gayatri projects limited - Edelweiss

Memorandum of UnderstandingIn addition to JVs, our Company has entered into following two MOU with Industrial Development Finance Corporation (IDFC)for the purpose of forming of consortium:MOU dated March 7, 2006 for bidding of project of design, construction, development, operation and maintenanceof Km 0.000 to km 49.700 on national highway no. 25/26 in Uttarpardesh and Madhyapardesh under North-Southcorridor (NHDP Phase II) on BOT annuity basis. MOU dated March 7, 2006 for bidding of project of design, construction, development, operation and maintenanceof Km 49.700 to km 99.005 on national highway no. 26 in Uttarpardesh and Madhyapardesh under North-Southcorridor (NHDP Phase II) on BOT annuity basis.The important conditions of the MOU are as under: The parties will form SPV for the execution of project and SPV will not undertake any other activity. The aggregate shareholding of parties of MOU will not be less than 51% during construction period and 3 yearsfollowing commercial operation date and 26% for the balance period.Gayatri Project Limited will be the leader of the consortium and shall hold minimum equity stake of 51% and IDFCshall hold minimum 10% of equity stake of the agrregate shareholding of the consortium in the SPV. Gayatri Projects Limited will be responsible for overseeing construction, operation and maintenace of the projectand IDFC shall be a financial partner.Key Processes and technologyThere are no key processes, technology and collaboration agreements with any parties for technology. Our clients normallyspecify proven conventional technologies and methods for their projects, therefore, it does not entail the need for anycollaboration agreements for technology to be used. The client specifies the same in the tender conditions. For us to prequalify,we should have implemented contracts using the similar technology in the past. We don’t require to own this technologyhowever we can access the same, as they are available domestically. In case, certain specialized projects call for similartechnology with higher capacities we may identify international sources and establish necessary tie-ups. However, one cannot rule out the possibility of going for collaboration to enable access new technologies in the future. Based on the projectrequirements, the company is required to tie up from time to time with JV partners who possess experience in implementingprojects with alternate technologies specified in the tender document.Raw materialsOur major raw materials required are steel, cement, diesel, bitumen, reinforcement steel, shuttering material, scaffoldings,river sand, and block masonry electrical items.We follow a centralized purchase system for cement, steel, diesel, and bitumen through our purchase department. In caseof cement, our requirements are seasonal and we procure directly from manufacturing units located near to project site. Wehave got an effective system to take the material at competitive rates and to maintain minimum inventory, so the supplies aremade on a just-in-time basis. In case of steel, diesel and bitumen our requirements are project specific. We procure steelfrom major steel suppliers to ensure availability and timely delivery to meet our project schedule needs.Most of our other raw materials/consumables are easily available and hence we face no monopoly from suppliers. Therequirement is processed through negotiations with the suppliers keeping in view the logistics of location of project andtiming of supply. For some of our projects, we may require to purchase specific equipments and components, which are keyinputs for project implementation, which are also procured by the centralized purchase department. However there are certainconsumable which are required at various sites which are available locally at project sites and we have not faced difficultyin past in procuring them.Plant Machinery & EquipmentsOur Company owns a fleet of construction equipments assets. Some of the equipments owned by us are: Heavy earth moving machines such as hydraulic excavators, loaders, dozers, earth compacters.57