Stake sale will reduce debt by Rs 1000cr: IVRCL

Infrastructure and construction player, IVRCL is looking retire almost one-fifth of its consolidated debt of Rs 5,000 crore. It has put three out of its six road projects on sale and three other projects on the block.

S Ramachandran, director - business development, IVRCL told CNBC-TV18 that discussions for stake sale of three projects are in advanced stages. However, the company is hopeful of offloading four projects before March.

If the stake sale for these projects goes through, then the company’s debt would reduce by Rs 1,000 crore, he added.

Below is the edited transcript of Ramachandran’s interview with CNBC-TV18.

Q: Can you just talk about the prospects of the sale of your six road projects that are doing the rounds? Are you planning asset sales and what could the timeline look like?

A: Out of the six, three are in fairly advance stages, but we have mentioned that we should be able to sell four of them before March. The fourth one is in relatively nascent stage. The idea is to see how we can get the debt out of our balance sheet. The money which comes in can be utilized for putting in the equity in the new roads that are just about be developed.

Q: How much are you planning to rake in via these assets sales and how much would that bring down your debt by?

A: I cannot reveal the number, but debt is transparent. For three roads almost Rs 1,000 crore will go off from our balance sheet in the SPV. As far as the amount that we are getting for sale is concerned, I will not be able to give an finite figure, say that it will be anywhere over Rs 400 crore.

Q: Is it safe to say that you are planning to bring down your debt from Rs 5,000 crore to Rs 4,000 crore and that it would be by the end of the year?

A: Yes, with the first three sales and thereafter I guess the fourth one which is in the block also should go through. Let us hope because this seems to be the only way out for all of us.

Q: Many of your peers have tried to do stake sales and try to bring down their debt but with the market condition so fragile do you think you will be able to meet your target?

A: Yes. I very firmly believe that three of them will be met soon. For the fourth one I cannot say, but it is a good road and it was won fairly competitively. The companies are normally interested only in taking operating assets, but they have now specifically shown interest in this particular project.

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Q: Apart from these stake sales of these three projects that you have talked about there is some talk of an international player interesting to pump in equity into one of your road projects? Can you tell us if that is one the cards?

A: I am not very optimistic about any international player coming in. You can see companies like L&T, or anybody all of us are having the assets on the block, but things have not been moving at the pace that we would desire.
 
Q: There are also some talks that you have decided not to bid for any new BOT projects – what is the rationale behind that?

A: The rationale is - we have to do justice to the projects that we have on hand. Secondly, resources are becoming very-very challenging be it equity, be it debt. The bankers are now really behaving in a very-very different manner. It is totally unlike what they were about four or five years ago.

There are under pressure from RBI and the finance ministry. They have their own targets to meet and if there is any concern about NPAs etc they also want to be very sure. So, as a result even the disbursement of the fund are now not taking place at the same pace at which it use to be.

Lots of questions are being asked, so we do not want to be on the wrong side. We will wait and watch. Let us see six months what happens then we will see.

Q: You have talked about how the situation is quite grim do you think this awards target of this NHAI that at the start of the year was pegged that 9,500 kilometers by the PMO – do you think that would be met because up until now NHAI has awarded only 500 kilometers year to date that is?

A: I don’t think it will be met. NHAI and the ministry are having a dream of themselves because lot of things is not going the way. There is nothing like regulatory body. All our claims are lying with NHAI ministry – no action has been taken. As usual land is not available, clearances don’t come in time.

It is heads they win and tails we lose, so there is a limit to it. When we lose it is the bankers who lose so bankers are tightening up, financial closures are becoming a great challenge. I do not see how they are ever going to be successful unless they take very drastic action.