GMR raising Rs 13,000 cr for power, road projects

In advanced discussions with many domestic lenders, including SBI, Axis Bank and IDFC for raising the debt.

Bangalore-based GMR Infrastructure, controlled by billionaire G M Rao, is close to raising about Rs 13,000 crore from domestic banks for funding its four power projects and two road projects. The company will invest about Rs 4,000 crore towards equity in these projects.

The infrastructure giant is in advanced discussions with a slew of domestic lenders, including State Bank of India (SBI), Axis Bank and IDFC for raising the debt, said banking sources.

Towards finding funds for its power projects, GMR has just got financing commitments from Axis Bank for the debt portion of recently acquired Emco’s 600 Mw project in Maharashtra, that costs Rs 3,360 crore, said A Subba Rao, group chief financial officer, GMR. “The projects, including the 768-Mw Vemagiri expansion (Andhra Pradesh), a 1,200-Mw coal-fired project in Raipur (Chhattisgarh) and a 300-Mw hydel project at Alaknanda (Uttarakhand) are waiting for financial closure to commence construction, in addition to the Emco project. We expect this to happen by February 2010,” Rao told Business Standard.

GMR is also raising funds for two build-operate-transfer (BOT) road projects by February, worth Rs 3,300 crore. The funds are for a 181-km national highway stretch between Hyderabad and Vijayawada worth Rs 2,200 crore and a 29-km Chennai Outer Ring Road worth Rs 1,100 crore. The debt-equity ratio would be in the range of 75:25.

The Hyderabad-Vijayawada road, which GMR bagged in May, is a toll project with a concession period of 25 years. The Chennai road, an annuity project with a concession period of 20 years, was awarded in June. The company had signed the concession agreement for the Hyderabad project in October and would soon do so for the Chennai one.

GMR is one of the largest highway developers in the country and currently operates six BOT projects, totalling a length of 421 km. It currently operates three power plants, a 380 Mw plant at Vemagiri in Andhra Pradesh, a 200 Mw plant in Chennai and a 235 Mw plant at Mangalore in Karnataka. Over half of its revenue comes from power projects.

The company’s special purpose vehicle, GMR Kamalanga Energy, had in May concluded financial closure for its 1,050-Mw coal-based power station coming up at Dhenkanal in Orissa. The Rs 4,540 crore required for the project was raised through a combination of debt and equity in a 75:25 ratio, with a debt component of Rs 3,405 crore tied up with 13 banks, including State Bank of India. IDFC was the sole debt arranger and syndicator of the debt. The loan tenure is 16 years.

The group’s subsidiary GMR Energy’s projects coming up in Orissa, Maharashtra and Andhra Pradesh will be completed by 2012. Its Chhattisgarh plant is slated for commissioning by early 2013 and the Uttarakhand hydel project by 2014.

The Vemagiri expansion requires Rs 2,800 crore, while the Raipur project needs Rs 6,000 crore. The hydel project will be completed at an estimated cost of Rs 2,000 crore. GMR Energy is developing five hydro power projects — three in India and two in Nepal.

Other power projects of GMR in the pipeline include a 2,000-Mw coastal plant in Andhra Pradesh at an estimated cost of Rs 9,600 crore, a 800-Mw project in Singapore under the recently acquired Island Power and a 428-Mw project in the Netherlands under InterGen, in which GMR holds 50 per cent stake. The Singapore project will tie-up for funds in the next six to nine months. As on March 2009, the company’s net debt-equity stood at 1.5:1.