Management Discussion And Analysis

KEC International Limited (the Company or KEC) is an infrastructure EPC major with brsence in Power Transmission & Distribution (T&D), Cables, Railways, Water and Renewables (Solar). The Company's footprint extends to 61 countries across the globe.

Economy and Power Sector Overview

A] Global Economy

The global economy decelerated further during 2015 causing global growth to fall short of expectations which declined to 3.1 percent in 2015 as compared to 3.4 percent in 2014 (Source: World Economic Outlook Update, January 2016). A host of factors, such as volatility in the financial and the commodity markets, plummeting oil prices, subdued global demand and curtailed investment, as well as slower than anticipated growth of the Chinese economy created ripples across the globe. The spillover of these developments impacted not only the emerging economies but also the developed economies.

The advanced economies appear to be showing signs of improvement from the beginning of 2016 at the back of accommodative financial conditions and strengthening of the housing and labour markets. Growth in advanced economies is projected to increase marginally by 0.2 percent at 2.1 percent in 2016 and is expected to remain steady in 2017 (Source: World Economic Outlook Update, January 2016). On the other hand, growth in the emerging economies is projected to increase from 4 percent in 2015 to 4.3 percent in 2016 and 4.7 percent in 2017 (Source: World Economic Outlook Update, January 2016).

The global growth is projected to recover modestly at 3.4 percent and 3.6 percent in 2016 and 2017 respectively (Source: World Economic Outlook Update, January 2016).

B] Indian Economy

India, though entwined with the global economy, has so far been able to fortify itself to a large extent against the current global economic turmoil. India's euphoric performance relative to the rest of the developing nations including Brazil, Russia and China is mainly attributed to factors such as containment of inflation, lower fiscal and current account deficit coupled with some key policy reforms. The fall in oil prices has also acted as a catalyst and benefitted the Indian economy. Growth across sectors, albeit has been at varying levels and pace. The Manufacturing and Industrial sector performed well though erosion in demand on the global front did have an impact on India's overall exports. The Agricultural sector also witnessed a downturn due to poor monsoon.

Buoyed by various positive factors, the macro-economic conditions in India are gradually improving and the economy is once again demonstrating resilience and stability. India's GDP growth at constant (2011-12) market prices witnessed an uptick from 6.6 percent in 2013-14 to 7.2 percent in 2014-15, and is further estimated to increase to 7.6 percent in 2015-16 (Source: Economic Survey Highlights, Press Information Bureau). For India to sustain a higher economic growth amidst global bouts of uncertainty would require more action on policy and reforms front as well as more traction on the ground level. Besides, the Government's thrust and commitment on varied initiatives, such as Make in India, Digital India, Skill India, Start-up India and Swachh Bharat Abhiyan (Clean India Mission), are expected to provide a boost to the Indian Economy.

C] Power Sector Review

The power landscape worldwide is on the cusp of transformation with emphasis on reliability, efficiency, sustainability and affordability. Emerging trends in the segment include increased focus on renewables, integration of renewables into the grid, distributed generation, smart transmission and distribution networks, migration to Extra High Voltages of transmission, use of Gas Insulated Lines where overhead transmission lines are not feasible, etc. These developments portray a very progressive image for the sector, although the fact that scarcity of power is rampant in large parts of the globe remains a matter of concern. Economic growth, fuelled by rapid industrialisation and urbanisation, increased Glocalization along with technological and digital interventions, demands incessant supply of power. At brsent, there is a disparity between the demand and supply dynamics, thus propelling the need for substantial investments, culminating in enormous opportunities and positive outlook for the global power sector.

The total investment requirement for Transmission & Distribution infrastructure for 2015-2040 period is projected at USD 8.3 trillion, of which India requires approximately USD 845 billion (Source: International Energy Agency (IEA),  World Energy Outlook 2015).

Globally, Transmission and Distribution networks are expanding steadily, nonetheless around 15 percent of the world population still lacks access to electricity, necessitating the need for development of power infrastructure across the globe. All this translates into significant opportunities for the Company. The Company has a global brsence and is recognised for its capability to execute complex and innovative engineering projects necessary to cater to the infrastructure requirements across the globe.

