Ahluwalia Contra Chairman Speech

Dear Stakeholders



I write you at a very important juncture in our journey. Having

successfully bounced back into the profitability zone after two tough

years of battling a depressed economic environment, we are now at the

threshold of a new wave of growth. Our goals are clearly defined – to

get smarter and bigger as we take on the huge opportunity challenge

resulting from the transformation that is visible on the Indian

landscape.



A nation in the grip of urbanisation



The inflection point in our journey coincides with the urbanisation

wave that is sweeping the nation. Just a few weeks back, the new

Government unveiled a plethora of initiatives in the Union Budget to

boost infrastructure development in the urban areas of the country. On

the anvil are a series of measures to boost investment, ease policy

norms, relax FDI regulations, build new-age affordable housing and

high-profile educational institutions, and generally create an

environment favourable for the enhancement of urban life.



The mood in the construction industry, which is directly linked to

growth in urban infrastructure, is positive. After a period of

de-growth resulting from a policy paralysis and slow rate of project

approval, things are finally beginning to look up on the construction

front. And, as a leading, integrated construction player, we stand at

the helm of this change, ready to take on the multitude of

opportunities thrown up by the transforming industry and business

environment.



An endorsement of our intrinsic strengths



After 40 years of consistent growth, your Company suddenly found itself

plunged into gloom two years back. The last two years proved to be

detrimental to our operational and financial performance as we battled

a spate of challenges, including volatility in the global environment,

slowdown in domestic reforms and hurdles to sectoral growth arising

from regulatory decisions and poor sentiment. The consequential

inflation, low GDP growth and high interest rate regime that prevailed

in the market threw us into despair, causing profitability to dip and

decline in sales.



What helped us come out of this challenging situation was a series of

strategic interventions that ensured that we were back on the track for

growth. The Board approved infusion of around Rs. 50 Crores through

Preferential Allotment and we also went in for completion of loss

contracts/ withdrawal from contracts with estimated loss. Sale of

non-core assets to increase the Company''s cash flow, streamlining of

the contracting policy, installation of a high- level committee to

regularly review and monitor projects, coupled with manpower planning

and cost control measures, enabled us to pull back out of the red.



Unlike many of our peers, we chose not to go in for CDR – a decision

that stood us in good stead as it led to a churning which saw reduced

competition and improvement in our margins.



In a strategic shift, we have also reduced exposure to the more

risk-prone private sector contracts, which shall help us deliver on our

promise to grow faster and better through a smarter approach and

business model.



The numbers get bigger



A Rs. 3,20,829 lacs order book (as of 15th July 2014) stands testimony to

the success of our growth strategy. With 48% of this coming from the

public sector, in line with our restructured approach, and greater

focus on high margin projects, we expect higher EBIDTA and PAT margins

to flow in over the next two years. The margins stood at 6.18% and

2.26% respectively for FY 2013-14, with a total growth of 31% over "the

previous fiscal.



Moving ahead, smartly



The tough times are definitely behind us, and what lies ahead is a

period of getting smarter and bigger, as we move towards garnering a

bigger chunk of the growth potential unleashed by the ongoing

urbanisation drive. The opportunities are humungous and, backed by the

vision of our promoters, the support of our stakeholders and partners

and the commitment of our people, we are confident of making the most

of the same. ¦ The US$ 1 trillion investment in infrastructure

targeted in 12th FYP, 50% of it from the private sector, opens up wide

vistas for our growth, going forward.



With strong growth drivers in place in the economy, and the push that

the infrastructure sector has got in the budget proposals, the

construction industry is on the way to expand and grow in a big way in

the coming years.



For ACIL, this offers opportunities of the kind not envisaged before.

The two tough years that we faced inspired us to learn the smart way of

approaching growth and addressing opportunities. It has taught us the

ideal



approach to reinforce our presence across diverse sectors while

foraying into new areas of growth.



With our eyes firmly fixed on becoming the industry leader, and focus

clearly on high margin Government projects, we are set to create new

benchmarks in excellence and quality by building new-age infrastructure

that will transform the face of India.



Affordable housing shall be high on our growth agenda and we plan to

introduce high-tech precast construction Russian Technologies for

affordable and mass housing, for which we have already established a

strong technical collaboration.



The government plans to set up more IITs and IIMs is another

opportunity area that we shall explore aggressively, as we chart our

future growth.



On a concluding note



While this may be the conclusion of my message, let me assure you that

what we are looking at is actually the beginning of an exciting new

chapter in our growth odyssey. With the continuing support of all our

stakeholders, to whom we owe much of the success of our strategy, and

guided by our visionary promoters, we have embarked on the next phase

of progress and expansion , which shall lay the foundation for your

Company to get bigger, and of course smarter.



Yours Sincerely

Bikramjit Ahluwalia

Chairman & Managing Director