We are happy to have avoided HAM projects

01 Aug 2019 CW Team

Name one major challenge faced in FY2018-19. How did the company approach the same?

Today, Gayatri Projects has industry-leading margins in terms of EBITDA and project profitability, but we are still being held back by debt from earlier infrastructure asset investments. We are actively pursuing opportunities to monetise our power investments, as well as to monetise claims we have been awarded from contracts from earlier years. Once we complete these activities and become an asset-light EPC player, we can double down on upcoming opportunities and become the dominant player in highway and irrigation construction.

What is one decision you consider the biggest contributor to the company’s growth in FY2018-19?

Over the past five years, our single best decision was to go with the cluster-bidding model where we can leverage economies of scale and synergies. In the future, we hope to use this expansion strategy to establish a monopoly across India in key focus areas like highways.At the same time, we are actively leveraging cutting-edge technologies like Internet of Things (IoT) and artificial intelligence (AI) to increase profitability. We’ve looked closely at the systems being used by construction industry leaders across the globe, and are proud to say that our integrated project and equipment management platform is the most advanced in the world.

Name one single factor you avoided that could otherwise have impacted the company’s topline and bottomline.

We continue to maintain our position that we are happy to have avoided HAM projects. A lot of newer players who have not already experienced the difficulties of the asset-heavy model have been gung-ho about HAM projects but I think we’re already seeing evidence of the challenges. We are going to continue focusing on an asset-light EPC strategy.

Going forward, what are your plans for the company’s growth in FY2019-20?

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.

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Gayatri Projects is one of India’s leading construction and infrastructure companies with interests in EPC, highways and power plants, and active operations in 19 states. Its EPC operations, the mainstay of the company, include roads, bridges, railways, dams, irrigation canals, underground mines, steel plants and power plants. Gayatri has also developed seven highway assets, now held by its associate company, Gayatri Highways, and has co-developed a 2,640-mw thermal power complex with Sembcorp Utilities of Singapore. Established in 1975, the company now has an annual revenue in excess of Rs 35 billion. TV Sandeep Reddy, Managing Director, Gayatri Projects, shares more….Name one major challenge faced in FY2018-19. How did the company approach the same? Today, Gayatri Projects has industry-leading margins in terms of EBITDA and project profitability, but we are still being held back by debt from earlier infrastructure asset investments. We are actively pursuing opportunities to monetise our power investments, as well as to monetise claims we have been awarded from contracts from earlier years. Once we complete these activities and become an asset-light EPC player, we can double down on upcoming opportunities and become the dominant player in highway and irrigation construction. What is one decision you consider the biggest contributor to the company’s growth in FY2018-19?Over the past five years, our single best decision was to go with the cluster-bidding model where we can leverage economies of scale and synergies. In the future, we hope to use this expansion strategy to establish a monopoly across India in key focus areas like highways.At the same time, we are actively leveraging cutting-edge technologies like Internet of Things (IoT) and artificial intelligence (AI) to increase profitability. We’ve looked closely at the systems being used by construction industry leaders across the globe, and are proud to say that our integrated project and equipment management platform is the most advanced in the world. Name one single factor you avoided that could otherwise have impacted the company’s topline and bottomline.We continue to maintain our position that we are happy to have avoided HAM projects. A lot of newer players who have not already experienced the difficulties of the asset-heavy model have been gung-ho about HAM projects but I think we’re already seeing evidence of the challenges. We are going to continue focusing on an asset-light EPC strategy. Going forward, what are your plans for the company’s growth in FY2019-20?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 scaleExpanding and consolidating our foothold in specialised industries like underground mining and water supplyLeveraging technology for improved project execution and equipment utilisation.

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