‘I can’t give a guidance on debt movement as it will all depend on new projects’
GMR Infrastructure has posted a loss of around Rs 1,000 crore in last fiscal due to divestment of Intergen. The higher capacity cost of T3 terminal of Delhi airport has also weighed on the balancesheet of the company. However, on the back of positive cash flow from its projects, it is hopeful of posting good numbers in the present fiscal. A Subba Rao, group CFO of GMR Infra, discussed with Debasis Mohapatra about company’s future plans. Edited excerpts;
Intergen divestment and higher capacity cost of T3 of Delhi International Airport (DIAL) have dragged your Q4 results. How do you see profitability going ahead?
Higher transaction cost and interest outgo in divestment of Intergen have affected our fourth quarter and annual results. However, out of this Rs 940 crore of loss, we had earlier recognised a revenue of Rs 366 crore on our balance sheet. So, the loss of this amount is nothing but a reversal of income. Also, we expect to recover around Rs 405 crore from the Island power project, which has been acquired from Intergen at a nominal value. As far as T3 of DIAL is concerned, we have requested the government to allow us to collect around Rs 1,700 crore of additional airport development fee (ADF). Presently, AERA is in a consultation mode. We hope to receive a favourable disposition from authorities regarding this issue. So, we should be able to increase our profitability in the future.
Does lesser gas supply from D6 block affect GMR’s operations in Andhra Pradesh? How much capacity is the company expected to add in the present fiscal?
There is no impact on our power project due to less gas supply from RIL. Rather, provision of gas for priority sectors like power and fertilizer, has increased gas supply to our plants. We are operating at a plant load factor of 68-70 per cent in the recent past and have also received LNG in May. Going ahead, we don’t have any concern with regard to gas supply.
As far as capacity addition is concerned, we are likely to add around 1,800 Mw in the current financial year .
GMR has plans to list its energy vertical. Will it happen in the current financial year?
Eventually, we have to list the energy vertical to provide an exit path to PE investors, who have invested in our various energy projects. Also,we would like to list the entity after commissioning of the projects than just before it. However, it will all depend on the market condition and it is very much unlikely that we will list this vertical in the current financial year.
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When are you expected to close $150 million equity infusion into GMR Infra for which you have received FIPB approval?
We are yet to get a formal approval letter from the government. We expect to get it soon, after which we will start the fund raising process. I can’t give any time frame for this fund raising plan as of now.
What is your current net debt level? How do you see the debt curve by the end of current financial year?
Our net debt is around Rs 14, 600 crore and gross debt stood at Rs 21,000 crore by the end of March , 2011. The balance sheet is leveraged by 1.26 times, which is sound for any infra company. What I also want to convey is that most of our debt is in project finance form, which any infa company has to take to further its business growth. However, I can’t give a guidance on debt movement as it will all depend on new projects.
How many of your projects are cash positive? Is there any concern relating to debt servicing charges?
All our projects under four verticals except one are cash positive. Ambala-Chandigarh highway project is the only project,which is not throwing positive cash-flow. So, there is no concern regarding debt servicing as cash flow from projects are taking care of debt components. Our total interest outgo was around Rs 1076 crore in FY11 and we don’t see any significant changes in the current fiscal.
Will there be a reshuffle in the overall contribution of revenue from various verticals in the current fiscal?
This is a continuous process. Last fiscal, airport vertical has contributed around 41 per cent, but this is expected to change in the current year with the commissioning of 2,000 Mw of power. Due to commissioning of these new facilities, Rs 6000 crore revenue will be generated from power sector, which will see change in contribution to total revenue from power sector.
Rs How is your Krishnagiri SEZ project progressing? Do you see any interest in SEZ after recent taxation issues?
We have acquired around 1,300 acres of land as of now and the state government is going to give us some land. We will see how we can move forward in the wake up recent taxation issues.