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| The construction and civil engineering industry is growing by leaps and bounds, going by the performance of the companies such as Gammon India.
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| In FY03, Gammon grew its topline by 42 per cent, while maintaining its operating margins at 11 per cent.
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| There were a considerable number of government infrastructure projects last year, most notable among which were the Golden Quadrilateral and the North-South East-West corridor.
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| Further, apart from the construction contracts, Gammon has also entered the private financing route, of which two annuity road projects (part of the Golden Quadrilateral) will be major contributors to revenues with an investment of Rs 400 crore.
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| The project, which is due for completion in 2005, will entail periodic revenues of Rs 57.5 crore twice a year.
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| Therefore on a consolidated basis, it will result in a higher growth in the bottomline since such projects are higher margin projects compared to the subcontracting business.
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| The encouraging bit is the high order book of Rs 3000 crore, providing a revenue cushion for Gammon over the next few years.
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| Of the top 10 contracts worth around Rs 2400 crore, around 60 per cent of the projects have moved beyond the 25 per cent completion level, which is the minimum level maintained by the company for recognising profits.
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| Compared to an order inflow of Rs 1120 crore in FY03, there has been an order inflow of Rs 526 crore so far this fiscal.
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| The second-half of the fiscal is generally a buoyant one for construction and engineering companies and as result, the order backlog at then end of FY04 should be higher.
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| The critical factor is that while the margins in FY03 have been sustained, margins could be under pressure.
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| With global contracting companies also bidding for projects in India, it could lead to lower margins in the projects acquired in future.
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| That said, the management expects topline growth for the current fiscal at around 30-35 per cent. What matters is whether the bottomline would keep pace.
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| But even if the bottomline for the rest of the fiscal remains stagnant, the 59 per cent jump in the first quarter bottomline should result in around a 10 per cent rise in FY04.
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| Changes in Sensex
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| The Index Committee of the BSE has made its first changes to the Sensex constituents after the shift (earlier this month) to the free-float method of index construction.
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| Previously, the Sensex, like most other indices in the country, was calculated using the full-market capitalisation methodology, under which the total market cap of the index constituents is taken into consideration.
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| Under the free-float method, only the proportion of shares that are readily available for trading in the market are considered.
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Thus, promoters
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