To use stake sale funds for reducing debt: Sadbhav Infra

Nitin Patel, ED, Sadbhav Infra in an interview to CNBC-TV18 spoke on stake sale in Mumbai-Nashik Expressway. The company received Rs 72 crore from the stake which was sold to BIF India Holding, said Patel. The company had invested Rs 10.4 crore in FY06 in the expressway project.

The consolidated debt for the company is around Rs 7000 crore and total debt in SIPL on standalone basis is Rs 1,100 crore, said patel. Sadbhav Infrastructure Project Limited (SIPL) is a subsidiary of Sadbhav Engineering Limited (SEL).

Patel also spoke on the benefits that will come through from infra boost in the Budget 2016.  The Budget proposed 10,000 km of national highways to be added in FY17. Rs 55000 crore were allocated to Ministry of Roads & Highways.

The company will also receive another Rs 18 crore against outstanding loan on project. Below is the transcript of Nitin Patel’s interview with CNBC-TV18's Nigel D'Souza and Latha Venkatesh. Nigel: A quick reaction on the Budget, we have the allocation number that came in at around Rs 55,000 crore that is allocated to Ministry of Roads and Highways, total allocation was roughly around Rs 97,000 crore. Is it enough and how does it make a difference to you all? A: First of all the allocation is obviously little bit higher than the previous year and the second thing what we try basically to figure is that a lot of land acquisition process has been done during the last one year. So, majority of this should go for the purpose of building the highways and obviously incremental money may also the government has to spend for acquiring the land but what we are of the view is that this Rs 19,000 crore for Pradhan Mantri Gram Sadak Yojana (PMGSY) what has been basically allocated from the budgetary support that will ease out some of the competition in the EPC front because some of the small and regional players will try to engage themselves into this kind of jobs and it will ease out the competition for us. Latha: You all have just got Rs 72 crore because of divesting your stake in Mumbai-Nashik Expressway. What are you going to do with the money? A: Obviously Sadbhav Infrastructure Project Limited (SIPL) will pay back to Sadbhav Engineering and obviously it will basically reduce the total debt of SIPL and apart from the Rs 72 crore we are supposed to get another Rs 18 crore because SIPL we already intimated to the exchanges. So, mostly within a couple of days this money will flow. Latha: What was the return you made on that investment? A: That total investment we have made Rs 10.4 crore for 20 percent stake in Special Purpose Vehicles (SPV) and that we have now sold at Rs 72 crore. So, almost 7x valuation it has been sold. Nigel: I wanted to understand what exactly is your debt before we continue in terms of what is the Budget reaction? What is your total debt, it is rather large because I am just looking at it, your finance cost have ballooned up in the last quarter or so, what is your exact debt and do you have plans to bring it down? A: Actually what to see in Sadbhav Infrastructure new projects are coming under the revenue front and mostly the last quarter particularly one of the large projects Shreenathji-Udaipur become operational and once we got commercial operations date (CoD) and the actual date of starting the toll there was a gap also. So, that finance cost is being charged to the profit and loss account but normally when this particular Q4 will come obviously we will have the whole two quarters revenues there and also the finance cost will be served out of the same but we don't see any other panic in the same but however this money will obviously help to reduce the further debt. Nigel: What is the debt? A: Sadbhav Engineering owns around Rs 610 crore from SIPL. So, with this stake sale around Rs 90 crore will be reduced by SEL actually. Latha: What is your total debt? A: Total debt in SIPL is Rs 1,100 crore on standalone basis. And the whole SPV put together it is around Rs 7,000 crore once all the projects are operational. Latha: I just wanted to ask you about the Public-private partnership (PPP) projects related announcements in the Budget. They spoke about renegotiation as well as a regulator for PPP projects, risk allocation. Basically the recommendations that were put forward by the committee. Do you see any movement on the ground because this PPP reform was discussed in the last Budget as well? A: Obviously because what has happened after last Budget government has introduced a new hybrid annuity model and actually the adaptability of that model finalisation of the revised concession agreement took a long time and recently the central government has given the approval for almost around 19-20 projects. So, what we understand is that now onward basically the fresh biddings will take place under the new hybrid annuity under the PPP. Obviously tolling there are very less number of projects for bidding. Hardly around 6 or 7 projects are there for bidding now. More to come