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Chairman and Managing Directors message
It's a special occasion for all of us at IRB, and it has been made possible by each one of you. I congratulate our stakeholders on the completion of five years since our Initial Public Offering. We commenced our journey with a vision to emerge as one of the largest infrastructure companies in the roads and highways sector of India. Our hard work, perseverance and the generous support and guidance of all stakeholders have stood us in good stead. Today, we enjoy pan–India presence and our achievement is the result of integration across the BOT value chain, an all–pervasive focus on every relevant area of the business and finally, expansion to embrace new opportunities.
Numbers can paint a better picture than words. Since FY 2007–08, our net worth has doubled in five years. Our total income has grown nearly five times; profit after tax nearly four and a half times; gross assets nearly four times. Our portfolio has increased from 11 BOT Projects and 2,112 Lane kms in FY 2007–08 to 18 BOT Projects and 7479 Lane kms in FY 2012–13, respectively.
Infrastructure is the backbone of any economy. Therefore, rapid investment in infrastructure creation and maintenance is vital for the economy to grow at 8%. The past year was tepid for roads and highways infrastructure, as few projects were awarded by NHAI, due to weak bidding, coupled with stringent lending norms adopted by banks and financial institutions. Now, we are seeing early signs of positivity in the operating environment. India's Wholesale Price Index (WPI) inflation is cooling off, interest rates are declining gradually and the government is implementing fiscal consolidation to bring dynamism in the economy. Delayed projects are also expected to receive prompt clearances with environment and forest clearances now being delinked.
An integrated approach to BOT projects has enabled us to strengthen revenues, invest in our asset base and create greater value for our shareholders. With our skill sets and experience, staying focused on BOT projects has benefited us with skill and experience, as compared to our peers, and helped us to minimise cost and time overruns. As a result, though infrastructure development is capital intensive our net Debt to Equity ratio is close to 2.24:1. Expanding our pan–India presence has also been vital to de–risking our portfolio as well as being less dependent on a few regions for our income. We have also been open to viable acquisitions, like MVR Infrastructure, value–accretive proposition which also helped us to widen our presence in South India.
In the current year, we have completed substantial work on four projects under implementation during FY 2012–13. Besides, we also started construction work on Ahmedabad–Vadodara project from January 1, 2013. This has led to 21% increase in construction revenue for FY 2012–13, as compared to FY 2011–12. The operating EBITDA for the Construction segment remains strong at around 26% during the year. Our toll revenue has increased by around 10%, as compared to FY 201112, on the basis of moderate traffic growth and higher WPI vis–a–vis last year. The Company earned a profit of Rs. 554 Crores on a total income of Rs. 3,817 Crores, an increase of 12% and 17% respectively in comparison to FY 2011–12. I am pleased to state that we have paid 40% dividend in FY 2012–13 vis–a–vis 18% in FY 2011–12.
Our order book now stands at approximately Rs. 8,400 Crores, of which projects worth Rs. 6,400 Crores will be executed in the next three years. This gives us good visibility for 2 to 3 years. We expect toll collections to grow significantly during FY 2013–14, on the back of Ahmedabad–Vadodara expressway, Talegaon–Amravati, Jaipur–Deoli and Amritsar–Pathankot projects.
At IRB, we believe businesses have an important role to play in social uplift. We touch the society by providing world class roads and highways, but there is another way, in which we can modestly make a difference: education. Education can encourage large sections of the population to create and embrace opportunities for a better quality of life. We have education–based initiatives, like IRB Primary Schools, targeting Rajasthan's backward regions and are replicating the model to other deficient regions close to our project locations.
We are committed to achieve balanced and long–term growth, ensuring greater stakeholder value. I take this opportunity to thank all our stakeholders for reposing confidence in our vision. With your support and encouragement, we will continue being a leading pan–India player, delivering world–class infrastructure for nation building.
Virendra D. Mhaiskar
Chairman & Managing Director