Corporate Presentation - Gammon India

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GAMMON INDIA LIMITED
Corporate Presentation November 2009

Disclaimer
No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all
events not current after the date of this presentation. Certain statements made in this presentation may not be based on historical
information or facts and may be "forward looking statements" based on the currently held beliefs and assumptions of the
management of Gammon India Limited (“Company” or “Gammon”), which are expressed in good faith and in their opinion
reasonable, including those relating to Gammon’s general business plans and strategy, its future financial condition and growth
prospects and future developments in its industry and its competitive and regulatory environment.
Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,
financial condition, performance or achievements of Gammon or industry results to differ materially from the results, financial
condition, performance or achievements expressed or implied by such forward-looking statements, including future changes or
developments in Gammon’s business, its competitive environment and political, economic, legal and social conditions. Further, past
performance is not necessarily indicative of future results. Given these risks, uncertainties and other factors, viewers of this
presentation are cautioned not to place undue reliance on these forward-looking statements. Gammon disclaims any obligation to
update these forward-looking statements to reflect future events or developments.
This presentation is for general information purposes only, without regard to any specific objectives, financial situations or
informational needs of any particular person. This presentation does not constitute an offer or invitation to purchase or subscribe for
any securities of Gammon by any person in any jurisdiction, including India and the United States. Gammon may alter, modify or
otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities in any jurisdiction, including the
United States. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or
commitment to purchase or subscribe for any securities. None of our securities may be offered or sold in the United States without
registration under the U.S. Securities Act of 1933, as amended, except pursuant to an exemption from registration therefrom. This
presentation is confidential and may not be copied or disseminated, in whole or in part, and in any manner.
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Table of Contents
1
2
3
4
5
6
7
Company Overview
Construction Business
Infra Development Business
Energy – One Stop Shop
Financials
Key Highlights
Industry Overview
Page #
4
9
12
20
23
26
28
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1
Company Overview

Company Snapshot
One of the oldest construction companies in India
Presence across Transport Engineering, Energy, Hydraulic &
Irrigation, Industrial Structures & Buildings, Power T&D, &
Environment & Pipelines
Entry into new segments:
1922
Incorporation
Power equipments such as Boiler, Turbine, Generators
(BTG) & Balance of plant (BOP) equipments and
Oil & Gas – Exploration
Market capitalization: Rs.26,746 Mn as of Nov 20, 2009
IPO
1962
1991
Current
Promoters
took over
Key Milestones Shareholding Pattern
Turnover
Crosses
Rs. 100 Cr
1993
2004
Turnover
crosses Rs.
1,000 Cr
ATSL merger
ISO Certification
Turnover crosses USD 1 billion
Overseas acquisitions
2006
2 nd GDR
Issue
2009
36,994
52,790
Promoters
26.2%
Key Financials (FY 09)
Public
18.8%
3,779
MF
8.0%
FI
2.8%
5,367
(as on Sep 30,2009 )
FIIs
21.2%
(Based on shareholding data as disclosed to Stock Exchanges)
1,387
Total Income EBIDTA PAT
Non-Institutions
23.0%
Rs. Million
654
Standalone Consolidated
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Landmark Structures
1. Clove leaf flyover of 5 kilometers at Hebbal, Bangalore in 2003, longest in India at that time
2. Urban viaduct of 2 kilometers at J.J. Hospital, Mumbai in 2002, longest in India at that time
3. Longest span Cantilever bridge of 140 meters across the river Jadukatta in Meghalaya in 2001
4. Tallest Cooling tower of 141 meter tall at Panipat in 2000, tallest in India at that time
5. Railway tunnel of 7 kms for Konkan Railway at Ratnagiri in 1995, longest in Asia at that time
6. First cable-stayed bridge in India at Akkar, Sikkim in 1988
7. First 500 MW thermal power station at Trombay in 1983
8. River bridge of 6 kilometers across the Ganges at Patna in 1982, longest in India at that time
9. First reinforced piling job in India for construction of the foundation of Gateway of India,
Mumbai in 1922
4 5 6
7
8
1
2
3
9
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Business Strategy
Cost effective and timely completion
Update and implement technologies and procedures in line with international standards
Consistently deliver quality product
Training staff for continual improvement
One stop Energy shop
Expand presence across the entire
energy value chain
Consulting, Design & EPC
Manufacturing & Supply of power
equipments
Transmission & Distribution
Operation & maintenance
Cover following forms of energy
generation
Nuclear
Hydro
Thermal Non-conventional
Enhance EPC Capabilities
Strategy
Recent Acquisitions
Develop the strengths in India to cater to Indian market
Turnaround our loss making subsidiaries
Setup manufacturing facilities in India to compete on costs
Capture the Infra Growth Story
Capture market share in Transportation
and power infrastructure opportunity
Leverage partnerships with global
players to increase market share
internationally
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Operating Divisions
Transport Engineering
Roads
Bridges, Metro &
Flyovers
Ports
Airports
Environment &
Pipelines
Water Treatment
Water supply projects
Cross Country Pipelines
Hydraulic & Irrigation
Dams
Lift Irrigation
Intake Well structures
Construction Infra Development
Power T & D
Transmission and
distribution lines and
sub-stations
Project electrification
Rural Electrification
System improvement
projects
Hydro-Power Structures
Civil & Hydromechanical
works for
Power house
Head race tunnel
Pressure/ Surge Shaft
Industrial Structures &
Buildings
Multi storied buildings
Residential,
Commercial &
Hospitality
Industrial structures
Energy
Nuclear Power
Thermal Power
Hydro Power
Non-conventional
Power such as Biogas
generation
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Roads
Power
Ports
Energy
Manufacturing
EPC
T&D
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2
Construction Business

