GMR net loss widens on higher interest outgo

Higher interest charges, non-availability of UDF at Hyderabad Airport along with higher depreciation impact financials

A big debt overhang continues to hurt GMR Infrastructure, which posted an 82 per cent rise in net loss to Rs 593 crore for the first quarter of 2014-15 as compared to the corresponding quarter of 2013-14.

GMR has been hit by higher interest charge,  delays in generating power at two of its coal-fired power plants and a setback in not getting higher passenger charges at its airport in Hyderabad, along with higher depreciation on account of the new Companies Act. The firm has debt of Rs 40,000 crore, with a leverage of more than three times on its net worth. This saw its finance cost increase by 36 per cent to Rs 832 crore.

Revenue rose by four per cent to Rs 2,731 crore, thanks to its power projects, though delayed. The management said it continued to consolidate and stabilise the operations. The operating profit rose by a small three per cent to Rs 613 crore, primarily led by the thermal power projects.

Commenting on the performance during the Quarter, G M Rao, Group Chairman, said: "The highlight of the first quarter was the budget announcement which clearly recognized infrastructure as the key pillar for economic revival. We expect significant contribution from the two power projects through resolution of the long pending power evacuation issues. We will continue to focus on operational excellence and strengthening of balance sheet through deleveraging by way of our Asset Light Asset Right Strategy. Going forward we will explore refinancing of the debt in line with recent RBI policy announcement for Infrastructure Financing."

All the three key verticals - airports, energy and highways segments, were in the red as the company exited the profitable airports operations in Turkey, which resulted in the airport vertical,which accounts for half of the group revenues, plunging into a loss to Rs 27 crore as compared to a profit of Rs 68 crore.

The energy segment contributed heavily to the net loss, reporting an outgo of Rs 500 crore due to low availability of gas for two of its power stations, mostly idle, as well as forking out higher interest charges. The highways segment's loss widened sixfold to Rs 67 crore, with multiple problems plaguing the company as well as divestments of a key asset.

The GMR stock gained 2.6 per cent on Thursday and closed at Rs 25.55 a share on the National Stock Exchange.