GMR Infra targets net debt to equity level of 2.5 times in FY14

To divest some of its assets to reduce debt, which stands at Rs 33,000 crore

GMR Infrastructure Limited, the Bangalore-based infrastructure major, is aiming at a net debt to equity level of 2.4-2.5 times during the next one year from the present level of 3.07 times. Currently, its net debt is in the range of Rs 33,000 crore.

 

“We have built up an asset level of close to Rs 52,000 crore, while we have got almost Rs 11,000 crore of capital and reserves. For any infrastructure company, a debt to equity ratio of 3 times is normal. Our net debt had moved up from 2.97 times in 2011-12 to 3.54 times in December 2012 and we have brought it down to 3.31 in June 2013. The group debt is quite normal with three times to the equity. In the coming year, it will come down further,” Madhu Terdal, Group CFO, GMR Infrastructure said.

 

Making a presentation to the shareholders at the 17th annual general meeting, here on Tuesday, he said the company has deployed about Rs 15,000 crore of debt in power projects, Rs 9,000 crore in airports and Rs 5,000 crore in the highways and road projects. The company is well positioned to service its debt and has made strategy to bring it down and increase the capital level in the year ahead, he said.

 

“We have abundant cash flows in the airports business, which will take care of that debt clearly. In the energy segment, there is a bit of a lag because of lack of gas and delay in coal allocation. It will start picking up this year as well as next year onwards. In the highways sector, except one road project --  Ambala-Chandigarh -- we are in a very comfortable position to repay our debt,” Terdal said.

 

In addition, the group has a corporate debt of Rs 3,400 crore, which has been substantially used to fund equity of projects. Much of it will go back to the company as dividend. “We are divesting some of these assets, so that this corporate debt can be reduced. We have a very clear strategy in place to reduce project debt and corporate debt separately,” he said.

 

GMR’s foreign currency debt is in the order of $1.43 billion. “Our position is nothing to worry about at all. We have a foreign currency debt of $550 million in Delhi and Hyderabad airports, which is completely backed by dollar revenues. We have no risk at all. About $730 million is in foreign subsidiaries, which are again matched by dollar revenues. We have got about $150 million debt taken for our energy projects, of which hardly $2 million is due for repayment in the next one year. We are not greatly impacted by the deceleration of rupee at this juncture,” Terdal told shareholders.

 

The company has also managed to bring down the cost of borrowings for some of its high cost borrowings from 10.40 per cent to 10 per cent in the recent days, he said.

 

With the commissioning of Emco, Kamalanga and Chhattisgarh power projects in the next three years, GMR will have an additional 3,020 Mw capacity operational. This will help the company double its revenues in the next three years from the current level of Rs 10,000 crore, he said.

 

In 2015-16, another 1,400 Mw project will be added, when the full gas is made available, there will be significant jump in EBIDTA, revenues and profits, he added.