gayatri projects limited - Edelweiss

REGULATIONS AND POLICIESThere are no specific regulations in India governing the construction industry. Sets forth below are certain significant legislationsand regulations that generally govern this industry in India:GeneralThe Company is engaged in execution of major Civil Works including Concrete / Masonry Dams, Earth Filling Dams, NationalHighways, Bridges, Canals, Aqueducts, Ports etc.Contracts are executed in pursuance of tenders/quotations issued by the Government, Government agencies, Governmentcompanies, private companies, public companies and multinational companies or by orders placed by them. For the purposeof executing the work undertaken by the Company, we may be required to obtain licenses and approvals depending uponthe prevailing laws and regulations applicable in the relevant state. For details of such approvals please see “Governmentand Other Approvals” on page 163 of this Prospectus.Foreign OwnershipUnder the Industrial Policy and FEMA, foreign direct investment up to 100% is permitted in construction and related engineeringservices. Further, the Industrial Policy now also permits foreign direct investment under the automatic route in projects forconstruction and maintenance of roads, highways, vehicular bridges, toll roads, vehicular bridges and ports and harbors.Subject to certain conditions and guidelines, the Industrial Policy and FEMA further permit up to 100% foreign direct investmentin townships, housing, built-up infrastructure and construction development projects which include, but are not restricted to,housing, commercial, premises, hotels, resorts, hospitals, educational institutions, recreational facilities and city and regionallevel infrastructure. In respect of the companies in infrastructure/ service sector, where there is a prescribed cap for foreigninvestment, only the direct investment is considered for the prescribed cap and foreign investment in an investing companymay not be set off against this cap provided the foreign direct investment in such investing company does not exceed 49%and the management of the investing company is with the Indian owners.The RBI by its A.P. (DIR Series) circular No. 16 dated October 4, 2004 granted general permission for the transfer of sharesof an Indian company by Non-Residents to residents, subject to the terms and conditions, including pricing guidelines, specifiedin such circular.Investment by Foreign Institutional InvestorsForeign Institutional Investors (“FIIs”) including institutions such as pension funds, investment trusts, asset managementcompanies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded onthe primary and secondary markets in India. FIIs are required to obtain an initial registration from the SEBI and a generalpermission from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the provisions of theSEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and the RBI’sgeneral permission together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sellfreely securities issued by Indian companies, to realise capital gains or investments made through the initial amount investedin India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments heldand to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation receivedtowards sale or renunciation of rights issues of shares.Ownership restrictions of FIIsUnder the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed24% of post-issue paid-up capital of the company. However, the limit of 24% can be raised up to the permitted sectoral capfor that company after approval of the board of directors and shareholders of the company. The Issue of equity shares to asingle FII should not exceed 10% of the post issue paid-up capital of the Company. In respect of an FII investing in equityshares of a company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% ofthe total issued capital of that company.Environmental and Labour RegulationsDepending upon the nature of the projects undertaken by the Company, applicable environmental and Labor Laws andregulations include the following:65