Business Scenario and Industry Outlook & Opportunities

POWER TRANSMISSION & DISTRIBUTION (T&D) BUSINESS

This is the largest business vertical of the Company. With around seven decades of experience, KEC has a global leadership position in the Power Transmission EPC space and is rapidly growing in power distribution space mainly in the  Substation segment. The Company's T&D business is sbrad across continents. The Company's Business scenario and region-wise outlook & opportunities are highlighted below:

I) South Asia Business

The Company delivered a commendable performance both in terms of revenue and margins aided by a surge in orders in this region which includes India and the SAARC. The Company accelerated delivery of numerous projects ahead of its scheduled completion time thereby reinforcing its commitment to build up and excel its execution capabilities. Furthermore, it significantly expanded its brsence in the Gas Insulated Substation (GIS) arena.

Region Wise Outlook &Opportunities a] India

India's power sector has scaled up imbrssively over the few years. Currently, India has an installed generation capacity of around 298,060 MW, installed transmission capacity of 341,551 ckm and substation transformation capacity of 658,949 MVA. In the last five years the generation capacity has increased by more than 50 percent whereas the Transmission & Distribution capacity has increased by only 30 percent thereby creating an imbalance (Source: Central Electricity Authority (CEA), India). This has triggered the need for commensurate T&D infrastructure which requires enhanced investments. The T&D sector is expected to require an investment of around Rs. 300,000 Crore over the next five years. The 12th and 13th Five year plans respectively envisages 88,537 MW and 93,400 MW of generation capacity addition, 109,440 ckm and 130,000 ckm of transmission capacity addition and 270,000 MVA and 300,000 MVA of substation capacity addition (Source: Erstwhile Planning Commission of India and Press Articles). This deciphers enormous opportunities for companies like KEC.

Likewise, the Government has planned to increase the renewables capacity to 175 GW by 2022 including 100 GW from solar power. Integrating solar power into the grid is also a priority area which again spells out good prospects for us. The Government is implementing the Green Energy Corridors-I project, encompassing intra-state as well as inter-state transmission strengthening. In addition, the Green Energy Corridors-II project is planned by Power Grid for grid integration of renewable energy by FY 2021-22. In the first phase, transmission schemes for the ultra-mega solar power parks of about 20-22 GW of capacity are expected to be developed during the 13th Plan period.

The Overall outlook for the sector appears to be positive backed by emphasis on T&D capacity augmentation plans, grid integration plans as well as a slew of measures initiated by the Indian Government to expedite forest clearances and Right of Way (RoW) issues, including the revision in land acquisition compensation, focus on expediting project clearances, push towards renewable energy and ease in coal availability. In addition, UDAY, the revival plan for State Distribution Utilities aimed at enhancing efficiencies and reducing losses is also expected to provide the necessary push to this sector.

b] SAARC

The Company has significantly enhanced its brsence in the SAARC region over the last few years and has a good order mix of Transmission and Substation projects in this region. In particular, the Company has secured sizeable orders in Bhutan and Nepal of up to 500 kV in the Substation space. This region plagued by energy scarcity calls for huge investments for development of T&D infrastructure which is expected to benefit the Company in the future. During the year, the Company has significantly contributed in the construction of two cross border transmission line interconnection projects namely, Indo-Bangladesh and Indo-Nepal.

II] International Business

During the year, the Company has secured some large orders in Ghana, Uganda, Kenya, Afghanistan and Saudi Arabia to name a few. The Company expanded its outreach in the International Substation arena, especially in the GIS substation space. The Company's thrust on penetrating in the International Cabling market has yielded good results, it secured its first Cabling order in Saudi Arabia. The International Business continued to deliver satisfactory margins even better than the domestic market. The revenue and order inflow were however impacted due to a series of uncertainties and volatility in the global markets.

The Company's wholly owned subsidiary in the Americas, SAE Towers Holdings LLC also turned profitable this year.

Region Wise Outlook & Opportunities

a] Middle East and North Africa (MENA)

Economic growth being directly correlated to the growth of power sector, the need for robust power infrastructure is clearly visible across MENA including countries like Saudi Arabia, Oman, Iran etc. During the year, the Company witnessed consistent order inflows and tender roll outs from this region. The region, having reworked and set forth infrastructure development as a priority area, the dip in oil prices had a minimal impact on their infrastructure spend. This translates into good opportunities for the Company. The Company is witnessing a regular flow of orders.

b] Gulf Cooperation Council (GCC)

The GCC is expected to invest USD 56 billion in power T&D infrastructure over the 2016-20 period. With around 76.8 GW of generation capacity expected to be augmented between 2016 - 2020 and GCC electricity consumption is expected to witness a significant uptick (Source: Arab Petroleum Investment Corporation (APICORP)). The GCC countries have also collaborated in developing a joint Gulf power grid to develop the region's electricity network and also help unify the six countries.

