IVRCL Ltd is on course to completing stake sale in three road projects and a desalination plant, all located in Tamil Nadu, by the end of this fiscal.

This will enable the company to bring down its debt by about ₹2,500 crore and free up ₹600-800 crore in equity.

The Hyderabad-based infrastructure company, which has embarked on a phase of consolidation, is divesting stakes in its completed BOT (built, operate and transfer) projects and the Chennai plant to become “asset light”. The company will focus on its core business of EPC (engineering, procurement and construction) contracts and water projects, including irrigation and last mile works in water grids.

E Sudhir Reddy, Chairman of IVRCL, said the company’s balance sheet has been under pressure over the past couple of years due to macroeconomic issues and delays in project implementation, cost escalation and high interest rates.

“Therefore, it was time to divest stake in completed BOT projects to free up equity for new projects and bring down the company’s debt, now at about ₹6,500 crore. We may consider bringing in a strategic partner later,” he told reporters. “The next financial year will be a turnaround year for the company. It will bring us back on the profitability path. The company has accumulated losses of about ₹800 crore. It will take about two years to completely wipe them out,” said R Balarami Reddy, Group Chief Financial Officer.

IVRCL had announced the divestment plan earlier in the year. In the phase II, the company plans to divest stakes in other road projects, including Jalandhar-Amritsar and Indore-Jhabua projects, Sudhir Reddy said. The sale of these projects would help the company bring down the overall debt and free up ₹1,500 crore in equity.

Land bank 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.

The infrastructure company has an order book of ₹18,000 crore.

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