 7 101,856.45 crore (US$ 16.37 billion) during the same period last year, registering an increase of 12.57 per cent. The total approximate earnings from goods during 1st April 2014 - 31st December 2014 were 7 77,161.55 crore (US$ 12.4 billion) compared to 7 68,776.35 crore (US$ 11.05 billion) during the same period last year, registering an increase of 12.19 per cent. Meanwhile, the number of export and import containers moving through major ports in India expanded 7.34 percent year-over-year from April to October 2014, as a result of the Modi Government's efforts to make port development a major priority. Foreign direct investment (FDI) received in construction development sector from April 2000 to January 2015 stood at US$ 24,028.19 million, according to the Department of Industrial Policy and Promotion (DIPP). The Indian Government is taking every possible initiative to boost the infrastructure sector. Some of the steps taken in the recent past are being discussed hereafter. The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector. The new limit is effective 2 December 2014, RBI said in a notification on its website. Recently, the Government has relaxed rules for FDI in the construction sector by reducing minimum built-up area as well as capital requirement and liberalised the exit norms. The Cabinet has also approved the proposal to amend the FDI policy. India and the US have signed a memorandum of understanding (MoU) in order to establish Infrastructure Collaboration Platform. The document showcases the relationship between both the Governments which intend to facilitate US industry participation in Indian infrastructure projects to improve the bilateral commercial relationship and benefit both the Participants' economies. The MoU's scope envisages efforts in the areas of Urban Development, Commerce and Industry, Railways, Road Transport and Highways, Micro Small and Medium Enterprises, Power, New & Renewable Energy, Information and Broadcasting, Communications & Information Technology, Water Resources, River Development and Ganga Rejuvenation. CHALLENGES AND OUTLOOK The outlook appears bright, as your Company is looking forward to completion of construction of its own power projects (in subsidiary Companies) besides participation in the tenders for a number of large hydro-electric projects. The Company expects a healthy order books of construction contracts. However, in the current macroeconomic environment, to achieve this objective, there is need to address sector-specific issues over the medium to long-term horizon in India. While your Company is an acknowledged leader in the field of multipurpose river valley and hydro-power projects and has in-house capability for undertaking challenging assignments anywhere in the world on EPC (Engineering, Procurement and Construction) contract basis, it is facing increasing competition from new entrants in the packaged contract sector for the past few years, which is expected to increase due to possible reduction of opportunities in the immediate future, till the economy recovers and the growth rate of the economy starts clawing back. 2. CEMENT As per the report of ICRA Limited published in May 2015 titled 'Weak demand hurts pricing flexibility of cement companies, profitability comes under brssures' states that Cement demand has remained sluggish post monsoon with all-India cement production increasing by merely 1.8% during Oct-Mar 2015 as against 9.7% during Apr-Sept 2014. While br- election spending and delayed monsoon had supported the growth in cement demand in H1 FY15, the growth slowed down in H2 FY15 once the election cycle was over. Cement demand was also impacted by cut down in government spending in Q4 FY15, muted demand from real estate and construction projects and slow recovery in infrastructure spending. Further, decline in kharif crops production owing to poor monsoons affected agricultural incomes and post-monsoon rural demand for cement for housing and other purposes. Regional factors such as extension of monsoon in South, extremely cold weather in North India and unseasonal rains in North in Q4 FY15 also affected construction activities and consequently cement demand in some areas. All-India cement production grew by 5.6% in FY15 as compared to 3.0% in FY14. The industry has seen slowdown in addition of new capacities due to supply glut faced in recent times. For instance, between FY11-FY15, the industry added 92 MTPA cement capacities as against 122 MTPA in the brceding 4-year period FY07-FY11. However, slowdown in demand (cement production grew by 6.0% during FY11-FY15 as against 7.6% during FY07-FY11) resulted in decline in capacity utilization from 77% in FY12 to 72% in FY14 despite slowdown in fresh capacity addition. Going forward, we expect the industry to add 28 MTPA capacities during FY16-FY17- 21 MTPA in FY16 and 8 MTPA in FY17 as against the peak addition of 50 MTPA in FY10. Eastern region will lead the capacity expansion and is expected to witness about 12 MTPA capacity additions during FY16-FY17. Southern region, which had witnessed the highest capacity addition in the last five years, will see a considerable slowdown adding only 6 MTPA of capacity addition in the next 2 years. Assuming a demand growth of 8% over the next two years, the all-India cement capacity utilisation is likely to improve from 71% in FY15 to 72% in FY16 to 77% in FY17. Delays in project execution and project commissioning may result in higher capacity utilization levels. In the Union Budget, the government increased the ad valorem rate of Basic Excise Duty on cement from 12.36% (including cess) to 12.5% and specific duty rate from 7 120/MT to 7 125/MT. This will result in a marginal increase in cost by 7 10-12/MT of cement. Further, in the rail budget, the freight rate was increased by 2.7% on cement and 6.3% on coal. The effect of this hike may vary from company to company depending on the rail-road mix and average lead distance and is likely to be in the range of 7 12-20/MT of cement. Imposition of clean energy cess on coal too is likely to result in cost brssures. These measures are likely to hurt the margins