gayatri projects limited - Edelweiss

GAYATRI PROJECTS LIMITEDWe are currently executing projects amounting to Rs. 1,04,654 lakhs of Public works /Irrigation Departments of various StateGovernments namely Andhra Pradesh, Madhya Pradesh, Chattisgarh and Gujarat and for other clients. Out of the projectsin hand, the highways constitutes projects amounting to Rs. 40,386 lakhs, irrigation projects Rs. 63,068 lakhs and otherworks constitutes Rs. 1,200 lakhs. In addition, we are also executing projects in our various joint ventures/ in SPV in whichour share of contract value to be executed, works out to around Rs. 1,35,335 lakhs which includes our share of contractsamounting to Rs. 15600 lakhs on BOT basis and Rs. 63115 lakhs on annuity basis. In addition our Company has beenawarded a contract on July 7, 2006 for Rs 6517.85 lakhs for Rehabilation and upgrading of Ambikapur (km 4) to Semersot(km 65) Section in Chhattisgarh by Director, PIU, ADB Project, Raipur. Most of these projects would be completed withinperiod of 36-42 months.Our Company is an ISO 9001 – 2000 engaged in execution of major Civil Works including Concrete/Masonry Dams, EarthFilling Dams, National Highways, Bridges, Canals, Aqueducts, Ports, etc.Factors affecting our results of operationsOur financial condition and results of operations are affected by the following factors:Growth in the infrastructure sectorOur business is significantly dependent on the general economic condition and infrastructure sector activity in India andGovernment policies relating to infrastructure development projects. The Government of India’s focus on and sustained increasein budgetary allocation for the infrastructure sector and the development of a structured and comprehensive infrastructurepolicy that encourages greater private sector participation as well as increased funding by international and multilateraldevelopment financial institutions for infrastructure projects in this region have resulted in or is expected to result in severallarge infrastructure projects in this region. Our ability to benefit from the considerable investments proposed in the infrastructuresector in the medium and long term will be key to our results of operations.Regulatory environmentOur operations may be exposed to uncertain political, legal and economic environment, government instability and complexlegal systems and laws and regulations regionally. Our ability to manage, evolve and improve our operational, financial andinternal controls across the organization and to integrate our widespread operations and derive benefits from our operationsis key to our growth strategy and results of operations.CompetitionWe compete against major engineering and construction companies as well smaller regional engineering constructioncompanies. Our competition varies depending on the size, nature and complexity of the project and on the geographicalregion in which the project is executed.Our capabilities to participate and executeThe nature of the Government’s tendering process is such that the pre qualifications obtained in the past play an importantrole in allowing companies to bid for the new projects. The ability to execute strategically with other players will also determinethe success in award of some key projects the company will be / is bidding for. The project management capability will alsodetermine the profitability.Market price behaviour of key materialsOur project cost mainly comprises of construction related materials i.e. steel and cement. These being commodities, changesin prices during the execution of the project may alter profitability on contracts, wicch are not covered by escalation provisions.Seasonality and weather conditions.Our business operations may be adversely affected by severe weather, which may require us to evacuate personnel orcurtail services and it may result in damage to a portion of our fleet of equipment or facilities resulting in the suspension ofoperations and may prevent us from delivering materials to our jobsites in accordance with contract schedules or generallyreduce our productivity. Our operations are also adversely affected by difficult working conditions and extremely hightemperatures during summer months and during monsoon which restrict our ability to carry on construction activities andfully utilize our resources.138