Gactel Turnkey Projects Limited is an Indian company that provides cooling towers and systems. It has experienced losses for the past three years due to total revenue being less than total costs. Expenses as a percentage of revenue and raw material expenses as a percentage of sales have increased significantly. The company also struggles with generating positive cash flow regularly and a high debt burden that exceeds assets. To improve performance, the company needs to reduce expenses, control raw material costs and borrowing to reduce interest payments, while pursuing aggressive sales to utilize growth opportunities in the market.

1. Gactel Turnkey Projects
Limited

2. Brief 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

3. Market Structure
Market Structure is 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 Out of the 31 companies
Gactel Turnkeys Limited ranks 27 in terms of sales
turnover.

4. Total Revenue and Total Cost
TR, TC Curve
100
88.13
84.3
80
70.32
64.32
60
TR
40 TC
Net Profit
20 20.32 18.63
-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.

5. Reason for Losses
P & L Statement Analysis
• The revenue from the sale of goods not adequate to meet
the expenses
Total Expenses as a
Year TR
Expenses percentage of 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
Year Sales
Expense as a percentage of Sales
2008 18.63 4.92 26%
2009 64.32 43.15 43%
2010 84.3 35.78 36%

6. Reason for Losses
P & L Statement Analysis
• 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

7. Reason for Losses
Analysis of Cash Flow
• Borrowing in 2010 was 21 times as that of 2009
Proceeds from borrowing Increase in
Year
(in Rs Cr) borrowing
2009 8.13
21 times
2010 169.46
• Interest burden due to borrowing has also increased to
Rs 10.31 crore in 2010 from Rs 9.65 crore in 2009
• Net Cash flow from Investing activities is -3.27 in 2009
and -1.26 in 2010 which is negative

8. Reason for Losses
Analysis of Cash Flow
• Net Cash Flow from Operating Activities in 2009 is -0.23
Crore 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.

9. Reason for Losses
Financial Ratios Analysis
In Rs Crore 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

10. Reason for Losses
Financial Ratios Analysis
 Debt to Asset ratio:
This ratio measures the % of total assets financed with
debt. For example, debt assets ratio of 0.85 indicates that
85% of the company's assets are financed with debt.
Generally, higher debt means higher financial risk.
 Interest coverage ratio:
This ratio measures the no. of times a company's EBIT
could cover its interest payments. Higher ratio offers
greater assurance that the company can service its debt
from operating earnings.

11. Conclusions & Suggestions
Company should continue its operations as there are great
opportunities for growth which is visible from the following data Year
Year Growth 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.

12. Conclusions & Suggestions
• With control of expenses Net Cash Flow from operating activities
will also improve
• Aggressive sales promotions
• Borrowing should be controlled in order to reduce the tax burden

13. Thank You !!!