QIP money to be used for debt reduction: Gayatri Projects

Gayatri Projects raised some money via qualified institutional placement (QIP) some time back. The company plans to use the money to reduce high cost debt and meet long-term working capital requirements, Sandeep Reddy, MD Gayatri Projects told CNBC-TV18 in an interview.

He also informed that the current debt after reduction is Rs 1200 crore and the firm are planning to bring it down to Rs 1000 crore by end of March.

Below is the edited transcript of his interview to CNBC-TV18

Also read: Tulip Tele plans long term debt restructuring, stock up 5%

Q: Can you tell us about the qualified institutional placement (QIP) money which has raised Rs 75 crore as we do understand. Has the money come through and how exactly is it going to be utilised for you?

A: Yes, the money has come through. We are using that money to reduce some of our high cost debt and long-term working capital requirements.

Q: What is your debt and how much have you reduced it by?

A: Our current debt is around Rs 1,200 crore, after the reduction.

Q: Is there any plan to bring it down further?

A: Yes, in fact we are trying to bring it down to 1,000 crore level by end of March. We are trying to get some more of our money released from our clients. Some retention money is pending. So, we are targeting to reduce it by end of March.

Q: Retention money that you paid as an L1 bidder or are you planning to sell off your stake in some projects. What is the plan?

A: Two three options, not stake but some of our money which is blocked by way of retention money, by way of debtors, etc from the client. Some of the money will get released when the projects are getting completed. So, there is a plan to reduce the debt up to Rs 1,000 crore levels by end of March.

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Q: How exactly are you doing on the business front then because post Q2FY13 there was reports that your order book is pretty much on a decline at this point in time. Where does your current order book stands at? How exactly is the trajectory panning out?

A: The current order book is not actually declined. Our current order book is around Rs 9,000 crore as of now. We hope to close with the growth of approximately 18-20 percent. Compared to this year which will be around Rs 2,000 crore of top-line growth as far as the EPC business is concerned.

Coming to our build-operate-transfer (BOT) road segment we have totally around eight projects. Out of this 5 projects have achieved commercial operation date (COD) and earning income. Two are under construction and one we are planning to achieve financial closure before end of March.

Q: What about your BOT projects- You were looking for some amount of equity for three road projects and two power projects where there was some amount of fund requirements which was on the higher side. Any improvement or movement on these?

A: No. In fact our road projects equities are totally funded now. We were looking at divesting some amount to private equities. However, it didn’t because of bad market conditions. We didn’t look at it. Five projects are fully funded and have achieved COD and earning income now. Two projects are under construction. About 50 percent completed and they would achieve COD by January FY14. One project is currently under financial closure. This we need equity for the next two years for which we hope to use internal accruals for equity for road projects.

Q: You have a lot of power projects and there is also a energy project that you are holding and two coal base projects, in all this are you selling any stake?

A: No. In Krishnapattam we have two projects. One, project we have 51 percent stake along with Sembcorp of Singapore. It is owning 49 percent and that project is fully funded. 50 percent of construction is completed. We hope to achieve COD by March 2014.

The other project in Krishnapattam, has joint venture (JV) with NCC. There also 35 percent equity has been upfront invested by both of us. The construction is in full swing on site. We hope that the project will achieve COD from 2015. In that project we are looking at divesting equity in the project level. Earlier our aim was to divest equity in the holding company, Gayatri Energy Ventures on both the projects. However, due to bad market conditions, we feel that project level that we are looking at. We are in the advance stage.