Annual Report 2010-2011 - Gammon India

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3. TADA SEZ Project
A NNUAL R EPORT I 2010/11
The Company has identified approximately 1,150 acres of land at TADA in the Chittoor District of
Andhra Pradesh. Land acquisition is currently in progress.
III. FINANCIAL AND OPERATIONAL PERFORMANCE:
The Turnover of the Company on a Standalone basis stood at ` 5637 crore for the year ended 31st March, 2011
(` 4534 crore previous year). Operating Profit (PBDIT) amounted to ` 250 crore (` 381 crore previous year).
After providing ` 92 crore (` 71 crore for the previous year) towards depreciation and ` 58 crore (` 86 crore previous
year) towards tax for current and differed taxation, the net profit amounted to ` 118 crore (` 126 crore previous year).
The annualized percentage increase in turnover over previous year amounted to 24.32%.
On a consolidated basis the turnover of the Gammon group stood at ` 8899.70 crores for the year ended 31st March,
2011. The annualised percentage increase in turnover over previous year amounted to 25.11%.
The order book position of your Company as on 31st March, 2011 stood at ` 15,600 crore.
IV. RISK MANAGEMENT:
Risk management is one of the key focus areas for your Company in its endeavour to protect its earnings and reduce/
eliminate losses arising out of the various risks it faces. Over the years, your Company has steadily incorporated
best practices in risk management. Each and every function has been covered in the ambit of risk management and
your company has evolved processes to mitigate all known risks. Your Company has undertaken an elaborate process
of documenting and standardizing its process to reduce risks. It has also undertaken steps to review its processes
followed across key functions like bidding, project management, procurement etc. to identify risk prone processes and
to build up rigorous processes.
Broadly, risks that your Company faces are grouped under the following heads:
(i) Internal Risks: These are risks that arise out of processes which are controlled and managed internally. These
could be in the nature of errors, delays, documentation etc. which are all directly linked to our operations.
Bidding process, Project management, Procurement, Materials & Finance management are the most important
risks under this category. Selection of partners, vendors, projects etc. also form part of this risk. Your Company
has prepared standard operating processes and created clear delegation of powers to manage all its operations.
Internal audit is closely involved in inspection and audit to ensure adherence. These are also covered in the
periodic reviews that are conducted in each function on weekly, fortnightly or monthly basis.
(ii) External Risks: Risks that arise out of changes in the external environment are classified under this head. These are
mostly outside of our control for e.g. changes in interest rates, changes in exchange rates, changes in commodity
prices etc. Our endeavour has been in taking proactive steps to mitigate these in the form of having “escalation”
clause, creating sufficient buffers in the pricing, making suitable provisions in books, insurance cover, hedging
of forex transactions etc. We are also regularly tracking key matrices in order to create stronger forecasting
abilities and prepare ourselves better. To the extent possible, your company has also incorporated strong internal
processes like disaster management process to control such eventualities.
(iii) Strategy Risk: Risks that arise out of strategic decisions may be grouped under this head. Your company has
recognised this and has put in place a strategy team to analyse, advice and forecast consequences of strategic
decisions.
V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has deployed an adequate internal control system, commensurate to its size & business. It provides
reasonable assurance of recording the transactions of its operations in all material aspects & of providing protection
against misuse or loss of company’s assets.
The Company has recently implemented ERP system so documentation of standard operating procedure is under
progress. Internal audit will review the checks and controls in compliance with documented procedure.
The internal audit team consists of both in-house techno-commercial professionals and independent firms of Chartered
Accountants, who conduct the internal audits at regular interval & reports to Audit Committee.
The Audit Committee consists of Independent Directors and is headed by experienced professionals. The Committee
meets periodically to review the auditors’ reports & their observations and makes recommendations for adequacy,
effectiveness of internal controls & required remedial action, if any, to the Board of Directors for its implementation.