Gayatri Projects Ltd is all set to commission its maiden power plant, a 1320-MW Thermal Powertech venture executed in partnership with Sembcorp Industries of Singapore. With a current order book of ₹7,000 crore, the Hyderabad-based diversified infrastructure company is looking at divesting stake in road projects and possibly in the power business, subject to regulatory and Central Government approvals.

TV Sandeep Reddy, Managing Director of Gayatri Projects, says that the market is challenging but there are signs of things getting better. Excerpts.

How is the Thermal Powertech project progressing? When do you expect to commission it? Any move to further divest stake?

The 1320-MW Thermal Power Project in Krishnapatnam has made significant progress. The unit one of 660 MW is likely to be commissioned by the end of September and the unit one will be fully commissioned before December.

We also have the facility to double the project size but that depends on fuel linkages. The supply of power will be based on power purchase agreements. AP may get about 500 MW. We may consider further divestment of stake in the venture subject to conditions and regulatory approvals. The other 1320-MW project with NCC and Sembcorp in Krishnapatnam is also progressing well.

How do you see the year ahead and what will be the focus of the company?

The EPC (engineering, producrement and consutruction) contracts offer potential for growth. The NHAI has indicated its intent to concentrate on EPC and the Government is keen to develop the infrastructure sector. We will benefit from this focus as EPC will offer opportunities. The new Government is in place but it will take about six to eight months before the revival of the infrastructure actually takes place. The Government is planning to float tenders and award contracts. It will take some time for things to get going.

What is your outlook for the current financial year?

Last year, the company closed with a revenue of ₹1,813 crore. We expect steady growth this year but see better business ahead as we step into the next financial year. The company currently has an order book of ₹7,252 crore (as of March 2014) and of this about ₹3,000 crore are in the irrigation sector, which have been relatively slow to take off due to State bifurcation.

Are you looking at new road projects? Any progress in terms of stake divestment?

We have a portfolio of seven road projects, five of them have been commissioned quite some time ago and are generating revenue. The sixth one was also recently commissioned and one is under execution. We have decided to bid only for EPC contracts rather than BOT mode projects. Completed road projects are cash positive.

We intend to divest stake in some of the road projects but the market conditions are not right as yet.

The issue boils down to valuation. In the current situation, buyers want lower valuations and are demanding. There are many sellers. Therefore, we will wait for the right time to divest stake.

What is the current debt of the company? Any plans to bring it down?

Gayatri has a debt of ₹1,600 crore at the holding company level.

We will bring it down gradually as the stake divestment takes place and redeploy equity in new projects.

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