Despite reporting a loss in the third quarter, GMR Infrastructure has shown a strong revenue growth, indicating traction in various business verticals of the company. A Subba Rao, group CFO of GMR Infrastructure, discusses with Debasis Mohapatra the various aspects of the company along with future growth prospects of the company.
What are the factors responsible for loss in the third quarter? When will these factors recede?
Loss in the third quarter is due to higher capacity costs owing to the commissioning of the new terminal (T3) at Delhi airport. The capacity costs comprising interest charges and depreciation has increased 59 per cent to Rs 197 crore in the third quarter, impacting the bottomline. This adverse impact of the capacity cost will be mitigated once the tariff is revised for the Delhi airport. While I can’t give you a time frame for this, we expect it to happen in next six months. Possibly by the second quarter of FY12, this cost will be totally absorbed.
Which are the factors that contribute to the revenue growth of 27 per cent in the third quarter?
All of our businesses have shown sound growth in the third quarter. Our airport business have shown a 66 per cent rise in revenue to Rs 626.4 crore in the third quarter with Delhi airport contributing around Rs 345 crore to the overall revenue. Our energy business has gone up by 14.6 per cent to Rs 506.6 crore during this period with an 8 per cent rise in highway business to Rs 98.5 crore in the third quarter of the present financial year.
What are the reasons for a fall in the other income?
Other income constitutes our EPC business along with two other related developments besides the airport in Turkey and Hyderabad. The drop is due to one of the turnkey project revenue that was realised last year, which is no longer under implementation. Our present order book for EPC is around Rs 3,500 crore as of now and the fall in revenue in this segment is not a matter of concern.
How is the overall power business doing and what is the average power tariff realisation for the company in the third quarter?
The overall power business has done well in the third quarter with the operationlisation of the Kakinada plant with an average plant load factor of 66 per cent in the third quarter. As far as the merchant tariff is concerned, there is a falling trend in the recent times. However, our average realisation of tariff stands at Rs 4.01 per unit in the third quarter and the tariff is expected to be robust during the May-June period.
What is the present debt position of the company and how do you expect it to pan out in the near future?
Debt is a function of project implementation. As the projects progress, we have to draw more money. I think, you don’t have to look at the balance sheet figure of Rs 21,000 crore as the debt level, as around Rs 3,000 crore is lying on our book on account of Delhi airport which cannot be classified as net debt with internal reserves of Rs 4,000 crore. So, our net debt level is around Rs 15,300 crore with debt, equity ratio of 1.3 which is pretty comfortable for any infrastructure company. It will all depend on the implementation of projects on the pipeline.
How big was the debt servicing charges in the third quarter?
Interest charges was around Rs 294 crore in the third quarter. On a financial year basis, interest charges outgo would be Rs 1,000 crore for the company.
Do you have coal linkages in place in all your upcoming coal-based power projects? How much will you invest in the coming quarters in power projects?
Except our MP power project, all others like Kamalanga project, EMCO and Chhattisgarh project have coal linkages. We expect the linkages to be in place in the near future in our MP project. We are looking at investments of around Rs 800 crore for our 25 Mw project in Gujarat along with implementation of two transmission projects.
Any updates on acquisition of overseas asset.
We are always looking at overseas assets for securing raw materials for our projects in India. We have already acquired two coal assets in South Africa and Indonesia and we are looking at other geographies like Australia for such assets.
How is your Krishnagiri SEZ progressing?
We have already acquired around 1,200 acres of the total 1,500 acres. There is also strong interest from different industries to acquire space in the SEZ.