of cement companies since they may not be able to fully pass on the hikes to the customers given the competitive brssures. Nevertheless, cement companies are likely to benefit from government measures to promote investment in ports, roads, rail and other infrastructure projects which will provide a fillip to cement demand. Further, increase in long term funding availability for infrastructure projects through setting up of National Investment and Infrastructure Fund is likely to facilitate more investment in these sectors. All cement companies in ICRA Sample (except The Ramco Cements Limited) reported YoY increase in revenues in Q3 FY15 with operating income for the ICRA Sample increasing by 10.8% YoY in Q3 FY15. ICRA Sample reported a healthy YoY growth of 12.8% in revenues in 9M FY15, driven largely by H1 performance. The operating profitability also improved marginally from 15.4% in 9M FY14 to 15.8% in 9M FY15. However, subdued performance in Q3 FY15 has pulled the margins down from 16.6% in H1 FY15. Going forward, we expect the operating profitability to remain subdued in Q4 FY15 (particularly in North and West) given the weak demand scenario and brssure on realisation. However, the operating margins are likely to improve in the medium term as cost brssure ease and pricing power return with steady growth in consumption and slowdown in capacity addition. While cement demand has grown at a moderate pace during H2 FY15, we expect it to gradually improve in the medium term in line with recovery in infrastructure, investment cycle and overall economy. The brsence of a stable pro-growth government at the Centre has improved the sentiment, but the results of policy initiatives taken by the new government will take time to materialize. While we expect demand to grow by 6.5-7% during FY16, the pace of recovery in cement industry is likely to mirror the trends in economic recovery. Given the capacity overhang, the capacity utilization is likely to remain moderate at 72% in FY16; but it is expected to improve to 77% in FY17 driven by both pick-up in demand as well as slowdown in new capacity addition. The profitability and debt protection metrics are likely to improve in FY16 but will continue to remain subdued. Pick-up in infrastructure projects and overall investment cycle as well as improved pricing power are likely to remain the key triggers for the sector over the near-term. Future Outlook in Cement The outlook of cement is bright considering the following factors: 1. Housing: The Housing segment accounts for a major portion of the total domestic demand for cement in India, Real estate market is expected to grow in future at a consistent pace. Growing urbanisation, an increasing number of households and higher employment are primarily driving the demand for housing Initiatives by the government are expected to provide an impetus to construction activity in rural and semi-urban areas through large infrastructure and housing development projects respectively. 2. Infrastructure: The government is strongly focused on infrastructure development to boost economic growth. It plans to increase investment in infrastructure. Infrastructure projects such as Dedicated Freight Corridors as well as new and upgraded airports and ports are expected to further drive construction activity. The government intends to expand the capacity of the railways and the facilities for handling and storage to ease the transportation of cement and reduce transportation costs. 3. Commercial: The demand for Commercial Real Estate segments, comprising retail space, office space and hotels, as well as civic facilities including hospitals, multiplexes and schools, has been rising due to the growth in economy. The demand for office space in India is being driven by the increasing number of multinational companies and the growth of the services sector. Strong growth in tourism, including both business and leisure travel, has boosted the construction of hotels in the country. Your management is of the view that the Indian cement industry had witnessed an incredible growth in the past, led by the growth in the real estate, infrastructure and industrial construction. However, in recent couple of years cement demand growth took a slight breather. The cement industry has registered a drop in margins mainly due to input cost rise and lack of pricing power. The Industry has been facing a chronic problem of insufficient availability of the main fuel coal, driving the manufacturers to resort to use of alternatives at steep cost. As the economic growth is expected to be stable, the cement demand is expected to sustain an average growth in demand. The key drivers of this demand shall be the continued expansion in infrastructure, real estate and industrial sectors. 3. ENERGY As per 'Indian Brand Equity' (a initiative of Ministry of Commerce & Industries) the Indian power sector is one of the most diversified in the world. Sources for power generation range from commercial ones such as coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources such as wind, solar, and agriculture and domestic waste. The demand for electricity in the country has been growing at a rapid rate and is expected to grow further in the years to come. In order to meet the increasing requirement of electricity, massive addition to the installed generating capacity in the country is required. As per the International Energy Agency (IEA) publication on World Energy Statistics, India ranks 5th in Electricity production and 110th in the per-capita consumption of electricity. This was stated by Mr Piyush Goyal, Minister of state for Power, Coal & New and Renewable Energy (Independent Charge). The Indian power sector is undergoing a significant change that is redefining the industry outlook. Sustained economic growth continues to drive power demand in India. The Government of India's focus to attain 'Power For All' has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing on both market side as well as supply side (fuel, logistics, finances and manpower). During FY14, electricity production stood at 967 TWh. Over FY07-14, electricity production