140
120
100
80
60
40
20
0
Size & Scale
Among the top 5 construction companies in India in terms
of revenues
Demonstrated ability to bid for and win large projects
Parbati Hydroelectric project: Rs. 7,377 Mn
Bridge across Godavari: Rs. 7,000 Mn
Secunderabad Water conveyer system: Rs. 4,359 Mn
Design, Engg. & Const. of offshore container terminal
in Mumbai: Rs. 4,040 Mn
56 65
Execution Ramp Up
3.8x 3.8x
3.5x
90
130
FY06 FY07 FY08 FY09
3.6x
Order Backlog (Rs. Bn) Book-to-bill
3.9
3.8
3.7
3.6
3.5
3.4
3.3
3.2
3.1
3
Executing Projects Across India (153 Projects)
SEWA HEP Stage - II
Indira Gandhi STPP
Chambal Bridge,
Kota
Sassan
RCC Chimney
Cooling Tower
Vadape
Gonde Road
Bridge Project
Parbati Hydro Power Project
Delhi Metro Rail - BC
Gorakhpur
Road project
Rail Road Bridge
Bridge Project
Lift Irrigation Project
Godavari River Bridge
Kalpakkam Reactor Bldng.
Teesta HRT
Water Infra
project
Kolkata Viaducts
Major Projects (As on September 30, 2009)
Besides India, primarily Power T&D projects in countries such as
Oman, Ethiopia, Nigeria, Algeria, Kenya & Afghanistan
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Diversified Order Book
11%
14%
Total Standalone Order Book: Rs. 13,179 Crores
8%
3%
15%
3%
As of 30 th Sept ember 2009
46%
Stability & flexibility in the business model
Transportation Engineering
Pow er Transmission and
Distribution
Energy
Environment and Pipelines
Hydro Pow er Structures
Hydraulic and Irrigation
Industrial structures & Buildings
Geographical Spread*
* Distribution excluding international Order book
Approximately 35 % of contracts are fixed price contracts and balance have price variation clauses
Strong technical, engineering and design capabilities to undertake the diverse projects
Advanced Software for design and a strength of 74 qualified persons in design team
We introduced several pioneering technologies in India like cantilever construction technology ; nuclear containment
structure in PSC, Reinforced concrete Piles Segmental construction technique
North
33%
East
20%
South
28%
West
19%
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3
Energy – One Stop Shop

