Pared debt by Rs 1500cr; promoters stake at 69.5%:GMR Infra

Latha: First up, now credit enhancement can be provided to banks to infra bonds and the hope is that as infrastructure bonds get credit enhancement, insurance companies will start investing in them. How positive can this be? How quickly can we see the first infra bond getting credit enhancement? Any of your bonds?

A: We are meeting in a very I can say right environment. And if you recall, last time I told you that the bad days are behind us and the worst is over. So, after a long time, I am coming on your screen, so whatever I had told last time, it is now being reaffirmed. And before I come to my operationals, just let me quickly respond to the your question in terms of partial credit enhancement. I should say that it is a very welcome move and of course the guidelines have appeared very recently, just last Friday-Saturday, so we are yet to make a detailed assessment of the how and which companies can do, but as I speak to you, I can see at least one or two companies in our portfolio. Definitely, I think they should be eligible for going in for a partial credit enhancement opportunity. But we will be working out the details in the coming days, but I can definitely say that it is a very significant and positive step in the right direction.

Sonia: Recently, the company completed that rights issue of Rs 1,400 crore, so some money has come in, but how much equity has the management bought from the open market in total? You have been doing a creeping acquisition, you just did a rights issue of warrant as well. So, what is the total equity that the management has brought in?

A: Actually if you recall, at the end of the rights issue, we were at around 67.7 percent – the GMR holdings. The flagship vehicle of the promoters was holding 67.7 percent. And during the last, post the rights issue, we have increased to now 69.6 percent. That is the additional acquisition whatever we have done from the market and the amount-wise it may not be very significant because of the share price has fallen subsequently. But, it only shows the confidence of the promoters in the operations of the group and the future direction of the company that it is heading to._PAGEBREAK_

Latha: Your two subsidiaries got gas for its power plants, can you tell us how much that might add to revenue and whether those plants themselves at least breakeven?

A: Let me tell you, first of all, in the direction of what the government has been undertaking for the last few months, if there is one particular development that is going to significantly change the scenario in the power sector is this stranded power assets, gas assets, whatever the policy, they have introduced. I can tell you now, recently, we have won two contracts to their Vemagiri Power as well as GMR Rajahmundry. We will be entitled to get 50 percent of the plant load factor (PLF).

If I have to translate for your information and the viewers, this translates to close to around Rs 1,500 crore of revenue and an earnings before interest, taxes, depreciation and amortization (EBITDA) in excess of Rs 200 crore. And this is, I am talking about only the next six months, that is from October 1 to end of March. So, during the next six months, if we start operationalise both our power assets and we start using the 50 percent PLF that is we are entitled to, there will be a significant addition of revenue and EBITDA, so it will not only take care of all the operational expenses and all. The need of putting in fresh equity into the company itself will be completely mitigated and there will be a renewed confidence with the lenders as well since the revenues will start operating, because these assets were stranded for the last three years or so.

In addition to that, in our GMR Energy, we have already signed a memorandum of understanding (MoU) with Cairn Energy for getting another 100 Moving Average Convergence Divergence (MACD) of gas in our GMR Energy Limited. So, that also is likely to add to our revenues. So, I am talking one is the policy of the government another is what GMR Energy has done. So, with this, our entire gas portfolio will be coming live and we should be registering significant jump in our EBITDA numbers.

Sonia: The other division that had helped you reduce your losses in the quarter gone by was the airport division. Over there you had good traffic growth of 13 percent in the Delhi airport and 23 percent in the Hyderabad airport. Can you give us a sense of how much the airport division will grow in the next couple of quarters and how much will it contribute to your EBITDA?

A: Let me just give some figures. Delhi International Airport (P) Limited (DIAL), for example, in the last year for the whole year, it did a turnover of around Rs 4,195 crore as against Rs 3,923 crore previous year, but this year, the traffic and the non-aero revenue is significantly moving up as you rightly said, more than 14 percent. Apart from, another very important area where the significant movement is seen is in the cargo revenues. So, this is going to add up to our topline as well as the bottomline very substantially.

And most important thing in our Hyderabad airport, after about one year of struggle, we have got a very favourable order from the regulator as well as the government of India whereby the 'single till' has been cancelled and 30 percent of the non-aero revenue which we are all fighting for a 'hybrid till' has been finalised completely without any question of doubt. This alone is going to add in excess of around Rs 330 crore in the current year.

So, you can see the kind of change. Not only the traffic is improving, both Hyderabad as well as the Delhi Airport, but very important finality, there is no now ambiguity, there is no other kind of an appeal or anything, so a finality has post as well as the Hyderabad airport where more than Rs 330 crore of EBITDA is now going to be added to our bottomline.

Apart from that, now, we will be initiating a major exercise on real estate on the Delhi airport in this year. I do not want to spell out more details but I can say that the real estate monetisation is one of the major things that the investors as well as the analysts are very keenly looking for and you will be seeing a major movement in this direction.

So, all-in-all the airport sector is going to be what you call registering very significant milestone on three factors - 1) traffic improvement and cargo improvement 2) the monetisation of real estate 3) resolution of the tariff in Hyderabad airport. Hopefully if the regulator resolves our Delhi airport tariff also, it will be a feather in the cap.

Latha: In the first quarter your EBIT was Rs 400 crore and your interest outgo was Rs 900 crore. When does this gap reduce, in the second quarter itself, in the second half? What might the last quarter difference be?

A: I will have to wait to reply to that, but important is, as I told you, the Kamalanga for example, just in one year, the kind of quarterly improvement, if you can see, I will just quickly give the numbers, you will see the kind of changes that are happening now.

However, another important thing is that we have reduced more than Rs 1,500 crore of debt and it has helped us to save more than Rs 80 crore of interest per annum. And in the coming year it will be much more than that.

Coming back to Emco, for example, as against our revenue of Rs 1,200 crore we have already done this year and EBIT of Rs 248 crore as against Rs 34 crore last year. You can see our number in Emco was Rs 34 crore last year, this year it is Rs 248 crore.

In Kamalanga, it was negative Rs 40 crore last year and this year it is positive Rs 75 crore. So, you can see the kind of change and also the quantum of change that is likely to happen.