USD 1.4 billion diversified global infrastructure EPC major continued its growth story unabated even amid lean phase on account of robust credentials and excellent project management
KEC International, the global infrastructure Engineering, Procurement & Construction (EPC) major, has presence across power transmission, power systems, cables, railways, telecommunications and water space. Involved in a flurry of infrastructural activities in over 61 countries (across Africa, Americas, Central Asia, Middle East, South Asia and South East Asia), the company is known for its mettle in executing projects in toughest of terrains owing to its experience and technical expertise in handling large projects.
The company is said to have the largest globally operating lattice transmission tower manufacturing capacity and is the only company in the world having four tower testing stations, capability to test towers up to 1,200 kV.
The company’s financials too are showing brisk growth signs and its PBT went up 8 times and margin at 7.7 percent- highest in last 14 Qtrs for Q2FY16. From June to October, it has won myriads of orders worth over Rs. 3100 Crores.
Mr. Vimal Kejriwal recently took over as the Managing Director and CEO of KEC International w.e.f April 01, 2015. He succeeded Mr. Ramesh Chandak who retired post an illustrious career with KEC. Wire & Cable India interviewed Mr. Kejriwal post his ascendance on the new designation to know his priorities and perspectives for further growth of the company.
Wire & Cable India: First, congratulations and best wishes for your new role! Tell us something about your long stay of 12 years at KEC International.
Vimal Kejriwal: Thank you very much for your good wishes. My association with KEC dates back to more than 13 years now and I am proud to be a part of such an outstanding organization. I joined KEC in 2002 as the Chief Financial Officer moving on to become the Executive Director for International Transmission and then was elevated to the position of President – Transmission and Distribution before stepping into my current position as the MD & CEO.
I must say the years gone by were really intriguing and satisfying. When I joined, KEC was in troubled waters, however, today, KEC is USD 1.4 billion global EPC major with footprints spanning over 61 countries. This transition was not an easy one, we have battled many difficult situations to reach to our present position and I am glad to have been an integral part of this transitional journey.
WCI: What would be your priorities now as MD & CEO of the company? What fresh perspective would you be adding to this high profile job to keep the company on right course?
VK: I was very much a part of the key decision making process at KEC since the time I joined in so you may not see a huge or sudden change, now that I have taken over as its MD & CEO.
With regards to priorities ahead, our efforts would be directed towards achieving greater levels of excellence, i.e. focused more towards strengthening our execution capabilities and expertise resulting in faster execution of projects in difficult environments and terrains.
Besides this, our focus would also be on establishing cost leadership in our sector and consolidating our position in the newer infra businesses. At the same time, continuous effort towards enhancing the profitability levels of our core businesses is also a key aspect on our radar.
WCI: What areas do you think KEC needs some serious work over to catch up with the rest of activities which are doing extremely well?
VK: Already a world leader in power transmission and progressing steadily in the power distribution space, we have to catch up on our railways and water EPC businesses. Also, our efforts are directed towards enhancing our market share in the EHV cables segment.
When we entered the railways and water EPC space we encountered numerous challenges including capability gaps at various stages in tendering and execution which led to cost and time over-runs on key projects.
Learning from our past experiences, we have now improved our capabilities, hired the right kind of people and have entered into tie-ups with the right set of partners. Further, we have attained closure of most of our legacy projects and are now bidding selectively with a more calibrated approach. Our focus is now more tilted towards large value orders. In water, we are now focusing only on waste water and sewage treatment projects. Presently, we have also secured a few good projects in the railway space. Just recently, we bagged a railway order of Rs. 288 crore which is the single largest order ever secured in this business.
Speaking of cables, it has evolved as a strong area of our business, enabling our emergence as a leading manufacturer of power and telecom cables in India; however, there is still much more to be done on this front. Here we are looking towards enhancing our presence in the EHV segment, increasing our exports market share, concentrating on providing more cabling solutions etc. Cables are highly price sensitive and manufacturing good quality that meets standards is a major challenge for which we are also focusing on lean manufacturing and tighter process controls. Last year, we manufactured 220 kV, 2000 mm2 cable which is the largest ever made in India. We are now commencing the manufacturing of 400 kV cables. Exports comprise of a large part of our cables revenue mix and currently we export to several regions including Africa, Asia, Europe, Australia and South America.
