We are an integrated (i) construction and (ii) infrastructure development and management company in India with a strategic emphasis on environmental oriented projects. Since commencing our business over 13 years ago, we have been involved in water and waste water projects, transportation projects, irrigation projects, industrial projects and parks (including SEZs), power transmission and distribution projects, residential, commercial and retail property developments and a transport terminal development. We are headquartered in Hyderabad and have five zonal offices and three regional offices throughout India.
The Company is the flagship company of the Ramky Group, a group of affiliated companies that, in addition to the services provided by the Company, provides waste management, environmental consulting, finance and accounting, data management, indirect procurement, real estate development and emerging technologies services.
We operate in two principal business segments: (i) a construction business, which is operated by the Company, and (ii) a developer business, which comprises nine of the Subsidiaries and the Associate. In addition, the Company has entered into a memorandum of understanding with Haldia Development Authority (“HDA”) for the Company to develop a 2,500 acre SEZ in Haldia, West Bengal. Pursuant to a letter dated September 27, 2007, HDA offered the Company the right to develop the initial 250 acres of the park. The memorandum of understanding provides that the Company and HDA will incorporate a special purpose vehicle for the project in which the Company will have an 89% interest and HDA will have an 11% but as of yet the special purpose vehicle has not been incorporated. Except for that project, each of our development projects is operated by an individual special purpose vehicle promoted by the Company. In addition to our construction business and developer business, Ramky Engineering and Consulting Services FZC, the Company’s 100% owned subsidiary in the United Arab Emirates, operates a small consultancy business.
The Company (Construction Business)
The Company, which operates the construction business, undertakes projects in the following sectors:
• Water and waste water projects such as water treatment plants, water transmission and distribution systems, elevated reservoirs and ground level service reservoirs, sewage treatment plants, common effluent treatment plants, tertiary treatment plants, underground drainages and lake restorations (the “Water and Waste Water” sector);
• Irrigation projects such as cross drainage works, lift irrigation projects, dams and barrages (the “Irrigation” sector);
• Industrial construction projects such as industrial parks and related works (the “Industrial” sector); • Transportation projects such as expressways, highways, bridges, flyovers and dedicated service
corridors (the “Transportation” sector);
• Building construction, which includes commercial, residential, public, institutional and corporate buildings, mass housing projects and related infrastructure and facilities such as hospitals and shopping malls (the “Building Construction” sector); and
• Power transmission and distribution projects such as electricity transmission networks, substations, feeder lines, and low tension distribution lines (the “Power Transmission and Distribution” sector). The Company executes projects for (i) unaffiliated third parties, (ii) Promoter Group companies, and (iii) certain of the Subsidiaries. For the year ended March 31, 2007 and the three months ended June 30, 2007, projects undertaken for third parties accounted for 76.11% and 70.56%, respectively, of the Company’s operating income on a standalone basis; projects undertaken for Promoter Group companies accounted for 13.49% and 14.45%, respectively, of the Company’s operating income on a standalone basis; and projects undertaken for the Subsidiaries accounted for 10.40% and 14.99%, respectively, of the Company’s operating income on a standalone basis. For the purposes of consolidation, only revenue received from third parties and Promoter
Group companies, which are considered to be external clients, is included in operating income on a consolidated basis and the revenue received from the Subsidiaries is eliminated. For the year ended March 31, 2007 and the three months ended June 30, 2007, the construction business segment revenue from external clients accounted for 87.08% and 90.79%, respectively, of the Company’s operating income on a consolidated basis `
Some of the major unaffiliated third party clients of our construction business include: Singareni Collieries Co. Ltd.; Visweswarya Technological University; Hyderabad Municipal Water Supply & Sewerage Board; Gujarat Water Supply & Sewerage Board; Andhra Pradesh Health & Medical Housing & Infrastructure Development Corporation; Karnataka Neeravari Nigam Limited; and Irrigation & CAD (PWD), Government of Andhra Pradesh.
Our construction business primarily enters into three different types of contracts: engineering, procurement and construction (“EPC”) contracts; lump-sum-turnkey (“LSTK”) contracts; and item rate contracts. Contracts entered into with unaffiliated third parties are the result of the Company having successfully engaged in a competitive bidding process. Contracts entered into with Promoter Group companies, the Subsidiaries and the Associates are negotiated, usually after third-party quotes for the construction project in question have been received. The Company is a preferred contractor of the Promoter Group companies, the Subsidiaries and the Associates.
