News Detail

• In an interview with CNBC-TV18, A Subba Rao, group CFO, GMR Infra was skeptical about the capex cycle improving for the power sector despite positive sentiment.

• Rao explained that the company would continue to make efforts to raise capital and added he was unable to comment on possible divestment of a 26% stake in road projects. Rao added that the company had recently bagged road projects worth Rs 7,500-crore.

• Q: Have you seen any improvement in the capex cycle after positive developments in the power sector all thanks to the Prime Minister's Office (PMO)? Has the environment improved at all?

• A: I don't think the environment has improved despite the positive sentiments that have emerged from the PMO. The industry will have to wait and see how the sentiment will be implemented. Only when there is confidence, will we see the capex cycle improving in the power sector.

• Till date, uncertainty in terms of fuel supplies and tariffs still remain. Though the clarity in policy has been expressed, clarity in implementation is yet to come. How these developments are going to be implemented at the ground level will determine revival of the capex cycle.

• Q: There are rumours that you are in talks with private equity investors to sell around 26% in your road project. How much are you looking to raise and at what stage are the negotiations?

• A: I am not going to comment on this specific subject. But infrastructure as a sector is capital intensive - we need both debt as well as equity. Debt can be drawn only on a foundation of equity.

• So raising equity is a continuous affair in infrastructure sector. As projects open up, growth continues and as long as growth continues, we need to raise capital. It is too uncertain at this stage to comment on our plans.

• Q: You are actively looking to shed stake in some of the road projects that you have?

• A: To raise the equity, we don't necessarily need to shed equity or any other stake. There are different structures to raise equity, without dilution, that we have followed in the energy and airports sectors. The dilution would be linked to the IPO. Such models are already available and we don't need to dilute hence the equity in the current situation itself.

• Q: What is the mode you have used to raise capital?

• A: We just bagged road projects of about Rs 7,500 crore and an island power project, which has been completely funded. There are some power projects in states like Chattisgarh which are still in progress. We continue to need equity for these projects but not in the immediate future. But we have to plan ahead and keep raising equity.

• Q: What is the fund requirement for the company? Where would the funds be used?

• A: The utilisation would be in the road and power sector as the airport-projects have been completely funded. We will commission the road project in the first quarter of the next financial year. In the power sector, there are a lot of projects that are going on. We need the equity for these projects, but not immediately. There is over a year's time to infuse the equity in these projects.

• Q: The President, in her inaugural Budget Session speech, mentioned that a Land Acquisition and Rehabilitation Bill would be introduced shortly. What will be the impact since you would be acquiring land for power projects? Do you predict a sharp increase in land prices?

• A: We have to wait and see how the bill is going to be introduced. If it is going to be introduced in the current form, it is going to be disastrous for the industry. We have voiced our concerns and hence the bill needs significant amendment. We have to see if the government will consider the representations made by the industry.

• Q: What about the fact that the President also mentioned building 7,000 km of road?

• A: The target of laying out 7,000-km of road is not bad news. We have closed at a target of around 8,000-9,000 km of road last year. If it can be achieved, it's a good target.

• Q: A payment of Rs 537 crore due from TNEB has now been awarded. Has the money come in?

• A: The money came in long ago. The case was pending with the appellate authority and as it was decided in our favour, the money can be retained. We would be able to account for it as an income in the current quarter subject to audit.

• Q: Was the Indonesian government expecting to limit foreign ownership of Indonesian coal mines to 49% for old and new licences? How would this impact GMR Infra?

• A Our understanding is that it would apply to the prospective licences, though not retrospectively and without any further development, I an unable to comment.

• Q: Has flow of cash from the state electricity boards (SEBs) improved?

• A: There are certain SEBs from where the flow of cash is not that good for e.g. in the case of TNEB. Otherwise, we have been regularly getting cash from other SEBs. In the case of TNEB, once the tariffs are revised by April, the cash flow would be restored. Overall, we don't see any other constraint in cash flow from other SEBs, as of now.

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