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Asset sales double GMR net profit to Rs1,170.18 crore

LiveMint logoLiveMint 30-05-2014 Mihir Dalal

Bangalore: GMR Infrastructure Ltd’s net profit in the March quarter doubled to `1,170.18 crore from the year-ago quarter, boosted by asset sales, it said on Friday.

Total income for the quarter ended on 31 March rose 15% to `3,066.8 crore.

GMR, which has businesses in airports, roads and power, has been selling assets to cut debt. Excluding the asset sales, GMR’s operational loss jumped to `558.8 crore from `45.29 crore in the year-ago period, mostly due to rising financing and interest costs.

The company’s debt stood at `33,599.28 crore as of 31 March.

GMR Group’s chief financial officer Madhu Terdal said that the company will now focus on raising equity rather than borrowing money.

“All these days, there was no potential to raise equity—the markets were dead. Now that the markets have started turning, there will be more emphasis on raising equity. I may do it through divestment or sale, I may place private equity, I may do some strategic asset sales. In the coming days, you will see a lot of action where our interest burden is going to come down,” Terdal said at a press briefing.

He said GMR will start selling its land assets this year after a gap of nearly five years. The company, which has about 200 acres of land, expects to monetise between 8 and 14 acres this year and up to 28 acres next year.

“This year and the coming years, we will see the next wave of monetisation of our real estate. Last time we monetised the assets in 2009 we got `88 crore per acre. Now, even if you take `100 crore (per acre), and even if you take just 10 acres, we’ll get `1,000 crore. But we don’t have any specific target,” Terdal said.

Infrastructure companies such as GMR and GVK Power and Infrastructure Ltd have been hit over the past few years by fuel shortages, regulatory controls of airport-running fees, and delays in getting project approvals—all of which have increased their already-high debt levels and accompanying interest burden.

Terdal, however, indicated that GMR’s financial performance would improve this year onward.

“The reason infrastructure companies were under stress is that projects were not being completed. But during the last year, we’ve operationalised two big projects. Now, our capex (capital expenditure) needs are over; we don’t need to put any money in roads or airports. So this year will be the revenue generation phase. The tough time of last year is completely behind us,” Terdal said.

He said GMR would “selectively” bid for road and airport assets this year, but not for power projects.

The company said in 2012 it was adopting an “asset light, asset right strategy” that involved selling assets to cut debt, reducing costs and lowering capital expenditure.

“We’ll be continuing with the asset light, asset right strategy. (But) today we’re not desperate. If there’s proper demand and there’s a good price then we may consider one or two sales depending on the offers,” Terdal said.

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