Gammon turns its gaze to transmission, logistics

MUMBAI: Construction firm Gammon India Ltd is ramping up its transmission unit and is considering a foray into logistics business, in a move to expand its presence in infrastructure development, a senior official said on Friday.

“We have been changing our profile from a construction entity to being a project-related company,” Parvez Umrigar, group spokesman and head of its infrastructure development arm, told Reuters.

“The new businesses are ramping up faster. As the group grows, I see the incremental revenues coming from them.”

The Mumbai-based firm, which last week announced a tie-up with a unit of Wyndham Worldwide Corp to develop a budget hotel chain across India, has a strong presence in road, power and port projects through its infrastructure development arm.

Gammon, which posted revenues of Rs 1,860 crore in 2006-07, currently focuses on infrastructure projects through its unit Gammon Infrastructure Projects Ltd and on transmission tower business through Associated Transrail Structures Ltd (ATSL).

With all three businesses stabilising, the company now plans to expand into areas where it sees synergies and high growth potential, Umrigar said.

“We are selectively looking at real estate and have already announced a foray into hospitality. We are looking at making transmission a well-rounded EPC (engineering-procurement-construction) player,” he said.

Gammon is ramping up capacity at ATSL and is also bidding for transmission projects to benefit from the government’s focus on increasing transmission networks in India. ATSL, in which it holds nearly 60% stake, is investing Rs 40 crore to set up a 30,000-tonnes-a-year conductor unit at Silvassa, to be completed in the next few months.

The unit, which expects to touch Rs 700 crore revenue this fiscal, will increase focus on export markets towards this end is eyeing small units to boost growth.

“We are looking at raising funds for ATSL by March, either through a public issue or through the private-equity route,” Umrigar said.

Gammon, along with CLP Holdings, has also submitted expressions of interest for four upcoming transmission projects, estimated to cost about Rs 10,000 crore. Bids for these are likely to be opened in the next two months.

Gammon is now considering entry into the logistics business in both road and port segments. In ports, it is looking at
both physical and services business, while in roads, it is eyeing fleet management and transport services.

“We expect infrastructure and logistics to converge ultimately. Although there is no direct synergy, we have strong knowledge of the area because of our road and port projects,” Umrigar said.

Gammon won a Rs 1,200 crore contract last month to build the Mumbai Offshore Container Terminal, and has already commisioned two berths at Visakhapatnam port in south India. It is the preferred bidder for three other ports in Gujarat.

The company is also very strong in the roads segment, having bagged several toll road projects across the country.