Italian Acquisitions
Sofinter
Itea
Acquisitions
Ansaldo Caldaie
Europower
Franco Tossi Meccanica
S.A.E. Power Lines
*As per Italian GAAP / IFRS
# Combined turnover of major group companies
Business Focus
Sofinter has following major operating
companies
Design & Manufacturing of Steam generators
Active in several industrial fields viz,
energy, waste-to-energy & oil & gas related
to engineering, supply & construction of
Turnkey power plants & operation &
maintenance
From Waste to Energy production
Manufacturing of Steam & Hydro Turbines
for power utilities including nuclear
facilities
EPC focused on Power transmission
Acquisition Cost
Euro 50 Million
Euro 40 Million
Euro 5 Million
Value of
Production*
6M CY 09
Euro 206.7 Mn #
Euro 47.3 Mn
Euro 33.9 Mn
Project execution across the world including Africa, Europe, Middle East, South East Asia & Latin America
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Italian Acquisitions (Cont..)
Rationale
GIL has presence in EPC (Civil) power plants
Single point responsibility of the Civil Contractor
Limited number of players & high entry barriers in Power
Equipment Manufacturing segment
Growth potential of the power industry
Creating a power vertical of Gammon and position it as a
complete solution provider
Strategy
Follow the acquisition route instead of green-field
to target technology driven companies
to ensure lower cost/Mw of installed capacity
having reliable captive replacement & service market
Improve the competitiveness of target companies in
existing markets
Extend operations in India for the Indian market
Make Target companies the technology providers
We believe that due to these acquisitions & partnerships we are eligible to bid for supplying Super critical boilers & Super
critical turbine contracts
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Gammon - “One Stop Energy Shop”
Design & Engineering
Waste to Energy
(Biogas Plant)
Near Zero Emission Plants
Nuclear
Boiler Turbine Generators
(BTG)
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Hydro
Non-conventional
Operations & Maintenance
Thermal
Balance of Plant (BOP)
Equipment
Transmission &
Distribution
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Sofinter Group
Established in 1979
Manufacturers of Power and Industrial Boilers
Brands - Ansaldo Power Boilers and Macchi
Oil & Gas / Petrochemicals Boilers
80,000 MW of Ansaldo boilers installed worldwide
Over 1,000 units installed of both brands
EPC on turn-key basis for power, petrochemical and chemical industry –
Europower Brand
Waste-to-energy plants
Operation and Maintenance for power and industrial plants
Water treatment operations under Saline Water Specialists (SWS) brand - Itea
Macchi Assembly Yard,
Venice
Map of Italy
Major Operating Group Companies
Ansaldo Workshops,
Milano
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Franco Tossi Meccanica
Established in 1881
Manufacturer of steam and hydro turbines
Own proprietary technology for Industrial steam,
Utility and Hydraulic turbines
Over 75,000 MW of installed capacity, aggregating
over 2,000 units installed in over 40 countries
Technology and references for surface condensers
Capability to design and supply Electro-mechanical BOP and HP piping systems
Building capabilities in growing waste-to-energy and biomass segment
Products
Facilities
Heavy Machine Tool Bay
Steam Turbines Heat Exchange Apparatus Hydraulic Turbines Assembly Bay
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SAE Power Lines
Primarily engaged in the design fabrication and erection of transmission
towers and lines
Operations in Africa, South East Europe, Middle East, Southeast Asia and
Latin America
Caters to both types of Customers:
Utilities companies: mainly consisting of state owned companies,
organized by subsystem departments with their own standard technical
and commercial specifications
IPP’s and developers: mainly consisting of private companies,
generally set up as special purpose companies for the project working in
transnational markets
120 kms 400 kV dc Transmission Line, Aranita
Island Crossing for Manuel Moreno Torres
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Italian Acquisitions
Consolidated PAT
EBIDTA
PAT
EBIDTA
PAT
Sofinter
Consolidated Total Revenues
Consolidated EBIDTA
Franco Tossi Meccanica
Total Production Value
SAE Power Lines
Total Production Value
Note: Financials are as per Italian GAAP / IFRS
CY 07
527.75
(30.12)
(38.29)
CY 07
102.34
(10.51)
(17.68)
CY 07
24.16
(2.38)
(2.5)
# Summation of the 4 major group companies Sofinter, Ansaldo, Europower and ITEA
CY 08
499.24
(16.72)
(41.69)
CY 08
102.40
(8.50)
(17.70)
CY 08
29.80
(2.73)
(2.77)
Efficient management of the newly acquired businesses
Euro Million
H1 CY 09
206.74 #
6.16 #
(3.37) #
H1 CY 09
47.34
2.10
(2.80)
H1 CY 09
33.90
1.30
0.10
Outstanding Order Book of Euro 504
million as of Sep 30, 2009
Outstanding Order Book of Euro 250
million as of Sep 30, 2009
Outstanding Order Book of Euro 45
million as of Date
Total International Order book of Euro
799 million as of Sep 30, 2009
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4
Infra Development Business