Developer Business
Our developer business segment began in fiscal 2007. Each of the entities that comprise our developer business is a special purpose vehicle formed for the development of one project. The table below gives summary details of each of our subsidiaries and the Associate that comprise our developer business.
Name of Subsidiary or Associate
Company’s Beneficial Ownership
(%) Project and Location
Estimated Project Cost in Rs. Million Completion Date/ Scheduled Completion Date
Ramky Pharma City (India) Limited
51 Jawaharlal Nehru Pharma City Industrial Park at Parawada Visakhapatanam, Andhra Pradesh
4,009.58 June 2008
MDDA Ramky IS
Bus Terminal Limited 100 Dehradun, Uttarakhand (Phase 1) Inter State Bus Terminal in Commercial Mall located next to the
Inter State Bus Terminal in Dehradun, Uttarakhand (Phase 2)
131.00 (Phase 1) 152.40 (Phase 2) June 2004 (Phase 1) March 2008 (Phase 2) Gwalior Bypass Project Limited
51 Gwalior Bypass Project in Gwalior, Madhya Pradesh
3,321.12 October 2009
Ramky Towers Limited
51 Commercial and residential buildings in Gachibowli, Hyderabad, Andhra
Pradesh
2,667.37 September 2009
Ramky Hyderabad
Ring Road Limited 74 Outer Ring Road to Hyderabad City 3,993.70 April 2010 Ramky Herbal and
Medicinal Park (Chhattisgarh)
Limited
100(1) Herbal and Medicinal Industrial Park in the District of Dhamtari,
Chhattisgarh
964.43 October 2014
Ramky Food Park (Chhattisgarh)
Limited
100(2) Food Processing Industrial Park in the district of Rajnandagao,
Chhattisgarh
834.84 October 2014
Ramky Gems & Jewellery Park
Name of Subsidiary or Associate
Company’s Beneficial Ownership
(%) Project and Location
Estimated Project Cost in Rs. Million Completion Date/ Scheduled Completion Date (Chhattisgarh)
Limited the district of Raipur, Chhattisgarh Ramky Enclave
Limited 89.01 Integrated Housing Project 1,120.07 June 2010
Ramky Integrated Township Limited
00.00(4) Integrated Housing Project 19,492.00 72 months from the date on which
the conditions precedent as specified in the of expression of interest-cum- request for proposal document for the
project are satisfied (5) The Company will have an 89% in the entity after financial closure of the project for which the entity
was formed.
(6) The Company will have an 89% interest in the entity after financial closure of the project for which the entity was formed.
(7) The Company will have a 26% in the entity after financial closure of the project for which the entity was formed.
(8) The Company will have a 30.60% in the entity after financial closure of the project for which the entity was formed.
In addition, the Company has entered into a memorandum of understanding with HDA for the Company to develop a 2,500 acre pharmaceutical, bio-technology and chemical park in Haldia, West Bengal. The preliminary estimated cost of the entire 2,500 acre park is Rs. 9,500 million. Pursuant to a letter dated September 27, 2007, HDA offered the Company the right to develop the initial 250 acres of the park. The preliminary estimated project cost for developing the initial 250 acres is Rs. 950 million, including the land premium. A more detailed estimate of the project cost for the initial 250 acres will be prepared after the completion of the detailed project report. The initial 250 acres of the park is expected to be completed by December 2010. The memorandum of understanding provides that the Company and HDA will incorporate a special purpose vehicle for the project in which the Company will have an 89% interest and HDA will have an 11% but as of yet the special purpose vehicle has not been incorporated.
Our work force, as at June 30, 2007, consisted of 1,111 full-time employees on a consolidated basis.
We have a large fleet of sophisticated construction equipment, including, concrete batching plants, transit mixers, concrete pumps, reversible drum mixers, excavators, rock breakers, backhoe loaders, dozers and tough riders, all of which we own.
Our work force, machinery assets, financial net worth and past execution capabilities enable us to undertake many large-scale projects, which we define as any construction project above Rs. 1 billion and developer business projects worth more than Rs. 1 billion.
