GMR looks set to monetise coals assets worth $600 mn

Firm has exited almost all its businesses abroad in past 18 months, and monetised to infuse equity in its India-focussed projects

Taking forward its asset-light -- asset-right strategy, GMR Infrastructure is understood to be keenly looking to monetise its coal mining assets in Indonesia, which it acquired for close to $600 million.

The publicly held infrastructure developer, which has presence in airports, power projects, highways and special economic zones, has been on an active asset shedding mode during the past 18 months and has exited almost all its businesses abroad.  During the past year and half, GMR exited power projects, airports in various global locations and monetised handsomely to infuse equity into its other India focussed projects.

The two coal mines in Indonesia, which GMR acquired during 2008 and 2011 for close to $600 million, may be under the block as the company looks aggressively to bring its debt levels to a manageable extent. A spokesperson for GMR Infrastructure told Business Standard that they will work towards creating and enhancing value of all their assets. "We would be focussing on increasing value of the coal assets. However, if we get an attractive proposal, we would not be averse from divestment as well," the spokesperson added.

GMR during 2008 had acquired PT Barasentosa Lestari, Indonesia for close to $100 million and which coal resources of 700 million tonnes. Subsequently during 2011, GMR went ahead and acquired a 30 per cent stake in PT Golden Energy Mines, a Sinar Mas Group company in Indonesia, for $500 million, which has coal resources of 1.9 billion tonnes. GMR has been working parallely on taking this asset on to the Singapore Stock Exchange through a reverse listing procedure, the process of which has been delayed as the Singapore Stock Exchange has asked for a series of clarifications.

GMR stake divestments during 2013

December 2013: Divests 40% at airport in Turkey for Rs 1,910 cr

Sept 2013: Divests 74% in Tamil Nadu highway project for Rs 222 cr

March 2013: Exits 70% at Singapore power project for Rs 1,376 cr

March 2013: Exits coal mine assets in South Africa with marginal gain

Feb 2013: Divests 74% in highway project in Andhra Pradesh for Rs 146 cr

GMR Infrastructure is currently weighed down with a net debt of close to Rs 40,000 crore with a leverage of almost 3.5 times, as a result of which the interest costs shot up by a good 45 per cent and which resulted in a significant net loss for the third quarter of Fy14.

This move by GMR Infrastructure, comes at a time when during the last calendar year, they divested three assets and have signed definitive agreements for divestment of couple of assets. "With this we would be achieving a reduction of around Rs 6,000 crore in our consolidated debt. However, there would be progressive draw-down of loan against the sanctioned limits in projects under construction. Hence, we should look into the corporate debt, rather than overall debt or project debt. Currently, we have around Rs 4,500 crore debt in GMR Infra and we intend to reduce the same by 25 per cent by next quarter," the spokesperson added.

The other aspect which GMR would have to address on an immediate basis will be the interest outflow which is taking a severe toll on the company, even as it is sitting on idling gas-fueled power assets which has dwindling fuel supplies to generate power.  "Based on the current estimates, the interest expenses for the next fiscal should be around Rs 3,300 crore. However, the figure may vary depending on the completion of the projects under construction and the prevailing rate of interest," the spokesperson noted. During last fiscal, GMR reported an EBIDTA of close to Rs 2,500 crore.