GIPL - An Overview
Established
Activity
Portfolio
Financial
Regulatory
Framework
Gammon Infrastructure Projects Ltd. (“GIPL”) was incorporated in 2001 as Gammon group’s
vehicle for undertaking infrastructure projects on public-private partnership (“PPP”) basis
Undertake and develop infrastructure projects in sectors such as roads, bridges, ports,
hydroelectric power, biomass power
Provide services in other areas of project development such as operation and maintenance
services and project advisory services
Provide end-to-end supply chain solutions for the transportation of air cargo through
warehousing and distribution facilities
Total project portfolio – 19 projects
4 operational projects
10 projects in the development phase
5 projects in the pre-development phase
Consolidated income of Rs. 2,134 Mn for the year ended March 31, 2009
Consolidated net profit of Rs. 350 Mn for the year ended March 31, 2009
Participation in projects based on BOT, BOOT, BOO and other PPP models
Long term contractual relationships with government agencies and private players for
development and operation of infrastructure facilities
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GIPL – Assets at a Glance #
93.5%
93.5%
97.65%
74.9%*
100.0%
94.9%
100.0%
Rajahmundry Expressway Limited
(REL) – 53 kms
Andhra Expressway Limited
(AEL) – 47 kms
Cochin Bridge Infrastructure Company
Limited (CBICL) – 700 mts
Mumbai Nasik Expressway Limited
(MNEL) – 99.5 kms
Kosi Bridge Infrastructure Company
Limited (KBICL) – 10 kms
Gorakhpur Infrastructure Company
Limited (GICL) – 32 kms
Rajamundry Godavari Bridge Limited
Gammon Infrastructure Projects Limited
ROAD PORTS POWER
73.76%
50.0%
31%
Vizag Seaport Private Limited (VSPL)
Indira Container Terminal Private
Limited (ICTPL)
Blue Water Iron Ore Terminal Private
Limited ( BWIOTL)
Operating Companies
Punjab Biomass Power Limited (PBPL)
–12*** MW
Pravara Renewable Ernergy Limited
(PREL) – 30 MW
Sikkim Hydro Power Ventures Limited
(SHPVL) – 66 MW
Youngthangkhab Power Ventures
Limited (YPVL) – 261MW
Under Implementation
# Pre-development stage such as Haryana biomass, Tidong hydropower, Adityapur and TADA SEZ not included
* Currently 79.99%
*** Rights for 7 projects, 10-15 MW each
50.0%
RR
100.0%
100.0%
100.0%
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5
Financials

18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Standalone Financials
14,740
12.8%
9,258
18,710
Revenues (Rs. Mn) Margins
CAGR 36%
4.9%
11,503
23,490
8.5%
12,290
36,994
18,218
FY06 FY07 FY08 FY09 6M FY10
15,808
FY06 FY07 FY08 FY09
(1) ROE = PAT / Average (Networth less investments)
11.7%
Networth (Rs.Mn) RoE (%)
12,000
14.00%
12.00% 10,000
10.00% 8,000
8.00%
6,000
6.00%
4,000
4.00%
2.00% 2,000
0.00%
0
13.3%
7.0%
0.2x
1,706
10.2%
2.3%
0.3x
3,715
9.0%
10.2%
0.3x
3,770
11.5%
3.7% 3.7% 3.8%
FY06 FY07 FY08 FY09 6M FY10
Return on Equity (1) Leverage Position
EBITDA Margin PAT Margin
0.6x
9,720
FY06 FY07 FY08 FY09
Total Debt (Rs.Mn) D/E (x)
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0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

Consolidated Financials
Total Income
EBIDTA
Interest
Depreciation
PBT
Tax
PAT
PAT margin (%)
Income Statement
Total Expenditure
EBIDTA margin (%)
* International Subsidiaries consolidated with 3 Month lag
Standalone
36,994
33,215
3,779
10.2%
1,053
640
2,087
700
1,387
3.7%
FY09
Rs. Million
Consolidated*
52,790
47,423
5,367
10.2%
2,415
1,439
1,494
840
654
1.2%
Share Capital
Total Debt
Total Liabilities
Net Block
CWIP
Investments
Total Assets
Balance Sheet
Reserves & Surplus
Shareholder's Funds
Total Current Assets
Total Current Liabilities
Net Current Assets
Standalone
1,270
14,520
15,808
9,720
26,068
9,480
354
2,210
33,031
19,006
14,024
26,068
FY09
Rs. Million
Consolidated*
RR
1,270
15,550
16,864
43,280
63,852
26,397
12,750
950
64,026
47,397
16,630
63,852
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6
Key Highlights

