FY17 to be a turnaround year: Sadbhav Infra Projects

All under construction projects of Sadbhav Infra Projects are likely to be operational over the next 12 months, the company's Director, Nitin Patel tells CNBC-TV18.Already, seven out of 12 projects are operational, and Patel expects FY17 to be a turnaround year for the company.He says the company recently got approvals for four special purpose vehicles, and also a reduction of 120-130 basis points on its loans from lenders. The company's total debt stands at Rs 6600 crore, and these cuts are expected to save the company around Rs 60 crore. Below is the transcript of Nitin Patel's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: In FY15, in the year gone by you were sitting on a big loss of almost Rs 300 crore. How long do you think it would take for a company like yours to get into the black or make profit?

A: This is the new beginning for the company. Getting to your question - we are confident that the refinance process - because the interest rate regime has already started easing out, one. Second, apart from that the majority of the projects of the company are operational. Third, this is fully funded portfolio that has no equity commitment pending post this initial public offering (IPO) because all the equity has been completely tied up. Therefore, we are seeing that overall rating of various special purpose vehicles (SPVs) has got changed and recently we got the sanction for four of the SPVs namely Dhule Palesner, Bijapur Hungud, Hyderabad Yadgiri and Aurangabad Jalna. In these four SPVs we have got 125-130 bps point rate cut from the new set of lenders, so this is in and apart from that on Maharashtra border check post we have got reduction by 130 bps by the existing set of lenders. So all put together we are going to see almost around Rs 60 crore plus of interest saving with this effect and apart from that these IPO proceeds is going to reduce the debt part. So these put together we are of the view that from current level to the next level of next year on yearly basis we are going to save minimum of Rs 100 crore in terms of bottomline. This is completely lined up now and this is going to become a complete turnaround year for the company.

Latha: Your outstanding debt was Rs 6,600 crore; you have raised Rs 492 crore. Yes, you will have some interest savings as well. What does your debt come down to and what will be your annual interest outgo reduction?

A: These are infrastructure projects and the average life of the entire portfolio is more than 18 years. The repayment is to be done over a period and apart from that at current level we are going to see more than Rs 350 crore of the debt reduction as of now. The refinance activity that I mentioned, around Rs 60 crore from the refinance of four of the SPVs plus the reduction by one of the SPV rate of interest plus we are going to save minimum Rs 40 crore in SIPL by way of debt repayment. So this is going to add at the bottomline for the current year.