Message from the Chairman

Dear Shareholders,

Greetings to all of you. It is my pleasure to present to you the Annual Report of your Company for FY 2019-20 and share the key highlights and the strategic roadmap going forward. The ongoing hardship of the Company due to the prolong depressed power sector has been further aggravated due to the widespread outbreak of Covid-19 pandemic which has imposed a global economic recession.
Stringent restrictions imposed to curtail the spread of the virus and the subsequent nationwide lockdown have disrupted livelihoods, supply chains and overall economic activity in the country. The crisis has dimmed the growth outlook for the global economy for the coming year, including for India.

A stimulus package of Rs. 20 lakh crores has been announced under the ‘Atmanirbhar Bharat Abhiyan' to help the economy tide over the crisis. It focusses on making India self reliant and special emphasis has been given on medium and small businesses, agriculture, labourers, urban and rural poor.Along with this, the Reserve Bank of India (RBI) has also announced a couple of measures including rate cuts, loan repayment moratorium, additional liquidity support, etc. to maintain financial stability.

Power is one of the most critical components of infrastructure crucial for the economic growth and welfare of nations. As the lockdown has severely reduced the industrial and commercial activities in the country, these segments would have seen a considerable decline in demand for electricity. Power distribution companies (discoms) buy power from generation companies and supply it to consumers. One of the key concerns in the Indian power sector has been the poor financial health of its discoms. The discoms have had high levels of debt and have been running losses.Due to the lockdown and its further impact in the near term, the financial situation of discoms is likely to be aggravated.
Part of the package announced by the Finance Minister Smt. Nirmala Sitharaman, Rs. 90,000 crores was allocated to power distribution companies (or discoms) in order to clear their dues with gencos (or electricity generation companies), who in turn can clear their outstanding dues with suppliers.Your Company can get the overdue outstanding from one of the Electric generation Company under this scheme.

In FY 2019-20, there is a downturn in the total revenue of the Company from Rs. 5204.59 Lakhs in FY 2018-19 to Rs. 2222.00 Lakhs in FY 2019-20.The Company has struggled to bag new orders due to the continuous adverse market conditions in the power sector especially thermal power.
However, the Company has abled to bag an order worth Rs.1350 Lakhs on 01 May, 2019 for Construction of Circulating Water System works for 2x800 MW APJL Project, Godda from HTG Engineering Private limited for Adani Power (Jharkhand) Limited.
Under the wholly owned subsidiary Company, Xlerate Driveline India Limited, a revenue of Rs.4331.89 lakhs has been registered against the previous year's revenue of Rs. 4678.46 lakhs in FY 2018-19. This is mainly due to enhancement in the market share in the subdued auto market in the aftermarket business.Further, maintaining the existing levels in the OES segment.

Your Company has been trying to diversify itself by entering into water distribution segment for which your Company is exploring many ways and means to bid for the projects under partnership and in collaboration with the Companies which are already into this segment. Due to prolong depressed market, your Company had been trying to raise funds by diluting its stake in Xlerate Driveline India Limited (XDIL) which has not been materialised.However, the Company's Board has approved the fresh proposal subject to the shareholders' approval for diluting the stake in XDIL for raising funds for EPC Business and discharging the financial liabilities.
Simultaneously, the Company is focused to effectively complete the current projects under execution within time.

Though the short-term economic outlook may appear gloomier in the wake of the pandemic, government stimulus package and gradual resumption of economic activities are expected to revive consumer sentiment. Sustained spending on infrastructure and thrust on domestic manufacturing will lead to a rise in business activity.Measures such as reduced tax rates for individuals and greater allocations to agriculture and allied sectors will invigorate consumption and boost the rural economy.
With our sustained track record of timely execution and engineering capabilities, we are focusing on the water distribution system as this sector holds ample potential in a country like India wherein the government’s main thrust is to provide better connectivity of water resources under their key projects for irrigation, drinking and interlinking the rivers.The said scope have led to increase the orders in pipeline and your Company can be benefited out of it.

I would like to extend my sincerest gratitude to our employees, customers, partners, business associates and our stakeholders for their undying faith and support. Each one has been a part of our exciting and enriching journey. We continue to seek value creation for our stakeholders and persevere in building a sustainable business.Here is hoping for a brighter and stronger future together. With best regards,

Surinder Paul Kanwar
Chairman and Managing Director



Raunaq EPC International Ltd.
20 km Mathura Road,
P.O. Box- 353, P.O. Amar Nagar
Phone: +91-129-4288888
Fax: +91-129-4288823