2. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
GTPL Profile
Gactel Turnkey Projects Limited is a Gammon Group Company founded in 2006. It was constituted to cater
specifically to National and International requirements of Cooling Towers and cooling systems. The Company has
the technical expertise and financial back-up by Gammon India Limited.
Products of GTPL
Air Cooled Condensers and Heat Exchangers
FRP Package Cooling Towers
Industrial Construction and Customer Services
Pultruded FRP Cooling Towers
GTPL's Presence
Power Sector
Metals / Steel Industry
Petrochemical Industry
Sugar industry
Captive Power Plants
Pharmaceutical and Chemical Industry
Heating, Ventilation and Air Conditioning (HVAC)
Fertiliser Industry
Cement Industry
Paper Mills and many more…..
Major Clients of GTPL
Indian Oil Corporation Limited
Bharat Oman Refinery Limited
Monnet Ispat & Energy Limited
Bharat Heavy Electricals Limited
Maharashtra State Power Generation
Thermax Limited
3. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
MARKET STRUCTURE
Market Structure: Oligopolistic since there are few major players in the market providing homogenous
services.
Concentration ratio - 4 firm concentration ratio is more than 60%.
Concentration Ratio
4 8 12 16 20 31
71.01 82.94 90.27 95.41 98.46 100
Herfindahl Index - Herfindahl Index is 0.305 (3053.36) which is above 0.25 (2500) which means there is
higher degree of concentration in the market.
Out of the 31 companies Gactel Turnkeys Limited ranks 27 in terms of sales turnover.
Total Revenue and Total Cost
TR, TC Curve
100
88.13
84.38
80
70.32
64.40
60
TR
40 TC
Net Profit
20 20.32 18.69
-1.69 -3.83
0 -6
2007 2008 2009 2010
-20
Company total revenue is less than total cost for the last three years so company is in loss.
4. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
Reason for Losses
P & L Statement Analysis
The revenue from the sale of goods not adequate to meet the expenses
Expenses as a
Total
Year TR percentage of
Expenses
Revenue
2008 18.69 20.58 110%
2009 64.40 81.49 126%
2010 84.38 88.50 105%
Raw Material Expenses as a percentage of Sales increased drastically
Raw Material
Raw Material Expenses as a
Year Sales
Expense percentage of
Sales
2008 18.63 4.92 26%
2009 64.32 43.15 43%
2010 84.3 35.78 36%
The profit generation was barely enough to meet the interest burden
Year PBIT Interest Paid
2008 2.69 3.59
2009 5.24 9.42
2010 7.9 10.32
5. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
Analysis of Cash Flow
Borrowing in 2010 was 21 times as that of 2009
Proceeds from Increase in
Year
borrowing borrowing
2009 8.13
21 times
2010 169.46
Interest burden due to borrowing has also increased to 10.31 crore in 2010 from 9.65 crore in
2009
Net Cash flow from Investing activities is -3.27 in 2009 and -1.26 in 2010 which is negative
Net Cash Flow from Operating Activities in 2009 is -0.23 that means operation is generating
negative cash flow in this year
Net Cash Flow from Operating Activities in 2010 is 4.73 Crore
It can be concluded that Company is not able to generate positive cash flow on regular basis.
Financial Ratios Analysis
2008 2009 2010
Debt 89.47 80.04 71.92
Assets 128.05 123.58 85.11
Interest payments 10.32 9.42 3.59
EBIT 7.9 5.24 2.69
Debt to Asset ratio 0.7 0.65 0.85
Interest coverage 0.77 0.56 0.75
Debt to Asset ratio:
This ratio measures the % of total assets financed with debt. For example, debt assets ratio of 0.4 indicates that
40% of the company's assets are financed with debt. Generally, higher debt means higher financial risk and thus
weaker solvency.
Interest coverage:
This ratio measures the no. of times a company's EBIT could cover its interest payments. Higher ratio means
indicates solvency, offering greater assurance that the company can service its debt from operating earnings
Company Debt to Asset ratio is high which indicates 85% of company's assets are financed with debt, so interest
payments are higher than its EBIT which makes company in loss. Also Company’s Interest coverage ratio is low,
which means weaker solvency.
6. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
Conclusions & Suggestions
Company should continue its operations as there are great opportunities for growth which is
visible from the following data
Growth
Year
Rate
2008 540 %
2009 245 %
2010 47 %
However following points should be taken care of during operations
The company should put a check on its Expenses, as expenses alone in all these years are more
than Total Revenue as explained above
Check on Raw Material Expenses should be put as Raw Material Expenses as a percentage of sales
is also continuously increasing
With control of expenses Net Cash Flow from operating activities will also improve
Borrowing should be controlled in order to reduce the tax burden
7. Managerial Economics: Project Report PGDM-Exec 2011 - Term-I
References
www.gtpl.co.in
http://www.facebook.com/pages/Gactel-Turnkey-Projects-Limited/152136948189609?sk=info
CMIE Database
www.powertoday.in
Annexure 1
Sales (Rs Market Sq Value of Market
S.No. Company Name
Million Share Share
1 Larsen & Toubro Ltd. 502850.5 53.70291855 2884.003461
2 Punj Lloyd Ltd. 77558.4 8.283003473 68.60814653
3 B G R Energy Systems Ltd. 47609.4 5.084540495 25.85255205
4 Era Infra Engg. Ltd. 36924.8 3.943457403 15.55085629
5 Ramky Infrastructure Ltd. 31479.3 3.361894408 11.30233401
6 Ircon International Ltd. 31087.9 3.320094067 11.02302461
7 Engineers India Ltd. 26775.4 2.859532058 8.176923593
8 Afcons Infrastructure Ltd. 22305.5 2.382160204 5.674687238
9 Alstom Projects India Ltd. 18487.7 1.974430665 3.898376452
10 Ahluwalia Contracts (India) Ltd. 17548.8 1.874158974 3.512471859
11 Shriram E P C Ltd. 16708.7 1.784438825 3.184221919
12 B L Kashyap & Sons Ltd. 15950 1.70341195 2.901612272
13 I O T Infrastructure & Energy Services Ltd. 15779.4 1.685192384 2.839873371
14 A 2 Z Maintenance & Engg. Services Ltd. 13444 1.4357787 2.061460474
15 M B L Infrastructures Ltd. 10016 1.069678627 1.144212364
16 Hindustan Dorr-Oliver Ltd. 8897.6 0.950236876 0.90295012
17 Sunil Hitech Engineers Ltd. 8055.6 0.860313812 0.740139856
18 Consolidated Construction Consortium Ltd. 7230.4 0.772184938 0.596269579
19 Techno Electric & Engg. Co. Ltd. 7166.1 0.765317892 0.585711476
20 U B Engineering Ltd. 6109.1 0.652433476 0.425669441
21 Jaihind Projects Ltd. 4093.3 0.437152109 0.191101966
22 Welspun Projects Ltd. 2448.8 0.261524463 0.068395045
23 Brahmaputra Infrastructure Ltd. 2062.7 0.220290146 0.048527748
24 Avasarala Technologies Ltd. 1491.3 0.159266347 0.025365769
25 Brahmaputra Consortium Ltd. 1123 0.119933017 0.014383929
26 M S Khurana Engg. Ltd. 1044.2 0.111517414 0.012436134
27 Gactel Turnkey Projects Ltd. 843 0.09002986 0.008105376
28 Techno Electric & Engg. Co. Ltd. [Merged] 755.4 0.080674444 0.006508366
29 Coromandel Engineering Co. Ltd. 241.5 0.025791472 0.0006652
30 Saag R R Infra Ltd. 137 0.014631187 0.000214072
31 Sika Interplant Systems Ltd. 131.2 0.014011765 0.00019633
936356 3053.36
Annexure 2
Herfindahl Concentration Ratio
Index
4 8 12 16 20 31
3053.36 71.01 82.94 90.27 95.41 98.46 100
