gammon india ltd Management discussions

The last decade of century of Gammon India Ltd was a roller coaster ride. It has witnessed financial Tsunami, Economic slowdown, change of policies, covid pandemic and many other challenges. The organization resilience and Managements will power has kept the Company going. From the tag of Builders to the Nation, the Companys focus restricted to resolve the stake holders issues. From a exciting expertise of 5000 people based, the Company has now shrunk to its root level and mitigating the challenges encountered by the Company.

No Company can survive with the past glory. Those past glory of technical innovations, land mark structures, bridging mighty rivers etc. are the back bone and knowledge bases for the new beginning for the next century. The basic four pillars of the organization namely Customers, Stake Holders, Technology Innovation and Human Resources will be the guiding principles for the future. The past learning has thought us "Cash is the King" and it will remain the main focus for the future.

CUSTOMER FOCUS

Unlike manufacturing facilities, we sell the products before making it. As a result we become more responsible for the delivery which satisfies the customers. We have witnessed in the last century that it is one of the best marketing tool for the growth of the organization. We will remain very much focus in meeting the challenging requirement of the Customers. We have demonstrated in the past that in majority of the cases, we have never deserted even in the worst natural calamities as well as in worst man made situation

FOCUS ON STAKE HOLDERS

Without satisfying stake holders we cannot survive, be it Bankers, Creditors, Share Holders, Associates, individuals or Institutes. Our focus will remain to satisfy all the stake holders. In past couple of years, the Company has demonstrated it by hiving of business, monetizing of assets etc. just to meet the Lenders requirement.

FOCUS ON TECHNOLOGY AND INNOVATION

Many of Gammons first of the last century needs to be re-written in the current century, with help of Information Technology.

Gammon will upgrade its knowledge base and adopt modern technology and innovate further to meet the Indian conditions. Such adoption and innovation is the integral part of Gammon DNA.

HUMAN RESOURCES

Human Resources is the biggest assets of any organization. They are not just employees but they are the part of the Gammon family. Having shrunk to the bases level after the turbulent years of crisis, the Company is ready to build its strength by employing dedicatedstaff. die spirit of those few Gammonites, which has helped the Company to meets it all obligations.

CASH IS KING

To survive in this severe competition amongst adverse adversities, it is most important to have proper cash management. This is achieved with optimum operational efficiency such as better inventory optimizing wastages.

INDIAN ECONOMY

India is heading towards 3^rd largest economy of the world under dynamic leadership. The Construction Industries will play a major role in meeting the targets. The Governments initiative for infrastructures, public utility, manufacturing sectors etc. has opened a lot many opportunities for the Construction sectors in the country. A timely delivery with optimum cost will give the age to the Company. The Government budget provides trillion of rupees for the Infrastructure structures under various schemes announced by the Honble Prime Minister. The Honble Prime Minister has always maintained that there is no derth of funds for the Infrastructure projects and his target of National grid covering all the districts remain very much in action. The Company will definitely have his share of the work in all those projects once its Resolution plan gets approval from the Lenders.

OPERATION OF THE COMPANY

The Company is in the last leg of its resolution plan which had a setback due to pandemic, the Company is trying its best to come out of the setback and the liquidity crunch faced in the last couple of years. The Companys main focus continues to be regularizing their accounts along with progress of the current project.

Arbitration process persists at a slow pace. However, the Company remains focused to ensure timely proceedings of the on-going arbitration matters. As an austerity measure, the Company has substantially scaled down its establishment and man power cost and adopted a lean and thin organization structure. The Company is in the process of gearing up to accept the opportunities thrown open by the Government of India.

REVIEW OF THE FINANCIAL PERFORMANCE

During the Financial Year the Turnover of the Company on a Standalone basis stood at 101.48 crores, as compared to 27.66 crores during the previous F.Y. ended 31st March, 2022. The Company posted a Net Loss after Tax of 1540.08 crores during the Financial Year, as against a Net Loss after Tax of 1085.75 crores during the previous FY ended 31st March, 2022.

On a Consolidated basis, the Turnover of Gammon Group during the Financial Year stood at 115.05 crores as compared to

27.85 crores for the previous financial year ended 31st March, 2022. The Group posted a Net Loss after Tax of Rs. 897.18 crores during the Current Financial Year, as against a Net Loss after Tax of 1180.51 crores during the previous F.Y. ended 31st March,

2022. Interest and finance costs continue to be high. The turnover/income is from the residual EPC business, post carve out of the operating business. During the Current Financial Year the finance cost which includes the interest costs was 813.29 crores. The loss was primarily due to the provisions made for the Companys funded and non-funded exposure of loans and investments, the details of which is provided in note no. 27 of the standalone financial statements.

MANAGING RISK

The Construction Industry in general has risk on many accounts such as:

1) Right of way

2) Geological condition variance

3) Law and Order Situation of the Location

4) Lack of fund allocation and subsequent delay in collection

5) Time overrun due to force majeure conditions

6) Increased working capital cycle due to above

7) Delay in dispute resolution with the client etc.

The Company is in the last leg of salvaging its value and restarting core business. At this stage the risk are mitigated by: Restricted business is limited to in-house expertise

1) Sub-letting the projects on back to back basis

2) Restricting the role to Project Management only

3) Early contractual and legal actions for all contract related matters

4) Periodic structured review of the projects on on-going basis to identify the challenges and the risks and to find the possible solution to mitigate the losses.

On the occasion of beginning of the Companys new century, we take this opportunity to thank our esteemed customers, associates and partners, bankers, vendors and subcontractors, friends, well-wishers and our large fraternity of Gammonites for their untiring support bestowed upon us.

STATEMENT CAUTIONARY

Statements made in the Management Discussions and Analysis describing the Companys objectives, projections, estimates, expectations may be ‘forward looking statement within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied.

Important factors that could make a difference to the Companys operation include economic conditions affecting demand- supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax law and other statutesand other incidental factors.