GMR Infrastructure's latest asset light asset right' strategy is aimed at easing liquidity pressures in the company. With a debt of over Rs 30,000 crore, the company is keen to offload stake in assets it owns.
GMR Infrastructure's latest asset-light asset- right' strategy is aimed at easing liquidity pressures in the company. With a debt of over Rs 30,000 crore, the company is keen to offload stake in assets it owns.
Last month, the company sold 70 percent stake in an energy venture in Singapore and this helped the company reduce debt by over Rs 2000 crore.
In an interview with CNBC-TV18, Parmit Chadha, CEO - Strategy & Corporate Development, GMR Infrastructure said that the firm is looking to reduce debt by Rs 10,000 crore via this strategy in the near term.
The company is keen to monetise assets at the right time to not only clean the balance sheet but to also re-deploy funds in ongoing projects, he added.
Below is the edited transcript of Chadha's interview to CNBC-TV18.
A: We have given our proposal. The implications of that project are beyond just GMR Infrastructure. It is time for introspection on how we can get that USD 150 billion of highways project about in the next plan. So, there have been some introspections. There was a delay in the project, which led to some concerns over the viability and a project of this nature does need to be viable for all concerns.
We have given our proposal to NHAI, which we think works for everybody. They have considered it. As far as we know, it is now lying with the ministry. So, it’s a wait and watch time.
Q: Since you submitted the proposal, you must have worked out what the financial implications would be for you in terms of how this would be revenue accretive and a better idea. Can you walk us through this new proposal and how things being backended works for GMR Infrastructure in terms of financial inflows being more predictable?
A: It is difficult to give any concrete number till we have a firm decision on this. In general terms, we have taken a few basic principles. We said that the interest of NHAI must be protected. After all, there is a certain number that we will bid at. So, we have given a proposal where net present value (NPV) for NHAI is protected. It is more of a reshuffling of cash flows, which is reasonable because it takes into account the fact that this is an extremely volatile situation. In many ways it is unprecedented. What we have seen over the last three-four years nobody could have anticipated either in India or internationally.
It is more of backending the cash flows. It allows some of the cash flows for the developer to make the project viable. It protects NHAI’s interest. One would have noticed that under this situation, we would end up paying NHAI more in total terms than we would have otherwise.
GMR Infra stock price
On May 22, 2015, GMR Infrastructure closed at Rs 14.33, down Rs 0.25, or 1.71 percent. The 52-week high of the share was Rs 38.30 and the 52-week low was Rs 14.26.
The company's trailing 12-month (TTM) EPS was at Rs 0.23 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 62.3. The latest book value of the company is Rs 16.45 per share. At current value, the price-to-book value of the company is 0.87.
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