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Construction : Cover Story | August 2018 | Source : CW-India

We will continue to focus on an asset-light, EPC strategy

Established in 1975, Gayatri Projects has an annual revenue in excess of Rs 29 billion, with operations in 19 Indian states. Specialised in EPC, highways and power plants, the company's operations encompass roads, bridges, railways, dams, irrigation canals, underground mines, steel plants and power plants. TV Sandeep Kumar Reddy, Promoter and Managing Director, Gayatri Projects, shares more...

Please highlight one major challenge faced in FY2017-18.
As a company, one of our major challenges was completing the demerger of our BOT and annuity road projects into a separate company. We had worked towards that goal for two years and, finally, we were able to complete all the regulatory requirements. Now, we have a separately listed entity, Gayatri Highways, which holds our asset investments; this has given relief to the Gayatri Projects balance sheet. Now, investors who believe in the asset-light EPC growth story can invest directly in Gayatri Projects, and investors who want to bet on toll roads can invest in Gayatri Highways. We are happy with this corporate restructuring.

Particulars Net
sales
Adjusted
PBDIT
Reported
PAT
FY2018 (Rs billion) 29.12 4.12 1.88
Growth over
FY 2017 (in%)
37.68 16.66 167.06

What decision do you consider the biggest contributor to the company's growth in FY17-18?
Over the past five years, our single best decision was to go with the cluster-bidding model. We are now able to comfortably win many new projects in regions where we already have experience and establishment, while beating out the competition, because of economies of scale and synergies between multiple projects.
We have had a lot of success in winning new projects in Odisha and Uttar Pradesh by following this model. In future, we hope to have such a broad footprint across India that we can achieve synergies anywhere - we are already operating in 19 states across the country.

Please share a decision you avoided, which could have otherwise impacted the company's top-line and bottom-line.
We avoided bidding for HAM projects. Newer players who have not already experienced the difficulties of the asset-heavy model have been gung-ho about HAM, but we are already seeing evidence of the challenges. If we went down that path, the return on capital and balance sheet of Gayatri Projects would be adversely affected. We will continue to focus on an asset-light, EPC strategy. Having said that, we may start looking at opportunities in asset investment through our company Gayatri Highways.

Going forward, what are your plans for the company's growth in FY18-19?
We are taking a three-pronged approach for future growth in the topline and bottomline:

  • Bidding for new highway projects in clusters where we already have synergies and economies of scale.
  • Expanding and consolidating our foothold in specialised industries like underground mining and water supply.
  • Leveraging technology for improved project execution and equipment utilisation. We have already deployed an elaborate IoT system for monitoring all plants, machinery, equipment and vehicles, as well as mobile apps for project reporting in five major highway projects.
 
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