gayatri projects limited - Edelweiss

handle BOT / BOOT project may adversely affect our business operations. Further our investment forexecuting the BOT or BOOT project would be in SPV should partly be in the form of equity again where nofuture dividend can be assured.19. BOT / BOOT projects in India are not successful.The work relating to Improvement, Operation and Maintenance of Rehabilitation and strengthening of existing2-lane road and widening to 4 lane divided highway of Km. 52.250 to Km. 131.000 of NH 59 (Meerut-Muzaffarnagar Section) is a toll based BOT project, executed through SPV. The main source of revenue forthe SPV will be toll, collected from the users of the highway over the concession period of 20 years andconstruction period of 3 years. The cost of the above project has to be met by SPV from these tollcollections and the grant given by NHAI. However the toll based projects have not been successful in India.20. As bulk of our business is awarded to us by the Central and state and Central government agencies,our business is dependant on the central and state budget allocations to the infrastructure sector.A substantial portion of our contracts are with central, state government or their agencies. For making thepayments, against our contracts these government department or agencies depend upon budgetary allocation/grants. If these allocations/ grants are delayed because of various reasons, we would get delayed paymentsagainst our bills, which could adversely effect our profitability and financial position.21. Our business is largely concentrated in southern and western region.Our projects are largely concentrated in the Southern and Western Regions. In the construction Industry,some of our competitors are larger than we are, and have greater financial resources than we do or greaterbidding capability, and may be able to deliver services on more attractive terms or to invest larger amountsof capital into their businesses / JVs. These competitors may limit our opportunity to expand our marketshare and may compete with us on bidding. Our business could be adversely affected if we are unable tocompete with our competitors and bid at competitive rates.22. Our contracts are awarded following competitive bidding processes as a result, we may be requiredto lower the prices we charge for our services in response to such competition from major playersin our industry, which may materially adversely impact our operating revenue and profitability.Our contracts are awarded following competitive bidding processes and satisfaction of other prescribed prequalificationcriteria. We face intense competition from big players such as international companies andmajor domestic construction companies who operate at the national level, to numerous smaller localizedcontractors /companies. Once the prospective bidders clear the technical requirements of the tender, thecontract is usually awarded based on price of the contract quoted by the prospective bidder. The nature ofthis process may cause us and other prospective bidders to lower prices for award of the contract, so asto maintain our respective market share. As a result of this competition we face margin pressure.Consequently, this could have a material negative effect on our financial condition.23. The projects sub-contracted by us could get delayed on account of the sub-contractors performance,resulting in delayed payments.As per normal practice in our industry a part of the work is subcontracted to the various sub-contractors.The completion of the contract depends on the performance of these sub-contractors. Delay on the part ofa sub-contractor to complete the project in time, for any reason, could result in delayed payment to us andin turn effect our operations. Sub-contractors may not have adequate financial resources to meet theirindemnity obligations to us. Losses may derive from risks not addressed in our indemnity agreements orinsurance policies, or it may no longer be possible to obtain adequate insurance against some risks oncommercially reasonable terms. Failure to effectively cover ourselves against construction industry risks forany of these reasons could expose us to substantial costs and potentially lead to material losses. Additionally,xi