expanded at a compound annual growth rate (CAGR) of 5.6 per cent. The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth In line with the government's plans to boost domestic output of coal, India's largest thermal power producer, NTPC Ltd, could soon become one of the major coal-producers of the country as well. NTPC plans to produce up to 300 million tonnes (MT) of coal within the next four to five years. The government is targeting capacity addition of around 89 GW under the 12th (2012-17) and around 100 GW under the 13th (2017-22) Five-Year Plan. The expected investments in the power sector during the 12th Plan (2012-17) is US$ 223.9 billion. There is a tangible shift in policy focus on the sources of power. The Government is keen on promotion of hydro, renewable and gas-based projects, as well as adoption of clean coal technology. Wind energy is the largest source of renewable energy in India; it accounts for an estimated 87 per cent of total installed capacity (18.3 GW). There are plans to double wind power generation capacity to 20 GW by 2022. Biomass is the second largest source of renewable energy, accounting for 12 per cent of total installed capacity inrenewable energy. There is a strong upside potential in biomass in the coming years. Conclusion Considering the huge potential in the Energy sector, your Company through its subsidiaries is well equipped and is making every effort to make its breakthrough. 4. EXbrSSWAYS As per 'Indian Brand Equity' (a initiative of Ministry of Commerce & Industries), India has the second largest road network in the world at 4.7 million km. This network transports more than 60 per cent of all goods in the country and 85 per cent of India's total passenger traffic. Road activity has gradually increased over the years with the improvement in connectivity between cities, towns and villages in the country. 1. With automobiles and freight movement also growing at a rapid rate, the necessity for a road network good enough to carry the traffic is paramount. Understanding this need, the Government of India has set aside 20 per cent of the investment of US$ 1 trillion reserved for infrastructure during the 12th Five-Year Plan (2012-17) to develop the country's roads. 2. The value of roads and bridges infrastructure in India is projected to grow at a compound annual growth rate (CAGR) of 17.4 per cent over FY12-17. The country's roads and bridges infrastructure, which was valued at US$ 6.9 billion in 2009 is expected to touch US$ 19.2 billion by 2017. The financial outlay for road transport and highways grew at a CAGR of 19.4 per cent in the period FY09-14. For FY14, India's Planning Commission provided an outlay of US$ 6.9 billion for the roads segment. Road construction projects awarded to build-operate-transfer (BOT) companies achieved a CAGR of 17.1 per cent over FY06-13. 3. The Minister of State for Road Transport and Highways informed that the Government has launched major initiatives to upgrade and strengthen 54,478 kms of National Highways (NH) in the 4. Also, the highways ministry has showcased revival of 34 projects worth more than 7 26,000 crore (US$ 4.21 billion) in its latest infrastructure targets. 5. India's Prime Minister, Mr Narendra Modi has outlined a broad vision for new modes of infrastructure development in India, which includes nationwide connectivity networks of roads, gas grids, water grids and power transmission lines. 6. The Indian government plans to set up a finance corporation with an amount of 7 1 trillion (US$ 16.22 billion), in collaboration with Japanese investors, to fund projects in the roads segment. Future Outlook in Exbrssways India is poised to attain the next level in highway development as the authorities and builders are increasingly focussing on transit efficiency. Experts believe that public funding or other alternate financial models, apart from PPP, would be instrumental for attaining the required targets. Moreover, the country has 600-700 km of access-controlled exbrssways and is working continuously to build more high-quality, access-controlled exbrssways for faster connectivity between cities and towns. The Government is making sure that new roads and routes are well equipped with Intelligent Transportation Systems (ITS) including round-the-clock CCTV surveillance for monitoring real-time traffic data and ensuring safety and security of users. Your Company having a vast experience & resources and depending upon the interest shown by the Government would expand its business further in Roads & Exbrssways Sector. 5. REAL ESTATE As per 'Indian Brand Equity' (a initiative of Ministry of Commerce & Industries) the Indian real estate sector is one of the most globally recognised sectors. In the country, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. It comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. According to a study by ICRA, the construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. It is also expected that this sector will incur more non-resident Indian (NRI) investments in the near future, as a survey by an industry body has revealed a 35 per cent surge in the number of enquiries with property dealers. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. The Indian real estate market size is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country's gross domestic product (GDP). Also, in the period FY08-20, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. Real estate has emerged as the second most active sector, raising US$ 1.2 billion from private equity (PE) investors in the last 10 months. Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the brvious year, in order to increase their rent-yielding commercial assets in Asia's third largest economy. According to a study by Knight Frank, Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR). Also, Delhi-NCR was the biggest office market in India with 110 million sq ft, out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. The weaker sections and low-income groups, through public-private-partnership (PPP), interest subsidy and increased flow of resources to housing sector', according to Mr M Venkaiah Naidu, Union Minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs, Government of India. The Government of India along with the governments of the respective states have taken several initiatives to encourage the development in the sector like the Government of Maharashtra has announced a series of measures to bring transparency and increase the ease of doing business in the real estate sector, the Government of India has relaxed the norms to allow foreign direct investment (FDI) in the construction development sector. This move should boost affordable housing projects and smart cities across the country. The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). This move will enable easier access to funds for cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors. Responding to an increasingly well-informed consumer and keeping in mind the globalization of the Indian business outlook, real estate developers have also shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are investing in centralized processes to source material and organize manpower and hiring qualified professionals in areas like project management, architecture and engineering. The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards. Future Outlook in Real Estate Your Company is a prominent real estate developer in the NCR region with large land bank and offering in various segments from Luxury to mid income, developing integrated cities, Golf centric homes etc is all set to gain from the rapidly growing real estate market. With rapid urbanization and improving connectivity in the region your company is poised for rapid growth. 6. HOSPITALITY As per 'Indian Brand Equity' (a initiative of Ministry of Commerce & Industries), The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India is a potential game changer. It is a sun rise industry, an employment generator, a significant source of foreign exchange for the country and an economic activity that helps local and host communities. The number of Foreign Tourist Arrivals (FTAs) has grown steadily in the last three years reaching around 7.46 million during January-December 2014. Foreign exchange earnings (FEEs) from tourism in terms of US dollar grew by 7.1 per cent during January-December 2014 as compared to 5.9 per cent over the corresponding period of 2013. FTAs during the Month of December 2014 were 7 120,083 crore (US$ 19.02 billion) as compared to FTAs of 7 107,671 crore (US$ 17.05 million) during January-December 2013 over the corresponding period of 2012. Foreign Exchange Earnings (FEEs) from tourism in rupee terms during January-December 2014 were 7 120,083 (US$ 1,902.53) with a growth of 11.5 per cent over the corresponding period of 2013. The Tourist Visa on Arrival (TVoA) scheme enabled by Electronic Travel Authorisation (ETA), launched by the Government of India on November 27, 2014 for 43 countries has led to a growth of 1,214.9 percent recently. For example, during the month of January 2015, a total of 25,023 tourist arrived by availing TVoA as compared to 1,903 TVoA during the month of January 2014. Hospitality, a major segment of tourism, has grown by 10-15 per cent on the back of better consumer sentiment with the change of Government. As demand is going up occupancies are improving. The tourism and hospitality sector is among the top 15 sectors in India to attract the highest foreign direct investment (FDI). During the period April 2000-February 2015, this sector attracted around US$ 7,862.08 million of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP). With the rise in the number of global tourists and realising India's potential, many companies have invested in the tourism and hospitality sector. Some of the recent investments in this sector are as follows: The Indian government has realised the country's potential in the tourism industry and has taken several steps to make India a global tourism hub. Some of the major initiatives taken by the Government of India to give a boost to the tourism and hospitality sector of India are as follows: The Government of India has set aside 7 500 crore (US$ 79.17 million) for the first phase of the National Heritage City Development and Augmentation Yojana (HRIDAY). The 12 cities in the first phase are Varanasi, Amritsar, Ajmer, Mathura, Gaya, Kanchipuram, Vellankani, Badami, Amaravati, Warangal, Puri and Dwarka. Under 'Project Mausam' the Government of India has prop osed to establish cross cultural linkages and to revive historic maritime cultural and economic ties with 39 Indian Ocean countries. Prime Minister Shri Narendra Modi has approved to enter into a memorandum of understanding (MoU) between India and Oman for strengthening cooperation in the field of tourism. Announcement by Mr Arun Jaitley, Minister of Finance, to extend Visa on Arrival Facility (VOA) to 150 countries in stages from the current 43, is a big step to promote tourism. The revenue from tourism sector can be utilised for the development of the country and can boost the economy of country. India's travel and tourism industry has huge growth potential. The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having grown at a compounded annual growth rate (CAGR) of 27 per cent over the last three years, according to a joint report by FICCI and KPMG. Also, inflow of medical tourists is expected to cross 320 million by 2015 compared with 85 million in 2012. The tourism industry is also looking forward to the E-visa scheme which is expected to double the tourist inflow to India. ICRA Ltd rating agency expects the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16. India is projected to be number one for growth globally in the wellness tourism sector in the next five years, clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International. 