Gammon: Major Player in Construction Industry
1
2
3
4
5
6
Size and scale of operations; Consolidated order book of Rs. 188 Billion
One Stop Energy Shop
Technology, Engineering & In-house Design Capabilities
Seeking to strengthen foothold in international business
Experienced and Professional team
Diversified BOT portfolio with project pipeline
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7
Industry Overview

Indian Economy
Fastest growing economy after China
Changing composition of GDP
Reduced dependence on agriculture and growing
industrial and services sector
Next phase of growth expected to come from rural markets
Per capita income grew by 50% over the last 10 years
Among the world's youngest nations with a median age of 25
(Source: World Bank; Planning Commission; MoF)
Russia
China
India
Brazil
Hong Kong
Korea
UK
US
Japan
Global Equity Markets - YTD Returns (2)
MICEX
Shanghai Composite
SENSEX
Bovespa
Hang Seng
Kospi
FTSE 100
Dow Jones
Nikkei 225
(1) CIA World Factbook
(2) Source: Bloomberg, as on Nov 23, 2009
(3) SEBI website
115.35%
82.39%
77.10%
76.64%
56.93%
43.64%
18.43%
17.57%
7.20%
9.8%
6.6%
6.0%
5.2% 5.1%
3.6%
1.3%
0.7%
China India Russia Brazil Malaysia Thailand US UK
8,106
GDP Growth in CY 08 (1)
Strong Growth in Foreign Investments (US$ Mn) (3)
* Till Jul 31, 2009
17,655
(11,974)
7,310
2006 2007 2008 2009*
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Growth Potential of Construction Industry
3,506
2,079
1,427
Total Construction Spend (Rs. Bn)
4,296
2,464
4,879
2,945
241
120
147
107
133
124
152
127
121
172
140
125
155 183 241
357 381 381
FY08 FY09E FY10P
5,222
3,154
1,832 1,934 2,068
FY08 FY09E FY10P FY11P
Industrial Infrastructure
Construction Spend in Infrastructure (Rs. Bn)
Roads Irrigation Railways Urban Infra Power Others
Source: Planning Commission
Roads: Investments to pick momentum through award of new
BOT projects
Irrigation: Driven by state governments
Power: Private sector capacity addition to bolster growth
Water & urban infrastructure: JNNURM investments through
Urban Local Bodies (ULBs)
Others: Railways, ports, airports, oil & gas, mining are
primarily government driven
39
55
78
170
Infrastructure Investments
Construction Spend in Industrial Segment (Rs. Bn)
42
50
60
240
52
34
105
257
FY08 FY09E FY10P
Oil & Gas Metals Automobiles Others
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Growth in Infrastructure BOT
PPP model to continue to increase for infra projects
Award of projects to pick up pace with the stability in new
government and policy actions
Model concession agreements
Viability gap funding, 100% FDI under automatic route,
increase in ECB limit to US$ 500 Mn
100% IT exemption for 10 years
Roads
Power
Ports
Airports
Target
1,000 km of expressways
6-laning of 6,500 km and 4laning
of 10,000 km
Capacity addition of 78 GW
in generation and 60,000
ckm in T&D
Cargo handling capacity of
1.5 bn MT by 2012 (2x
growth)
500 operational airports in
12 years (~5x growth)
Government Action
NHAI’s 7-phased NHDP
Competitive bidding for BOT
Electricity Act, 2003
Captive coal block allocation
IPTC in T&D
Competitive bids for BOT
terminals on revenue share
NMDP for Major Ports
Privatization precedents set
80
60
40
20
0
7,200
Source: Ministry of Finance, GoI
3,700
3,200
2,900
Power Roads Telecom Railways Ports Airports
% PPP (Plan X) % PPP (Plan XI) Plan XI Investments (Rs. Bn)
Outlook
Growth @ 12-15% p.a for passenger traffic and 15-18% p.a for
cargo
US$ 50-60 Bn investment required over the next 5 years
Cargo to grow @ 7.7% p.a, container cargo @ 15.5% p.a till 2012
2x growth in India’s share of global exports
Investments of US$ 19 Bn in Major & Minor Ports
Port connectivity projects
800
Capacity additions ~ 100 GW generation and 60,000 ckm
transmission lines with investments of US$ 200 Bn
Peak deficit ~ 12%, AT&C losses ~ 30%
Growth in passenger traffic @ 15% p.a, cargo @ 20% p.a
Development of 35 non-metro airports @ US$ 9 Bn
400
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Thank You