"Our capex cycle is over and all assets have started generating cash. Low interest regime has started, so on our Rs 45,000-crore deb
Online PR News – 03-April-2015 – Mumbai/2nd April – MUMBAI: GMR InfrastructureBSE 0.96 % plans to raise Rs 4,000 crore over the next one year through divestment of assets and share sale to reduce debt and ease cash flow, Group Chief Financial Officer Madhu Terdal told ET.
The loss-making infrastructure company plans to divest projects, monetise land assets and sell stake at holding company level to raise funds. It has put a freeze on capital expenditure for the next 2-3 years. "Our aim is to raise about Rs 4,000 crore in the next 12 months to reduce debt," Terdal said.
While the company has toned down aggression in business, it is aggressively trying to improve the health of its balance sheet. In the last two years, GMR, which builds airports, roads and power projects, has sold about 23 different assets to raise close to Rs 11,000 crore to pare debt, the CFO said.
"We have 3-4 due diligence going on right now. There are simultaneous talks happening for asset, subholding, and even at the listed company level. We will be able to raise not less than Rs 2,000 crore in energy business and another Rs 1,500-2,000 crore at group level," Terdal said.
GMR Infrastructure, the flagship company of the group, that builds power projects, airport and roads has a staggering debt of Rs 45,000 crore. It will not take up any new projects except some cash contracts in roads and aims to get one more Indian and one international airport project.
The priority is clear. To halve the corporate debt of the company in the next 18 months from Rs 7,000 crore now in order to reduce the leverage on the balance sheet and free cash flows. For the balance debt, which has been raised at project level, the company is not worried as the repayment tenures are longer and most projects have started generating cash.
It is also in the process of monetising 50 acres of land associated to its Delhi International Airport project. Terdal did not reveal how much this could fetch them but said that the company had sold similar land at an average of Rs 80 crore per acre in 2008.
The company's Rs 1,400-crore rights issue, which opened March 24 and closes April 8, will also help it increase share capital and improve its debt-equity position.
Terdal said the company is constantly working on reducing debt but it has not reflected yet on its performance because it has also been drawing fresh debt and cash flows have remained muted. But this situation is going to ease as most projects have become operational and are generating cash to service their debt.
"Our capex cycle is over and all assets have started generating cash. Low interest regime has started, so on our Rs 45,000-crore debt, even if we can reduce interest rate by 1%, we will make savings of Rs 450 crore annually," Terdal said.
GMR, which operates 2,501.35 MW of power generation capacity and has another 2,318 MW under construction, sees slow improvement in the sector with some visibility of coal and gas availability now.
It is simultaneously working on reviving its initial public offer plan that was shelved in 2014, sale of project and stake sale in the power holding company, and will seal the deal that gets it best valuation. "We could do one or more deals to raise Rs 2,000 crore in the power business in the next 12 months. Sale of our EmcoBSE 2.76 % power plant (600 MW) alone can get us Rs 1,800-2,000 crore," he said.
It is speculated that international energy majors like Sembcorp Industries of Singapore and Korea Electric Power Corporation have had talks with the company to acquire its 1,050 MW plant at Kamalanga in Orissa.