7. SPORTS In the recent years, India has hosted a large number of international events. Since the time, Delhi hosted the Commonwealth Games, the prime focus of the government is on infrastructure development including transportation, power, etc. Sports retailing has also boosted the manufacturing industry in countries like India and China which are global manufacturing hubs for sports products. Moreover, India has organized major sporting events like the Cricket World Cup, Commonwealth Games, Men's Hockey World Cup, the Commonwealth Youth Games, etc. to name a few, which has increased the government and private sector focus on this sector. It shows India's active participation in international sporting events such as the Olympic Games, Commonwealth Games, Asian Games and Cricket World Cup. The sports market is one of the most complex and diverse markets in which the government, federations and private sector are inter-twined and all of them play an important role. With privatisation and commercialisation of sports, the private sector is playing a key role in promotion, training and marketing of sports. They now own sports clubs and teams. Sports retailers, brands and manufacturers, therefore, have to work closely with government and federation for equipment/goods procurement, event sponsorship, etc. contribute to development of sports infrastructure, and play a crucial role in selection of sports brands. Planning Commission plays an important role in central budget allocations to different states for sporting activities. Overall, the role of the central government is confined to development of policies, creation of infrastructure, training, direct funding for team participation in international events and capacity-building at the grass-root level. The growing interest of youngsters and even elderly people in India towards sports is an encouraging force to invest in this sector. The three F-1 races organized in India also prove the growing interest of people of India in non-conventional sports activities. Most of the population of India being in lower brackets of age groups, the future of sports will always be lucrative and bright in India. JAYPEE IN ENGINEERING & CONSTRUCTION This year also, the Engineering & Construction Division of the Company continued to perform well. The Company has been qualified for new Projects, as reported in the Directors' Report. While the Company is facing the brssures of Indian economy as well as global conditions coupled with liquidity crunch and weak demand, the Company also remains confident about India's strong fundamentals as well as Company's own strength, expertise and experience in the infra-structure sector, which is the backbone of India's growth potential. As a multi-disciplinary infrastructure player, Jaiprakash Associates Ltd. (JAL) is geared up to participate in the infrastructure development of the country. Its leadership as an EPC player, a Cement producer, a Power Producer, an Exbrssway developer, a brmium Township developer and a niche in Hospitality business is well established. With rapid capacity expansion across most of its business domains, it shall reap rich dividends from the forthcoming infrastructure boom and create substantial value for all its stakeholders. JAYPEE IN CEMENT Your Company, alongwith its subsidiaries, is the third largest cement producer in the country with 31.65 MTPA (Million Tonne Per Annum) operative capacity. This includes (i) 2.20 MTPA through joint venture with SAIL (i.e BJCL) and (ii) 8.00 MTPA (including 3 MTPA under implantation) through a wholly owned subsidiary, Jaypee Cement Corporation Limited (JCCL). Plant of JCCL in West Zone (4.8 MTPA), JAL in North Zone (Panipat Cement Grinding Unit 1.5 MTPA) and plant of BOJCL (2.10 MTPA) were sold during the year. Plants of JAL in Central zone (4.9 MTPA) are being sold for which necessary process is on. The purpose of sale of such plants is to reduce the debts of Company. JAYPEE IN ENERGY Jaiprakash Power Ventures Limited (JPVL) (a subsidiary Company of JAL) is the largest private sector Hydro Power producer with 1700 MW of operational assets, with plant capacities of 300 MW Baspa, H.P., 400 Vishnuprayag, Uttarakhand, 1000 MW Karcham-Wangtoo, H.P. In addition, another 3,920 MW of Hydro-Power Projects are in various stages of development. JPVL has since hived off the Baspa and Karcham-Wangtoo plants on 08.09.2015 to reduce its debts for which approval of scheme of arrangement has been sanctioned by Honourable High Court of Himachal Pradesh. Bina Thermal Power plant Phase-1 with a capacity of 500 MW located at M.P is also operational (250 MW from August, 2012 & 250 MW from April, 2013). Nigrie Thermal Power project of 1320 MW was started in 2 phase 3rd September, 2014 and 21st February, 2015. Your Company (JAL) has been operating Wind Power Project of 49 MW (40.25 MW in Maharashtra and 8.75 MW in Gujarat). The said wind power plants (entire 49 MW) have been agreed to be hived off and sold on September 30, 2015. JAYPEE IN EXbrSSWAYS Jaypee Infratech Limited (JIL), a subsidiary of JAL had successfully executed the Yamuna Exbrssway project, in August, 2012, a 165 kilometres access controlled 6 lane super exbrssway along the Yamuna river connecting Noida and Agra on Build - Own - Transfer basis. The project envisages ribbon development along the exbrssway at 5 locations aggregating 25 million square meters of land for residential/ industrial/ institutional purposes and has triggered multi-dimensional, socio-economic development in Western U.P. besides strengthening the Group's brsence in real estate segment in this decade. Himalyan Exbrssway Limited (HEL), a subsidiary of JAL, had successfully implemented Zirakpur-Parwanoo Exbrssway Project in the States of Punjab, Haryana and Himachal Pradesh in April, 2012. The project consists of 17.39 Km of widening of existing two-lane carriageway to four-lane and 10.14 Km of new four-lane bypass. Work on 1047 Km long 8-lane Access-Controlled Ganga Exbrssway Project connecting Greater Noida with Ghazipur-Ballia along the left bank of river Ganga has been held in abeyance due to non-availability of Environmental Clearance. Uttar Pradesh Exbrssways Industrial Development Authority (UPEIDA) & Jaypee Ganga Infrastructure Corporation Limited (JGICL) in September, 2014 have decided to close the Concession Agreement. With the closure of Agreement between UPEIDA & JGICL, the contract between JGICL & JAL shall also cease to exist. JAYPEE IN REAL ESTATE The Group did receive