Gammon India’s stock is on radar as the company is looking to divest its EPC and T&D businesses to reduce debt and unlock value. Speaking to Bloomberg TV India, Gammon India CFO Vardhan Dharkar said the parent company will continue to hold a 25 per cent stake in both the entities. Over a period that stake will get a good valuation because both these are very good businesses.

Take us through the dynamics of this deal. What proportion of your revenue comes from the EPC division?

In terms of dynamics, the EPC business is being carved out into a separate company called GRIL. In this company, the new company investor will come in and eventually he will be holding around 75 per cent. Almost two-third of the revenue of the company comes from the EPC business.

What are you left with?

In terms of our restructuring, last month we had announced that the transmission and distribution (T&D) business will be carved out into a separate company. That process is on and the investor is on board. So that is done. Gammon India will be then left with various investments it has made in India and outside.

A lot of this restructuring is because of pressure from bankers to deleverage. To what extent will your debt levels come down after this sale? The deal is pegged at ₹250 crore. Is that the value?

The value is ₹250 crore and it will come as fresh equity investment into the company in which the business is being carved out. In terms of exposure of banks in Gammon India, almost two-third of the exposure will be sitting in these two companies — the T&D as well as the EPC company.

Both these companies will take the burden of debt. So will the remaining projects and other businesses will be debt free? What is the level of debt over there?

There will be debt left in the residual company and that will be serviced by monetising various non-core assets. The debt that will get transferred to EPC and T&D will be a combination of funded limit, funded exposure and non-funded exposure in terms of bank guarantees and LCs.

What is the plan on monetising from here?

Various assets that Gammon India holds, over a period of next couple of years, will get divested and monetised. This is the action plan we are working upon. I

n fact, Gammon would be the first company that went into CDR and SDR after they were implemented and actually came out from the crisis. We already had a plan and announced the investors for both the companies.

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