Annual Report Highlights FY 12-13 : Engineers India Limited

For the financial year the company secured new business of Rs 1438 Cr which is around 89% higher than last year and most of it (Rs 1296 Cr) has been in consultancy segment.   Company seems to concentrate more on the consultancy segment going forward.  This is high margin segment unlike the turnkey which is low margin. Company’s mainstay continues to be Hydro Carbon  followed by Chemicals and Fertilizers.  Overseas consultancy contribution is around 12% of the total consultancy contribution.  Company has come out with a new project execution solution called Open Book Estimate which is beneficial to both customers and contractors.  They have secured some orders based on this mode.  Only time will tell if this is beneficial as the impact could not be understood.  As per company most of the competitors are introducing many business models and any core competencies are imitable and competitive advantage is short lived.  There is really no moat in these businesses.  Company was granted one patent and has applied for another one.  Company currently has 13 live patents and 17 are in pending approval.

When one looks at the last 10 year performance of the business, it is difficult to predict anything.  The margins, ROCE, RONW and debtor turns everything has fluctuated.  Current year metrics is definitely better than what was in first year and by a big margin but there has been a lot of fluctuation.

Company has made reentry into Fertilizer segment this year. There has been some successful completion of some assignments and the company is  considering an investment in JV for revival of one project.

In the infrastructure and waste and water management the company may get into other modes of project management like BOO or BOOT.  Company is diversifying into Fertilizer, Nuclear, Solar and waste and water management which is showing encouraging signs as per company.  They are positive that this competency can be leveraged to  expand business in overseas as well.

While the profit has reduced a bit compared to last year the cash flow has increased by 200 Cr due to huge reduction in the loans and advances which may be due to change in revenue mix which has increasing contribution from consultancy.  Company increased the dividend payment compared to last year.  Consultancy projects have increased while the turnkey projects have reduced.  It would be great in the coming years if the consultancy projects continue to increase at a healthy rate as it did last year which was done during a tough year.