GMR writes off Rs 450 cr on coal, airport assets

GMR Infrastructure, the Bangalore-based publicly-held infrastructure developer, has written off Rs 453 crore on two of its global assets in coal mines and airports. The company which reported a healthy jump in yearly profits due to sale of its 70 per cent stake in a power project in Singapore said that it wrote off Rs 251 crore when it exited its presence in coal mines in South Africa while another Rs 202 crore has been written off after it was forcefully made to exit the airport at Male which it was managing for nearly four years.

GMR has been pursuing arbitration in a court in Singapore over its exit in the $500 million Male airport and is seeking as much as $800 million as damages for the same. While it is understood that the Government of Male is has submitted its total list of reasons on which the consortium led by GMR was forced to exit, the compensation claim of $800 million is expected to be considerably watered down from GMR going forward.

GMR, as part of its 'asset light - asset right' strategy during the past six months has been aggressively shedding assets including the 74 per cent stake in a highway project besides the power project in Singapore. The company has broadly indicated that it intends to raise as much as close to Rs 5,000 crore during the current fiscal by shedding assets.

While the first target is to shed its stake in three highway projects, the company is also understood to have initiated a process to exit its presence in the airport at Turkey. GMR has been struggling for the past couple of years over its high leverage which now stands at 3.07 by end of FY13 as against 2.59 by end of FY12. The net debt is now at Rs 33,700 crore, which rose by 15 per cent.

The company however has been maintaining that most of the debt has been ring-fenced over the cash flow of specific projects and there isn't much of a concern over servicing the debt. The interest charges at Rs 608 crore during last fiscal grew by 31 per cent and going forward, GMR has said that it plans to spend around Rs 1,700 crore towards funding its ongoing power vertical and other projects.