In a bid to lighten its debt burden and infuse more liquidity in operations, energy-to-infrastructure major GMR Group is planning to bring down stake in its holding company, GMR Infrastructure, from 72 per cent. The group has also chalked out a new ‘asset light’ and ‘asset right’ strategy for all future infrastructure projects.
As part of the new plan, the Bangalore-based group is also going to sell up to 49 per cent stake in GMR Highways, one of the three infrastructure holding companies, besides GMR Airports and GMR Energy.
“Currently, we are looking for a strategic partner who could bring in investment in the highways company,” GMR Group Chairman G M Rao told Business Standard in an exclusive interview.
| GMR Infra’s total debt Rs 33,600 crore |
| THE NEW ASSET LIGHT & ASSET RIGHT MODEL |
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The group hopes the divestment of these stakes will garner Rs 3,500-4,000 crore. It is also scouting for strategic investors in GMR Sports, the firm that controls the Indian Premier League team Delhi Daredevils, and is willing to dilute 10-15 per cent stake.
“No one knows how long the economic volatility will continue. The group’s focus, therefore, is to develop more cash flows in the business. Our target is to increase cash reserves from Rs 3,000 crore currently to Rs 10,000 crore within the next two years,” Rao said.
Global financial services firm Credit Suisse, in a report last week, had ranked GMR eighth among the top ten corporate houses in India in terms of the size of debt in fiscal 2011-12. GMR Infrastructure had total debt of Rs 33,600 crore in its books at the end of last fiscal. Rao, though, says debt is not a problem. “Our debt position, considering we are an infrastructure company, is comfortable but by having more liquidity we can bid for new opportunities.”
GMR’s asset right strategy, across businesses, involves getting into new infra projects with majority stake, running these for one or two years, and then divesting majority stake for a premium.
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In the airports space, the group will also follow an ‘asset light’ strategy. It will pick up projects where it will maintain or run the airport infrastructure for a fee with only a minority equity stake of 10-26 per cent. The group is not interested in minor airport projects coming up for bidding.
The recent CAG report on Delhi International Airport Limited, where the GMR Group holds majority stake, alleged an undue benefit of Rs 3,415 crore on account of allowing it to charge development fee from passengers, though the operator says all bid conditions were duly upheld by the Supreme Court.
The CAG report also notes that land with earning potential of Rs 1.6 lakh crore was given to the airport operator at just Rs 100 lease rental per year. GMR had said the calculation of Rs 1.6 lakh crore was erroneous as 20-25 years were required to completely develop the land for commercial use. The CAG’s coal allocation report also names GMR Infra as one of the 57 companies that may have benefited at the cost of the exchequer.