Hyderabad-based Ramky Infrastructure plans to sell road assets and a 1,200-acre land parcel on the outskirts of the city to retire its Rs 1,400-crore debt by March 31, 2015, its chief financial officer IW Vijaya Kumar told FE on Monday.
“At present our focus is on repaying the debt of Rs 1,400 crore and become a zero-debt company,” Kumar said. He said that apart from asset sales, promoters are also planning to infuse equity into the company. He didn’t divulge any further details.
According to sources, the company is actively looking for buyers for three road assets: Ramky Eslamex, Sehore Kosmi Tollways and NAM Expressway.
Ramky has a total equity investment of close to Rs 300 crore in the three projects, said the sources.
Kumar refused to name the road assets or the expected valuations, citing the confidentiality agreements with potential buyers. “We are in advanced stages of discussions,” he said.
However, a July 2014 report from India Ratings had downgraded NAM Expressway’s Rs 1,060 crore of long-term senior project bank loans to ‘IND D’ from ‘IND BBB-’ reflecting delays in term debt payment over March-May 2014. “This was mainly due to delays in achievement of commercial operations and a shortfall in toll collection since the commencement of tolling on the partially completed stretch (89.5% complete),” the ratings firm noted.
The valuations of road assets that have changed hands in the last one year remain a mixed bag. GMR, for example, sold a 74% stake in its Jadcherla Expressway last year for Rs 206 crore, about 40% premium from the book value, while its Ulundurpet Expressway was sold for Rs 220 crore, which according to sources fetched a 5% premium over the book.
Meanwhile, Hindustan Construction Company (HCC) earlier this month sold an annuity road project, Nirmal BOT, for a total consideration of Rs 64 crore, on a par with book value.
Apart from the three road assets, Ramky holds a 1,200-acre contiguous land parcel, around 25 km from Hyderabad. Though it was intended to be used for development of an industrial park, the company plans to sell it now, Kumar said.
“There was a plan to make an industrial park, but now we are looking for an outright sale of the parcel. We will be looking to sell the land in smaller plots as given the market conditions it may be difficult to sell the entire land in one go,” he said.
These asset sales form part of the company’s Corrective Action Plan (CAP), which Ramky submitted to SBI, the lead member of the joint lenders forum (JLF) of consortium banks. On Monday, Ramky informed the stock exchanges that “JLF of consortium banks in order to arrive at an early and feasible solution and preserve the economic value of the underlying assets as well as the lenders’ loans has advised the company for restructuring under JLF as the Corrective Action Plan (CAP)… the JLF will finalise the restructuring package.”
According to RBI guidelines, companies that wish to restructure debt need to get it done by March 31, 2015.
Kumar clarified that the restructuring option will kick in only if the company is unable to sell the assets.
“This is not corporate debt restructuring and the banks will only step in if the asset sale plans do not work out. This is just to keep ourselves prepared for an eventuality of a restructuring by the banks,” he said.