overwhelming response to all its products across residential, commercial and institutional segments during the year 2014-15. The Group has followed a well balanced approach of readying itself to deliver its various projects in the coming year along with continuous infrastructure development providing educational, recreational, healthcare and other facilities. While the various initiatives taken by the Group in the educational and sports are already in operation, a super specialty hospital will commence commercial operations during the year 2015-16. The Group's primary focus shall remain on the development of the integrated townships along the Yamuna Exbrssway with a wide range of planned product mix to suit all strata of the population. JAYPEE IN HOSPITALITY The Hotels Division of the Company has 5 'five-star' luxury hotels, finest Championship Golf Course, Integrated Sports Complex and Town Centre strategically located to service the needs of discerning business and leisure travellers. In New Delhi, the Division has two hotels - Jaypee Siddharth with 94 rooms and Jaypee Vasant Continental with 119 rooms. The largest property of the Company Jaypee Palace Hotel and Convention Centre is located at Agra with an inventory of 341 rooms and Jaypee Residency Manor with Valley View Tower at Mussoorie has 135 rooms. Jaypee Greens Golf & Spa Resort, a brstigious brsentation by Jaypee Hotels in the luxury segment, offers 170 state of art rooms and world renowned "Six Senses Spa" overlooking the Championship 18 hole Greg Norman Golf Course at Jaypee Greens, Greater Noida, U.P. It has emerged as a brferred choice of upmarket business travellers. Jaypee Hotels being the division of the Company was conferred the 1st Prize at the National Energy Conservation Award - 2014 by Hon'ble Minister of State, Power & Energy, Govt. of India, Shri Piyush Goyal. The award is the recognition of the implementation of the energy conservation measures with perfection at Jaypee Vasant Continental. Indian Green Building Council has conferred LEED certificate in "Gold Category" to the Jaypee Residency Manor, Mussoorie and "Platinum Category" to Jaypee Vasant Continental, New Delhi for energy & environmental design of the building. In the close proximity to the Golf Course is Atlantis-The Club, an integrated sports complex that offers World Class sporting events & tournament facilities, rooms & conference facilities and Jaypee DelCourt, offering hospitality with a difference, offers well appointed rooms and serviced apartments making it a viable destination for corporate entrebrneurs, expats business and leisure stays. The Company's Hotels at New Delhi, Agra and Mussoorie have been accredited with ISO 9001 for Quality Management System (QMS), ISO 14001 for Environment Management System (EMS), ISO 22000 for Food Safety Management System (FSMS) and Hazard Analysis and Critical Control Point (HACCP). JAYPEE IN SPORTS The erstwhile Jaypee Sports International Limited (JSIL), a wholly owned subsidiary of the Company, got merged into Company on 16.10.2015 (w.e.f. 01.04.2014) and now known as Jaypee International Sports, a division of Jaiprakash Associates Limited. The core activities of this division (earlier JSIL) are sports inter-alia Motor Race Track, suitable for holding Formula One race and setting up a Cricket stadium of International Standard to accommodate above 1,00,000 spectators and others. It owns a Motor Race Track known as Buddh International Circuit (BIC). It hosted three Indian Grand Prix (called as Formula One race) held in October, 2011, October, 2012 & October, 2013, successfully. The success of the event was acknowledged by winning of many awards and accolades. It is also a one stop destination for exhibitions, shooting of movies, concerts, product launches and other promotional entertainment activities. M/s. ALA Architects were appointed to design the cricket stadium and the first phase of construction is likely to be completed soon. Meanwhile friendly matches are being conducted from time to time to check the quality of the pitch. The same was found more satisfactory than expected. OUTLOOK The Company has an established growth record as a leading infrastructure Company with decisive competitive advantages. We believe that the next decade in India belongs to infrastructure sector. While even the smallest constituents of infrastructure sector will immensely benefit from it, Jaiprakash Associates Ltd. shall not only benefit from the ensuing growth phase of Infrastructure but actually lead the Infrastructure development of India. Its future outlook appears bright for the following reasons: (i) It is "Rightly Placed" in the core infrastructure sectors of cement, power, roads, and realty. (ii) It has "Right Blend" i.e. diverse business mix leading to de-risked business model. (iii) It is "Right Scaled" as it has leadership positions in almost all of its business domains and is scaling up its capacities across all of them. Ready and rolling capacities will help it maximise from the growing demand. and (iv) It has the "Right Span" from northern to southern India, western to eastern through central India within its reach. It is based on the above facts that the Company's outlook appears very positive and given the favourable conditions, the Company should grow at a rate higher than the economy and most of the industry sub-verticals it operates in. OPPORTUNITIES & THREATS 1. Engineering & Construction Industry: In view of more and more competition in the construction industry, the opportunities for securing cash contracts are reducing. Now many clients are also brferring to go in for projects on BOOT (Build, Own, Operate and Transfer) and BOO (Build, Own and Operate) basis. PSUs dealing with development of power projects have also shown increasing inclination towards EPC contracts, since this mode not only results in speedy implementation of the projects, but it also reduces the Owners headaches in certain key areas such as coordination amongst various disciplines, project design and engineering, etc. The Company is now a leader in the field of EPC Contracting. The Company has performed in