Companies

IVRCL to complete divestment of 3 BOT road projects, desalination plant by March

V. Rishi Kumar M. Somasekhar Hyderabad | Updated on December 29, 2014 Published on December 29, 2014

IVRCL Limited is on course to completing the stake sale in three road projects and Chennai desalination plant, all located in Tamil Nadu by end of this fiscal (March 2015). This will enable the company to bring down its debt by about Rs 2,500 crore and free up Rs 600-800 crore equity.

The Hyderabad-based infrastructure company, which has embarked on a phase of consolidation, is in the process of divesting its completed BOT (built, operate and transfer) mode projects, to lay thrust on its core business of EPC contracts.

E. Sudhir Reddy, Chairman of IVRCL, said the company balance sheet has been under pressure over the past couple of years due to macro economic issues and delays in project implementation, cost escalation and high interest rates ruling for too long.

“Therefore, it was time to divest stake in completed BOT projects to free up equity for new projects and bring down company debt, which is about Rs 6,500 crore. We may also consider bringing in a strategic partner,” he said.

“Next financial year (2015-16) will be a turnaround year for the company. It will bring the company back on to profitability path. The company has accumulated losses of about Rs 800 crore. It will take about two years to completely wipe them out,” R. Balarami Reddy, Group Chief Financial Officer, said.

The company had announced its moves to divest stake in all the three road projects and Chennai plant during the year.

In the next phase, IVRCL plans to take up divestment of other road projects including Jallandhar-Amrritsar and Indore-Jhabua projects and focus on EPC works and water projects, including irrigation and last mile connections in water grids, Sudhir Reddy said.

The company, which has a land bank of about 1,700 acres, including 750 acres in Sriperumbudur, is planning to divest once the realty sector gathers momentum, the CMD said.

Published on December 29, 2014
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