Directors' Message

We at Padghams are pleased to report that signs are starting to emerge indicating the negative effects of the Global Financial Crisis (GFC) are diminishing in each of the markets in which we operate.

The Australian Construction Industry (non - residential) appears set to see a general decline in its activity levels compared to the cyclical peak of 07/08 and 08/09. The Australian Construction Industry Forum (ACIF) forecasts this decline will continue in 09/10 before levelling off in 10/11 followed by modest growth in the following years. Education and Healthcare are expected to be the best performing sectors, with Melbourne, Sydney and Brisbane representing the highest growth markets.

None-the-less, Padghams expects its business to grow in South Eastern Australia due to some large PPP projects. These will benefit from Padghams past experience as well as some new service innovations (referred to in this edition). Our recent appointment of Mr James Beck to head of our Sydney offices reinforces our long term business confidence in the NSW market. Please contact James Beck or Director Lyndal Rofe for further particulars.

India now generates half of the group earnings, having grown rapidly under the leadership of Padghams India Director and Resident Manager, Mr Sateesh Kumar.

The Indian economy is forecast to maintain its recent past growth performance despite some negative impacts from the GFC. The International Monetary Fund predicts GDP growth for India of 5.5% in 2009 and 6.5% in 2010.

Speaking at an Infrastructure Industry event organized by the Australia India Business Council during his recent Melbourne visit, Mr Kumar said: "We remain optimistic about the Indian market, despite recent Financial Crisis related setbacks for the economy as a whole and the property sector in particular.

"Combined with a general lack of confidence in the residential sectors, the IT and BPO sectors, which had propelled the construction development boom, have certainly hit a wall. Despite this, the IT sector continues to grow with recent results indicating a 30% growth rate in exports. However, we see continuing opportunities in the corporate sectors, especially hospitality, manufacturing and telecommunications."

The approach to procurement is the major difference between the Australian and Indian markets, while the fundamental need of clients to optimise the value of their building products and minimise risk are universal.

Demand for international designers and construction managers is anticipated to continue to grow in order to meet the burgeoning urban growth centres across India, and we see opportunities for Australian consulting firms who offer innovative and cost effective solutions. Offsetting this is a notable increase in new market entrants from the UK and USA especially in architectural and engineering related services. This also reflects the dramatic reduction in project opportunities in their respective domestic markets.

Padghams expects its service exports to grow in the medium terms from projects in other regions, including Africa, Middle East and Asia, delivered in conjunction with local alliance partners in these markets.