Our western zone office is ISO 9001:2000 certified for the quality management system we apply to the design, development, engineering and construction with operation and maintenance of water, sewerage and effluent treatment plants together with collection and distribution pipelines, construction and execution of roads, bridges,
buildings, irrigation and such other infrastructure works. We are in the process of obtaining the same certification for the Company. We have also received several accolades, including the 2005 Best Construction Award from the Government of Rajasthan and the Indian Concrete Institute’s 2005 Outstanding Concrete Structure Award for Gandhi Medical College and Hospital Complex in Hyderabad. Our Chairman, Mr. Alla Ayodhya Rami Reddy, received the Engineer of the Year Award – 2005 from the Government of Andhra Pradesh and the Institution of Engineers (India). Our strict adherence to health, safety and environmental policies and our contributions to environmental management have also been recognized. In particular, we were awarded an Environmental Leadership Award by the United States – Asia Environmental Partnership in 2004 and the Safety Health and Environment Performance Award by the Confederation of Indian Industry in 2005. In the year ended March 31, 2007 and the three months ended June 30, 2007, our total income on a consolidated basis was Rs. 7,403.42 million and Rs. 1,729.67 million, respectively. In the year ended March 31, 2007 and the three months ended June 30, 2007, we earned a net profit, as restated, on a consolidated basis of Rs. 408.32 million and Rs. 76.14 million, respectively. The value of our Order Book was Rs. 41,593.00 million as at September 30, 2007 compared with Rs. 22,308.00 million as at March 31, 2007. We have added contracts worth Rs. 4,664.10 million to our Order Book during the period from October 1, 2007 through November 30, 2007.
Corporate History and Structure
The Company was originally incorporated as Ramky Engineers Private Limited on April 13, 1994 to undertake construction projects. In 1998, we diversified into construction and began to undertake civil and environmental EPC projects. Our early construction projects were primarily concentrated in the water and waste water sector. Subsequently, we expanded into roads, buildings, irrigation and industrial construction. We then decided to leverage opportunities in infrastructure construction and on June 23, 2003, Ramky Engineers Private Limited was renamed Ramky Infrastructure Private Limited. On June 24, 2003 Ramky Infrastructure Private Limited was converted into a public limited and became Ramky Infrastructure Limited.
Until fiscal 2007, we conducted all our operations and business through the Company.
Set forth below is our organizational chart showing the Company’s beneficial interest in each entity and the business segment each entity is involved in.
(5) On September 27, 2007, the Company was awarded the right to develop a 2,500 acre pharmaceutical, bio-technology and chemical park in Haldia, West Bengal. The Company plans to transfer its rights and obligations in the project to a special purpose vehicle in which the Company will have an 89% interest but as of yet it has not done so.
(6) The Company will have an 89% interest in the entity after financial closure of the project for which the entity was formed.
(7) The Company will have an 89% interest in the entity after financial closure of the project for which the entity was formed.
(8) The Company will have a 26% interest in the entity after financial closure of the project for which the entity was formed.
Our Strengths
We believe that we have the following strengths:
Experience and expertise in construction and management of environmental infrastructure projects
We believe that our experience and expertise in planning, designing and constructing environmental infrastructure projects is a competitive strength and differentiates us from many of our competitors when
Ramky Infrastructure Limited
Ramky Pharma City (India) Limited 50.72% Ramky Towers Limited 51% Gwalior Bypass Project Limited 51%
Ramky Engineering and Consulting Services (FZC) 100% (Consultancy Services) Ramky Hyderabad Ring Road Limited 74% MDDA Ramky IS Bus Terminal Limited 100% Ramky Enclave Limited 89.01% Ramky Herbal and Medicinal Park (Chhattisgarh) Limited 100%(2) Ramky Food Park (Chhattisgarh) Limited 100%(3) Ramky Gems & Jewellery Park (Chhattisgarh) Limited 100%(4) Developer Business Segment(1)
Construction Business Segment
Ramky Integrated
Township Limited
bidding for environmental infrastructure projects. Constructing and operating environmental infrastructure projects, particularly in the area of Water and Waste Water, has been a significant area of focus for our business. We have an in-house design and engineering team headquartered in Mumbai that specializes in designing and making proposals for Water and Waste Water projects. This team makes use of the latest design tools, including the latest design software and state-of-the-art computers, and technology that is new to India. For example, we use C- Tech technology for sewage treatment plants, which is an aerobic biological process where aeration, settling and decanting happens in a single tank and which eliminates the inefficiencies of continuous systems like activated sludge process and extended aeration. The focus of this team enables us to build on our past experience in the Water and Waste Water sector and maintain our expertise in this area.
From April 1, 2002 to June 30, 2007, we completed 82 Water and Waste Water projects and we are currently undertaking 57 Water and Waste Water projects. In the year ended March 31, 2007 and three months ended June 30, 2007, the total revenue from external clients generated from Water and Waste Water projects was Rs. 2,380.89 million and Rs. 295.35 million, respectively, on a consolidated basis.
