The company usually follows a centralised procurement strategy for all its projects across the country with a few select suppliers.
Having faced a cash-crunch from 2010 to 2015 owing to a declining order book and turnover, Gayatri Projects, along with the overall industry, has turned itself around. Our order book now stands at over Rs 14,000 crore, says TV Sandeep Kumar Reddy, Managing Director, Gayatri Projects, with pride. With an eye on long-term performance and an industry presence of over 50 years, the company has always tried to keep its overheads low to minimise the negative impact during industry downturns.
With a turnover of around Rs 2,150 crore as of March 2017, the company's order book has actually tripled over the last couple of years. In fact, for the half-year period of FY2017-18, its top-line grew nearly 50 per cent. And Reddy confidently adds, We foresee major growth to the tune of 20-30 per cent annually for the next few years.
Gayatri Projects has recently bagged multiple new road projects across India. In Jammu and Kashmir, the company won a Rs 1,339-crore project, and in Odisha a cluster of three neighbouring projects worth nearly Rs 1,500 crore.
This cluster approach is a key management strategy we follow to streamline and optimise procurement of materials and equipment, says Reddy.
We have already seen success with this model in our cluster of four national highway projects worth nearly Rs 3,300 crore near Varanasi.
On an average, materials and equipment together constitute over 60 per cent of the project cost, so we go to great lengths to optimise procurement and minimise cost to the company, says Reddy. As for bulk materials, the company usually follows a centralised procurement strategy for all its projects across the country with a few select suppliers. This benefit of economies of scale will further be increased by our clustering model. In the case of plants and machinery, the company deals with a set of international manufacturers.
As Reddy explains, While we generally cultivate a long-term relationship with certain manufacturers, we also like to play the market from time to time to get competitive offers. At times, different manufacturers are selected based on the modalities of projects.
What's more, the company generally outsources non-specialised works within a project scope.
For example, Reddy explains, We may outsource embankment layers but we usually execute the specialised and important parts of a project, such as the pavement layers, structures, etc. In recent times, we have also outsourced certain activities like transportation of aggregate and other materials.