Intergen divestment knocks GMR results

GMR Infrastructure took a severe one-time bottom line hit on divesting its 50 per cent stake in US-based power generator Intergen. The publicly-held company posted a net loss of Rs 1,007 crore for the fourth quarter of 2010-11, as against a net profit of Rs 73 crore a year earlier in the same period.

There was a one-time loss of Rs 940 crore on the divestment of Intergen due to higher transaction cost, interest outgo and expenses incurred during the three-year holding period. GMR had acquired 50 per cent stake in Intergen in 2008 for Rs 5,127 crore and divested it to a Chinese firm in 2011 for Rs 5,565 crore.

Despite revenue rising by 26 per cent to Rs 5,774 crore in 2010-11 and operating profit increasing 14 per cent to Rs 1,555 crore, there was an overall loss of Rs 929.6 crore in 2010-11 as compared to a profit of Rs 158.4 crore in the corresponding period last year.

The bottom line was further hit due to increased capacity costs at Terminal 3 of Delhi International Airport Ltd, a project which envisages GMR modernising and maintaining it over 30 years.

GMR manages four airports in India and abroad, besides having a power generating capacity of 800 Mw, which is being scaled up. It also maintains a clutch of toll-based highways across India.

Total income during the fourth quarter rose 74 per cent to Rs 1,962 crore due to starting of operations at Male (Maldives) airport, increase in traffic in Hyderabad and Delhi airports and higher revenue from the power division. Operating profit increased 40 per cent to Rs 440.7 crore during this period.

Upside
“The progress of implementation of all the projects across all the sectors is on schedule. Though the divestment of Intergen has resulted in a one-time loss of Rs 933 crore, it has released an equity capital of Rs 958 crore, enabling us to reinforce our focus on resources in more profitable Indian assets,” said G M Rao, group chairman.

About 41 per cent of revenue came from the airport sector, 38 per cent from energy, seven per cent from highways and around nine per cent from ‘other sectors’, basically engineering, procurement and construction.

In the airport vertical, the company posted a loss of Rs 372 crore in 2010-11, as compared to a loss of Rs 123 crore in 2009-10. This is attributed to widening of losses in DIAL to Rs 448 crore, more than two times compared to last year. “The decision on Airport Development Fee of around Rs 1,700 crore by the government will ease the situation for Delhi airport in the future,” a top company official said.

The energy vertical has posted a marginal six per cent rise in net profit to Rs 249 crore in 2010-11. The net declined by 70 per cent to Rs 37 crore during the fourth quarter, owing to a Rs 74 crore deferred tax liability. “We have a total operational capacity of 800 Mw and expect to increase this to 2,800 Mw by the end of the current fiscal,” a top company official said.

In the highways segment, GMR narrowed its losses by 26 per cent to Rs 38 crore. The ‘Others’ vertical showed a loss of Rs 886 crore in 2010-11, that included the Intergen divestment.

The company has a net debt of Rs 14,600 crore, with a debt-equity ratio of 1.26 as of this March.