Gammon India builds up

Gammon India is doing well on the bourses today. The stock is up 3% at Rs.26, with its upper circuit filter at Rs.30.35. Over the past few days, the stock has been hovering around its low levels of Rs.24.

Today, the stock is in the limelight on news that the company is in talks with its lenders to restructure debt of Rs.3500 crore through the CDR route. With this, the company joins the league of league of other similar infra companies which have sought a bailout – GTL, Suzlon, HCC, Jindal Stainless. A host of factors – slowdown in orders, higher costs have led most of these companies to report loses. Its European subsidiary also weighs heavy, reporting losses. Banks like Canara Bank, Allahabad Bank and ICICI Bank have lent to Gammon India.

For 9MFY13, the company had reported a 3% (YoY) drop in topline and its accumulated losses stood at Rs.321 crore. The company has an order backlog of Rs.16,000 crore but the challenge is execution.