Riding high on the growth trajectory
We firmly believe that this sustainable growth model will take the company into acompletely uncharted territory of value creation where we will attempt to achieveboth-adding growth opportunities and simultaneously releasing cashflows for shareholderswhich is unheard of in the Infrastructure segment.
After successfully steering through the unprecedented pandemic IRB group is nowlooking forward to a robust growth phase. While the pandemic brought uncertainties andunforeseen challenges for the business we also encountered good growth opportunitiesduring this period which we successfully lapped up in spite of the challenges. TheMumbai-Pune TOT was one of our largest wins of the year. The constraints at that time ledto increased leverage levels for funding such opportunities and maintaining cashflowsduring such a period.
As a prudent practice we have always worked on keeping leverage in check and hence -as we were getting out of the pandemic and seeing growth opportunities coming back - wedecided to address both - i.e. bring leverage down and have growth capital ready toencash upon the opportunities that were in the offing.
We successfully raised Rs.5347 Crores at the end of FY21 from two largestrategic/financial investors. Spanish infrastructure behemoth Ferrovial group throughit's subsidiary Cintra invested Rs.3180 Crores for a 24.86 % stake and sovereign wealthfund GIC Affiliates put in Rs.2167 Crores for a ~16% stake in IRB infra.
Along with the fund flow this also helped us to bring in global best practises andraise the bar of governance. We now have two directors from the Ferrovial team on the IRBboard and also an observer from GIC and I take this opportunity to welcome them and thankthem for their contribution.
With this transaction - IRB has secured access to capital and as an IntegratedDeveloper the mantra from here on is sustainable growth without increasing the leveragethus unlocking shareholder value.
We have successfully improved the order book of the company which now stands at 16052Crores providing us a good 2-3 year EPC visibility.
We have over the last 5 years created a formidable business model in several ways.
The Bidding and execution platform-Listco IRBIDL is involved in chasing neworganic opportunities ensuring quality execution and part funding the growth capital.
The development platform-Private InvIT gives us the muscle to persue meaningfulopportunities of large size with a 49% financial partner in GIC affiliates to support thesame. We have successfully created value in this portfolio and the valuation of thisplatform has now swelled from Rs.19000 Crores to 24000 Crores basis latest third-partyvaluation report.
Lastly our third platform Public InvIT-We couldn't add assets to this platformgiven the under construction/ stabilisation status of the assets and thereafter due to thepandemic related uncertainties. Public InvIT will see two of its assets finish theirconcessions successfully in FY23 and the same going back to the government. With verylittle leverage this platform is now well-poised to tap growth and we will offermeaningful opportunities to acquire assets from the IRB fold at regular intervals.
We successfully raised Rs.5347 Crores towards the end of FY22 from two largestrategic/financial investors.
As a part of this strategy we will offer the first asset to Public InvIT and we arepresently in the process of engaging with their investors to take their inputs on addingassets and its means of funding. This strategy as mentioned earlier will provide valueunlocking for IRB and simultaneously offer stable asset to Public InvIT providing itfurther cash flow visibility and expanding its portfolio.
We firmly believe that this sustainable growth model will take the company into acompletely uncharted territory of value creation where we will attempt to achieve both -adding growth opportunities and simultaneously releasing cash flows for shareholderswhich is unheard of in the infrastructure segment. With this churn and grow strategy wewill achieve meaningful growth for the group while keeping leverage in check.
The ugly inflation that is trying to dent margins will be countered by workingaggressively on reducing debt cost as rating upgrade facilitate the same. While inflationwill be a pass through in HAM projects for BOT assets - the higher than factored tariffincreases on the projects will take care of the same.
We will take up this growth journey with a stronger more resilient and well-stemmedIRB and look forward to promising times ahead.
We thank all our stakeholders for believing in our capabilities and staying put throughthese unprecedented times.
Virendra D. Mhaiskar
Chairman and Managing Director.