consortium with large foreign based companies and can thus easily get a JV/ Consortium partner, where necessary. Companies with proven track record and established credentials have an edge over others for securing large contracts on EPC, BOOT and BOO basis and the Company enjoys this status. Though increased competition from the new entrants in the field sometimes appears a threat to the business prospects of large established companies, yet the established companies need not have any fear in this regard. Timely completion of projects shall remain the most important requirements of major and high value projects, which shall keep the scale tilted in favour of the established players. The Company has emerged as a "Significant Infrastructure Company" with diversification in Real Estate, Exbrssways and Hospitality business. Already on a higher trajectory in growth curve, the Company is poised to seize every opportunity to expand the existing line of business or enter into new related line of businesses. The Company is well equipped to handle threats of competition and challenges which might emanate from Cement Industry or the Company's ongoing execution of Projects on Mountainous Regions and in difficult terrains. 2. Cement: Cement consumption and demand in India has been growing during the last few years. However, due to market conditions, the selling price had been under brssure during the year under review and for the brsent as well. To meet the challenge, the Company keeps taking steps to improve economy in operations on continuous basis. The pan India brsence of the Company for manufacturing and marketing of Cement will give the Company inherent locational advantages and economies of scale. 3. Energy: The necessity for addition of power generation capacity of the country and the various incentives provided by the Government of India for private sector participation in development of power will be key to the development of Power projects on Build, Own, Operate (BOO) basis by the Company. 4. Hospitality: The prospects of the Tourism Industry is bright as the Govt. of India is continuing the focused campaign "Incredible India" to promote the Industry. The "Incredible India" campaign offers number of attractions and unmatchable diverse topography to make India an ideal destination for tourists. This shall result into more number of in-bound and national tourists to create more demand for hotels. The country's economic conditions and low growth rate has direct impact on the earnings of hotels. The competition in terms of economical destinations from neighbouring countries also pose direct threat to the industry. 5. General: The Indian Economy is expected to grow at around 7.5% p.a. in the medium term. The growth is envisaged to be driven by investments in infrastructure including Roads, Ports, Power Sector etc. Besides, housing sector in the urban and semi-urban areas is poised for growth. Increasing economic activity and population is expected to increase both, per capita and aggregate, cement and power consumption, besides housing & hospitality needs. These factors are expected to positively impact the prospects of demand for Company's products. The Company has emerged as a Significant Infrastructure Company with diversification in Real Estate, Exbrssways and Hospitality business. Already on a higher trajectory in growth curve, the Company is poised to seize every opportunity to expand the existing line of business or enter into new related line of businesses. The Company is well equipped to handle threats of competition and challenges which might emanate from Cement Industry or the Company's ongoing execution of projects on mountainous regions and at difficult terrains. RISKS & CONCERNS With the fairly diversified nature of Jaypee's business, the risks and concerns vary from one business to other. With Company's span of businesses falling under core infrastructure domain, the continuing infrastructure development phase of India provides considerable cushion. The divisions cross leverage strengths to each other and help mitigate major risks at Company level. 1. Cement industry being highly energy intensive, any possible rise in energy cost might affect Company's business adversely. The setting up of the captive power units in addition to the proactive steps towards reducing power consumption helps the Company counter this threat effectively. It has commissioned captive thermal power plants. The cement industry is cyclical in nature and also witnesses seasonal reduction in consumption during monsoon season. Keeping in view the demand growth, the Company has been ramping up its capacities. It carefully evaluates the regional mismatches and deploys capacities to minimise from the cyclical risks. 2. The Engineering & Construction Division: Hydro-Power Projects are invariably located in mountainous regions and have to face the direct challenges from nature, such as fury of flood, rock fall triggered by snowfall/rains and unexpected geological surprises. The Company has to work in the river bed for dams, water conductor systems including tunnels, underground power houses and other components which pose a serious challenge because so much depends upon the quality of rock/ geology encountered during construction. These risk areas and concerns will definitely draw upon the in-depth experience and expertise of established player in the field, like JAL, but the end product (generated power) will more than compensate for the hazards/ risks involved. In an expanding economy each one of the fields of business of the company is bound to experience prosperity. The Company provides the Performance Guarantee which depends on the Terms and Conditions as stipulated by the Clients and is up to 5% of the contract price and is in line with the general practice brvailing in the country for awards of contracts. The high value BOOT/BOO projects also require project financing at a very high scale. Since the melt down in economy, which surfaced in November, 2008, it is to be seen whether funding would be available for large projects as easily as it was before the melt down in the economy. The Company is confident of coming out of this unexpected set back at the national level with flying colours. 