Gammon Infra looks to raise Rs 500 cr via QIP to fund projects, retire Rs 100-cr debt

Written by Shubhra Tandon | New Delhi | Updated: Jul 5 2014, 07:40am hrs
Gammon Infrastructure Projects, the infrastructure arm of Gammon India, plans to raise R500 crore through a qualified institutional placement (QIP) to facilitate fund requirement for some projects and retire part of its debt.

The company will use the proceeds to complete those projects over the next 6-9 months that require funds and to retire around R100 crore of debt, KK Mohanty, managing director, Gammon Infrastructure Projects, told FE.

The projects where funds from the QIP will be infused include the Godavari Bridge project in Andhra Pradesh, the Pravara co-generation project in Maharashtra and the Patna Highway Project, a 63.17-km annual annuity road project of National Highways Authority of India. Part of NH-77, the road connects Hajipur (Patna) to Muzaffarpur.

"All the projects are nearing completion and there are some last-mile investments required on these, which we plan to fund through the QIP issue. Some part of the funds will be used to retire debt on the holding company as well," Mohanty said.

Gammon Infra's net debt as on September 2013 stands at close to R3,700 crore.

Gammon informed the BSE on Friday that its board will hold a meeting on July 12 to consider and approve the unaudited financial statements of the company for the quarter ended March 31, 2014 as reviewed by auditors in connection with the company's proposed QIP.

There has been a flurry of QIP issues in the market following Narendra Modis thumping election victory. The first quarter of FY15 has witnessed a 10-times rise in the amount of capital raised through QIPs.

The QIPs of two other infrastructure companies, GMR Infrastructure and JP Associates, hit the capital market earlier this week, raising around R3,300 crore.

The amount of capital raised through QIPs in Q1FY15 stood at Rs 12,151 crore against R1,222 crore in the corresponding period last year, according to Prime Database.

The total capital raised through institutional placements (QIP + IPP) in June quarter stood at Rs 12,569 crore.

The amount raised by QIPs & IPPs together has increased 151% against the R5,006 crore raised in the corresponding period last year, Pranav Haldea, managing director, Prime Database, had recently said.

The largest QIP was by Reliance Communications at R4,808 crore. Idea Cellular and Yes Bank raised R3,000 crore and R2,942 crore, respectively. According to Haldea, there is pent-up demand for capital, which is now being released.