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Hyderabad-based Gayatri Projects, which saw a dip in its revenues in the past two years, hopes to garner ₹2,000 crore revenue this year.
The company, which had achieved a high turnover of ₹2,022 crore in 2013, recorded a decline at ₹1,815 crore in 2014 and ₹1,601 crore in 2015.
“This year we will come back to guidance of ₹2,000 crore revenue,” TV Sandeep Reddy, Managing Director, told BusinessLine . The company expects its current engineering procurement contract (EPC) road project portfolio, apart from railways and irrigation, to contribute to its growth. “We are bullish on the power business to increase capacity in future. We are also growing the business along with Sembcorp of Singapore,” Reddy said.
The company will not look at public-private partnerships (PPP) in road projects in the future.
“I will never bid for build-operate-transfer (BOT) projects because no bank is ready to fund such projects. Our balance sheets are in a weak condition because of BOT projects. Out of our seven PPP projects, six were delayed due to lack of land availability, forest clearance. We have few BOT (annuity) projects and few BOT (toll) projects.”
For the toll projects, the actual traffic revenues have been bad against initial projections in the past four years.
The total project cost – estimation and escalation – is another Achilles Heel for companies pursuing BOT projects in the road sector.
“The project cost includes financing cost, which has gone up by about three percentage points from the time we bid for projects, to now,” said Reddy. He admitted that the traffic risk was the developers', but pointed out that were it not for delays, many cost-side aches could have been controlled.
The order book of the 50-year-old firm, at ₹6,000 crore as on March 31, is close to doubling.
“We have orders from NHAI for four projects worth ₹3,300 crore near Varanasi, and one ₹675 crore project near Delhi (the Eastern Peripheral Expressway),” Reddy said, adding that all these are EPC orders.
In these contracts, the cost escalation due to delays on National Highway Authority of India’ (NHAI) end will be borne by the authority.
On succession, Reddy, having inherited the company from his father T Subirami Reddy, a Parliamentarian, said it was “institutionalised”, adding that his son was “getting ready” to join the firm.
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