Gayatri Projects: Staying the course

TV Sandeep Kumar Reddy, MD, Gayatri Projects, is known to meticulously consider details before embarking on projects

TV Sandeep Kumar Reddy.
Copyright d ravinder reddy
TV Sandeep Kumar Reddy.

Pedigree matters. It matters even more when you are running an enterprise that is largely family-run. In today’s world, the next generation is groomed very early in life so as to prepare them for the future. Most often it works.

So it is with Gayatri Projects. TV Sandeep Kumar Reddy, MD, Gayatri Projects, inherited the company from his father, T Subbarami Reddy, who left behind his business to join the world of politics and public service full-time. However, Gayatri Projects in 1989 is a far cry from what Sandeep Kumar Reddy has grown it to today. At the time, it was an engineering company doing irrigation projects in a couple of southern states. Today, it is one of India’s leading construction and infrastructure companies with active projects in over 19 states. The company has also made forays into ownership of infra assets such as toll roads and power plants, but has now retreated to its mainstay of EPC projects. And though he continues to run the company, today his sons, Anirudh and Rajiv, are infusing a different kind of novelty into the business that would catapult the organisation to a higher level.

Businesses today do not rely on the old tried and tested theories alone. They are required to innovate. Have a growth mindset. Like Reddy says, “We have come a long way from our operations that were mainly confined to Andhra Pradesh. Today, we are executing projects in several states and if you look at our history, we have worked across all the states.”

Over the years, Gayatri Projects has garnered expertise in constructing and executing projects in various spheres. Roads, irrigation, industrial, power (thermal, hydro and wind), ports, dams and mining are the mainstay of its business.

Building large
Large scale infrastructure projects never fail to impress. Not only in terms of the civil engineering skills, but also by their utility and sight. Some of them go on to become landmarks. Companies that build this cultivate on their applied science knowledge and develop projects that could take years to build. It’s not surprising that the firm has played a critical role in several landmark infrastructure projects across the country. The Nagarjuna Sagar project, Polavaram dam, Sardar Sarovar Narmada dam, Mangalore Refinery, Reliance Petroleum, Nagarjuna Fertilisers & Chemicals, Hyderabad Outer Ring Road, Eastern Peripheral Expressway, Purvanchal Expressway, Mumbai-Nagpur Expressway are only some of the projects which the company has and continues to develop.

Ask Reddy about the expertise garnered over the years and he says, “Irrigation projects have traditionally been our strong point. In the 90s, the local government was highly focused on developing irrigation projects and we played a large role. However, the use of equipment and technology is irrigation is not as sophisticated as those required in roads and mining.”

Expertise does not come easy. In a bid to move from irrigation to other sectors, the company had to put together skills and manpower who could get the desired results. Probably for this reason, the company has appointed functional heads that helps them bag and execute projects like clockwork.

In recent times, it has also ventured into tunnelling – another feather in the cap. Its rapport and work experience with National Highways Authority of India (NHAI) has enabled the company to venture into newer methods of roads and highways construction. Reddy says the company has built roads and highways in practically every state and constructed over 4,000kms of roads with another 3,000kms under construction. Reddy says, “Roads projects began opening up in the 90s and then there was no looking back. We began bidding and soon set the ball rolling moving from one project to another. The Golden Quadrilateral offered opportunities to many newer construction companies.”

On its own
As a listed company, the team at Gayatri Projects believes in delivering and enhancing the shareholders’ trust. With every new project, the infrastructure company has also built up an equipment bank so as to be self-sufficient. Reddy says, “If one talks only about road projects, it has three elements to it – earth works, paving and structures. We sub-contract certain jobs and the advanced work of paving are done by us. We have a large equipment bank and that helps us build the roads according to specifications of the NHAI, which is the nodal agency for roads construction in India.”

