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GVK Power & Infrastructure Limited is on course to divesting stake in its airport holding arm and raise funds through an Initial Public Offer, as a part of its efforts to consolidate its business and take up expansion of new projects.
The company expects this process to complete over the next few months.
Paring debt
Seeking approval from the members’ to dilute over 50 per cent stake in the airport arm, the company management proposes to utilise these funds to retire some of the debt and meet requirement of upcoming projects, including the ₹15,000-crore Navi Mumbai airport.
The company sought shareholders nod for an enabling resolution which will enable it to raise up to ₹8,000 crore, which in turn will help pare its debt.
The board of directors are seeking to raise the funds through either private equity funding or an IPO of the GVK Airport Holdings Limited, the holding company of airports business and a step-down subsidiary.
At the 24th annual general meeting here today, GVK Reddy, Founder-Chairman of the diversified Hyderabad-based infrastructure company, said: “the company’s 25th AGM will hopefully bring cheer to the company shareholders, who have been very patient about the company’s future prospects, in spite of several headwinds.”
Addressing the concerns of some of the shareholders during the AGM, which includes divestment of stake, bringing down debt and extending dividend, Reddy said, “various issues beyond the company management control like lack of fuel supplies for its gas-fired and coal fired thermal power plants, were responsible for mounting debt.”
Land monetisation
Among various measures the company was planning to raise funds, is monetisation of the 200-acre land parcels in the Mumbai International Airport Limited.
Since the real estate has taken a hit lately due to the NBFC crisis, the company is awaiting an opportune time to divest stake in some of the real estate assets.
Request for proposals has been issued for some of the land parcels in the MIAL where more than 15 companies have participated, according to GV Sanjay Reddy, Vice-Chairman, GVK. During 2017-18, GVK earned a total income of ₹3,863.21 crore from operations on a consolidated basis as against ₹3,516.47 crore in the previous year registering a growth of 10 per cent.
While the energy assets contributed ₹4 crore, the airports’ contribution was ₹3,423.93 crore and transporataion’s ₹435.27 crore.
The loss was down at ₹561.68 crore as against ₹1,302.28 crore for the previous financial year.
The losses were attributed to lower generation of power, shortage of coal for coal-based power plant and delay in tariff fixation for both hydel and coal-based power plants.
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