Survival in volatile market is challenge: Gammon Infra
KK Mohanty, MD Gammon Infra agrees that infra sector is struggling amid a slump in economic growth, which has fallen to a decade-low as companies have put fresh investments on hold.
Amid high interest rates, sluggish pace of orders and absence of big ticket projects, infra companies are finding it difficult to sustain margins. In such circumstances, one has to get its survival instincts right before targeting growth plan, believes, KK Mohanty, managing director Gammon Infra Project Ltd.
"We are treading cautiously and are not so aggressive in monetising assets. Our primary agenda is to sustain and grow order book along with timely execution of existing projects," said Mohanty in an interview to moneycontrol.com.
Mohanty agrees that infra sector is struggling amid a slump in economic growth, which has fallen to a decade-low as companies have put fresh investments on hold.
Companies have stalled projects due to either cash crunch or due to delay in regulatory approvals prompting them to stall atleast 200 projects in the past one and a half years.
“Firms are confronted with high borrowing cost which is straining balance sheets,” added Mohanty.
The above mentioned factors are not in one’s control, Hence one has to do a balancing act, he believes.
In previous year, the firm completed three projects and we have also shown growth on the top-line, and we moved from an Rs 25 crore loss to an Rs 15 crore profit at the bottom-line. We are keen to put three more projects into operation in FY14, he said.
The company is towards completion of its Godavari Bridge, Patna-Hajipur Highway and one of the power project.
Analysts have also maintained a cautious stance on the sector overall in short-term. Despite the government easing policy decision and fast-track clearances for several projects, the upcoming scheduled elections in the next 15 months could delay reforms.
Brokerages also anticipate an around 40 percent decline in collective order book of infra companies in the June quarter.
Gammon Infra has declined over 29 percent in the past one year to Rs 9.05 on fundamental issues overall. However, the firm is on the prowl for new projects to sustain growth, adds Mohanty.