Not fazed by developments, says IVRCL CMD

Mr E. Sudhir Reddy, Chairman and Managing Director of IVRCL Ltd., and his company are in news with Essel Group picking up 12.27 per cent stake in the Hyderabad-based company, crossing the promoters holding.

Having built the company brick-by-brick over the past two and half decades, Mr Reddy has seen several highs and lows and continues to scout for opportunities to consolidate the business. The company is at advanced stage of restructuring its businesses.

The economic conditions are tough, interest rates have gone up, and the market is relatively unfavourable to investments. Speaking to Business Line , Mr Reddy explains the way forward.

“I am unfazed by these developments. We have seen these cycles over the years. I continue to be in wait-and-watch mode and will take appropriate decision as things unfold,” he said.

How are you seeing the Subhash Chandra's group firm acquiring stake in IVRCL?

It is business as usual for us at IVRCL. I am seeing this investment as a strategic one for the Essel Group and nothing beyond this. Media seems to be speculating a lot of things around the stake sale and the possible outcomes, including hostile takeover. I am not fazed by this. I see this as another corporate development and give respect to the investment decision made by Essel Group.

Are you in Mumbai to talk to investors?

No. I am here to talk to my clients. Couple of whom have expressed concerns about the development. I am here only to assure them that there is nothing to be concerned about and it is business as usual. It is premature to make any assessment as to how these developments unfold.

You seem to have indirect relationship with Essel Group already through some special purpose vehicles?

The Sion-Panvel road project has Kakade Infrastructure Group as a partner. We also have Kakade group as partner in couple of other projects. Kakade group in turn has some arrangements with the Essel Group. There is a surrogate relationship with Essel through Kakade. In the Sion-Panvel project, IVRCL has 50 per cent stake.

IVRCL had decided to exit or offer stake in some of the road projects already developed by bringing in a partner. What is the status?

This is something which we had decided to do for six projects about 6-8 months ago. Negotiations and discussions are now underway. These take time to finalise as lot of issues are involved.

Are you worried about the current situation faced by IVRCL?

My nature has been to be composed and not get worried by issues. If you are worried you cannot handle issues properly. What is there to be worried about? We are watching the developments and will take appropriate action. I enjoy cricket and watch IPL events daily. But lately I am receiving over 150 to 200 calls, which is tough to handle as I have business to do.

Aren't you initiating counter measures?

No. In fact I have lot of friends and who have expressed interest to back me and at least six infrastructure companies have shown their willingness to support me to thwart this move. Even the financial institutions know IVRCL strengths and its execution capabilities. Therefore, I have said there is no need for that as of now. And I have also not sought any support from FIs. It is for them to gauge what we are capable of before they take a call in their holding.

You seem to have accumulated huge debt?

One must understand that debt is vital aspect of running an infrastructure company. We have about Rs 2,400 crore debt on IVRCL books. This is part of the business to execute projects. The interest rates have gone up to close to 12 per cent and we are still bidding for projects. We had bagged projects when interest rates were as low as 7 per cent. Silver lining is we all know that the interest rates are likely to come down. So in a cyclical business these things happen.

What about ensuring FIs are with you?

The company performance has rewarded the shareholders, including institutional with bonuses etc over the years. They are in the business of lending and know that the sector is passing through tough times. They know this would get better. Therefore, I am not unduly worried about who they would back.

>vrishi@thehindu.co.in

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