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Sep 15, 2010, 03.01 PM IST | Source: CNBC-TV18

GMR Infra achieves financial closure for Karnataka project

Road constructor GMR Infra has achieved financial closure for their 99 km Hungund-Hospet Highway. In an exclusive interview with CNBC-TV18, DRS Krishnan, GMR Infra spoke about the latest happenings in his company and sector.

DRS Krishnan, GMR Infra

Road constructor GMR Infra has achieved financial closure for their 99 km Hungund-Hospet Highway. In an exclusive interview with CNBC-TV18's Latha Venkatesh, GMR Infra's, DRS Krishnan spoke about the latest happenings in his company and sector.

Below is a verbatim transcript. Also watch the accompanying video.

Q: Now that you have achieved financial closure, what is the interest cost?

A: Hungund-Hospet Expressway is the ninth road project of GMR and the first in Karnataka. It is about 99 km in length and its a build-operate-transfer (BOT) toll project with three toll plazas.

Total project cost is Rs 1,650 crore, out of that the loan component is Rs 1,080 crore, the lead arranger is Axis Bank, which has been fully unwritten by them which is likely to be down sold by Axis Bank at 10.5% fixed during construction and reset after COD. Roughly the construction period is about 27 months. This project has a project support fund of Rs 340 crore also from National Highways Authority of India (NHAI). The equity component is Rs 230 crore.

Q: What are you assuming in terms of growth? Is it 6% or 8%, what kind of traffic growth?

A: As of now for our existing road projects, the growth in absolute terms of traffic is between 7-8% as of now that is during the last financial year. It can remain provided the economic development is at the same level.

Q: Therefore, what will be the internal rate of return (IRR) of the project?

A: Equity IRR of this project is expected to be around 18-20%. Since I have a grant of around Rs 340 crore it can even improve as a traffic growth.

Q: Anything else on the anvil in terms of financial closure, in terms of further projects?

A: We have nine projects on the road. All of them are financially closed. Yesterday, we closed Rajahmundry Power and we are always ahead in doing the financial closure as well as completing the project. This project is supposed to be completed in 30 months time but we are planning to do it in 27 months this time.

Q: Is anything getting into earnings tolls sometime in FY11, any of your nine projects?

A: Out of the nine projects, six projects are already in operation. Three are already being tolled, and three are already in annuity. The other three projects which are under construction will come into income stream in 2012-13.

GMR Infra stock price

On November 24, 2014, GMR Infrastructure closed at Rs 20.05, down Rs 0.1, or 0.5 percent. The 52-week high of the share was Rs 38.30 and the 52-week low was Rs 17.20.


The company's trailing 12-month (TTM) EPS was at Rs 0.23 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 87.17. The latest book value of the company is Rs 16.76 per share. At current value, the price-to-book value of the company is 1.20.

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