c] North Africa

North African region, enriched with vast natural resources, is a potential market for the Company in the near future once the region attains political stability and geopolitical risks are minimized. The Company is already witnessing infrastructure development tenders being floated in regions like Egypt etc.

d] Rest of Africa

The region has significant growth potential as it is plagued by acute energy shortage; around 65 percent of its population is without access to electricity. The region is endowed with vast untapped energy resources, including renewables like solar energy, which could be tapped to meet the growing demand for power. This highlights the need for substantial investment necessary for development of requisite infrastructure thereby culminating into good opportunities for the Company.

e] Central Asia

This region post the Soviet era has become increasingly cognizant of the need for rapid industrial development. This has resulted in an upscale in the demand for efficient and affordable power, triggering the necessity for capacity augmentation and evacuation infrastructure. As a consequence, huge generation capacity additions are planned in various countries of Central Asia.

f] South East Asia

The South East Asia market is very buoyant and we expect good opportunities from this region. Many countries in this region like Indonesia, Thailand, Malaysia etc. have already formulated generation capacity and grid expansion plans which are expected to translate into opportunities for the Company.

g] North America

The North American transmission system needs investment to build new lines, as also to upgrade and refurbish the existing network, which is ageing due to under-investment in transmission infrastructure. The need for upgradation of the existing transmission network has also arisen to ensure compliance with potential upgrades to regulations related to United States Environmental Protection Agnecy's (EPA) Clean Power Plan, currently under judicial review by the U.S. Subrme Court.

As coal-fired power plants go offline under the U.S. EPA's Clean Power Plan, building new power lines to bring renewable energy to customers requires substantial investment over the next five years.

In addition, under the new federally proposed Clean Power Plan, many states in the U.S. have issued the Renewable Portfolio Standards Regulations. This directive mandates electricity suppliers to produce a specified portion of their electricity from renewable energy sources. In Canada, new generation sources in Alberta and new hydroelectric generation expansion culminate into the need for increase in transmission lines.

h] Latin America

In this region, majority of the Company's business comes from Brazil and Mexico. Brazil is the largest market in Latin America and covers nearly half of the continent of South America. Brazil's Government plans to build about 85,782 kilometers of transmission lines between 2015 and 2024 (Source: Embrsa de Pesquisa Energe'tica's Plano Decenal de Expansao de Energia 2024). In Mexico, the still state-owned Comision Federal de Electricidad (CFE) owns and operates transmission lines. Besides, the recent Electrical Reform has mandated the overall planning and control of the transmission grid through the entity named CENACE (Centro Nacional de Control de Energia). The CFE, jointly with CENACE, plans to focus on transmission line projects to evacuate power from wind power generation, mostly in the South East and the North East regions. About 14,694 circuit kilometers of 230 kV and 400 kV lines are planned between 2015 and 2029 in the country (Source: CENACE's"Programa de Ampliacion y Modernizacion de la Red Nacional de Transmision y Redes Generales de Distribucion del Mercado Electrico Mayorista 2015 - 2016). In addition, the first DC Line of approximately 1,100 km/C is being planned in the near future. All of these elicits good prospects for the Company.

CABLES BUSINESS

Cables being a purely commodity driven business, the growth was primarily impacted due to decline in commodity prices. Product wise, the growth in LT Cables segment was almost flat in terms of value although there was a moderate growth in quantity supplied. HT Cables showcased moderate growth levels. On the positive side, revenue from the EHV Cables segment almost doubled on account of rise in demand from Power Transmission Utilities. Telecom Cables, revenue declined owing to cancellation of some large orders by Customers due to reduction in market prices.

Product Wise Outlook & Opportunities:

The Company manufactures power cables (EHV, HT & LT including instrumentation and solar cables) and telecom cables. Power Cables constitute a significant part of the Company's business. The Company provides turnkey cabling solutions for EHV cables. In addition to catering to the domestic market, the Company also exports a part of its manufacturing to numerous developed and developing nations.

a] Power Cables

The domestic demand for these cables being inextricably linked to the infrastructure growth is expected to rise on the backdrop of the Government's thrust on strengthening the country's transmission and distribution systems. The demand is also expected to get a boost on account of the proposed smart cities and mass transportation projects, where a higher proportion of EHV and HT cables are used. Besides, there is a huge potential market for solar cables due to rise in share of renewables.

