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At Utkarsh India Limited, we are effectively riding the Indian growth Story.
Chairman Message Utkarsh India Limited

At Utkarsh India Limited, we are effectively riding the Indian growth Story.

The national transition is being driven by a larger infrastructure outlay than in the past. In the Union Budget FY2019-20, ₹4.56 lakh crore (US$ 63.20 billion) was allocated towards infrastructure. India's infrastructure priority is being driven across a broad range - roads, ports, railways, housing, aviation, agriculture, telecom, power and urban renewal. In turn, these sectors are being addressed through structured long-term policies that do not just indicate attractive realities today but also investment sustainability across the foreseeable future. Construction and project award activity are at their peak.

Five years ago, infrastructure spend of ₹10 trillion was indicated over five years starting 2014 while at this point, India addresses an expenditure almost twice that size at ₹21 trillion. Besides, most infrastructure companies have significantly repaired their balance sheets by divesting non-core assets and raising equity capital. As a result, the average leverage of the sector stands at 0.3x as against 1.1x in 2014 while the interest coverage ratio is at a healthy 3.9x as against 2.4x in 2014 (Source: Phillips Capital). At Utkarsh, we are addressing this increased opportunity by not directly selecting to build infrastructure as EPC players do but by focusing on the manufacture of infrastructure components and products where our capital outlays and risks are lower. The spaces that we are present in are mature and marked by high knowledge-led entry barriers.

Over the decades, we have widened this moat and strengthened our competitiveness by extending beyond the commodity-end of the spaces of our presence, building a deep engineering competence that can be applied across a range of products, building sizable capacities that enhance our procurement and manufacturing economies and combining these various businesses effectively into a corporate structure that enhances customer value and business de-risking. I am pleased to report that this business strategy has resulted in each of our businesses reporting healthy profits, higher order books and a disproportionately larger share of the growth of India's infrastructure sector.

Looking Ahead

India is projected to emerge as the third largest economy by 2030, its GDP approximately trebling to US$ 7 trillion by 2030 (Source: Oliver Wyman). At Utkarsh, we are addressing this optimism with on-the-ground investments. The Company invested a total of ₹75.54 crore in capacity building in the three years ending FY2018-19. Our investments will translate into commercialisation through the course of FY2019-20, kick-starting the next phase of our growth journey. Since all these investments were made in our existing facilities, they were completed at a capital cost per tonne considerably lower than the prevailing benchmarks, strengthening our overall competitiveness.

We believe that in doing so, we have laid the foundation for increased revenues and higher margins, potentially strengthening our organisational value. It took Utkarsh India Limited 10 years to achieve ₹1,151 crore in revenues; we are at an inflection point that is expected to make it possible for us to almost replicate this growth in only the next three years. We believe we are in line to grow aggressively to ₹2,000 crore in turnover in three years with a 10% EBITDA margin, enhancing value in the hands of all those associated with our Company.

Sunil Bansal

Chairman and Managing Director

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