About Garuda Construction and Engineering Limited

Garuda Construction and Engineering provide end-to-end civil construction for residential, commercial, residential cum commercial, infrastructure and industrial projects and additional services for infrastructure and also hospitality projects. Wherein, civil construction includes construction of residential, hospitality, industrial, infrastructural and commercial buildings, construction of concrete building structures and composite steel structures which are required for the civil construction. Their end-to-end civil construction starts with detailed route survey, designing, detailed engineering, mobilization of resources, micro scheduling of construction activities, obtaining construction permissions and conducting soil/water testing, hiring of contractor / manpower, procurement of material, lab testing, carrying out construction activities as per approved plan and finally handing over the project are per the agreed terms. Further, they also provide services such as operations and maintenance services (“O&M”) and Mechanical, Electrical and Plumbing (“MEP”) services and finishing works as a part of their construction services.

Their aim is to increase their execution capabilities in terms of the size and number of civil construction projects across various sectors, namely, residential, residential cum commercial, infrastructure, commercial and industrial. They started the civil construction work in hospitality sector with Golden Chariot Vasai Hotel & Spa in the year 2010, the Boutique Hotel, these were construction contracts with their promoter namely PK Hospitality Services Private Limited, now known as PKH Ventures Limited. In the year 2017, they commenced the civil construction of residential buildings in the Mumbai Metropolitan Region (“MMR”) named the Rivali park, Kandivali. In 2021, they concluded civil construction of the Delhi Police Headquarters, for the concessionaire M/s. Eternal Building Assets Private Limited, (a group company), which is also one of their marquee projects, which involved construction of twin towers of seventeen (17) storeys each, with a complete glass façade and steel bridge connecting the two towers, admeasuring total construction area of 89,140.53 Sq. Mtrs. They are currently engaged in civil construction of six (6) residential projects, two (2) commercial projects, one (1) industrial project and one (1) infrastructure. 

Construction sector in India
The construction sector is the country’s second-largest economic segment after Agriculture. The sector contributed 8.4% to the national GVA (at constant price) in FY23. The order book of construction companies is dependent upon the capital expenditure in the economy. Broadly, the investments can be classified into infrastructure, real estate and industrial construction. The largest segment of Indian Construction industry is Infrastructure segment which contributes 59.7% as of FY23. The major chunk of growth is attributable with increase in government spending in building infrastructure. The construction segment witnessed a drop in FY21 due to impact of COVID but has strongly recovered in FY22 and FY23. 

Overall the Indian Construction sector has grown at a CAGR of 10.6% from FY18 to FY23 from Rs. 2,375 Billion to Rs. 3,922 Billion. The construction sector is further expected to grow from Rs. 3,922 Billion in FY23 to Rs. 6,494 Billion in FY30 at a CAGR of 7.5%. Historically, infrastructure creation, spread across sectors such as roads and highways, telecom, airports, ports, power, oil and gas and railways has dominated the investments. Increase in Infrastructure demand & government initiative shows the potential for catapulting India to the third largest construction market globally. The sector is expected to contribute 15% to the Indian economy by 2030. Share of key segments that contribute to construction spending.

EPC stands for ‘Engineering, Procurement and Construction’. EPC entails the contractor build the project by designing, installing and procuring necessary labour and land to construct the infrastructure, either directly or by subcontracting. The EPC contract is a type of construction contract between parties where the contractor is responsible for all the engineering, procurement, and construction activities to deliver the completed project to the employer or owner. In addition to the delivery of the complete facility, the EPC contractor must deliver it within a guaranteed time and guaranteed price. EPC vendors are those service providers which execute projects on a turnkey basis.

The Construction sector was hit hard during the pandemic, because of the lockdown, labour migration leading to logistical challenges. However, the sector has witnessed a growth in FY22 and FY23, supported by unlock measures and significant infrastructure investments by the Government. 

The industry has experienced a similar growth trajectory in the FY24, supported by a sustained focus on infrastructure investments in roads, railways, and airports, in addition to the expansion in real estate activity. According to CMIE, early indications from the real estate sector reveal a robust 23.5% year-on-year growth in sales revenues for the quarter ending December 2023. While operating expenses related to sales increased at a comparatively slower rate of 19.4%, the industry's most significant operating expense, categorized as other operating expenses, witnessed a notable rise of 75.3%. Consequently, the industry's operating profit saw a faster growth rate of 32.1% compared to sales. The operating profit margin expanded by 224 basis points, reaching 34.3%. 

Over the long term, the outlook for construction sector is favourable supported by continued government spending on infrastructure. The Government has expanded the National Infrastructure Policy (NIP) during the Budget to 7,400 projects from 6,835 projects and announced plans for the National Monetization Pipeline and Development Finance Institution (DFI) to improve the financing of infrastructure projects. The NIP covers various sectors and regions indicating that it is relying on an ‘infrastructure creation’ led revival of the country’s economy. The NIP covering rural and urban infrastructure entailed investments to the tune of ₹11,10,000 thousand lakhs will be undertaken by the central government, state governments and the private sector during FY20-25. 

Road construction in India is expected to grow with new funding mechanisms by NHAI, such as ToT (Toll Operate Transfer) and InvITs (Infrastructure Investment Trust) and interest from international funds (both for equity as well as debt). 

This has the potential for catapulting India to the third largest construction market globally. The sector is expected to contribute 15% to the Indian economy by 2030. The recent policy reforms such as the Real Estate Act, GST and REITs are steps to reduce approval delays and are only going to strengthen the real estate and construction sector.

GARUDA CONSTRUCTION AND ENGINEERING LIMITED COMPETITIVE STRENGTHS
1. Exclusive and focused business approach.
2. Established and proven track record
3. Strong project management capacity and execution capabilities
4. Strong financial performance and healthy balance sheet
5. Visible growth through increasing order book
6. Experienced Promoter, Directors & Management Team

GARUDA CONSTRUCTION AND ENGINEERING LIMITED STRATEGIES
1. Thrust into the Construction and Development segment
2. Increase their focus on and execute greater number of projects on a lock-and-key basis
3. Continue focusing on timely completion
4. Continue to maintain an asset light model for their business operations
5. Expand their geographical footprint

GARUDA CONSTRUCTION AND ENGINEERING LIMITED RISK FACTORS & CONCERNS
1. One of their Promoter- Mr. Pravin Kumar, Brijendra Kumar Agarwal is involved in a criminal proceeding initiated by Airport Police Station which is currently pending before the Hon’ble Metropolitan Magistrate at Andheri, Mumbai.
2. The business and profitability are significantly dependent on the performance of the real estate market generally in India and particularly in the Mumbai Metropolitan Region (“MMR”).
3. Their contracts are mostly of the nature of EPC contracts and they are exposed to inherent risks related to their contractual framework.
4. Infrastructure projects are typically awarded to them on satisfaction of prescribed pre-qualification criteria and following a competitive bidding process.