3. Hospitality: The low tourist friendly culture adversely affects the tourist traffic and consequently affects the business of the hospitality industry. The major restraint to the hotel industry of India is the cost of land which as high as 50% of total project cost, against low 15% abroad. Besides this, the higher tax structure and multiple taxes as compared to the other countries which inflates the hotel expense a great deal. 4. Cyclical and Political Condition affecting businesses: The Cement Industry is cyclical in nature and consumption level of cement reduces during monsoon seasons. However, the level of spending on housing sector is dependent on the growth of economy, which is brdominantly dependent on agriculture since India is an agricultural centric economy. Cement Industry has maintained a good growth rate during last few years. Engineering & Construction growth in infrastructure sector is also dependent on political stability. There has been continuous emphasis on development of Infrastructure and Housing by the successive governments after reform process was initiated in nineties. 5. A significant proportion of the Company's revenues of Engineering & Construction Division comes from a limited number of customers. It relies heavily on Central and State Governments and public sector undertakings which are subject to political influence. 6. Contract Payment Risk: In view of the fact that JAL typically takes up large size construction contracts, with sizes over 7 500 crores, which require large scale mobilization of man power, machinery and material, therefore, timely receipt of payments from the client is critical. Generally, the contract terms involve payment of advance for mobilization while the balance amount is linked to the physical progress of the project. JAL restricts its interest to those projects, which have the budgetary outlay / sources of finances tied up (i.e. financial closure achieved), thus, minimizing the risk of delays in payment. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY Your Company is ISO 9001:2008 certified company and accredited by NABCB and UKAS. Your Company has developed very efficient communication systems between the Projects and the Head Office, which is the key to its high performance levels. This is of utmost assistance in ordering materials, spares and meeting other requirements, pertaining to finalisation of construction drawings, project monitoring and control. These aspects, along with the Management Information Systems, are the areas on which your Company is continuously trying to scale new peaks.The Company has an internal control system commensurate with its size and nature of business. The system focuses on optimum utilisation of resources and adequate protection of Company's assets. It monitors and ensures efficient communication between the Projects and the Head Office; efficiently manages the information system and reviews the IT systems; ensures accurate & timely recording of transactions; stringently checks the compliance with brvalent statutes, listing agreement provisions, management policies & procedures in addition to securing adherence to applicable accounting standards and policies. The internal control system provides for adherence to approved procedures, policies, guidelines and authorization. In order to ensure that all checks and balances are in place and all the internal control systems and procedures are in order, regular and exhaustive internal audit is conducted by the qualified Chartered Accountants. Internal audit reports are reviewed by the Audit Committee on a quarterly basis. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS The core of achieving business excellence lies in a committed, talented and focussed workforce. Under the exemplary leadership of its Founder Chairman, the Company has created a highly motivated pool of professionals andskilled workforce that share a passion and vision of the Company. The resultant power of HR pool gets reflected in the growth of the Company in the recent past. The Company adopts latest techniques in evaluating the potential and training needs of the employees at all levels. Designing of tailor-made training programmes that fill the knowledge/skill gap and imparting in-house training in addition to utilising external programmes are significant functions of HR Department of the Company. As at 31.03.2015, the Company had a total workforce of approximately 19,432 persons, including managers, staff and regular/casual workers. Industrial relations in the organization continued to be cordial and progressive. Your Company has been proactive in development of Human Resources and latest techniques are being adopted in evaluating the potential, assessing training and retraining requirements and arranging the same. Leadership by example, consistent policies in Human Resource and their participation in management has ensured unique bonding of entire work force across all facets of company operation and management. ENVIRONMENTAL MATTERS, HEALTH AND SAFETY AND CORPORATE SOCIAL RESPONSIBILITY The initiatives taken by the Company from an environmental, social and governance perspective, towards adoption of responsible business practices, in the areas of Environmental Management and Corporate Social Responsibility more specifically in the sphere of Education and Healthcare have been described in detail in the Business Responsibility Report forming part of this Annual Report. FORWARD LOOKING/ CAUTIONARY STATEMENT Certain statements in the Management Discussion & Analysis Report detailing the Company's objectives, projections, estimates, expectations or brdictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future event, actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting domestic demand supply conditions, finish goods prices, changes in Government Regulations and Tax regime etc. The Company assumes no responsibility to publically amend, modify or revise any forward looking statements on the basis of subsequent developments, information or events. |