Gayatri Highways Ltd Management Discussions.

COMPANYS OVERVIEW

Gayatri Highways Limited - GHL ("the Company") (Formerly Gayatri Domicile Private Limited - GDPL) was incorporated during the year 2006 in accordance with the provisions of Companies Act, 1956. The Company on its own and through its jointly controlled entities is in the business of construction, operations and maintenance of carriageways on toll and annuity basis pursuant to the development agreements with the National and State Governments and makes investments in companies engaged in the construction, operations and maintenance of roads, highways, vehicle bridges and tunnels and toll roads. The registered office of the Company is located at 1st Floor, 6-3-1090, TSR Towers, Rajbhavan Road, Somajiguda, Hyderabad-500082, Telangana.

Industry Analysis:

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2016, India jumped 19 places in World Banks Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries.

According to data released by Department of Industrial Policyand Promotion (DIPP), the construction development sectorin India has received Foreign Direct Investment (FDI) equityinflows to the tune of US$ 24.28 billion in the period April2000-December 2016. The housing sector alone contributes5-6 per cent to the countrys Gross Domestic Product (GDP).

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport, prior to the general elections in 2019.

The Government of India is taking every possible initiative to boost the infrastructure sector.

The Government of India is working to ensure a good living habitat for the poor in the country and has launched new flagship urban missions like the PradhanMantriAwasYojana (Urban), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Swachh Bharat Mission (Urban) under the urban habitat model, according to MrHardeep Singh Puri, Minister of State (Independent Charge) for Housing.

Opportunities and Threats

In view of more and more competition in construction industry, the opportunities for securing contracts needs continuous innovation in its various core functions. The Company has emerged as a significant Infrastructure Company with diversification in Roads and Expressways. The Company is poised to seize every opportunity to expand the existing line of business. The Company is well equipped to handle threats of competition and challenges or the Companys ongoing execution of Projects.

Road Ahead

Indias national highway network is expected to cover 50,000 kilometres by 2019, with around 20,000 km of works scheduled for completion in the next couple of years, according to the Ministry of Road Transport and Highways.

The Government of India is devising a plan to provide wifi facility to 550,000 villages by March 2019 for an estimated cost of Rs 3,700 crore (US$ 577.88 million), as per the Department of Telecommunications, Government of India.

India and Japan have joined hands for infrastructure development in Indias north-eastern states and are also setting up an India-Japan Coordination Forum for Development of North East to undertake strategic infrastructure projects in the northeast.

Business outlook:

The Government of India is taking every possible initiative to boost the infrastructure sector. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from the Government. The present Projects and the opportunities in the Indian infrastructure sector provides good visibility towards a sustainable and profitable growth going forward.

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.

Indias national highway network is expected to cover 50,000 kilometres by 2019, with around 20,000 km of works scheduled for completion in the next couple of years, according to the Ministry of Road Transport and Highways.

Your company is steadfast in adopting modern technologies for better execution and improving the margins going forward.

RISKS AND CONCERNS

Inadequate risk management is a primary cause of concernindicated by most organizations in India. To be in a position to have fully identified all risks associated with a project andhave a response plan for each; that is clearly a benchmarkmost organizations acknowledge, nevertheless, do little aboutit. Risk Management by its very nature is flawed because itonly identifies the things project managers know; it fails toappreciate the "unknown", "unknowns", the "un-controllable".That said, the more risks identified and planned for, the betterposition the project team is in to deliver a successful project.Risk Management has been identified as a best practice bymost respondents. Moreover, there is a growing concernamong Organizations about inaccurate risk identification. Theproject will yield continuous flow of revenue for the Company.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has adequate Internal Control Systems andProcedures with regard to purchase of Stores, Raw Materialsincluding Components, Plant and Machinery, equipment,sale of goods and other assets. The company has clearly defined roles and responsibilities for all managerial positionsand all operating parameters are monitored and controlled.

The Company designs and maintains accounting andinternal control systems to provide reasonable assurance atreasonable cost that assets are safeguarded against loss fromunauthorized use or disposition, and that the financial recordsare reliable for preparing financial statements and maintainingaccountability for assets. These systems are augmented bywritten policies, an organizational structure providing divisionof responsibilities, careful selection and training of qualifiedpersonnel, and a program of internal audits.