GMR Infra gets set for a stabilisation phase

The company has shed assets worth Rs 10,000 crore since January 2013

GMR Infrastructure, the Bangalore-based publicly held infrastructure developer, is gearing for a stabilisation phase during the current financial year, after years of leveraging heavily to build assets worth as much as Rs 64,000 crore, which resulted in a debt of close to Rs 40,000 crore under a leverage of 3.5 times on its net-worth.

The company, which has interests across airports, power stations and highways, has said that as part of its "asset light - asset right" strategy started during January 2013, it has been able to shed assets worth Rs 10,000 crore as a result of which the there has been an equity infusion of Rs 4,000 crore and a net debt reduction of Rs 6,000 crore so far.

As part of this move, the company which shed some five assets across airports, power projects and highways said that its net profit for the fourth quarter of Fy14 was at Rs 1170 crore as against a net loss of Rs 441 crore during corresponding previous quarter. Net Revenues grew by a healthy 22% to Rs 2436 crore.

G M Rao, Group Chairman, GMR said: "We are now on a stable path with the right mix of assets, reduced debt levels and optimum cost utilization. With our assets becoming operational and stabilizing, we expect the performance to improve in the coming year. We are optimistic that there will be resurgence in the infrastructure sector and we are well poised to participate in this phase."

Senior management officials further added that the asset light strategy will continue, but they will not be rushing through it. "We are reasonably comfortable and we can afford to wait till we get the right valuation for the assets. There are good inbound interest for the assets which are operational and we are exploring all of them to drive maximum value," Madhu Terdal, Group CFO, GMR Infrastructure told Business Standard.

It is understood that GMR has received some strong interest for its two functional coal-fired power plants in Maharashtra and Orissa and they are evaluating keenly on how to take forward the offers.

"To a large extent, the debt inflow will reduce substantially, even as we look to raise equity during Fy15. This will bring steadiness to the leverage issue. At a corporate level, our debt is Rs 6,000 crore and we expected to reduce that by around Rs 1,500 crore during Fy15," Terdal added.