EHV cables are a relatively higher margin product and efforts to increase EHV cables share in the product mix forms a part of the Company's core strategy for the next financial year.

b] Telecom Cables

The demand for Optic Fibre cables is expected to grow on the back of 3G and 4G network installations, along with the Central Government driven National Optic Fibre Network (NOFN) programme.

c] Cabling Business

There has been a surge in demand for turnkey cabling solutions due to increase in requirement for EHV cables. The demand for EHV cables has increased due to they being highly brferred in areas impacted by floods and places where Right of Way is an issue as constructing overhead transmission lines would be difficult.

RAILWAYS BUSINESS

During the year, the Company significantly improved its performance and achieved closure of most of its old projects. The progress on composite projects undertaken by the Company has been fairly satisfactory as has been the progress on other railway projects. The acquisition of Jay Railways in 2010 and subsequent focus by the Company to strengthen its capabilities in this space has resulted in the Company having a strong br-qualification background. In respect of composite projects, KEC is qualified to bid upto the value of Rs. 350 Crore without any Joint Venture support. Likewise, the commissioning of some current projects would further enhance the Company's br-qualification status.

Outlook & Opportunities:

The Company is an integrated player and undertakes Railway Electrification as well as Composite Railway projects related to civil works, track laying, building railway stations, tunnels and bridges and electrification & signalling works. Currently, the Company's business mainly comes from conventional railway projects and it is also looking at relevant opportunities in Dedicated Freight Corridors (DFC) and Metro Railway projects. The Company is br-qualified in certain packages of Dedicated Freight Corridor projects and plans to bid selectively in consortium for the newly announced DFC corridors.

The outlook for this sector is very positive as it is garnering significant thrust by the Indian Government which has set forth plans for network expansion as well as upgradation and modernisation of the existing infrastructure. The FY 2016-17 railway budget unleashed ample opportunities for players like us. Some of the positives decoded in the budget include; an increase in capital outlay to Rs.1.21 Lacs Crore, electrification of 2,000 kms, commissioning of 7 kms of broad gauge lines per day, announcement of 44 new projects, proposed additional 3 DFCs, focus on port connectivity, online bidding, standard policy document for EPC contracting, allotment time for projects to be reduced to 6-8 months, decentralization of decision making etc.

WATER BUSINESS

During the year, the Company closed most of its old water resource management projects and is currently focusing on Waste Water/Sewage treatment projects. Due to its conservative bidding, the Company did not secure new orders in this space and is closely observing the execution of its current projects.

Outlook & Opportunities:

Water and Waste Water/ Sewage management continues to be an area of emphasis in India. The sector is expected to unleash opportunities on back of numerous developmental programs initiated by the Government of India including tenders anticipated under the Clean Ganga Mission.

RENEWABLES (SOLAR) BUSINESS

During the year, the Company witnessed significant momentum in its Solar Business with substantial uptick in its order inflows. Considering the fact that the Company marked its entry in the Solar EPC space in FY 2014-15 by securing its first turnkey order valued at Rs. 10 Crore, the Company has showcased exemplary performance during FY 2015-16 wherein the order intake increased approximately 13 folds.

Outlook & Opportunities:

The outlook for the Solar sector in India is extremely positive, driven by Central and State Government initiatives.

The Jawaharlal Nehru National Solar Mission (JNNSM), a major initiative of the Indian Government has revised its target of Grid Connected Solar Power projects from 20 GW to 100 GW by 2022. The 100 GW target is split between 60 GW of utility scale projects and 40 GW of rooftop and other small grid-connected projects. Both Central and State Governments have announced a number of schemes and policies to accelerate solar project development. A total investment of around Rs. 6,00,000 Crore has been estimated to achieve the target of 100 GW. JNNSM has made noteworthy progress in the past year. There has been a spate of guideline notifications, tender announcements and capacity allocations. Today, India's solar capacity is more than 5,000 MW. During FY 2016-17, more than 10,000 MW is estimated to be installed in the Solar sector alone generating good prospects for the industry.

FINANCIAL PERFORMANCE

Analysis of Profit and Loss statement and Balance Sheet including the key ratios based on consolidated results is mentioned as follows:

Profit and Loss Statement Analysis

Net Sales increased by 0.6 percent Y-o-Y to Rs. 8,516 Crore. The sales growth was impacted by soft commodity prices, significant debrciation of Brazilian Real and delay in conversion of some large L1 positions into orders. Out of the total net sales, 51 percent has come from the markets outside India.