Examples of environmental projects we have built and managed include the Bhanasimal Regional Water Supply Scheme, Gujarat, a 30 MLD sewerage treatment plant constructed on a LSTK basis at Neyveli for Neyveli Lignite Corporation Limited (NLCL), and a 106 MLD sewage treatment plant at Pirana, Gujarat. Our achievements in this area have been recognised with two awards: an Environmental Leadership Award by the United States – Asia Environmental Partnership in 2004 and the Safety Health and Environment Performance Award by Confederation of Indian Industry in 2005. We believe these awards have enhanced our reputation as a significant player in the Water and Waste Water sector.
Our construction business operates in diverse sectors and has a pan-Indian presence
We provide engineering, design, procurement and construction services across six industry sectors: Water and Waste Water; Building Construction; Irrigation; Industrial; Transportation; and Power Transmission and Distribution. This variety of project types enables us to keep our construction business diversified and reduces our dependence on any one sector or nature of project. In addition, our broad range of governmental and private clients ensures that we are not dependent on a limited number of clients.
In addition to our headquarters in Hyderabad, we have five zonal offices and three regional offices throughout India, which gives us the ability to execute projects in any region of India.
The total amount of orders for our construction business and the average order size for our construction business has been consistently growing
As shown in the table, the average order size for our construction business has been increasing and the average amount of new orders per employee has more than doubled from fiscal 2003 to the six months ended September 30, 2007.
Period (Rs. in million) New Orders
Average Size of New Orders
(Rs. in million) Average Number of Employees(1)
New Orders per Employee(2) (Rs. in million) Fiscal 2003 1,519.73 31 155 9.80 Fiscal 2004 2,362.11 45 232 10.18 Fiscal 2005 5,771.35 125 379 15.23 Fiscal 2006 10,210.85 133 746 13.69 Fiscal 2007 15,279.90 218 1,008 15.17
Six Months Ended
(3) Calculated by adding the number of employees at the beginning of the period and the end of the period and dividing the sum by two.
(4) Based on the average number of employees. Strong and diverse Order Book
The value of our Order Book was Rs. 41,593.00 million as at September 30, 2007. We have continued to add value to our Order Book at a steady pace, having added contracts worth Rs. 4,664.10 million to our Order Book during the period from October 1, 2007 through November 30, 2007. Additionally, our Order Book is diversified sector-wise. As at September 30, 2007, none of the sectors in which our construction business is involved contributed to more than 25% of our Order Book.
Qualified and experienced employees and proven management team
We have a qualified and trained workforce consisting of vice presidents, general managers, managers, engineers, technical staff and non-technical staff. As at June 30, 2007, we employed 1,111 full-time employees, of which 461 or 41.50%, were engineers, including 13 members of our management team. The skill sets of our employees give us the flexibility to adapt to the needs of our clients and the technical requirements of the various projects that we undertake. We are committed to the development of the expertise and know-how of our employees through regular technical seminars and training sessions organized or sponsored by the Company. Our management team is also qualified and experienced in the construction and infrastructure development industry and has been in many ways responsible for the growth of our operations. In particular, Mr. Y. R. Nagaraja, our Managing Director, is a civil engineer who has over 22 years of project management experience, Mr. A. P. Kurian, our Senior Vice-President-Operations, is a civil engineer with over 20 years of core construction experience in India, South East Asia and the Middle East and Mr. V. V. Rao, our Chief Financial Officer, is a Post Graduate with specialization in Finance from IIM Ahmedabad and has over 20 years of experience in the finance and accounts function. We believe the strength and quality of our management have been instrumental in implementing our business strategies.
Our Strategy
Our objective is to continue to improve on and consolidate our position in the construction and infrastructure development and management industries. We intend to achieve this by implementing the following strategies: Focus our construction business on undertaking larger projects
We intend to focus our construction business on undertaking large order size projects, which we consider to be projects above the size of Rs. 1 billion. As at September 30, 2007, we had five projects in our Order Book with a value of more than Rs. 1 billion. Large order size projects, in addition to typically having a smaller percentage of overhead cost as a percentage of total cost and therefore higher potential profit margins than small and medium order size projects, are, in the current market, also subject to less competition. Because of the pre- qualification and financial requirements involved in pursuing large order size projects, there are only a limited number of players that can bid for and that have the capacity to undertake such projects. The high entry barriers for bidding for large order size projects and the resulting decreased competition to bid for and undertake such