Page 30 - TCE Annual Report 2019-2020

21 Annual Report 2019-20
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Key Risks and How we Mitigate Them

Risk Category Key Risk Areas Mitigation Strategies Areas Impacted
Economic Risk • Demand for our services is mainly CAPEX • TCE has multiple Business Units (BU) • Ability to
based. Sectors in which our clients operate across sectors, making it immune to a generate new
may get impacted by economic downturns, downturn in any single sector. business,
reductions in government or private spending, generate revenue
political and economic uncertainty, etc. • Diversify business across sub-sectors, out of existing
geographies, opex vs CAPEX, etc. business as
• Uncertain global economic and political well as make
conditions on account of the pandemic may • Proper due diligence of clients, collections for
negatively impact the ability and willingness of projects to ensure at bid time that current and past
our clients to announce or fund projects, pay viability, funding tie up etc. are in dues
our invoices in time. place.

Business • There is a good deal of uncertainty in getting • Identify new sectors / areas / • Reduced
Acquisition & new business as forecasted. Acquisition adjacencies of growth revenues and
revenue flow depends on several factors external to TCE • Develop new key accounts & enter profits
like economic trends, risks like a pandemic, new areas through partnerships, etc. • Employee morale
government policy, market conditions, etc. affected
• Delays or reduction in new orders affects the • Build customer connect & deepen
targeted revenues. the relationship, especially for key
accounts.
• Revenue generation could also be negatively
impacted due to internal issues like lack of • Ensure rigorous project risk
matching skill sets to requirements, inadequate management.
planning, etc.

Locked • Many of our contracts have milestone-based • Follow-up to get the collection in line • Impact on
Working payment terms, due to which, we may incur with the contract terms working capital.
Capital and significant costs before we can raise bill and • Enhanced focus on contract & claims • Higher cost of
Cashflow subsequently receive payment.
management through review rigour financing the
• Cash flows from projects can fluctuate at various levels to ensure project project.
significantly over the execution period delivery with profitability
depending on the timing of the contract,
financing contingencies, delays, etc. • Due diligence and factoring in locked
capital or cash flow impact into our
• Due to the current pandemic, our clients could bid pricing.
be severely stressed in terms of funding ability
and liquidity which may negatively impact • Where possible, negotiating for
our cash flows from past, existing and future favourable payment terms and
projects granular milestones

Concentration • If one or few clients have a substantially large • Conscious efforts at dependence or • Inability
Risk share of revenue of a business unit, the loss of concentration on any single client or to achieve
or a significant reduction in business from such sector. acquisition and
client(s) will have a negative impact on the revenue targets
revenues. • Develop newer key or large accounts • Impact on profits
• Despite good relationships and performance • Strengthen business relationships
by TCE, such client(s) may sometimes be forced with clients at all levels
to reduce, delay or cancel their contracts due
to changed business scenario or changes in
policy.

Cost Overrun • Costs may increase in projects beyond • Ensuring the study of secondary data • Lower
budgeted estimates due to various reasons like: to identify issues/risks that emerge profitability
during project execution, quantify the
• Higher quantum of resources required • Disputes with
same and factor into the prices.
• Schedule delays • Follow project and contract client
• Scope creep management best practices to avoid
delays and cost overruns.
• Resources being unoccupied while being
deployed on the project
• Higher actual cost of outsourced work

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