- T Sandeep Reddy, Managing Director, Gayatri Projects
With its entire new order book on the EPC basis, Hyderabad-based Gayatri Projects manages its projects with its existing working capital. T Sandeep Reddy, Managing Director, Gayatri Projects, elaborates on the company's projects and strategies.
How has the change in NHAI awarding projects from BOT to EPC and HAM helped companies?
The change in NHAI's strategy from the BOT model to EPC was a welcome move. Losses suffered in BOT projects were because of two reasons: Drop in toll revenue due to economic slowdown or mining bans and execution delays due to local or government issues. While the HAM model takes care of tolling risk and allows companies to take on less capital risk, it still faces the risk of delays. We are cautiously evaluating a strategy for HAM, but are doing well with EPC. In the past six months, we have added Rs 45 billion EPC orders to our book.
Tell us about the key strategy applied by the company while bidding for its projects in FY 17-18.
We have always bid for our projects with a healthy EBITDA margin. We are able to undercut competition without compromising margins because of our superior execution and optimal utilisation of equipment and our cluster approach, where we bid for projects in the same region to enable synergies and sharing of equipment and material sources. For both these strategies, we are using advanced technologies such as IoT equipment tracking devices and mobile apps.
How do you intend to raise funds for these projects?
As our new order book is on EPC basis, we do not need to raise any equity or funds. We can manage with our existing working capital.Gayatri Projects is already listed, but we are awaiting the listing of our subsidiary, Gayatri Highways, which was demerged. Gayatri Highways holds our BOT and annuity toll road investments.