WCI: Prior to being appointed as CEO you acted as CFO to President and KEC is touted to have a 14 fold increase in revenues. How did that happen? Do you think your work as CFO is going to be critical in handling the present task?
VK: A mix of factors have contributed to our success like adoption of a focused growth strategy based on de risking the business through geographic expansion, diversification of our business portfolio as well as taking the M&A route whenever required. To add to this, our industry fundamentals are very strong, our engineering, design and execution capabilities are excellent and vendor relationships are very well maintained and nurtured. We also created a distinct culture revolving around the pillars of Delivery Focus, Cost and Profitability, Ownership & Accountability, Cross-functional team, and others which ensured that every aspect our business operations was deployed around these pillars.
In fact, I would like to mention here that on account of our robust credentials and excellent project management capabilities combined with adherence to financial discipline, we were one amongst the few companies in the EPC space to have maintained its growth levels during the lean phase currently experienced by the entire infrastructure industry.
At KEC, we continuously raise our benchmark and strive towards enhanced levels of excellence. During 2014-15, we underwent an organization wide transformation exercise aimed at further enhancing our project management and execution capabilities. We understand that it is necessary to re-invent and innovate in order to maintain as well as enhance our success levels.
Now to answer the second part of your question, I would say KEC’s growth has widened my horizons as well. My experiences and learning from my very many roles at KEC will definitely play a crucial role in my present decision makings. Besides, for EPC business model, commercial acumen is prime and critical which is why today we see many large EPC companies now being managed by commercially astute professionals and not just people with technical knowledge.
WCI: KEC’s power and T&D segments are of special interest to us. Please tell us how these two segments are faring for KEC, revenue-wise.
VK: Today, we are a USD 1.4 billion diversified global infrastructure EPC major and a world leader in power transmission EPC space. T&D is our core and integral segment which accounted for more than 85 percent of our total revenue of Rs. 8468 crore in FY15. This segment has achieved a CAGR growth of around 20 percent over the last 10 years. Further, around 50 percent+ of our business consistently comes from outside India and our footprints span across more than 61 countries. We are currently executing projects in over 30 countries and our current order book is in excess of Rs. 10,600 crore.
WCI: How is the power infrastructure business landscape in India? What are the challenges and prospects in days ahead? Please share some vital numbers which may inspire faith for businesses engaged in power, transmission & distribution, and cables?
VK: Indian power sector has come a long way and is advancing steadily towards higher levels. On the transmission front, India is effectively progressing and the sector has witnessed reasonable growth over the years. Today, India is migrating to higher transmission voltages of up to 1200kV, working on new technologies for bulk power transmission, has a fully synchronized National Grid, is developing High Capacity Power Transmission Corridors (HCPTCs) and inter-regional links for the grid etc.
However, blackouts and power shortages still occur in major parts of the country and power theft is also rampant as the power infrastructure in India is highly inadequate and imbalanced. Although numerous progressive developments appear to be taking place, progress is largely hampered on account of myriad challenges, the most critical ones being issues pertaining to inadequate coal linkages, Right of Way (RoW) issues, forest clearances and cash strapped SEBs.
With regards to prospects, the upcoming market opportunities are enormous from the Central and State transmission utilities.
Big ticket projects like the Rs. 43000 crore green energy corridor, Government’s announcement of floating Rs. 100,000 crore worth of transmission tenders, initiatives pertaining to strengthening of existing T&D infrastructure, investment of estimated Rs. 10000 crore for the strengthening of T&D system in Northeastern region, doubling of existing capacities and refurbishment demand create a positive outlook for the sector. Apart from these, SEBs annual capex is also expected to match that of PGCIL at around Rs. 20,000 crore. In addition, with developments happening on coal auction front, we expect the capacities of power plants to increase which will in turn necessitate an increase in the T&D capacities as well.
With regards cables, the demand is expected to increase on account of the government’s thrust on development of Railways, Ports, Smart cities, Renewables amongst others. The EHV cables segment, wherein we are in the forefront, is also expected to get a boost on account of the rise in transmission voltage levels. Our 220 kV cable has been approved by KEMA, Netherlands and we have already started manufacturing and supplying the same. Further, the demand for optic fiber cables is also expected to increase on account of the Government’s plan to expand the broadband network within the Country. Our Cables business is well positioned to cater to the increasing demand in domestic as well as international markets.
