GMR to slash debt by half; plans listing of energy, airport vertical

V Rishi Kumar Hyderabad | Updated on January 23, 2018 Published on April 09, 2015

Rights issue is a step to ‘de-leverage balance sheet’

As the diversified GMR Infrastructure Ltd concludes its ₹1,400-crore rights issue of equity with oversubscription, it is resolved to bring down corporate debt by about 50 per cent over the next 12-18 months.

Apart from divesting some assets, it proposes to unlock value and raise capital by listing energy and airport verticals.

Madhu Terdal, GMR Group Chief Financial Officer, says, “In the last 18 months, the company through strategic divestment released equity of ₹3,834 crore and reduced its liabilities by ₹6,180 crore. As on September 2014, the consolidated gross debt was ₹45,800 crore and net debt was ₹39,400 crore.”

Responding to e-mail queries, he said the rights issue was just one of the several initiatives to bring down its debt. While the company total debt is about ₹45,000 crore, at the corporate level it is ₹7,000 crore, or about 15 per cent of overall debt. It is this debt, the company plans to slash by half.

The rights issue is a step to de-leverage the balance sheet where the proceeds would be utilised to reduce debt. The company allotted 18-crore warrants to the promoters to be converted into equity by February 2016. The process of churning capital is a continuous exercise ensuring that the balance sheet of the company remains healthy.

On three gas-based projects with 1,400 MW capacity GMR has, he said, “Two of these plants are operational [about a couple of years back] and are debt free. The third plant though complete is yet to announce commissioning date due to lack of gas.” The gas polling process announced by the Centre would be beneficial as it would enable to service debt and fixed expenses.

“Proceeds of divestment of good assets are being used to create more good assets by operationalising the remaining projects. We believe the delta value addition from the operationalisation of the new projects is significantly higher,” he said.

Explaining difficulties faced by infra firms, he said over the last few years, environment remained challenging for infrastructure companies in the country.

While on one hand, sentiments were subdued due to various business-related issues, infrastructure financing, especially equity raising turned out to be a big challenge.

The company had to therefore take higher amount of corporate debt in lieu of equity to fund its projects to completion. Now with all the projects nearing completion, there is no further equity requirement.

The group is, therefore, working towards specifically reducing its corporate debt.

Published on April 09, 2015
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