Hope to bring down consolidated debt by 25%: IVRCL

3328 Investors following IVRCL Assets. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hope to bring down consolidated debt by 25%: IVRCL

In an exclusive interview to CNBC-TV18, S Ramachandran, director of business development at IVRCL said that they are hoping to bring down the consolidated debt of the company by 25%.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about IVRCL Assets See previous management interviews See what other Experts & Brokerages are saying about IVRCL Assets

IVRCL is in the market to sell a few assets, and hopes to end the deal by March end, said S Ramachandran, director of business development.

In an exclusive interview to CNBC-TV18, Ramachandran said that they hope to bring down the consolidated debt of the company by 25%. IVRCL Assets and Holdings currently has debt of Rs.700 crore on its books.

Ramachandran goes on to say that it is still difficult to get funding from banks, which is why they are opting to sell their assets. "We felt it will be good to get back into our parent company, use its balance sheet but keep the advantages of having split and focus as a developer," he explained. He further adds that the company's liquidity position is good and that they will be able to execute its order book.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: The market is quite excited about your plans of monetising assets to improve your balance sheet by selling some of the land bank. Can you give us some colour into what exactly you are planning along those lines?

A: We have some operational assets, a desalination plant and three road assets, which are currently under operation. We are definitely in the market and people are looking at these assets. In addition, we are also open to unlock the value in our road assets which are currently under development.

Essentially, this being a heavy equity oriented asset business, we will have to find ways and means of getting that equity in place. Earlier the scenario was very different, but now banks are firming up and being very cautious in terms of funding. Even funding equity through debt has become a big challenge, so we felt it will be good to get back into our parent company, use the balance sheet of the parent company, but keep the advantages of having split and focus as a developer. So we still have arms length between the BOT division and the parent EPC.

Q: Can you give us a sense of what you may eventually end up monetising from these assets that you just spoke about?

A: I think numbers maybe little difficult for me because you have SEBI and everybody running after us. But the roads that I talked about, Salem-Kumarpalayam and Chengapalli-Walayar which is under development are in a continuous stretch of 150 km and we do find good value for a prospective investor in that. Similarly, even our desalination plant is one of its kind, so we should be expecting a fairly good value as and when people come in as investors.

In addition, there are some new ones which we have recently received like Raipur-Bilaspur. It's a real fast track road and it's in the heart of the country where you have all the raw materials being transported through this road, so the growth is phenomenal in terms of the power plant scheduled to come in as well as cement, steel etc. So while we focus on capex, we are open at any and every stage to bring in an investor as we are 100% owners.

Q: You said you are already in dialogue with several prospective suitors. By when do you think you can start reporting the first of these asset sales?

A: I think one of them could be before the end of this financial year, before the end of this quarter, and the others may take a little more time. As long as we get the money that we are looking for, we should be able to close out deals one after the other.

Q: Would you now be in a position where you can execute the order book without any kind of liquidity difficulty because that was the big question your investors were asking earlier? Has that situation improved or will it improve in the next three months?

A: Knowing the position we are in, I must say that I am 100% confident that the situation has improved and we should not have any issues whatsoever of pumping equity in the projects that we have on hand. I think the market at large should be fairly comfortable with this view of ours.

Q: Do you have any timeline by which to reduce this consolidated debt of Rs 4,000 crore plus crore that you have on your balance sheet and can you give us any numbers of what kind of levels you could bring it down to in the next one year?

A: When you mentioned Rs 4,000 crore was it including the SPV levels, because when we consolidate we are looking at both IVRCL the parent as well as the debt that we have in the asset in holding. I am not sure whether it is Rs 4,000 crore, however, at the asset level we have around Rs 700 crore and we are very hopeful to bring it down by around 25% during this calendar year.

Once we consolidate, it is again a function of how IVRCL the parent company improves its working efficiencies to bring down the receivables and thereby reduce the requirement of debt. So I can say that maybe around 25% should be our ballpark improvement in bringing the overall consolidated debt level down..