EBITDA increased by 32.7 percent Y-o-Y to Rs. 679 Crore. EBITDA margins improved by 200 basis points to 8 percent of net sales. The margin improvement is on account of successful turnaround of SAE business, improved profitability in our core T&D business and fast track completion of projects helping deliver better margins.

Debrciation and amortization remained at Rs. 88 Crore similar to the levels seen in FY 2014-15.

Finance Costs decreased to Rs. 277 Crore from Rs. 309 Crore in FY 2014-15. Finance Costs to Net Sales ratio decreased to 3.3 percent as against 3.6 percent in FY 2014-15. The finance cost improved as we replaced high cost borrowing with low cost borrowings.

In FY 2015-16, profit on sale of Telecom towers was Rs. 5 Crore. In FY 2014-15, the disposal of Thane land yielded a profit of Rs. 135 Crore.

PBT excluding the impact of profit on disposal of Telecom towers stood at Rs. 319 Crore, as against this, FY 2014-15 profit excluding impact of Thane land sale was Rs. 126 Crore. This is an improvement of 153 percent over the brvious year.

Net profit stood at Rs. 192 Crore as against Rs. 161 Crores in

FY 2014-15.

Earnings per Share (EPS) before impact of sale of assets increased to Rs. 7.2 from Rs. 2.7 in FY 2014-15.

Earnings per Share (EPS) after impact of sale of assets increased to Rs. 7.4 from Rs. 6.3 in FY 2014-15.

Dividend for the year is 50 percent of face value of equity share, reflecting a distribution of Rs. 30.9 Crore (including dividend distribution tax).

Balance Sheet Analysis

Net Worth increased to Rs. 1,512 Crore from Rs. 1,330 Crore in FY 2014-15. Equity Share Capital remained unchanged at Rs. 51 Crore. However, Reserves and Surplus increased to Rs. 1,460 Crore from Rs. 1,278 Crore recorded in FY 2014-15.

Book Value per share increased to Rs. 58.8 from Rs. 51.7 in FY 2014-15.

Gross Borrowings increased to Rs. 2,514 Crore from Rs. 2,189 Crore in FY 2014-15 while Net Borrowings increase to Rs. 2,403 Crore from Rs. 1,983 Crore in FY 2014-15 as we shifted some high cost acceptances to cheaper borrowings.

Gross Debt-Equity ratio stood at 1.7 times while Net Debt-Equity ratio stood at 1.6 times.

Fixed Assets (without considering goodwill) decreased to Rs. 860 Crore from Rs. 881 Crore in FY 2014-15.

Gross working capital (including long term loans and advances and other non-current assets) cycle has increased to 275 days from 268 days in FY 2014-15. Inventory cycle decreased to 18 days from 21 days in FY 2014-15. Total receivable cycle increased to 197 days from 179 days in FY 2014-15. However, payable cycle has reduced to 126 days from 143 days in FY 2014-15 as we shifted some high cost acceptances to cheaper borrowings.

Return on Capital Employed (before tax) increased to 16.4 percent in FY 2015-16 as compared to 13 percent in FY 2014-15.

OPERATIONAL PERFORMANCE - KEY HIGHLIGHTS

• The Company significantly improved the profitability with EBITDA growth of 33 percent and PBT growth of 153 percent.

• Successful Turnaround at SAE with positive PBT & strong order book

• Successful expansion of Substation business -Afghanistan (AIS); Bhutan and Saudi Arabia (GIS)

• Expansion in the Saudi underground cabling market

• Solar business ramped up with a turnover of Rs. 93 Crore and order intake of Rs. 130 Crore

• Significant progress on Railways & Water legacy projects execution

• Interest cost reduction by Rs. 32 Crore. The year's total order intake is at Rs. 8,714 Crore and year end order book is at Rs. 9,449 Crore. The orders were sbrad across business verticals and geographies. During the year the company:

o Secured largest ever single order from PGCIL, valued at ~ Rs. 608 Crore

o Secured high value order of Rs. 404 Crore in Ghana

o Continued to consolidate brsence in SAARC (India, Afghanistan, Bhutan), Americas (United States, Mexico, Brazil, Chile), MENA & CIS (Saudi Arabia, Georgia, Oman), Africa (Uganda, Ghana, Kenya, Zambia).

• Power T&D business expanded its substations business in international markets by securing orders in Saudi Arabia, Bhutan and Afghanistan. The T&D business also expanded the cabling business with additional orders in Saudi Arabia.

• Cables business secured orders worth Rs. 967 Crore.

