Annual Report 2006-2007 - Gammon India

GAMMON INDIA LIMITED
1. Industry Structure and Development :
MANAGEMENT DISCUSSION AND ANALYSIS
The Indian Economy is in the fulcrum of an increasing growth curve with positive indicators of 9% GDP, rising
foreign exchange reserves, a booming capital market and increased FDI inflows in all sectors of the economy.
This high rate of economic growth in India and parts of the world especially the Middle East has lead to overall
growth in the Construction Industry/Infrastructure projects. Further Infrastructure development in India has set
off in a major way in the last two years and is witnessing impressive growth across various segments. This
has lead to high standards of execution of work, fast track completion, quality and safety. Road Projects and
Hydro Projects continue to be on private sector participation and is an integral part of the business model of
the Company for continuing growth.
2. Opportunities and Threats :
The growth in the infrastructure sector is being driven by a host of factors, which include political will and
policies to enhance the quantum of investments in the infrastructure segment. Multi-lateral agencies such as
the World Bank and the Asian Development Bank (ADB) are funding various infrastructure projects on a large
scale in India. Various State Governments are mobilising funds from these agencies to support the various
projects. To encourage private sector participation in the sector, the Government has announced several tax
breaks for investments. It has also devised return schemes that are attractive for the private participants, such
as annuity payments and capital grants for road projects. Laws have been enacted to improve the finances of
utilities and make their management more transparent, so as to improve returns on these facilities.
Your Company is one of the leaders in the Construction Industry involved in practically all fields of Civil
Engineering projects of large magnitude and continues to bid for larger and complex projects in the years to
come.
Indian cities as well as the Middle East and Africa continue to grow at a fast pace. Transportation projects, Metro
Projects, Hydro and Thermal Power Projects and Water Supply projects continue to offer major opportunities.
Your Company has a strong presence and possesses the experience, expertise and resources and is well
equipped to tap the same.
Your Company already has a presence in the Middle East and hopes to expand its presence in the African
countries. However with the emphasis on infrastructure development both in India as well as globally and the
increasing opportunities in almost all sectors of construction and civil engineering, your Company has been
facing competition. There is strong competition not only from Indian construction companies but also from
foreign construction companies thereby putting pressure on profit margins. The future outlook in infrastructure
will also depend on Government policy framework as well as how investment in infrastructure is facilitated.
3. Spectrum of Activity and Review of Performance :
a. Transportation Engineering
India has one of the largest Road Networks in the world consisting of Expressways, National and State
Highways and other District Roads. Your Company has successfully completed a novel extra dosed bridge
for Delhi Metro Rail Corporation (DMRC), which is a new technique and first of its type to have been
implemented in India. Your Company has been awarded a contract valued at Rs. 173 Crores for the
Design and Construction of elevated road at Golden Temple for the Municipal Corporation of Amritsar.
The Roads Directorate, Government of West Bengal has awarded Gajol Hilli Road Works valued at
Rs. 225 crores. During the financial year 06-07, we have successfully completed the concrete road project
at Gaya, Bihar for Rs. 133 crores. Further, Khurda-Bhubaneshwar Road project has also been completed.
The Total turnover achieved by the road project division is Rs. 226 crores.
Once again, the Company has been awarded two contracts of elevated viaducts by Delhi Metro Rail
Corporation cumulatively valued at Rs. 195 crores. The Company has also secured construction of
Gurupriya Bridge valued at Rs. 48 crores and Vynetheya Project at Rs. 56 crores.
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