Operational projects enough to service debt: Gammon Infra

In an interview KK Mohanty, MD, Gammon Infrastructure, talked about the company's fourth quarter earnings and explained how the company's projects becoming operational will help it service its debts going forward.Below is the verbatim transcript of KK Mohanty’s interview with CNBC-TV18's Reema Tendulkar and Nigel D'Souza.Reema: On a standalone basis while your revenue growth is there it is Rs 74 crore or revenue versus Rs 48 crore this time there is an earnings before interest, taxes, depreciation and amortisation (EBITDA) loss of nearly Rs 8 crore versus profit of Rs 14 crore. What was the reason for that and do you believe that you can be EBITDA positive at least in the coming quarters?A: Yes, as you know we have done a strategic deal and a major contribution has come from that, by sale of fixed assets. Second thing is yes, the topline increase is due to some of the projects being implemented and there is some engineering, procurement and construction (EPC) revenue. In EPC, we do not have same level of EBITDA and the third thing is we have completed also a couple of projects previous to the last quarter. That has also slightly added into the activities. We have further cleaned up our balance sheets also those projects which were terminated and there are some investments. We have also cleaned up those balance sheets so that today we are much more cleaner position with cash surplus in the company.Nigel: Could you tell us what exactly is your debt on your books currently, what you are looking to bring it down to and also how will you bring it down in the next one year or the next couple of years?A: You need to appreciate that the public-private partnership (PPP) business -- especially for infrastructure development -- is a capital hungry business. You need debt -- more projects, you will have more debt.Nigel: So, could you give us those numbers. What is your debt, are you going to take more debt, are you going to bring it down?A: The debt was initially in the order of Rs 4,500 crore. We have reduced the debt by Rs 2,000 crore by selling off six projects. So, now present level will be approximately Rs 2,500 crore. Out of this four projects are already operational. Another two projects are expected to be operational soon. So, that will take care of the debt servicing and as we go ahead and do new projects, naturally debt will go up and as we proceed in the operational years slowly the debt will get operational. So, all the debts are self-servicing from different operational projects.Reema: What are the total claims that you have received from NHAI?A: We have not received claims. We have sold six projects and received some considerations which has been shared previously. This was in the order of Rs 500 crore. So, that we had just sale of projects but from NHAI to get dues and claims it takes a long time, you have to go through your arbitration process.Nigel: You said your debt is at around Rs 2,500 crore. Could you tell us what is your borrowing cost currently, roughly, blended borrowing cost?A: Blended borrowing cost is in the range of 11-11.5 percent.Nigel: So, you are quite confident then that your EBITDA will be more than Rs 250-260 crore in the coming fiscal that you can service it?A: EBITDA will be always higher than that. I don't think we will have a difficulty of servicing this debt.Nigel: So, it will be definitely more than Rs 260 crore is what you say?A: Yes. Our EBITDA will be in the order of Rs 350 crore in a consolidated basis.