Message from the Chairman

Dear Shareholders,

Greetings to all of you. It is my pleasure to present the Annual Report for FY 2016-17. The year 2016-17 has been both a good and difficult one. With repo rates declining by 25 bps to 6.25% and government's investment in infrastructure, the scenario was favourable for EPC players. However, on the other hand, the industry was passing through a turbulent phase. The market was slow and the government's lack of focus on the thermal power sector, our core business area, did affect the performance of the Company to a large extent. No new projects came up in thermal power from the end of FY 2015-16 till a better part of FY 2016-17. This reflected in the Company's order book as well.

However, Raunaq EPC International Limited (REIL) has proven time and again, its technological and EPC competence in the market. The Company's focus on timely execution and quality consciousness has not only brought new clients but also received positive feedback in the form of repeat orders from existing ones. As a result, even in turbulent times, things started looking better. The Company received order inflows from old clients like NTPC Limited and Hindustan Zinc Limited as well as from new reputed clients like Alstom BF Power Limited and Toshiba JSW Power Systems later in the year.

The automotive business too suffered a major setback in the third quarter of the year due to demonetization. Cash flows were delayed, especially because it caters to the after-market sector, which primarily deals in cash. The scenario is expected to return to normalcy in the current financial year. However, the business also achieved a landmark by making a roadway to OEM Sector. This proved the Company's strong manufacturing excellence and quality. The OEM business will guarantee regular business volume enabling it to optimally utilize its capacities (Company's plant is running at 1/3rd capacities now).

In the EPC business, the Company bagged new orders worth Rs. 101.61 crores during the year taking its total order book position as on 31 March, 2017 to Rs. 105.22 crores providing revenue visibility for the next 1-2 years. Key projects received during the year include:

The Company is actively exploring tie-up opportunities with reputed international players for getting access to newer technologies that shall enable us to create a niche market in India.

While thermal power sector remains our forte, we are exploring opportunities in water distribution sector. Water supply is amongst the top priorities of state governments across the country owing to the fact that cities and most villages in India reel from major water scarcity in summer months. Safe drinking water is a precious commodity in most parts of rural India where people have to travel several miles before they reach a source of potable water. Our key focus will be on bringing water from source to the nearest water treatment plants. This diversification will help us to keep afloat in future, even if further investments from the government in thermal power stations decline.

As far as diversification in the automotive segment is concerned, we have made a breakthrough by finalizing an OEM deal with one of the largest reputed commercial vehicle player in the country. Validation and trial of the product has already started and we plan to commence supply in the current financial year. Beside commercial vehicles, we also plan to foray into manufacture of passenger vehicle clutches for the after-market sector.

In the future, the Company hopes to gain from the Government's boost to the infrastructure sector, including power sector. The initiative will definitely open more opportunities for the Company in the water distribution and fuel oil handling and storage systems. Alongside diversification, both segments require adequate technology upgradation that will help in value-addition. In automotive segment, we are looking at equipment updation and improving the quality of manpower. These initiatives by the Company will ensure improvement of margins and enhancement in shareholders' worth.

Finally, I would like to thank all our shareholders for believing in us and supporting us through the tough times. I would like to thank our customers and suppliers for their unstinted support throughout our journey. Last but not the least, our employees whose tireless efforts have borne fruits of success. Our motto, 'On time execution' and 'Best quality norms' still remain the key strengths that have helped us sail through tough times. We proudly say that the Company is ready for growth. We are thinking out of the box to see where the path of growth is leading. And we welcome all of you to ride this growth.



Surinder P. Kanwar
Chairman & Managing Director

CORPORATE

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Raunaq EPC International Ltd. (Formerly Known as Raunaq International Ltd.)
20 km Mathura Road,
P.O. Box- 353, P.O. Amar Nagar
Faridabad-121003
Phone: +91-129-4288888
Fax: +91-129-4288823
Email: info@raunaqintl.com