GMR writes off Rs 450 cr on coal and airport assets

Bangalore-based firm has been pursuing arbitration in Singapore court over its exit from the $500-mn Male airport project, seeking $800 mn damages

GMR Infrastructure 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 thanks to the sale of its 70 per cent stake in a power project in Singapore, said it wrote off Rs 251 crore when it made impairment (reduction in company's stated capital) of assets in its South Africa-based coal mine subsidiary Homeland Energy Group, and another Rs 202 crore after it was forced out of the Male airport project.

The Bangalore-based publicly-held company has been pursuing arbitration in a Singapore court over its exit from the $500-million Male airport project, seeking $800 million damages. While the Maldivian government has submitted the reasons that led to the exit of the consortium led by GMR, the compensation claim of $800 million is expected to be considerably watered down.

For the past six months GMR has, as part of its 'asset light, asset right' strategy, been aggressively shedding assets including 74 per cent stake in a highway project besides the power project in Singapore.

The company has indicated it intends to raise as much as Rs 5,000 crore during FY14 by shedding assets.

While the first target is to shed its stake in three highway projects, the firm is also understood to have initiated a process to exit from the Istanbul Sabiha Gokçen International Airport in Turkey.

For the past two years, GMR has been struggling over its high leverage (ratio of debt to equity), which stood at 3.07 by the end of FY13, against 2.59 in the previous financial year. The net debt, as of end-FY13, is Rs 33,700 crore, up 15 per cent from the previous financial year.

According to the company, 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 were Rs 608 crore during the last financial year, growing by 31 per cent.

Going forward, GMR plans to spend around Rs 1,700 crore towards funding its ongoing power vertical and other projects.