MANAGEMENT DISCUSSION AND ANALYSIS Power Mech Projects Limited is a leading integrated power and infrastructure Companies in India providing combrhensive service in erection, testing and commissioning of boilers, turbines and generators and balance of plant ("BOP"), civil works and operation and maintenance (O&M) services. The four principal business lines on which the Company stands are: (i) Erection Works, (ii) Operation & Maintenance (O&M) Services, (iii) Civil Works and International Operations. The company is undertaking projects of all types, sizes and in all environments in India and abroad which include Ultra Mega Power Projects, Super Critical Thermal Power Projects, Sub Critical Power Projects, Heat Recovery Steam Generator, Waste Heat Recovery Steam Generator, Circulating Fluidized Bed Combustion Steam Generator, Gas Turbine Generator, Hydro Electric Plants, maintenance, renovation, modernization and annual maintenance of running plants and complete civil works. Business Opportunities • India is witnessing changes and there are greater expectations all around and Power Mech is not an exemption. We are expecting rekindling of economy and Power sector would get its due share in the growth story of India in the months to be followed. In power sector there is more remain to be achieved and it is seen as an opportunity because power is the basic requirement for all other developments. • The 12th five year plan envisages adding another one lakh MW to the grid and we are lagging behind the target. The Government is poised to boost the energy sector and there is hope for greater growth and capacity addition. The shortage of coal which played a major hurdle in running of the plants already commissioned is being addressed and if everything goes in the right direction, the day is not far off for power industry to regain its lost glory and pace. • It is worth mentioning that the company has an order book of Rs.34062.68 Mn as on 31st March, 2015 executable over the period of next 24-30 months. We are confident of sustaining the order book value and will be in a position to keep it at healthy level. • The company is strategically focusing on Civil works, AMC and overseas projects and also entering steel and petro-chemical industries. The Company has been able to create a healthy order book both in Civil and O&M with unexecutable order book of Rs.5129.74 Mn and Rs.5904.28 Mn respectively as on 31st March, 2015. Risks, Threats As there is opportunity, so is there risk and threats associated with any progress. Power Mech being an ETC Contractor, and service provider envisages problems like any other Company at the receiving end and as executioner. The foremost major challenges such as local labour issues, delay in land acquisition, import of materials, and clearances from various agencies remain to be addressed vigorously, effectively and continually. There is no marked improvement either in availability of finance for power industry and it needs to be addressed immediately We are hopeful for a break through very early for the financial institutions and bankers to open their doors and windows wider. The shortage of skilled and semi-skilled labour still poses a major hurdle in this sector. As the demand for power generation keep increasing which is only expected and construction activities getting spurred up, the gap between the supply and demand for skilled and semi skilled labour may widen further. But again this is a matter of concern for not only the power sector industry but to entire industry as well. A combrhensive scheme is expected to be in place in coming year to address this issue. SWOT Analysis Strengths • Fifteen years of experience with proven records and achievements. • Incredible crane bank capable of handling and erecting more than 3,50,000 MT per annum. • Man power strength with 2283 direct employees and more than 30,000 indirect employees. • Excellent relationship with all power majors operating in India. • Vast and rich experience in overhauling and maintenance of Boilers and Turbines. • Better connectivity and wider network to remain a 'combrhensive Service Provider'. • Operating on Mechanical, Civil, O&M and International Operations. Weakness • Ever increasing cost of labour and commodities. • Insufficiency in the availability of employable engineers in the brsent market. • General slow down due to inadequate support from Financial Institutions and bankers Opportunities • Change expected in investments through Govt intervention and due to market growth. • Annual maintenance contracts has gained momentum in power sector. • Exploring opportunity in International Market for maintenance and overhauling works. • Expansion of civil works to infrastructure in Power Sector. Threats • Competition for critical works where price plays primary role over quality. • Delay and short supply of erection materials from manufacturers. • Insufficient coal linkage and undue escalation in price of imported coal against demand. Human Resource Management Power Mech draws its strength from the work force apart from machines. At brsent the company has manpower strength of 2283 direct employees as on 31-03-2015 which includes qualified Engineers and highly skilled technicians. This is in addition to huge roll of indirect employees of more than 30,000, engaged through our Associates. Each department at site is headed by qualified and experienced persons fulfilling the requirements at sites. Periodical meetings of Heads with senior officers, planned visits to sites and branch offices by Directors and other officials keep the monitoring system in tact and healthy. Internal Control System The Company has inbuilt check and balance mechanism to safeguard its interests and to protect from loss, pilferages, and misuse of resources. With SAP system in place all transactions are made transparent and are to be duly appended by authorized persons with facility for multiple checking. The company is following proper procedures for accounting and book keeping. It has in-house auditing department as well as external auditors and is meeting all statutory needs in accordance with rules and acts. Periodical and surprise visits to sites and branches are made by internal auditing team and detailed auditing are conducted regularly. Audit reports are periodically reviewed by the management and Directors. |