Earlier this month highways developer IRB Infrastructure Developers bagged the rights to build one leg of the mega Ganga Expressway project. This is also IRB’s biggest build operate transfer (BOT) project. With the government offloading some of its work of building highways to the private sector, investors are watching this space. In an interview with BusinessLine, Virendra Mhaiskar, CMD, IRB Infrastructure Developers explains what the coming onboard of new investors means to IRB.
How will the proceeds be used?
We have two large investors – one is a strategic investor and the other is a sovereign wealth fund. This is a large capital raise of ₹5,347 crore and the money has been partially used for deleveraging the holding company’s debt and the balance will be used for growth. So, almost ₹3,250 crore is being utilised to pay off corporate debt and the balance will be used for general corporate and growth purposes.
What is the debt on IRB’s books?
The holding company’s debt, most of it except the self-liquidating ones, we are paying off. On the consolidated level, the net debt-equity ratio comes down from 2.1 to 1.2. So, through this deal, we have brought down the debt considerably.
What is the absolute debt?
Absolute debt should be ₹13,000 crore at the project level, which is concession-based and is long-term, which will keep unwinding along with the project execution. That is not something which we are looking at reducing. It was only the corporate-level debt that we wanted to cut down. So, we had around ₹5,500 crore of corporate-level debt and we have brought it down to ₹2,250 crore. Balance of the corporate debt is clearly cash-flow linked and it will be self-liquidating
What changes will be seen in the promoter holding in the company?
From 58 percent, the promoter holding in the company has come down to 34 percent post the deal with Cintra holding (24.86 percent) and GIC holding (19.9 percent).
Will there be any changes on IRB board?
The two members who have resigned from the IRB board are continuing to work with the company in their official capacities and they are moving to the EPC company’s board and have made way for the two representatives who have joined the board. Apart from this, there are no further changes; the existing management will continue to run the company.
What is the total order book of the company?
It is around ₹19,500 crore
What is your outlook for FY23?
The pipeline looks very strong. I am very much thrilled about the outcome of the Ganga Expressway. What it has done is that it has not just given us an order to construct the Expressway, it has for the first time in history demonstrated that there is an appetite from the private sector to bid for such large complex projects.
Can you elaborate on that?
The entire 600 km of Ganga Expressway, comprising four packages has been lifted by the private sector. This is a huge signal that the private sector is now ready to come back in a big way to take up large projects with private funding. This is a clear signal from the government that they can look at reducing their outlay which they have been increasing in the last few years because there was not much appetite from the private sector.