GMR Infra set to sell more assets to offload debt

GMR Infrastructure Ltd, which is reeling under a debt of Rs 37,000 crore, is planning to raise as much as Rs 10,000 crore by the end of the next financial year through asset sales to reduce the debt burden.

Immediately after selling its 70 per cent stake in a Singapore-based power project by raking in two times returns and freeing as much as Rs 1,600 crore to be deployed, GMR is squaring up for a series of such strategic measures, according to people aware of the development.

The company has zeroed in on its coal-mines in South Africa, which may fetch GMR close to $100 million (around Rs 550 crore). Parallely, GMR is also working on floating a business trust in Singapore for its highway assets with a target to raise $500 million, said the sources.

After raising $300 million from the sale of its power project in Singapore and another $50 million from offloading 74 per cent in one highway project, GMR is within striking distance of raising $1 billion, which should be in place within the first quarter of the next financial year. It is also learnt that GMR may look to monetise its holdings in two coal mines in Indonesia for which it paid close to $600 million. One of these mines is expected to be listed on the Singapore Stock Exchange shortly.

Given the steps the company took to raise more funds, industry analysts are now starting to upgrade the stock. "The GMR stock has underperformed the benchmark NSE Nifty over the past one year, primarily due to balance sheet concerns, high leverage and funding constraints for its mega expansion plan. Over the past two months, the company sold two assets at a premium and is in the process of selling some more assets," said Amit Srivastava, senior research analyst, institutional equities at Nirmal Bang.

"This has released equity as well as reduced debt. We believe the company is in the right direction of repairing its balance sheet as well as funding ongoing projects with the asset sale proceeds," he added.

Management officials of GMR, however, aren't revealing much on this "asset-light strategy", except for the fact that they are targeting to reduce debt levels by Rs 10,000 crore by the end of 2013-14.

The aggressive pursuit of this strategy comes at a time when the company is struggling with losses. GMR has been in the red for most part of the past eight quarters due to lack of fuel to fire its power projects or protracted litigations for its highways business.