With over 30 years of experience in road construction, the company continues to bid for these projects, leveraging on and expanding its operations in pre-qualification. The idea is to make inroads into more states and regions and more complex projects. Over the years, Gayatri Projects has set up a base of operations, capitalised on its local experience, established contracts with local clients and suppliers, and familiarity with local working conditions. In pursuing its strategies, the team seeks to identify markets where it can provide cost and operational advantages to clients. In order to expand operations, the company has identified and associated with joint venture partners whose resources, capabilities and strategies are complementary to and likely to increase its business operations. Reddy says, “We understand that we might not have all the skills and talent for executing a project end to end. Along the way, we have formed several joint ventures to bring in expertise to a project while helping us get business. These are just tools that contractors use to assure the owner of our abilities.”

Similarly, special purpose vehicles (SPVs) have also been formed for BOT projects that it took on for its lucrative purpose.

More on the anvil
The astute business man that he is, Reddy has not put all his eggs in one basket. Besides its role as a concessionaire, Reddy has thoughtfully entered manufacturing, hospitality and real estate. Gayatri Sugars and Gayatri Bio Organics are two manufacturing companies that employ thousands. Similarly, it has profitable ventures in real estate through residential, commercial and retail development.

Reddy’s biggest contribution to growth and jobs has been in his native state of Andhra Pradesh, where he collaborated with the renowned Sembcorp Utilities of Singapore to set up a massive 2640MW power plant in Nellore, which produces enough electricity to power 20 million homes. However, in line with his strategy of becoming asset-light, Gayatri has partially exited from that project post-completion.

What must not be largely ignored here is a development unique to and Indian company. Reddy’s sons, Rajiv and Anirudh, are teaching the construction business a thing or two. Having developed Einsite, the plug-and-play software, the team is capturing data from across machines and helping them understand the amount of raw materials used and machine time used. Anirudh says, “It’s essentially about project management. We are digitising the site operations with IoT that can only better and smoothen operations. This is helping us account for every detail in a project and are using it to its full scale now.”

Rajiv and Anirudh started working on an in-house Digitisation Initiative in 2015 which has turned out to be a pioneering and industry-leading solution. They hired a world-class software and hardware team and started building technology that bridges the gap between the management and their remote sites. The goal was to be able to monitor and control all aspects of the site through a mobile app.

To make this ambitious goal happen, they first had to start by automating some of the data capture, for which they designed, built and deployed an array of IoT (internet-of-things) devices and sensors that automatically collected production and utilisation data from all the machines, trucks, plants, weighbridges and crushers in their integrated infrastructure projects. They then provided smartphones to all their managers on site and had them enter their daily work reports on a mobile app. All of this data – materials, machines and manpower – was brought onto a single platform for analysis and insights, for the very first time in the industry.

This digital project and equipment management system has now been deployed on all new highway projects, worth over Rs 7000 crores, and involving hundreds of daily mobile users, machines and plants. The system has led to improved coordination, project management, planning, as well as significant cost savings. Moreover, this system is expected to serve Gayatri well as it scales up and plans to 5X its orderbook and revenue over the coming years.

Anirudh, a graduate from Stanford University, USA, started working on taking these technologies to the external construction and mining markets in India and the US in 2019, under the banner of Einsite.
The biggest challenges that the company faced were related to the capex-based and debt-fuelled expansion into ownership of assets like toll roads and power plants. While the promise of developing such impactful public infrastructure projects was enticing, in reality, frequent delays due to land acquisition, and high interest rates made most of these projects challenging.

And while the company has beaten most of its peers in tackling and overcoming these challenges, the baggage from those years (2005-15) have held the company bank from more aggressive expansion of market share in core construction and EPC.

Since 2015, to overcome debt and asset related challenges, the company has decided to adopt a more asset-light strategy and has systematically begun deleveraging to return to its bread and butter of construction, where it has the greatest edge.

Gayatri has also taken up another strategy of cluster-bidding where-in it take sup multiple projects that are close by to each other so as to leverage local expertise, efficiencies of scale and existing establishments. Once it has 2-3 projects in a certain area, Gayatri is better placed to bid, win and profitably execute project 4, 5 and 6 in that area.

This strategy has really paid off, and the company has made strong bases in UP, Orissa and Maharashtra to start.
The asset-light model in tandem with a cluster-approach and use of technology has placed Gayatri on a growth path like few others.

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