Ready to monetise 25-30 acres near Delhi airport: GMR Infra

GMR Infra is one of few infra companies which has managed to meaningfully pare down debt via its Asset Light – Asset Right Model. It has sold stake in a number of its assets and is now getting ready to monetise 25-30 acres of land around Delhi airport, says Madhu Terdal, GMR Infra, in an exclusive interview on CNBC-TV18.

Since the government has considered making changes to Land Act to boost private public partnership or PPP projects, the beleagured infrastructure sector has sprung back to life. GMR Infra, which has fallen over 11 percent YTD, is said to benefit if PPP is exempted from consent clause. The proposed changes to Land Act puts the onus of social and environmental study on to states.

Speaking to CNBC-TV18, Terdal said the company won't be immediately impacted by positive reforms but government's PPP initiatives will help stranded road and power projects. The company's joint venture with Philippines Airport will start making profits from this year and will add around Rs 110 crore in revenue.

Below is the transcript of Madhu Terdal’s interview to CNBC-TV18’s Latha Venkatesh and Sonia ShenoySonia: How much of a positive this could actually be for the industry and for GMR Infra?A: For the industry as such of course it will be very positive news but its immediate impact will be quite minimal because most of the infrastructure projects are now suffering because of lack of raw material, coal and also the availability of finance itself. Most of the projects have been completed 80-90 percent and I don’t think any infrastructure developer is in a mood to start off new projects immediately. Of course some of the road projects which have been stranded for want of a small last mile availability of the land, definitely it will be a very beneficial thing. Couple of things that really distorted the whole thing in the Land Act, they introduced a consent clause whereby we require 85 percent of the people who are being affected. So that was one very difficult clause for the developer to obtain. Now that is likely to be reduced to something around 50 percent or so, the final word is yet to be told on that. Secondly it was also made with retrospective effect for example if we are developing urban infrastructure where we have already got 1000 acres if I am going to acquire only five acres intermittent land, the whole clause will be applicable and even R&R provisions - in most of our cases we have completed our R&R provisions. So if we have to reopen the whole thing it is going to be adversely affected. Of course we are not really actively considering any investment into this area immediately. So as a group we are not really going to get much impacted but definitely in the urban infrastructure space where we are developing couple of projects but they are couple of years away, we are going to have a beneficial impact. Latha: We understand that your joint venture with Megawide Construction has now got full control over the Philippines airport, the Cebu Airport. Tell us what this means to your own P&L? How should your investors rejoice?A: First of all it is going to add profit from the very first year itself. Now we have got another five months to go. Latha: So this is a constructions contract or a maintenance contract?A: It is a 25 years PPP project so totally the concession is for 25 years. The best part is the whole process is done in less than 18 months from end to end that is the first thing. We were awarded the reward only in April 2014 and in less than six months time we have taken over even the operation despite that we had faced certain legal challenges in the government. Despite that we have already about two days before the midnight of day before yesterday we have already taken charge of the operations. In a normal one year I think this coming full year only 40 percent we will be accruing to us. So we will be adding around Rs 110 crore of revenue but the EBITDA levels are as high around 75 percent. So this year alone revenue wise we will be adding totally around USD 44 million for full year. But the remaining five months alone, we will be adding close to around Rs 105 crore on the revenue but EBITDA will be almost Rs 80 crore.