• Railway business secured an order of Rs. 288 Crore for electrification, civil works, track laying, signaling and telecommunication works in Madhya Pradesh from Rail Vikas Nigam Limited.

ADEQUACY OF INTERNAL CONTROL

The Company's internal control system is combrhensive. The objective is to safeguard the Company's assets and ensure that transactions are properly authorised. The internal control system also assures integrated, objective and reliable financial information. The Internal Audit department conducts audits at the Company's various locations. It covers all major functions with a focus on various operational areas and internal control systems. The suggestions, recommendations and implementation of the same are placed before the Management and the Audit Committee of the Board of Directors periodically. The adequacy of the internal control systems is also periodically reviewed by the Audit Committee.

ENTERPRISE RISK MANAGEMENT AND INTERNAL AUDITS BY EXTERNAL SPECIALISTS

The Company engages external specialists for audits and reviews in various critical functions, such as Enterprise Risk Management (ERM), Information Technology (IT), and internal audit of certain manufacturing facilities and project sites. ERM review includes identification of risks across the Company, their assessment, review of mitigation plans, and brsentation of risk profile to the Audit Committee and the Board of Directors.

RISKS AND CHALLENGES

The Company is brdominantly engaged in the Engineering Procurement and Construction (EPC) business. As the business is sbrad across many countries and faces various risks associated with turnkey projects, its long-term success depends largely on the existence of a robust risk identification and management system, which helps the Company continuously identify and mitigate various risks. It continuously reviews its systems to ensure they are inline with current internal and external environments. Details of some of the risks involved in the business and their mitigation methods are discussed below:

1) Commodity price variations and currency fluctuations:

The Company deals with various commodities, such as steel, zinc, copper and aluminium. Fixed price contracts can have a negative impact on the Company's profit if input costs rise without proper hedging mechanisms. With significant contribution to the business coming from international markets, the Company is exposed to the risk of currency fluctuations, if any exposure remains open.

Mitigation: The Company believes in keeping its commodity and currency exposures hedged to optimum levels. It measures and manages these risks centrally, and carries out periodic reviews of these risks at appropriate levels.

2) Infrastructure investment slowdown: Infrastructure investment slowdown can lead to lower order intake and lower sales.

Mitigation: The Company's global brsence helps it minimise the impact on business during investment slowdown in one country or region. Further, the Company is significantly brsent in underdeveloped and emerging economies, where infrastructure investment remains a key priority for sustainable growth. The Company has also diversified its business portfolio to include Substations, Cables, Railways, Water and Solar.

3) Political unrest: Political unrest in countries and markets where the Company is brsent can impact the progress of its projects.

Mitigation: The Company carries out detailed studies of the potential risks involved in a market before bidding for a project in a particular country. This careful selection of the country, along with the Company's prior experience, aids in combatting the challenges. The Company has also started taking local funding to cover its exposure in the local markets.

4) Delays in execution of projects: EPC projects could face delays due to issues relating to Right of Way, forest clearances, manpower shortage and so on. This could lead to payment postponements, thereby prolonging the working capital cycle and increasing the overall project costs.

Mitigation: The Company reviews these risks periodically and employs suitable strategies and actions to minimise their impact. The Company factors such delays at the time of estimation of the tenders.

HUMAN RESOURCES

We have continued to lead on employee engagement with industry sustaining indicators on engagement and remain an employer of choice in the EPC infrastructure space.

Our investment in digitization to automate people processes and improve productivity is complete and we went live across all our locations in India and overseas with a Human Capital Management (HCM) platform christened 'RPG Talent One'. We also launched an interactive digital portal for employees to view potential learning and growth paths covering a majority of our job families.

Our Engineering Leadership Program to bring in quality engineering trainees has been significantly enhanced. While doing so, we have continued to provide every opportunity to our internal talent through our in-house 'RPG Talent First' initiative.

Our focus to provide a differentiated reward for our employees saw significant changes implemented across the board in reshaping the performance evaluation and variable pay practices. While enhancing our employee proposition, this provides an additional edge in attracting and retaining talent.

Employee Count - As on March 31, 2016, the KEC Group (including subsidiaries and joint ventures) has 5,661 permanent employees.

CAUTIONARY STATEMENT

Statements in this report describing the Company's objectives, expectations, brdictions and assumptions may be 'forward looking' within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those exbrssed herein. Important factors that could influence the Company's operations include global and domestic economic conditions affecting demand, supply, price conditions, natural calamities, change in Government's regulations, tax regimes, other statutes and other factors such as litigation and industrial relations.